The early futures today are down.
But in Europe, it’s a different tale. There, markets are up – not ginormously – but up, nevertheless.
Why down on the futures, including gold and silver, then? Wasn’t our state-extreme variance trading model showing a rally is the more likely move ahead?
Could be “mechanical short-covering.”
See, when there is a holiday like the one we’re just through, the Bigs can put on large “just in case” short positions. If the end of the world doesn’t show up – like it didn’t – then the Bigs have enough “horsepower” to blow things down for a quick knock down. This allows Bigs to cover their shorts – plus haul in some “fresh tuna” from among the frightened Main Streeters, and then get on with a short-term rally.
In the next few hours? Unless Europe slides down – dramatically – the US-Europe delta beckons like a cash siren.
But, this brings up another problem: Going back in the rock n’ roll library, we remember “Give Peace a Chance.” (The Yoko is on us…) See, maybe peace is not good for the Death Industries. With much of the industrial base off-shored…we aren’t the powerhouse of Once-Upon-a-Time America.
Today, we’re playing “Understanding the Gap. “
Let’s Zoom On That
One of Wall Street’s more uncomfortable truths is that markets do not trade on morality. They trade on cash flow. And historically, the mere hint of peace — admirable, noble, desperately needed peace — has sometimes triggered weakness in sectors that quietly thrive on sustained conflict. Defense contractors, energy suppliers, reconstruction logistics firms, cybersecurity outfits, and even certain commodity producers often see their revenue visibility diminish when war risk declines. Remove the urgency, and you remove the premium.
Take the end of the Cold War. When the Berlin Wall fell in 1989 and tensions between the U.S. and Soviet Union eased, major defense contractors entered a multi-year slump. Companies that had built their entire growth trajectory around sustained military expansion faced what became known as the “peace dividend.” Budgets contracted. Procurement slowed. Investors rotated capital elsewhere. Peace was geopolitically welcome — but it reduced the forward earnings narrative for large swaths of the defense complex.
A more recent example surfaced during periods of de-escalation talk in the Middle East. On several occasions over the past two decades, headlines suggesting potential détente with Iran or drawdowns in Iraq and Afghanistan coincided with short-term pullbacks in defense stocks and energy volatility premiums. When war risk rises, oil carries a geopolitical premium. When negotiations advance, that premium often compresses. Markets price uncertainty — and conflict is a very expensive form of uncertainty.
Even World War I provides a lesson. As armistice discussions gained traction in late 1918, shares of certain wartime industrial suppliers softened on expectations that government orders would decline post-conflict. The same pattern appeared after World War II: demobilization meant factories retooled, contracts ended, and investors had to reprice earnings expectations. Peace is good for civilization. But war — extended, funded, industrialized war — has historically produced predictable revenue streams. Markets respond to predictability. And in the harsh arithmetic of capital flows, prolonged conflict can be easier to model than lasting peace.
And if peace compresses premiums, the next logical question is whether peace actually sticks.
Intermediate Term – War Comes Anyway
I still hold to the theory (not advice or a recommendation) that war will show up before May. Reader Ray, who has a very good sense of such things, sees it too.
Despite there being “talks” on Iran, Ray is very much on point in noticing:
“I expect Trump to meet with whatever minor mullah Khamenei sends to represent Iran.
I expect nothing to be settled.
I expect Trump to announce that the United States recognizes Reza Pahlavi as the true leader of Iran.
I expect about 43-44 other countries to recognize Pahlavi, within hours…
followed by fireworks.”
For now, the Futures are watching Iran talks, the gap with Europe, and this morning’s…
First Data of the Week
Empire State Manufacturing is up first:
“Business activity increased modestly in New York State in February, according to firms responding to the Empire State Manufacturing Survey. The headline general business conditions index was little changed at 7.1, its fourth positive reading in five months. New orders increased, while shipments held steady. Unfilled orders rose and delivery times were slightly longer.”
We sense a rally before collapse. (Wish the futures did!) As we sit around, holding hands, and chanting “All we are asking is Give Greed a Chance.”
Now the REAL Enemy: Digital Dustbowl
This is the “one in the wings” of the Great Depression replay – and it may be only the leading edge. Quietly, this winter has been turning into a snow pack disaster. Experts issue warning as impending crisis threatens major US region: ‘This is not going to be good’
How bad? Think about a Digital Dustbowl. Sure, hope lingers in stories like California Storm With Feet Of Sierra Snow, Locally Flooding Rain Continues Through Thursday.
But hope is not a solution. Not when this early, some parts of (panhandle) Florida this year have had more snow on the ground than Utah.
And those server farms being built along the Columbia River up in Washington State that G2 has been working on? What happens to the AI boom and build if a long-term climate change featuring dramatically less precip is in the works? AI doesn’t run on hope. It runs on electrons and lots of hydro power.
That’s when asymmetric warfare on the American middle class could launch in earnest: rising summer power costs, rolling blackouts. Then mix in foreign insurgents attacking key grid infrastructure.
Not a pleasant future, but then neither is this:
No, it’s not time to crawl under the bed with the dusty bunnies. But we have taken to living a blanket and a pillow on the floor, just in case.
Big Droughts – the kind that get nicknames and land in the history books – don’t happen overnight. They are part of long-term trends. And, if you look at the monthly animation in this report Drought in 2025 in 14 Graphics | January 15, 2026 | Drought.gov, you can scale your sense of the problem.
The Lindbergh Rhyme and More
OK, so the Greater Depression is still coming together, the Dustbowl reincarnation has more AI and food angles. Might be as bad year for towboat operators along their breadbasket, too. But what about the OTHER rhyme of times before?
Here’s an answer: Sheriff clears Guthrie family; Trump warns of severe penalties for those responsible.
The rest of the “rhymes of times” are more subtle. A few upticks in bankruptcies might be hinted in Major UK brewery collapses into administration – popular beers to vanish – Birmingham Live. And which that rolls, here’s one that gives cause for pause: How Billionaire Miles Guo Hijacked the Bankruptcy Court System – Business Insider.
Durable goods, housing, and international trade are still ahead, as the financial orchestra is striking up another week to dance to…
Around the Ranch: Drought Prep Time?
When you make the time to just sit around and “be with things” out here in the deep woods, a lot comes into focus.
Two things we have been focusing on are really looking like high payoff plays that it’s not too late to get on board with.
Although we have a fair bit of solar now, I may be adding some additional panels. Found a deal on 250-watt used panels for under 25-cents a watt. Sure, that doesn’t include the BOS (balance of system) parts – like a power wall or liquids, a big grid-interactive charger, and charge controllers. BUT if there’s a drought it MIGHT mean extreme sunshine so to keep cool?
Along with this, the spring “rework all air seals” is on tap, too.
And other one – in the garden – is drip irrigation. Because it’s relatively inexpensive and easy to back up with a simple rain catchment and IBC tote mashup and some flow control. Amazing what we can do with a 12-volt marine-type water pump, too. A panel or two, a 100-amp-hour battery? Now you’ve got chill independence and a salad on standby.
I’m not saying run out and sign up for a major solar debt. Far from it. But scale back and build what you’re really after – resilience.
Because when times get tough – and history is replaying a bit lately – the Big Strategic Wins will come from being first to solve the everyday problems of life.
During the Great Depression, home gardens weren’t a lifestyle choice — they were an economic survival tool. With unemployment reaching roughly 25% at its peak, millions of families turned vacant lots, backyards, and even city rooftops into food-producing ground. These “thrift gardens” (a Depression-era precursor to the WWII Victory Garden) supplied vegetables, potatoes, beans, and fruit that offset grocery costs when cash simply wasn’t available. In many towns, local governments actively promoted seed distribution programs and community garden plots because food security meant social stability.
Does your locale have a “pea patch program?”
Back then, gardens were part of a broader resilience system that included canning, root cellaring, backyard chickens, and small livestock. A well-managed garden could stretch a family’s food budget dramatically — not by luxury standards, but by calories and nutrition. Fresh produce also buffered families against the volatility of food prices and supply disruptions. In practical terms, the home garden reduced dependence on fragile cash income streams and turned time and labor into edible security — a lesson that tends to resurface whenever economic uncertainty returns.
Our plan is simple: Get there before the crowds. Start eating fresh out of the garden instead of store-bought veggies that have lost half their nutritional value from a two-week truck ride to the store.
If the old saying “You are what you eat” is true, we plan to eat “young and fresh.”
Write when you get an appetite,
Read the full article here
