DER Martin Armstrong Thread

1. The "Panic Phase" (Current: Week 1–2)

We are seeing this right now.

Market Action: The S&P 500 and Nasdaq are already showing "modest" pullbacks (0.3%–1% daily), but oil prices have jumped 50% since the start of the conflict.

The Trigger: As of April 13, President Trump’s announcement that the U.S. Navy will begin clearing mines and blockading the strait itself is the immediate catalyst. If this military move fails or results in significant ship losses, the "slow bleed" in the stock market will likely turn into a sharp drop.

2. The "Strategic Reserve" Cushion (Next 2–4 Weeks)

The world isn't out of oil yet, but the clock is ticking.

IEA Intervention: On March 11, IEA members released an unprecedented 400 million barrels from emergency reserves. This is currently "propping up" the market.

The Limit: Economists (notably from Andbank and the Dallas Fed) warn that the global economy can only withstand this shock for another month or two using these reserves.

The "Tank" Point: If the strait remains contested or closed through May 2026, the physical shortage of oil will hit refineries globally. This is when the market usually "front-runs" the disaster, meaning stocks could drop 20%–30% in anticipation of the supply dry-up.

3. The "Stagflation" Collapse (Month 2 and Beyond)

If the closure reaches the 8-week mark without a clear resolution:

Oil Prices: Projections suggest Brent crude could hit $200 per barrel.

Economic Contraction: Global growth would likely drop from 2.5% to -0.5% (recession).

Market Impact: Analysts expect a revision of corporate earnings to zero or negative growth. In this scenario, the S&P 500 could see a 30% correction as valuation multiples compress under high inflation and high interest rates.

Summary of Key Levels

The Bottom Line: You have about 4 to 6 weeks before the "buffer" of global oil reserves is exhausted.

If the U.S. Navy's operation to clear the strait this week is unsuccessful or leads to a wider war, the "tanking" of the markets will accelerate significantly as investors price in a total energy blockade.