The Sum of All Fears

The week ended on October 30, 2026, interesting news items to look at for the past fortnight are:

The Sum of All Fears: The title of this Blog came from Winston Churchill: "Why, you may take the most gallant sailor, the most intrepid airman or the most audacious soldier, put them at a table together - what do you get? The sum of their fears." (Fig. 1).

Modern interpretation of the quote is “when leaders, military commanders, or rival nations sit down with built-in mistrust, they do not find calm or reason; instead, individual insecurities, miscalculations, and worst-case scenarios multiply into a collective panic.” This pretty much sums up the sentiment prevailing in global Geopolitics and Geo-economics as we come toward the end of 2026.

1. Rage in the Streets Across Europe - Generational rage and widespread social unrest are sweeping through European cities, fueled by a potent mix of economic stagnation, underfunded education, and an acute housing crisis. Driven primarily by Gen Z youth and coordinated through social media, the uncoordinated movements have seen hundreds of thousands of people take to the streets. In France, initial student strikes over dilapidated schools escalated into severe nationwide riots and curfews, while tens of thousands in Italy have blockaded landmarks like the Colosseum to protest surging living costs and military spending. Across Spain and Portugal, tent cities have been erected by activists demanding affordable housing, as the unrest spreads to Germany and Eastern Europe ahead of a major continental election cycle. (Fig. 2).

European leaders are at their wits’ end as to how to solve all the issues that have plagued the nations on the Continent. Historians and philosophers ascribed the fall of the West to four reasons and termed them “The Four Stupidities of Declining Civilizations.” (Fig. 3)

(i) Solving Every Problem Until Solutions Kill You: Adding layers of bureaucracy and taxes eventually leads citizens to prefer abandonment of the system over its burden.

(ii) Manufacturing More Princes Than Thrones: Overproducing elites causes fierce internal civil conflict as rejected insiders mobilize aggrieved populations.

(iii) Trading the Deed for the Argument: In the Age of Intellect, debate replaces action, childlessness spikes, and entertainment/comfort replace long-term creation. NATO - No Action Talk Only.

(iv) Praying for a Caesar: Exhausted by endless political debate, the public voluntarily forfeits freedom to a strongman ("Caesarism") who promises to simplify life and make the machinery stop mattering.  

As we shall see in the following paragraphs, the fall of the Western Civilization have a very simple reason but very deep roots, with manifestations in most nations and economic sectors. This occurs when “intelligence succumbs to ideology—groupthink.” (Fig. 4)

 There are four observations that tie this behavior together:

(i) Bonhoeffer’s Theory of Stupidity — The German theologian and philosopher Dietrich Bonhoeffer famously wrote about this while imprisoned by the Nazis. He argued that stupidity is a moral defect rather than an intellectual one.

* The Core Idea: An intelligent person can be made stupid if they are overwhelmed by a powerful external ideology (like a political or religious movement).

* How it Works: The ideology essentially takes over the person's independent consciousness. They become a tool of the movement. When you try to reason with them, you aren't speaking to the person; you are speaking to their slogans and dogmas.

(ii) Groupthink — Coined by research psychologist Irving Janis in 1972, Groupthink occurs when a group of well-intentioned, highly intelligent people make irrational or dysfunctional decisions driven by the urge to conform.

* The Core Idea: The desire for harmony, loyalty, and consensus within the "in-group" overrides any realistic appraisal of alternative courses of action.

* How it Works: Intelligent individuals actively suppress their own doubts, censor their peers' dissenting opinions, and isolate themselves from outside perspectives to maintain group cohesion.

(iii) Motivated Numeracy and Identity-Protective Cognition —  Modern psychological research, notably by Yale professor Dan Kahan, shows that intelligence often makes people better at rationalizing bad ideas rather than helping them find objective truth.

* The Core Idea: When an issue becomes tied to a person's cultural or political identity (their "creed"), their primary goal shifts from "being accurate" to "protecting my status in the tribe."

* How it Works: Highly educated individuals use their superior cognitive skills not to evaluate facts objectively, but to construct elaborate justifications and arguments to defend their group's ideology. In short: smart people are better at fooling themselves.

(v)  Ideological Subversion and "Useful Idiots" — A concept often attributed to political history (and detailed by KGB defector Yuri Bezmenov), this describes how highly educated intellectuals—often referred to as the intelligentsia—can be manipulated into supporting destructive ideologies.

* The Core Idea: People who are highly educated can become so enamored with abstract, utopian theories that they lose touch with common sense and practical reality.

* How it Works: Because they are heavily invested in the "moral superiority" of the creed, they willfully ignore the negative real-world consequences of that creed.

2. Merz met Takaichi - German Chancellor Friedrich Merz met with Japanese Prime Minister Sanae Takaichi in Tokyo on October 28, 2026, marking Merz’s first official visit to Japan since taking office. Both leaders released joint declarations to combat economic coercion, safeguard critical minerals, and diversify supply chains for semiconductors, batteries, electric vehicles, industrial AI, robotics, and pharmaceuticals. The two WWII Axis Powers have been left far behind in the race of the Industrial Revolution 3.0 and 4.0 have nowhere to turn but onto each other. But what a mistake—joining hands of losers with similar redundant abilities would hardly gain any advantage in areas of their incompetence. (Fig. 5)  

3. AI Groupthink - Cracks are now visible in the AGI (Artificial General Intelligence) Tower of Babel as the financial market finally realized that artificial intelligence has delivered "zero" measurable financial payoff to mainstream corporate America outside of a small group of major technology companies (the "Magnificent Seven"). While capital expenditure on AI infrastructure continues to surge at the top, the broader economy has yet to see corresponding revenue growth or margin expansion, and AI funding has suddenly stopped. Since my alert on August 15 and subsequent updates thereafter, the performance of AI platforms and related semiconductor stocks has been disappointing. (Fig. 6)

Microsoft (+5.6%); Meta (+3.50%); TSMC (-4.45%); Nasdaq (-5.30%); Amazon (-8.30%); Micron (-8.52%); Nvidia (-8.85%); SK Hynix(-9.95%); ASML(-10.56%); Gold(-11.5%); Oracle(-12.85%), Philadelphia Semiconductor Index (-13.2%); Google (-18.62%); Silver (-24.23%) and Coreweave (-47.59%).

4. TINA USD Groupthink - Bloomberg published an exclusive report detailing how countries and regions most aligned with the United States significantly cut back on their U.S. Treasury purchases and dollar-related reserve accumulation. In the first eight months of 2026, countries and regions with the closest ties to the United States made net purchases of $174.3 billion in U.S. Treasuries, excluding short-term Treasury bills, down more than 60% year over year and the lowest level for the same period since 2021. Japan, the largest foreign holder of U.S. Treasuries made net purchases of just $389 million in the first eight months, down 99% from the same period last year. (Fig. 7).

According to comments made by Masahiko Loo, senior fixed income strategist at State Street Investment Management, to Bloomberg, the U.S. Treasury market has not lost foreign buyers, but rather “the buyers who would automatically buy.” He noted, “An increasingly unpredictable United States makes it increasingly difficult for investors to find a reasonable basis for large-scale, structural overweight positions in U.S. Treasuries and for automatically channeling capital back into the U.S. Treasury market.”

Meanwhile, private investors such as hedge funds and banks now hold about 70% of U.S. federal government debt, close to the highest level since 1990. Private investors are more sensitive to price changes, and financial markets could react more sharply if concerns arise about U.S. monetary policy, the economic outlook, or the widening fiscal deficit.

Pardon me for repeating my parroting of synthetic US bond demand through interest rate and FX swaps. USD is still useful as a unit of account, but it is increasingly losing its usefulness as a unit of exchange and is no longer treasured as a store of value. My thesis that such derivatives driven synthetic bond demand is unsustainable and will break in October 2026. W has manifested in almost all asset class sectors in the financial market.(Fig. 8)

The World Gold Council projects full-year 2026 central bank purchases to land around 850 tonnes, closely matching 2025's total of 863 tonnes as emerging markets and reserve diversification continue to support long-term demand.

5. CIA Playbook for USD Stabilization by Chaos in Other Economies -  There are multiple reports and official investigations regarding agent provocateurs, masked agitators, and foreign interference during the recent autumn 2026 riots and protests in Europe (particularly in France and Italy) (Fig. 9)

Italian Government Investigations: Italian officials launched inquiries into whether external or foreign actors helped fuel violent cost-of-living protests in Milan and other cities. Italian Defense Minister Guido Crosetto described aspects of the unrest as part of a potential "hybrid war", prompting Prime Minister Giorgia Meloni's government to seek briefings on possible foreign provocateurs.

Official Stance on Foreign Spark: While European authorities and the European Commission acknowledge widespread foreign manipulation of information and digital amplification after the fact, officials have noted a current lack of conclusive evidence proving that foreign powers directly engineered or sparked the physical riots on the ground.

For those readers from Hong Kong, we are all too familiar with such CIA tactics in the black mob riots in 2019. (Fig. 10).

Dear readers, history need not repeat exactly, but history shows that mankind repeats the same mistakes and does not learn from history. I am sorry if you all get too tired of my parroting, but since I rarely get any feedback from you guys, that you are prepared, I will continue until this ill wind is behind us. Be safe and stay well.

Ecclesiastes 3:1  To everything there is a season, A time for every purpose under heaven: 2  A time to be born, And a time to die; A time to plant, And a time to pluck what is planted; 3  A time to kill, And a time to heal; A time to break down, And a time to build up; 4  A time to weep, And a time to laugh; A time to mourn, And a time to dance; 5  A time to cast away stones, And a time to gather stones; A time to embrace, And a time to refrain from embracing;6  A time to gain, And a time to lose; A time to keep, And a time to throw away; 7  A time to tear, And a time to sew; A time to keep silence, And a time to speak; 8  A time to love, And a time to hate; A time of war, And a time of peace. 

Fish Rots from the Head Down:

The week ended on October 16, 2026, interesting news items to look at for the past fortnight are:

Fish Rots from the Head Down: It is mid October and the economic impact of the Zionist Shiite War are showing up everywhere especially in countries with politicians who value their own throne more than the well-being of the country they lead. It is at this time that we need to discern the white wash false signs and politically designed narratives from the complete underlying facts. (Fig, 1)

Trump/Putin Diesel Deal - on October 9, 2026, the U.S. Department of the Treasury issued a temporary license suspending sanctions on Russian diesel deliveries until April 2027. In exchange, Russia is pledged to supply several million tons of diesel to U.S. and global markets to help combat soaring domestic fuel prices ahead of the November 3 midterm elections. What was not announced was , Ukraine;s access to Starlink and Starshield satellite internet communications was abruptly restricted immediately following the announcement of the Trump/Putin diesel deal and with it Ukraine’s drone strikes against Russia. (Fig. 2).

Little Financial Appetite for Super Intelligence -  The Australian data centre developer Firmus rocketed in private market valuations from about $1.85 billion in late 2025 to roughly $15 billion by August 2026. The valuation was achieved by a private placement to NVIDIA and Blackstone. In late September, Underwriters (Morgan Stanley, BOA, JP Morgan and Morgans Financial) distributed aggressive pre-marketing reports valuaing the company up to US$58B -US$70.4B. On October 1, the IPO was launched at $43.7B ($11.0 per share). By October 8, cold response from potential investors triggered a repricing to $8.25 per share (25% discount) and went as low as $5.50 but even with that, the IPO was not successful and on October 10, investors completely walked away. (Fig. 3).

The Firmus debacle showed institutions no longer buy the over-the-top hype of Super Intelligence. This news is a shock-wave that reverberate all around the globe resulting in a bloodbath of AI and semiconductor stocks. (Fig. 4).

Leading the pack is SK Hynix of South Korea (-47.7%), Corewave, a US Data Centre developer (-29.87%), Micron Tech, US memory chip manufacturer (-18.47%), TSMC (-9.03%), Oracle (-6.87%), Nvidia (-6.67%) and by comparison Silver (-5.61%) and Gold (+0.2%).

Since the end of September 2026, credit default swaps (CDS) on AI-related companies have widened sharply, hitting record levels, with particularly severe stress on data center operators reliant on debt financing. Coreweave CDS spread breached 1,100 basis points, Oracle to 300, Softbank 424 basis points, Nvidia 90 and Meta 105 basis points.

In our last Blog, we reported that the 2026 first half earnings of Google and Alphabet and other AI related stocks were significantly boosted by unrealized gains on private valuations of AI related investments. The same logic that catapulted the Mag 7 earnings upwards would weigh down their earnings to crash.  

Like the 2008 sub-prime fiasco, when the AI dominoes finally fall, it will cause a cascading effect first on the $25 trillion combined value of the US AI and semiconductor stocks, then the $2.5 trillion Private Equity and Credit market, the Tsunami will travel to hedge funds, ETF, insurance, pension and endowment funds, to commercial banks, stock exchanges and central clearing houses and ultimately central banks and national treasuries. The final act is to default or print and you all know they have only one option - a humongous print similar to the Wiemar Republic. (Fig. 5).

Dear readers, I may be early in my alarm but that is what alarms are designed for.

MOAB (Mother of All Bombs) and the new Mid East Geo-political Realities -  CNN reported that US military had deawn up contingency plans to use MOAB to strike Iranian energy facilities and nuclear sites. The MOAB is a large-area blast weapon and not a deep-penetration “bunker buster” and unlikely to have reaeffect in destroying Iranian nuclear facilities which typically are deeply buried under the solid granite Pickaxe Mountain. Sources described it as more of a “psychological warfare” tool. Independent military analysts ascribed the use of MOAB is designed as a cover for Trump to exit from the Mid East war theatre similar to the theatrics of bunker buster bombing in 2025 which accompanied a broadcast of victory and mission accomplished. (Fig. 6).

In a previous blog titled “Preparation Precedes Blessings”, we have identified a possibility of 10 regional power blocs to emerge after a fall of the Anglo American Zionist Alpha, we are one step closer to that realization. (Fig. 7)

Finally, Neil Ferguson, historian and co-author of the book “The Fourth Turning” identify the current state of politics is in favour of strongman and authoritarian leadership, interstate conflict, technological advances that made legacy defence systems obsolete and AI advancement that usurp traditional institutional powers. (Fig. 8).

My friends, be alert and expect the unexpected to happen.

Revelation 13:1  Then I stood on the sand of the sea. And I saw a beast rising up out of the sea, having seven heads and ten horns, and on his horns ten crowns, and on his heads a blasphemous name. 2  Now the beast which I saw was like a leopard, his feet were like the feet of a bear, and his mouth like the mouth of a lion. The dragon gave him his power, his throne, and great authority. 3  And I saw one of his heads as if it had been mortally wounded, and his deadly wound was healed. And all the world marveled and followed the beast. 4  So they worshiped the dragon who gave authority to the beast; and they worshiped the beast, saying, "Who is like the beast? Who is able to make war with him?" 5  And he was given a mouth speaking great things and blasphemies, and he was given authority to continue for forty-two months. 6  Then he opened his mouth in blasphemy against God, to blaspheme His name, His tabernacle, and those who dwell in heaven. 7  It was granted to him to make war with the saints and to overcome them. And authority was given him over every tribe, tongue, and nation. 8  All who dwell on the earth will worship him, whose names have not been written in the Book of Life of the Lamb slain from the foundation of the world. 9  If anyone has an ear, let him hear. 10  He who leads into captivity shall go into captivity; he who kills with the sword must be killed with the sword. Here is the patience and the faith of the saints. 

Destructive Hubris

The week ended on October 2, 2026, interesting news items to look at for the past fortnight are:

Destructive Hubris: My family is on heightened alert as we cross into the final quarter of 2026. Yes, Trump displayed a certain level of courtesy and respect toward Xi and the two great nations kept their swords in their sheaths. But what was not announced was the off-ramp presented by Xi to ease global tensions and the looming economic disaster—simply for Trump to honor the MOU already signed with Iran. Allow me to draw a too-simplistic analogy: Trump, as an ex–real estate developer, should know that both Israel and the US’s cheap bids for real estate in Gaza and Iran were inadequate. Rather than a revision to give better terms, Netanyahu and Trump instead employed gangster tactics and totally alienated all other stakeholders, particularly their creditors. I can only draw the conclusion that they are both exhibiting “destructive hubris.” (Fig. 1)

Destructive hubris is extreme overconfidence, arrogance, and pride that causes a person to ignore warnings, overstep human limits, and trigger a catastrophic downfall. The consequence of destructive hubris are: (i) Sudden, severe failure that harms not just the individual, but organizations, teams, and innocent bystanders, and (ii) complete loss of trust, broken relationships, and poor decision-making within groups.

1. Expiring Deadlines & Escalation Risks: (i) September 28: Expiration of a deadline issued by Mohsen Rezaei regarding the U.S. naval blockade. (ii) September 30: A crucial 45-day deadline set by Iran on August 16 for the U.S. to lift its naval blockade, after which Iran threatens to shift from a defensive stance to an active offensive posture. (iii) September 30: An Iraqi resistance deadline demanding a full military exit by the U.S. forces from Iraq. (Fig. 2)

On Thursday, September 29, U.S. forces pulled out from their last bases in Iraq, a departure celebrated as a victory by Iran and its allies, who now have deep influence in the country where 4,500 Americans died during more than two decades of war. (Fig. 3).

To every political and military analyst, the departure from Iraq signaled that (i ) the U.S. cannot defend her final 2,500 troops in Iraq, (ii) by extension, the US cannot defend her Gulf allies, and (iii) a new security arrangement will emerge in the region, pivotal around the relationship with Iran. Cast our memories back to 2009, when the U.S. built her largest embassy in the world at a cost of $750 million. She felt invincible and had grand plans to totally dominate the richest oil region in the world. 7 wars in 7 years to remove all resistance from Iraq, Syria, Lebanon, and finally Iran. The plan failed. The petrol dollar use-by date officially expired on September 29, 2026.

2. Yen Carry Trade: The Pillar of Japan’s Industry—The Auto Industry is under severe stress, with Toyota and Honda set to reduce annual production by 800,000 vehicles. (Fig. 4).

With import costs rising rapidly and export revenue down, speculators are having a field day shorting the yen. Yet with destructive hubris, the US Treasury Secretary challenged the world with his yen and bond intervention that “He is the House.” It took just thirteen days for Bessent to eat humble pie. (Fig. 5).

The term “I am the House” came from a pop culture reference in the Netflix television series The Gentlemen (Season 1, Episode 6: "All Eventualities"). (Fig. 6).

The unwinding of the Yen Carry Trade is by no means out of the woods. Of course, this has happened before in the neo-mercantilist period of pre-WWI, when countries weaponized their FX rates to compete and national exchange rates were like cannonballs rolling on a ship’s deck. (Fig. 7).

A single country’s attempt for own survival will result in defensive measures by other countries.

Compare and contrast the proxy for creditworthiness expressed in terms of the yield of the 10-year notes. (Fig. 8).

Within the same period, the exchange rate of CNY has strengthened against the other currencies despite the fact that China was the sole nation that lowered its interest rates. (Fig. 9)

3. Destructive Hubris in AI Trade - Although the IPO of Anthropic was delayed, its Form S-1 was leaked and showed that in 2025, Anthropic had revenue of $4.6 billion, an operating loss of $8.06 billion, a net loss of $42 billion, and $518 billion of future computing commitments, of which $400 billion is non-cancellable take-or-pay. On this very skewed set of financials, Anthropic is targeting a valuation of $2 trillion. So far this year in 2026, Amazon and Google have booked unrealized profits due to the increase in the valuation of Anthropic by $70.2 billion for Amazon and $78 billion for Google in the first half of 2026. Had Amazon and Google had a slightly larger stake, they would have been required to adopt equity accounting for Anthropic’s operating loss instead of a huge profit on a private valuation. When we put this into context, the reported first half of Amazon’s profit was only $62.65 billion ($70.2 billion from Anthropic valuation), and Google’s first half was $174.77 billion ($78 billion from Anthropic). These tech titans’ results are not as robust as they appeared.  

For critics who may have doubts about my thesis regarding AI valuation, may I present below the credit market’s overall assessment of AI (Fig. 10).

The takeaway points from the credit market observation is:AI-related credit is trading at a wider spread than non-AI credit in both Investment Grade (IG) and High Yield (HY). The divergence is much larger in High Yield than in Investment Grade.

(a) IG AI–non-AI spread difference: 18 bp → 37 bp from January to September. HY AI–non-AI spread difference: 110 bp → 165 bp.

(b) The AI credit premium has generally widened during 2026. IG: approximately +19 bp increase in the AI/non-AI differential. HY: approximately +55 bp increase.

(c) HY shows the strongest evidence of investor discrimination. The much larger spread differential suggests investors are demanding substantially more compensation from AI-related lower-rated borrowers.

(c) The divergence accelerated during the year. By August/September, the difference between AI and non-AI credit was considerably greater than at the beginning of 2026.  

4. Which Domino to Fall first: We had a long history to guide us of how and when a fiat currency fails. The cycle of life is remarkably simple. Rise: Driven by initial trust, convenience, and commerce.  Fall: Caused by debasement, over-issuance, and inflation.  Replenish: A forced return to hard assets like gold or silver after trust collapses.

There are 4 primary reasons behind a fiat currency failure: 

(a) Over-Printing: Violates scarcity.  (b) Unsustainable Debt: Violates Solvency.  (c) Loss of Confidence: Violates trust.  (d) War & Crisis: Violates economic stability.

Allow me to capture this history from experiences both in the West and the East. (Fig. 11) and it does not matter which domino falls first.

Unlike the GFC in 2008, the world is polarized and divided, and countries are not working in concert to hold the old system together. Even within a single country, the K economy is against nationals uniting to share the burden of making amends for a failed social order. There is no more energy to prevent chaos from breaking out.

My friends, be warned and be prepared.

Proverbs 16:18  Pride goes before destruction, And a haughty spirit before a fall. 19  Better to be of a humble spirit with the lowly, Than to divide the spoil with the proud. 20  He who heeds the word wisely will find good, And whoever trusts in the LORD, happy is he. 21  The wise in heart will be called prudent, And sweetness of the lips increases learning. 22  Understanding is a wellspring of life to him who has it. But the correction of fools is folly. 23  The heart of the wise teaches his mouth, And adds learning to his lips. 

Insanity

The week ended on September 25, 2026, interesting news items to look at for the past fortnight are:

Insanity: On August 21, 2026 I sounded an alarm that a clear sign would be visible that the USD hegemony will crack by October this year. Having explained both the technical and fundamental aspects in the last two blogs, this week I like to take stock of recent data points that reinforce my conviction. This hopefully would allow readers to judge whether my forecast is still on track or whether insanity has set in on my thinking. As is typical, any bold forecast would receive its fair share of cynicism and ridicule. (Fig. 1)

1. Interest rate movements - One of the mistakes made by a casual observer of the financial market is that the US Federal Reserve always has the power to control key global interest rates. This is because the controlled MSM has spent years educating the public that it is. Quite the contrary, the Fed is just another follower of market interest rate movements and has recently been a slow follower. The truth is the Fed can only change the Fed Funds Rate, and typically the Fed follows the market rate of YR2 rate of Treasury notes. (Fig. 2).  

Remember the Fed chant of “transitory inflation” in 2021, the market determined that inflation was out of control and sold off low-yielding Treasuries from mid-September 2021, it was only 163 days later that the Fed finally accepted her error in judgment and began a series of interest rate hikes.

The Fed had recently, on September 17, raised interest rates by 25 basis points. (Fig. 3).

This would have no impact on the Trump Administration to reduce spending, but such an increase in interest payments on the humongous $40 trillion of federal debt means that the interest payment will be similar to any other increase in government deficits and will fuel inflationary pressures. (Fig. 4)

showed after an initial knee-jerk reaction of narrowing the FFR spread, the gap between FFR and Treasury Yield resumed its upward momentum.   

2. US Out of Cash - The technical driver of my foreca-st was that by October 2026, the US economy will be out of cash (Fig. 5).

This week, there were two clear signals toward that forecast. (i) SoftBank offered a $10 billion USD bond priced at around 9–10% when the average non-investment-grade bonds was trading at 7.4%. (Fig. 6).

Both Softbank and the lead bookrunner (Citigroup) knew they would be scrapping at the bottom of the barrel for cash, as both the U.S. Treasury and corporations are crowding out each other for the interests of investors, and (ii) Wall Street analysts have reported that US banks have tightened credit to consumers and corporations to the tune of $1 trillion.

3. AI Problems Surfaced - Oracle ( one of the key hyperscalers) issued a force majeure notice to Blue Owl Capital regarding "Project Jupiter," a massive 2.45-gigawatt AI data center campus in Doña Ana County, New Mexico.  (Fig. 7).

 4. The West is trapped in both the Ukraine War and the Iran War and needs China’s Help - In an op-ed, the Wall Street Journal Editorial Board outlined five key points and warnings Donald Trump should present to Chinese President Xi Jinping, including halting military and targeting assistance to Iran, protecting U.S. artificial intelligence models, defending Taiwan's peaceful status quo, ending rare-earth mineral economic coercion, and using tariff powers to stop support for Russia. Read the full editorial at Wall Street Journal (Fig. 8).

Would China cut off its major energy supplies to let US aggression triumph?

5. Crack Spread - Anyone who had simply focused on the spot crude price increase this year from US$60 to the current price of US$97.47 (+67%), would have severely underestimated the impact of the inflationary pressure brought on by the current geo-political conflict. (Fig. 9).

A crack spread is the price difference between a barrel of crude oil and the refined petroleum products made from it. At the end of January 2026, the crack spread was $25 per barrel, but it has now expanded to over $70 (+210%). The crack spread has widened because refinery capacity in the Middle East and Russia has diminished due to war damage, which prompted operating refineries elsewhere to increase their margins. What is rarely reported in the MSM is the cost of oil transportation and insurance due to severe disruptions and risks. Very Large Crude Carrier (VLCC) daily spot and charter rates have skyrocketed over the past year, with benchmark spot earnings surging from historical averages of $20,000–$50,000 per day up to historic peaks exceeding $1 million to $1.2 million per day on key routes like the Middle East to China, representing roughly a 20-fold to 24-fold increase driven by geopolitical conflict, longer routing around the Cape of Good Hope, and severe vessel supply constraints. So far, the price at the pump has gone up by approximately 70%, but due to a delivery time lag and the depletion of most countries’ strategic petroleum reserves, I am afraid we have not seen the worst-case scenario at the moment.  

6. Runaway Food Cost - In my previous blog post, I reported that for every calorie of food on our plate, on average, a man needs to put in 15 calories of energy. A major portion of that energy input (up to 40%) is fertilizers and pesticides. With the closure of the Strait of Hormuz, there is a supply squeeze for nitrogen and sulfuric fertilizers. (Fig. 10).

As sulfuric acid is essential to convert potash into potassium chloride, the supply of potassium fertilizers will also face shortages. (Fig. 11).

Year to date wheat  and barley prices have increased by 38% and 26% respectively. There are reports that some farmers in Australia has ceased planting and sold the fertilizer stockpile to raise cash.

I will continue to keep a watching brief on global inflation and the factors that may have a serious impact thereon.

Revelation 6:5  When He opened the third seal, I heard the third living creature say, "Come and see." So I looked, and behold, a black horse, and he who sat on it had a pair of scales in his hand. 6  And I heard a voice in the midst of the four living creatures saying, "A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not harm the oil and the wine."