Ten31 Timestamp: Dog Days

**Marty Bent** (0:00)
Mr. Arnold, how are we, sir?

**John Arnold** (0:02)
Doing all right. Dog day is the summer. You know how it is.

**Marty Bent** (0:06)
I can feel it shifting. People, at least here in the States, I don't know what the Europeans are doing. They're probably still away, not thinking about anything, but I'm beginning to see people talk about, like, okay, it's time to lock in and focus. Kids are going back for fall sports practice. People are getting engaged.

**John Arnold** (0:24)
People are getting engaged? Is that a common signal of work returning?

**Marty Bent** (0:29)
Yeah, for engaging more.

**John Arnold** (0:31)
I see.

**Marty Bent** (0:32)
But I'm looking forward to it. I love summer, but it is a chaotic season for me because we get on the shore, as you know, and you're supposed to go relax, but we don't really relax as much as we should.
The kids are relaxing, but on that note...

**John Arnold** (0:47)
You don't have vacations with kids. Everything is a trip, you know? So it's very active.

**Marty Bent** (0:52)
Very active. It's a game of survival, if you will. Speaking of which, we're officially a Strait of Hormuz podcast at this point. I feel like the last six months, it's the recurring theme. Guess what? It remains blocked.
Yeah.
I sent out a tweet last week from Groundhog Day with Bill Murray. It's Groundhog Day again.

**John Arnold** (1:15)
Yeah, look, I never thought that if you did like a word cloud on the timestamp newsletter, that Hormuz would be like the most commonly used. It's literally, it's like Bitcoin and Hormuz, is like I think the two big biggest clouds right now. But here we are, same as it ever was over the last, call it six months.
We've got our president saying he's going to turn the Strait of Hormuz into another US territory. So you can expect the Trump card island to open surely. Both of them going back and forth saying each side is in control insisting that they have control, they have the power. So yeah, remains basically a summer doldrum stalemate there.

**Marty Bent** (1:53)
Do you think this resolves any time soon?

**John Arnold** (1:54)
You know, I'm increasingly less optimistic that you see definitive resolution on this through the end of the year.
But a lot of it, I think, is going to come down to some of the dynamics we'll talk about on the rest of these slides. But you've clearly got multiple factions. We've talked about this a little bit on the show over the past couple months, but multiple factions in Iran of decision makers, some who are more pragmatic and willing to move negotiations forward and looking for a deal, probably acknowledging some of the pain being wrought by Treasury sanctions, which are apparently getting stepped up even further to the double secret sanctions tier, pervescent this week. But you've got a contingency feeling that and wanting to move forward. And then you've got the IRGC who are, depending on who you talk to, if you talk to Tom Luongo, that's just an arm of the City of London. But whether you believe that or not, they are certainly much more intransigent. So it kind of depends, I think, on how much economic pain is actually being wrought behind the scenes that we're not totally privy to, and how that affects the relative standing of those two factions and who kind of has the upper hand to move things forward. But I've very much learned to think about this as a two weeks TM situation for the time being.

**Marty Bent** (3:12)
It is. And as we've been saying for months, the signal to keep your eye on while all this is unfolding or continuing to go in a groundhog day like circle is what's going on in the bond markets. We currently have the US 30-year trading at 5.279 and the 10-year at 4.7. So elevated rising seems to have broken the structural bull market that we had in bonds for 40 years. I think cleanly, it looks like the trend has reversed over the last couple of years. But one thing we've been pointing out is to make sure that you're juxtaposing those rising yields with this Bank of America, US bond market option volatility index, the move index. It seems relatively suppressed. We've been tracking this pretty closely for the last three months.
It looks like it's falling quite a bit and settling in a range.

**John Arnold** (4:05)
Yeah. I think this goes to your question. This is one of the reasons that I also don't know that you see, as long as you have this move downtrend relatively intact, I think that's one less reason for the US to take a bad deal, just to get it all over with.