USO bearish call by Meet Kevin

USOBearunverifiable

“I think there is a more like cumulative 80% chance that we get some kind of positive outlook on Iran between now and the election. That drives oil prices down.”

Thesis at the time

Mixed

Kevin argues that a confluence of attacks on the East-West pipeline, Houthi control of the Red Sea, and peak rate-hike fears has pushed oil prices to a near-term peak, but he expects a pre-election Iran deal to bring oil prices back down. He frames this as bullish for the broader market even though it implies a near-term drop in oil prices.

Key arguments

Strikes on the East-West pipeline and Houthi control of the Red Sea have squeezed Saudi oil export routes, pushing Brent higher
Trump has incentive to leak a prolonged-war narrative now so he can announce a deal before the election, dropping oil prices
He estimates an 80% cumulative chance of a positive Iran outcome before the election that would drive oil and inflation down

Counter-arguments acknowledged

Small chance (~1%) Iran uses a nuclear weapon, which would be catastrophic
Small chance of a ballistic missile strike on a US carrier escalating the conflict

Hedges and caveats (from the video)

Acknowledges rate hikes will create challenges for AI capex buildout
Notes uncertainty about when AI spending will roll over and trigger recession
Warns that worst-case scenario (three rate hikes) is already priced into markets
Emphasizes reliance on AI earnings as canaries in the coal mine for market direction
Recognizes new Fed chair may hike sooner to establish credibility
States 'we just don't know when it's going to roll over' regarding AI bubble