SPEAKER_01 0:00

Imagine driving down the highway in a car that's basically running on fumes, but the driver is panicked and just, you know, slamming the gas pedal to the floor.

SPEAKER_00 0:10

Aaron Powell Yeah, you're accelerating, but the engine is totally about to give out.

SPEAKER_01 0:14

Right, exactly. That disconnect between surface speed and the uh underlying reality is exactly what we're seeing in the markets right now.

SPEAKER_00 0:21

Aaron Powell It's a really dangerous setup, honestly. So today we're tearing into the April 24th pre-market briefing from Canon Trading Company.

SPEAKER_01 0:29

Yeah, that's authored by Eli Levy. And you know, you can actually reach him at Eli at Canon Trading.com if you want to follow his work.

SPEAKER_00 0:35

Exactly. And our focus today is how massive geopolitical shockwaves are, well, completely masking these underlying structural market weaknesses.

SPEAKER_01 0:44

Before we really dive in, though, we do have to cover some ground rules for you listening. Disclaimer. Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

SPEAKER_00 1:17

Right. So with that out of the way, Eli Levy's briefing points us straight to the Strait of Hormuz. I mean, Iran is seizing commercial ships right now.

SPEAKER_01 1:24

Yeah, and we've got Navy intervention to clear mine laying vessels. Because of all this, Brent Crew just shot up to$105.63.

SPEAKER_00 1:32

Which is huge. But the question is, how much of that price tag is purely a fear-driven premium?

SPEAKER_01 1:39

I mean, it has to be a massive chunk of it, right?

SPEAKER_00 1:41

Oh, absolutely. When almost a fifth of global oil flows through a choke point that's currently contested, the market obviously prices and worst case disruptions.

SPEAKER_01 1:49

Right. But then if you actually look at the fundamental data from Goldman Sachs and the International Energy Agency, the underlying demand is different.

SPEAKER_00 1:57

Aaron Powell Yeah. Things like jet fuel and petrochemicals, the demand there is actually remarkably weak right now.

SPEAKER_01 2:03

Aaron Powell Wait, really? So the structural foundation just isn't even there?

SPEAKER_00 2:06

Exactly. It's a lot of panic buying.

SPEAKER_01 2:08

Aaron Powell But wait, didn't OPEC Plus just announce a 206,000 barrel output bump? Shouldn't that extra supply sort of, you know, cool down the panic?

SPEAKER_00 2:17

Aaron Powell Well you would think so, yeah. But the market is largely ignoring it.

SPEAKER_01 2:21

Aaron Powell Why is that? I mean, oil is oil, right?

SPEAKER_00 2:23

Trevor Burrus Sure. But that spare capacity isn't uh easily deliverable. It is almost entirely bottlenecked in Saudi Arabia and the UAE.

SPEAKER_01 2:31

Oh, I see. So they might have the oil sitting there, but they can't move it.

SPEAKER_00 2:34

Right. Pipeline constraints and terminal logistics mean that they just can't actually get those barrels onto the water on short notice.

SPEAKER_01 2:41

Aaron Powell Wow. So it looks good on a spreadsheet, but it doesn't solve a physical supply crunch today.

SPEAKER_00 2:46

Aaron Powell Exactly. So the fear is valid because the buffer is basically an illusion at this point.

SPEAKER_01 2:51

That makes sense. And I guess that explains why capital is just rushing into safe havens. I mean, gold is consolidating your$4,700.

SPEAKER_00 2:58

Aaron Powell Yeah. And JP Morgan is modeling$5,055 by late 2026.

SPEAKER_01 3:03

Aaron Powell But what I really don't get is copper. At$6.09, shouldn't copper be soaring too?

SPEAKER_00 3:09

You'd think so. It's supposed to be the defining trade of 2026 with all the AI data centers and grid electrification.

SPEAKER_01 3:16

Right. So what's holding it back?

SPEAKER_00 3:17

Well, the demand narrative for copper is strong, sure, but it's being suffocated by the currency market.

SPEAKER_01 3:23

Oh, because of the dollar.

SPEAKER_00 3:24

Exactly. That same Middle East panic that's driving gold is also pushing investors into the US dollar.

SPEAKER_01 3:30

And when the dollar surges, dollar-priced industrial metals like copper just become much more expensive for global buyers.

SPEAKER_00 3:36

Yep. That currency headwind is totally overpowering the AI demand story, leaving copper just chopping sideways.

SPEAKER_01 3:43

Wow. And the dollar isn't just bullying copper either. With US and Iran talks stalled, it's wrecking other currencies too.

SPEAKER_00 3:50

Oh, completely. The yen just crashed to 159.77.

SPEAKER_01 3:54

It's easy to see how a crude spike hits the pump or, you know, currency markets. But the ripple effects into secondary commodities are what's really catching my eye. Like look at cotton.

SPEAKER_00 4:05

Cotton is such a perfect example of this mechanical domino effect. It just hit 79 cents a pound.

SPEAKER_01 4:11

Which is the highest since mid-2024. Right. But how does crude oil connect to cotton?

SPEAKER_00 4:18

The mechanism here is petroleum. So competing synthetic fibers like polyester are derived directly from crude oil.

SPEAKER_01 4:25

Oh wow. So when crude spikes, producing those synthetics becomes super cost prohibitive.

SPEAKER_00 4:29

Exactly. Clothing manufacturers are forced to pivot and they end up bidding up cotton instead.

SPEAKER_01 4:34

It's literally all connected. And the agricultural sector isn't just dealing with spillover effects, right? There are massive structural shifts happening internally too.

SPEAKER_00 4:41

Oh, absolutely. Like U.S. wheat plantings just hit a modern record low of 43.8 million acres.

SPEAKER_01 4:47

Aaron Powell, which is keeping those prices elevated, but not for the right reasons. Trevor Burrus, Jr.

SPEAKER_00 4:50

Right. It isn't surging global demand for wheat, it's pure supply destruction. Trevor Burrus, Jr.

SPEAKER_01 4:55

Because farmers are shifting acreage to more profitable crops, I guess.

SPEAKER_00 4:58

Yeah. So the reduced planting is doing the heavy lifting to prop up the market.

SPEAKER_01 5:01

Trevor Burrus So across the board, from energy to metals to agriculture, we basically have a tape completely dominated by Hormuz headlines and supply constraints.

SPEAKER_00 5:11

Yeah, but severely lacking in actual fundamental demand, which leaves you with a critical variable to watch.

SPEAKER_01 5:17

Aaron Powell Right, because JP Morgan's models assume the Strait of Hormuz situation normalizes by mid-May.

SPEAKER_00 5:23

And that is the ultimate question for you to ponder. If that geopolitical premium just evaporates next month and the panic gas pedal lifts.

SPEAKER_01 5:30

Wait, what happens then? How violently are these commodity prices going to correct to match that weak structural reality?

SPEAKER_00 5:37

That's the million-dollar question. We will let you chew on that.

SPEAKER_01 5:40

Disclaimer: Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.