Steve Hanke

Hanke notes an "armada going in to start a war with Iran" and predicts "the Strait of Hormuz will definitely be closed." The Strait of Hormuz is a critical chokepoint for global oil supply. A closure would cause an immediate, violent supply shock, sending crude prices (WTI) significantly higher from the current $65 level. LONG Oil (USO) and Energy Producers (XLE) as a geopolitical hedge. Diplomatic resolution or de-escalation would cause the war premium to evaporate quickly.

Hanke observes that the 3-month and 6-month annualized growth rates of M2 money supply have accelerated above 6%. He explicitly states inflation will "drift up" and the Fed will not hit its 2% target sustainably. Inflation is a monetary phenomenon with a lag. The current acceleration in M2, combined with the "second shoe" of bank deregulation, guarantees sticky or rising inflation. Standard inflation hedges (Gold, TIPS) are mispriced if the market expects a return to 2%. Long Inflation Hedges to protect against the debasement of purchasing power caused by accelerating money supply. A deflationary bust or a sudden contraction in the money supply (though Hanke views this as unlikely given the deregulation).

The US and its allies are rearming, which requires vast amounts of raw materials, and geopolitical risks (Iran war, Strait of Hormuz) are disrupting supply. This is driving a commodity super cycle where prices of hard assets will trend up with spikes. Specific commodities like ferro vanadium, molybdenum, lithium, tantalum, aluminum, tin, steel are already surging.

If the 10-year Treasury yield stays above 4.5% on a sustained basis, the bond vigilantes will emerge. Yields are driven by elevated inflation and the negative feedback loop of rolling over short-term debt at higher rates, squeezing the budget.

Short BTC as it fails to participate in a ~30% Nasdaq rally from March lows, signaling structural weakness; speaker argues asset has zero fundamental value and is purely speculative with no demand floor.

The US and its allies are rearming, which requires vast amounts of raw materials, and geopolitical risks (Iran war, Strait of Hormuz) are disrupting supply. This is driving a commodity super cycle where prices of hard assets will trend up with spikes. Specific commodities like ferro vanadium, molybdenum, lithium, tantalum, aluminum, tin, steel are already surging.

"The de-dollarization narrative is basically BS... If you look at last year, the net investment inflow into the United States increased by a little over 31%... the dollar is very strong." Despite geopolitical turmoil and narratives of BRICS nations moving away from the dollar, global capital is actually fleeing to the safety and yield of US assets. This sustained capital inflow structurally supports the value of the USD against foreign fiat currencies. Going long the US Dollar captures the reality of global capital flows, fading the inaccurate "de-dollarization" media narrative. Accelerated money supply growth (M2) and aggressive rate cuts by the Federal Reserve could eventually debase the currency and weaken the dollar relative to its peers.

Hanke states that the "most important price in the world" is the EUR/USD exchange rate, and his model places fair value between 1.20 and 1.40 (currently trading lower). While the Dollar is "King," it is currently expensive. Hanke expects the exchange rate to slide back into his fair value zone, implying Euro appreciation against the Dollar. Long the Euro (via FXE) or Short the US Dollar (DXY) to capture the mean reversion to fair value. Geopolitical instability in Europe or the ECB cutting rates faster than the Fed, which would weaken the Euro.

Hanke highlights that the Federal Reserve (specifically Vice Chair Bowman) is moving to loosen bank regulations, including supplemental liquidity ratios and mortgage origination rules, to "re-empower commercial banks." Hanke argues that bank regulation *is* monetary policy. By loosening these rules, banks can expand their balance sheets and reclaim mortgage market share from non-banks. This regulatory shift directly increases the profitability and lending capacity of the traditional banking sector. Long Commercial and Regional Banks as they benefit from a structural shift in regulatory favor and increased lending volume. A sudden recession or credit event that causes loan defaults to spike before the volume benefits materialize.

Hanke highlights that the Federal Reserve (specifically Vice Chair Bowman) is moving to loosen bank regulations, including supplemental liquidity ratios and mortgage origination rules, to "re-empower commercial banks." Hanke argues that bank regulation *is* monetary policy. By loosening these rules, banks can expand their balance sheets and reclaim mortgage market share from non-banks. This regulatory shift directly increases the profitability and lending capacity of the traditional banking sector. Long Commercial and Regional Banks as they benefit from a structural shift in regulatory favor and increased lending volume. A sudden recession or credit event that causes loan defaults to spike before the volume benefits materialize.

Hanke observes that the 3-month and 6-month annualized growth rates of M2 money supply have accelerated above 6%. He explicitly states inflation will "drift up" and the Fed will not hit its 2% target sustainably. Inflation is a monetary phenomenon with a lag. The current acceleration in M2, combined with the "second shoe" of bank deregulation, guarantees sticky or rising inflation. Standard inflation hedges (Gold, TIPS) are mispriced if the market expects a return to 2%. Long Inflation Hedges to protect against the debasement of purchasing power caused by accelerating money supply. A deflationary bust or a sudden contraction in the money supply (though Hanke views this as unlikely given the deregulation).

Hanke highlights that the Federal Reserve (specifically Vice Chair Bowman) is moving to loosen bank regulations, including supplemental liquidity ratios and mortgage origination rules, to "re-empower commercial banks." Hanke argues that bank regulation *is* monetary policy. By loosening these rules, banks can expand their balance sheets and reclaim mortgage market share from non-banks. This regulatory shift directly increases the profitability and lending capacity of the traditional banking sector. Long Commercial and Regional Banks as they benefit from a structural shift in regulatory favor and increased lending volume. A sudden recession or credit event that causes loan defaults to spike before the volume benefits materialize.

Hanke notes an "armada going in to start a war with Iran" and predicts "the Strait of Hormuz will definitely be closed." The Strait of Hormuz is a critical chokepoint for global oil supply. A closure would cause an immediate, violent supply shock, sending crude prices (WTI) significantly higher from the current $65 level. LONG Oil (USO) and Energy Producers (XLE) as a geopolitical hedge. Diplomatic resolution or de-escalation would cause the war premium to evaporate quickly.