Geo Chen
· Fidenza Macro
· May 12, 2026 at 06:02
· ⏱ 6 min read
| Read on Substack ↗
Summary
The newsletter argues that the upcoming Trump-Xi meeting and Kevin Warsh's Fed confirmation will create a more dovish policy environment, while oil supply/demand dynamics point to a potential crash that would deliver a strong disinflationary impulse. This regime shift supports risk assets and precious metals, and the author remains bullish on AI infrastructure without selling.
•Trump meets Xi in Beijing May 13-15; possible outcomes include a joint plan to end the Iran war, US concessions on Taiwan and trade, and Chinese purchases of US agricultural products and Boeing airplanes.
•Senate confirmation of Kevin Warsh as Fed chair is near certain, expected to allow a more dovish path; the author believes front-end SOFRs pricing in a hike by March 2027 is a mispricing.
•China is importing 3.5-3.8 mbpd less due to the Strait of Hormuz closure, while US crude exports have increased by 3.8 mbpd, offsetting much of the lost supply.
•Net global supply reduced by 700 million barrels since March 1 (1 billion lost from the strait minus 300 million in demand destruction); spec buying of 730 million barrels in futures equals net loss; IEA releasing 400 million barrels.
•If specs sell, a glut reappears by June 11; if the strait opens, 424 million barrels would be added in 31 days, with another 300 million from Iranian storage.
•Alpine Macro notes every major oil surge is often followed by a >50% crash; if repeated, it would create a strong disinflationary impulse supporting risk assets and precious metals.