A ~$10bn military just deterred a ~$1tn one – no bomb, just a strait. It may be the biggest "TACO" yet: not a tariff walked back, but a war. Episode 3 of Investment Musings reads the Iran climbdown as the opening note in a much larger score.

This is the audio edition of "Chokepoints". The ceasefire over Hormuz is the sideshow; the piece traces a single fault line running under markets, geopolitics and the texture of work itself – the line between what can be measured, financed and copied, and what cannot. The cheap, the commoditised and the explicit are losing ground; the scarce, the non-substitutable and the tacit are where the value and the power are quietly concentrating.

IN THIS EPISODE
– TACO ("Trump Always Chickens Out"): why the Iran ceasefire is the pattern at its largest scale yet – bullish for risk in the moment, corrosive for US credibility over time.
– Economic deterrence: a chokepoint you can credibly weaponise as a third category beside the conventional and the nuclear – and the trap the West built for itself by weaponising the financial system and outsourcing its supply chains.
– The dollar squeezed from both sides: allies hedging toward Beijing (CIPS, the digital renminbi, gold overtaking Treasuries in reserves) and a US fiscal path that does not close – Social Security near benefit cuts, debt close to 100% of GDP, and only inflation or yield-curve control as exits.
– Weather and climate: why the war is a sideshow and the equity case rests on the AI capex cycle – with the long end of the curve as the one variable that decides it.
– The new risks in the machine: the demand question (small, cheap models that could make AI far less profitable than investors expect) and the political one (an administration that can switch off a frontier model overnight).
– The treasurer returns: what AI does to the value of a person – it commoditises explicit knowledge, leaving judgment, relationships and soft skills as the irreplaceable layer. The catch: tacit judgment can only be grown, and AI is eating the junior rung where it was grown.
– The human face: a generation gone "YOLO" – priced out of housing and entry-level work, betting on crypto, meme stocks and prediction markets. Financial nihilism with a political tail.

The through-line: what can be copied is being commoditised at speed; what can't is where the value went. Hormuz, the yield, and the analyst who can no longer be trained – the same story in different registers.

THREE LINES FROM THE PIECE

– "Everything else is weather; the long end is the climate."
– "If AI eats the bottom of the ladder, no one climbs to the top of it."
– "We are commoditising knowledge faster than we can grow the wisdom to use it."

SOURCES & REFERENCES
– Reuters – "The future of AI may be small, cheap, unprofitable" (18 June 2026): https://www.reuters.com/commentary/reuters-open-interest/future-ai-may-be-small-cheap-unprofitable-2026-06-18/
– Alpine Macro – reading of the Iran deal
– 13D Research (WILTW) – economic deterrence and financial nihilism
– Robert Armstrong, Financial Times – the "TACO" trade
– Taylor Pearson – tools and judgment
– Michael Polanyi – explicit vs tacit knowledge
– William Penn – knowledge and wisdom
– Clive Crook – the US fiscal bind
– Ernest Hemingway – "gradually, then suddenly"

Read the full essay: https://www.investmentmusings.com
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Investment Musings is a newsletter on macro, markets and the ideas moving them, written for people who invest.

The views expressed are personal and for information and discussion only. Nothing here is investment advice or a recommendation, and it does not represent the views of any employer or affiliated firm.
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A personal editorial view, read aloud – not investment advice.

A personal editorial view, read aloud – not investment advice.

Low volatility is not the absence of risk – it is risk moved somewhere it no longer has to be counted. This episode argues that the AI build-out is the largest version of that trade ever built.

It starts with the 2018 collapse of XIV, the note that sold calm and returned 585% until it lost 96% in a single day, and traces carry – the family of trades that earn a steady income for assuming stability holds, from the trader selling a put to the company buying back its stock to the central banks that have spent thirty years promising disorder will not be allowed to persist. Then it asks where that logic shows most clearly today, and lands on the financing edge of the AI build-out: the labs' compute commitments, the off-balance-sheet "shadow borrowing," and the circular flows between Nvidia, OpenAI, and CoreWeave.

The other side gets its hearing – this may be infrastructure, not carry, the way railways and fiber once were. So the piece ends where most commentary won't: a written-down level at which the author is wrong.

With thanks to Ahmed Husain, whose newsletter and podcast The Curious Mind first put The Rise of Carry in my hands.

A personal editorial view, read aloud – not investment advice.