The Iran War Isn’t About Nukes — Follow the Money (and the Trade You Can’t Miss)

The Iran conflict is not what you're being told. And if you understand what it actually is, you'll be able to position yourself financially to come out ahead at the end of all of this. Right now, millions of investors are asking themselves a very simple question. What should I do? Many are going to panic and sell, and many others will move too quickly and buy high. But there's a third path that is far more intelligent. My goal is that by the end of this video, you'll understand the three primary phases markets go through during geopolitical conflict where the money flows and how to position your portfolio without panic and without gambling on the latest headline. But before I can walk you through the right way to approach this moment, I need to lay out what's actually going on so you're not blinded by the propaganda, I'm going to do it in six easy parts, and you do not want to miss part five. That is where the secrets are all put together, so you'll see a very clear picture of what's happening. Welcome to part one, the US's motivation for launching a war against Iran. First, we were told troops were amassing in the Gulf so we could help the people of Iran. But somewhere in the neighborhood of 30,000 Iranians were slaughtered and all we did was threaten. Then, as the protests in Iran died down, but the military buildup continued to escalate at pace, we were told this was really about negotiating over Iran's pursuit of nuclear weapons. An argument, by the way, that is constantly used to justify aggression towards Iran. But given that this came less than a year after Trump assured the American people that Iran's nuclear program had been completely obliterated, that just seemed impossible to believe. Then suddenly, we attacked. And Marco Rubio said, "We attacked when we did because Israel was about to strike. And we knew Iran would retaliate. So we needed to strike first to ensure maximum lethality. >> Yesterday you told us that Israel was going to strike Iran and that that's why we needed to get involved. Today the president said that >> Iran was going to get >> Yeah. Your statement is false. So that's not what I was asked very specifically. Were you there yesterday? >> Yes. >> Okay. Question. >> Wait a minute. >> What? Then we were told, well actually it isn't so much the nuclear program which of course we did obliterate. It's actually about their ballistic missile program which was about to go underground and that would have made it impossible to stop. Then we were told psych just kidding. It really was the nuclear program all along. Want to know why the rationale keeps changing? Because the attack on Iran is not primarily about nuclear weapons or freeing the Iranian people. That's certainly the moral cover story that the administration has to feed the American people. But the reality is that like all wars before it, the primary driver is economic. If you're skeptical of that fact, welcome to part two. The Trump admin is facing an existential economic crisis. And this is your investing clue number one. Trump is spending recklessly, running a roughly $2 trillion annual deficit. He's not the first politician to do it, but he is the most legally hunted politician to do it. If he loses power, the odds that he will end up in jail are distressingly high. That makes the midterms absolutely critical for him to win. If the Republicans lose the House in the midterm elections, Democrats will almost certainly seek to impeach him immediately. If he's impeached, his economic agenda likely dies and his administration will not be able to fulfill the one thing that will help them retain power in 2028, namely a better economic outlook for the average American who right now is being abused by debt, inflation, and money printing. A failure in 2028 leaves Trump vulnerable to another round of criminal prosecutions if the Republicans lose power. All of that makes this moment truly existential for Trump. And he only has one path to avoiding that fate. Grow the economy so much that the average worker in the US sees their standard of living go up. But how is he going to do it? Welcome to part three, the termination of the entire old world order. The question on everyone's mind should be, why the hell is Trump blowing up the entire world order? Business has taught Trump a powerful lesson. If you really want radically different results, you have to do something radically different. Trump was not elected to maintain the status quo. He was elected by populists who want the status quo broken, blown apart into a million pieces. And Trump by temperament is all too happy to oblige. If America is busy being the moral beacon and the world's police, the best it can hope for is to optimize its profits. Eek out another 5% here, 7% there. But for a country drowning in debt, being torn apart by a ferociously K-shaped economy, and facing a rising global superpower in the name of China, that's just not going to cut it. Trump's only hope is truly radical change. Now, I wish he would have gone down the path that Margaret Thatcher went down when she needed radical change, austerity. But what I want doesn't matter. My job here is to outline not what ought to happen, but what is happening so you can position yourself wisely. So, let's look at it. Trump has disrupted global trade with an avalanche of tariffs and begun the process of onshoring critical manufacturing. He's kidnapped the leader of a sovereign nation and vowed to do it again to the successor if America doesn't get what it wants. He's threatened to take Greenland away from a European country by force and intimated that he may leave NATO if he doesn't get his way at the exact moment the war between Russia and Ukraine threatens to spill into Europe. It's one thing to begin decoupling from China. It's another thing entirely to take territory from an ally by force. Now, did he finally admit that he wouldn't use force? Yes. But by then the bridges were already on fire. I would understand anyone who thought Trump was acting without a plan. I mean Europe is a gigantic economy even if Trump doesn't like them. Surely they're strategically important enough to deal with. But instead he insists on alienating them at every turn. Why? And why cozy up so closely with the GCC countries in the Middle East? and why, for the love of God, go to war with Iran right now. Now, we're going to get more into Iran in a minute, but first, let's look at why Trump's attention is so squarely placed on the GCC. As always, you need only follow the money. As we established, Trump is in an economically existential position. He must fix the US economy. He must grow it like crazy or he is vulnerable to attacks. The Middle East is critical to his plans to do exactly that. First of all, there's the importance of maintaining the US dollar's status as the world's reserve currency. Something that is only possible with the pro dollar in place. Saudi Arabia has already refused to officially extend the formal agreement that has kept the dollar in that pole position globally. And in the last 25 years, world trade in dollars has declined from over 70% of transactions settled to now down into the 50s. But the truth is any decline in the dollar supremacy, which is happening, is going to continue happening slowly. So, there's got to be something far more immediate that draws Trump's attention to the Middle East. And in fact, we already know what it is. But most people seem completely blind to it. The Gulf States, Saudi Arabia, UAE, Qatar have incredible sovereign wealth funds. They are sitting on trillions of dollars in deployable capital and they have a strong political incentive to direct that capital towards the US. They want the US to help protect them against guess who? The Iranians. When MBS announces a $600 billion investment pledge or the UAE commits hundreds of billions of dollars into American AI infrastructure, that's an unchecked head of state making a topdown decision. It's fast, it's transactional, and it's photogenic. The exact kind of deal that Trump likes. The EU simply can't do that kind of thing. No matter how big the EU's economy, no single leader controls European capital allocation, and private EU investment in the US doesn't come with a ribbon cutting ceremony. You have to remember Trump's mental model is dealmaking, not systemic trade. Trade barriers for him are just how you get people to the table to make a deal. They're not a deal in themselves. The EU relationship is mostly expressed through complex trade frameworks, regulatory harmonization disputes, tariff schedules, and WTO mechanisms. There's no deal to announce. It's a slowm moving institutional grind. Trump finds that friction frustrating, not energizing. The Gulf relationship, on the other hand, looks more like what he understands and covetss. a sovereign counterpart who can write a big ass check. The EU pushes back. The Gulf largely doesn't. European leaders will lecture on the rule of law, press freedom, climate commitments, and democratic norms. Gulf monarchs won't. For transactional operators like Trump, who's trying to shake up the world order and assert dominance so he can get all of the best deals and grow his economy, as he must do. A partner who raises no uncomfortable preconditions is simply easier to work with. And given that the Gulf States want to make sure that the US wants their investment dollars so that they'll provide protection in an unstable region, it is a match made in heaven. The relationship stays in the register of commerce and security rather than values. Also, Trump is personally financially entangled in the Middle East. He's got real estate and branding interests in the Gulf region, golf courses in Dubai, licensing deals, and the broader orbit of his family business interests like the live golf deal, Kushner's $2 billion from the Saudi PIF. That doesn't mean every policy decision flows from that. I want to be very clear. But it does create a warm prior towards the region that doesn't exist with Brussels bureaucrats. And Trump governs heavily through optics. A state visit to Riad with a $500 billion investment announcement looks like a win in a way that renegotiating EU agriculture tariffs never will. The Gulf States understand this. They know how to play it. They're sophisticated at packaging their sovereign interests as gifts to whoever's in the White House. So the EU may be a larger economy, may be a more durable trading partner. It may actually be more systemically important to American prosperity in the long run, but importance and political utility are not the same thing. The EU is harder to deal with because it's more institutionally sophisticated. It has its own interests, its own regulatory power, and its own regulatory burden. The EU seems to be doing its best to make itself irrelevant over time. And member states that don't all move in the same direction just make it that harder to deal with them. And that complexity real, yes, but to Trump, it just also reads as friction rather than depth. We'll be back to the show in a second, but first, let's talk about the retirement mistake even smart people are making. Most people think playing it safe means keeping their money in stable, familiar assets. 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If Trump is going to pull off the insane gambit that he's currently running by deficit spending with no end in sight to get reelected and then money printing to cover the massive gap, he's got to bring manufacturing back from China. use tariffs as a sneaky tax that is spread across foreign exporters, domestic importers, and citizens instead of just citizens. Don't believe anybody that tells you that citizens pay all of the tariff. They don't. That's their magic. They're spread out. He's also got to win the AI race against China to drive innovation and desirable deflation. Yes, there is such a thing. He has to deregulate to drive innovation and jobs and keep interest rates down for the same reason. He's got to use crypto to create massive global appetite for US debt. And he's got to do everything he can to secure as many foreign investment dollars in the US as humanly possible. And on that last point, securing the $2 trillion in investment promises that he got the Middle East to make him back in May is step one. Those dollars are largely earmarked for AI infrastructure buildouts that will create jobs, help win the AI race. It provides great optics and it further intertwines the destinies of the US and the Middle East. Think about this. 54% of the funding of the largest private equity and venture capital firms in the US comes from the Middle East. The Middle East is already driving the majority of the investment in one of the sectors of the US economy that's actually working. The tech sector generally and AI specifically. Think about how critical AI is to our current economy. And the Middle East has managed to make themselves one of the most important players in the AI race without needing to develop the technology themselves. And Trump knows that. And so does Iran. And that's why they're not just striking Israel and US military bases. They've got a much more clever strategy. Welcome to part five, the war from Iran's perspective. Iran wants to run the Middle East. Like the US wants to run everything but Asia and China wants to run Asia and ultimately the world. Iran wants to run the Middle East. To do that, they need nukes. That part of the story really is real. They do want ballistic missiles and they want their nukes and they want to wipe Israel off the map. That's all true. And they would love to destabilize the entire Gulf region, break up the Abraham Accords, partner with China, and grow more powerful. so that they can get out from under the influence of US sanctions and become the country they've always wanted to be. Now, given the fact that the Ayatollah was already losing his grip on the people of Iran before he was killed, and the fact that the Abraham Accords is making more and more GCC countries increasingly pro- capitalism, post oil, and pro-western, Iran knows it cannot back down now on its quest to build nuclear weapons and reassert its authority on the region. Doing so is the regime's last chance to establish dominance over the region and maintain legitimacy inside of its own country. If an unchecked Iran were to destabilize the balance of power in the region with their ballistic missiles, nuclear ambitions, and ability to close the straight of Hormuz, those sovereign wealth dollars that Trump is so covetous to get pouring into the US would end up instead going towards GCC national defense and not US AI infrastructure. Iran is proving that they know exactly how to make that happen. Think about what Iran did the moment the US struck. They didn't just hit military bases. If this were a conflict really just about Iran's nuclear ambitions, they'd go after Israel, who they know don't want them to have some, and they'd go after US military bases. But instead, they hit oil infrastructure all across the GCC. They fired on supposed allies. They fired on civilian targets in Saudi Arabia, Kuwait, Qatar, Bahrain, and the UAE. all within hours of each other. Every single nation that had just written a nice big 9 figure check to American AI infrastructure, that's who got hit. Every single nation whose sovereign wealth fund is propping up the US tech sector, that's who got attacked. And then they hit something that makes it abundantly clear that the real battle and the battle we're being sold are two very different things. Iranian drones struck two Amazon Web Services data centers in the UAE and a third data center in Bahrain was damaged when a drone exploded nearby. All three facilities went offline. Digital services poof across the UAE. They just collapsed. AWS told its customers, "You need to migrate your workloads out of the Middle East immediately." Why? Because there's probably more coming. Iran didn't stumble onto those data centers. It wasn't a misfire. These aren't random buildings. Iran state media was explicit about that. These are part of the physical backbone of the AI economy that the entire $2 trillion Gulf investment pipeline is designed to scale up. Here's the chain reaction Iran is trying to trigger and why what they're doing is not random. Every dollar a GCC nation spends intercepting drones is a dollar that doesn't flow to Nvidia in the US. Every facility that gets destroyed has to be rebuilt. And that reconstruction money comes directly out of the sovereign wealth fund capital that was earmarked for AI infrastructure in the US. Every CEO watching a data center burn on a live stream has to ask whether the Gulf is still a safe place to build. And every institutional investor watching this unfold has to ask whether the AI buildout that is currently propping up 33% of the S&P 500 is as solid as they thought. Because without the sovereign wealth fund dollars from the GCC, where is the AI investment dollars going to come from? And given the AI isn't even close to being profitable yet, what happens to the AI bubble if the GCC pulls its funding? And another piece of Iran's master plan is to close the straight of Hormuz, the narrow bottleneck through which roughly 20% of the world's oil supply flows through every single day. An IRGC commander declared the strait closed and threatened to set ablaze any vessels that tried to pass. and they got a handful of them and that was plenty for the insurance companies to shut it down. So even though the US has created naval and air superiority somehow someway, Tyrron has still been able to close the straight of Hormuz at least temporarily. Tanker traffic dropped to near zero, leaving over 150 ships stranded at least briefly. Brent crude surged over 9% in a single session and RBC Capital Markets called it the biggest energy crisis since the oil embargo of 1973. Higher oil prices feed directly into inflation. Sticky inflation means the Fed cannot cut rates. Rates staying high means corporate borrowing costs stay high. High borrowing costs kill the profit margins of every company that borrowed money to build AI infrastructure. and they all borrowed money and falling profit margins crater stock prices. Iran doesn't need to defeat the US military to secure a victory. They just need to make the Gulf too expensive and too unpredictable to invest in. Force the GCC to choose between funding Nvidia chips and funding their own survival. That's the play. But Trump has to push forward anyway, at least with the way he believes things are. If Iran can force the GCC nations to spend their wealth funds on repairs, collapse the AI bubble and make the Gulf region uninvestable, it continues to have a chance to leverage China to get out from under US sanctions and back on top of the Middle East. And that brings us to part six. How do you take advantage of this moment? As I promised at the top of this video, smart money will take advantage of this disruption and come out better than they went in. Let's walk through the mechanism. Now, please keep in mind predicting the future is impossible. So, be thoughtful as you go through this analysis. History rhymes, but it does not repeat. And if you get the sonnet wrong, you are in for a world of hurt. Having said that, the markets have been through this kind of disruption many times before, and there is a discernable pattern in the data. Here's roughly how money moves when there's a major geopolitical conflict. Markets drop in the initial shock phase. Sometimes a little, sometimes a lot, depending on how severe the event is and how much it threatens the underlying economy. LPL research analyzed more than 20 major geopolitical events going all the way back to Pearl Harbor and the average total draw down was around 5%. Markets typically bottom out quickly and then bounce back. If you don't believe me, we can walk through the tape. 80 years of it. Korean War 1950. North Korea invades South Korea and suddenly the US is in a hot war again 5 years after World War II ended. The S&P dropped nearly 13%. That's serious money, but it bottomed out in just 19 days and then fully recovered in less than 2 months. A year later, the market was up 20%. The Cuban Missile Crisis back in 1962, 13 days where we were one miscalculation away from nuclear annihilation. But the Dow lost just 1.2% then gained 10% for the rest of the year. Desert Storm in '91, markets had already dropped 10% on fear before a single bomb even dropped. 4 weeks after the air campaign launched, it was up nearly 18%. The full year up 30%. 911 markets closed for days. When they reopened, the S&P dropped 11% in one week but fully recovered within a month. So you put it all together and the average max draw down is about 5%. Average recovery time 47 trading days and stocks were higher one year later in 73% of those conflicts. Now I didn't start with Pearl Harbor because it's the exception that proves the rule. The shock was so total that markets dropped nearly 20% and took almost a year to recover. But that's the worst case scenario. That was us going into World War II. And even then, the Dow gained 50% over the course of the war. Every single time, the fear was real. And every single time, people thought the same thing. This one's different. This one's going to break the pattern. And yet, every single time, the market just moves on despite the disruption. So, let's look at what's happening right now in real time with Iran. Through the first five days of the conflict, the S&P is down roughly 1 to 2% from its highs. Deutsche Bank noted this week that the index remains close to record levels. The market is processing uncertainty, sure, but is not collapsing under it. Now, in a strange twist of fate, war rarely destroys markets. What it destroys is the confidence of retail investors who don't understand the pattern. Now, there are three phases to watch out for, and if you keep your head straight long enough to understand them, you're going to be ahead of 99% of the people you're investing against. Phase one is shock. This is the first few days, maybe a couple of weeks. It's driven entirely by emotion and algorithms. Oil's going to spike. The VIX, that's the market fear index. It's going to go through the roof. Growth stocks get hammered. Gold firms up. And commentators all say the world is ending. This is almost certainly the worst possible time to make a move. If you sell everything here, you're locking in the bottom. The smart move is likely to do nothing. Phase two is repricing. The panic subsides. Institutional investors, the ones who actually move markets, they start asking structural important questions. Is inflation going to be sticky? Will supply chains permanently shift? Is this a short conflict or a long one? This is where the real money repositions behind the scenes before anybody's talking about it on YouTube. And this is where you make your move, not in the panic, but in the repricing. When the thesis is clear, but the crowd hasn't caught up yet. Phase three is rotation. Capital visibly flows into the sectors that win in this environment. Typically, things like energy producers, defense contractors, the companies that thrive when oil is expensive and military budgets are expanding. By the time the pundits are explaining why those names are outperforming, it's too late. The money's already moved. Your job is to be there early if you're confident that you're right. According to Bank of America's analysis of major geopolitical shocks going back to 79, oil is the single best performing asset in the three months following a shock up a median of more than 18% but then it fades. Gold doesn't spike as dramatically, but it holds ground longer. Bank of America's own strategist put it simply, trade oil, hold gold. Ultimately, in times of great uncertainty, the question isn't whether to act. It's how to act without making the same mistake every retail investor makes when the sirens go off. And they may be going off for a while. Right or wrong, Trump is blowing up the world order. He believes he's got no other choice. He's wrong, but that's what he believes. A two trillion annual deficit, a K-shaped economy, and a midterm election that could end his presidency and potentially his freedom. He sees a path to the radical economic growth that he needs, the control that he craves, a path to stopping a regime that has slaughtered its own people. I think that's real. A path to ending the largest state sponsor of terror's nuclear ambition. That's definitely real. He sees a way to please an ally in Israel and a way to unite a region long divided by terror. Trump is moving away from historic allies towards people who like to make deals and towards deals that help him personally and the US at large. It's all pretty gross, but it feels pretty accurate to me. None of this is how things ought to be. I'd rather live in a world where wars weren't fought over investment pipelines, where politicians balanced budgets, and where ordinary people didn't have to understand sovereign wealth funds and investing dynamics just to protect their savings. But that's not the world we live in. The world we're in is one where the people who understand what's actually happening, not what they're told is happening, which is almost always spin and a lie. They have an enormous advantage over everyone else. Marketers just don't care about our feelings, not about any of this. They don't care about my feelings, your feelings, anybody's. They respond to structure and incentives, not morality. So don't invest in the story you wish were true. Invest in the one that is true. All right. If you want to watch me explore ideas like this in real time, be sure to hit the subscribe button and join me Monday, Wednesdays, and Fridays at 7:00 a.m. Pacific time for our lives. I hope to see you there. Until next time, my friends, be legendary. Take care. Peace. If you like this conversation, check out this episode to learn more. In 2008, the American financial system didn't just crash, it almost ceased to exist. And a similar danger is building in the system once again. 12 of the 13 largest