By Michael Every of Rabobank
Two wars and two economic wars
Friday’s Jackson Hole speech from Fed Chair Warsh would traditionally be the big event this week but that’s arguably no longer true: the action is not with central banks but elsewhere. I don’t mean the ECB’s Lagarde going to work for the WEF. Rather, markets now face two wars and two economic wars.
Dawn in the US will see what Treasury Secretary Bessent calls ‘Economic D-Day’ designed “to sever every economic lifeline that sustains the tyrannical regime until Tehran stands alone.” Until the regime collapses - and everyone must either stand with the US or against them. Iran has likewise stated that any country joining new US sanctions would be “considered an enemy.” Yes, Iran’s (powerless) president said the US MoU is still the best path out of this mess, as Pakistan's army chief is to visit Tehran again today; then again, Iran also claims Saudi Arabia, Turkey, and Pakistan invited it to join their new defence pact, which just failed to defend the Saudis from attacks by the Houthis instigated by Iran.
Indeed, as the Iranian parliament advances plans for Hormuz ‘service fees’ and the US says it’s shuttling more oil through Hormuz, the risk is Tehran opts to attack the GCC and US bases in Europe. Greece is moving a Patriot missile system to Crete. The UK is having to face that Iranian hackers just shut down one of its power plants for four days. As if that were not enough, worrying signals about Turkey-Israel clashes in Syria have prompted deescalation efforts, yet regional tensions remain very high. Towards the western edge of the MENA region, Spain has rejected Morocco's calls for talks on Ceuta and Melilla sovereignty.
Today marks Ukraine’s Independence Day, with EU officials in Kyiv t
