Iran’s Capabilities Are Over and That Country Will Never Be the Same Again

Stocks are falling and oil is rising. And a lot of bears are crawling out of the woodwork. And most of the press would have you believe that America is losing the war to Iran.Among the most disgusting examples of that is the Economist magazine with a cover headlined: “Advantage Iran.”Not only is this left-wing press disreputable hogwash, but the so-called bear case to sell stocks and buy oil I think will be proven very wrong.Here’s my basic point: One way or another, all of Iran’s capabilities would be destroyed through military action whether there’s a deal or not.And one way or another, our military will soon take control of the Strait of Hormuz again through military force whether there’s a deal or not.Iran will never be the same when we are finished with it.My hunch is like the Venezuela story, America will control Hormuz, and any Iranian money from Hormuz, and the disbursement of that money.Even more, these outcomes are going to come sooner rather than later, and that’s why I believe investors should be buying stocks, preferably the broad-based index funds, and they should be selling oil. And by the way hold the index funds for 100 years or 200.Regarding oil, the 12-month futures contract is down to about $75 a barrel for West Texas Intermediate, compared to about $100 a barrel in the spot market. That tells you something.By the way, people in the oil business tell me the marginal cost to produce the extra barrel of oil is somewhere in the low to mid $60s.So the futures are not all that far from the ultimate production-based pricing.Here’s another point for the stock market. Profits are booming. Forward-looking profit estimates are well above $300 per share for S&P 500 companies, which gets you to something like 19 times earnings.On top of that, the One, Big, Beautiful Bill is a supply-side stimulant for the economy that will boom in the post-war period. Let us not forget, tax cuts, 100 percent depreciation, free and fair reciprocal trade.Inflation expectations are looking right through the temporary oil bulge. Ten-year break evens in the TIPS market haven’t moved at all and are hovering around 2.30 percent. Five-year forward inflation has remained barely higher than 2 percent, the market price of gold is falling, and “King Dollar” is rising.Even the price of natural gas, which is really the global clean-burning fuel choice, hasn’t budged from around $3 per million British Thermal Units during this whole period.My basic point against all this press misreporting and self-seeking bears is that America is going to take control of Hormuz, that’s going to settle down oil markets and the U.S.-Israeli coalition will be ending all of Iran’s capabilities.And it’s not going to take much longer.From Mr. Kudlow’s broadcast on Fox Business Network.

Iran’s Capabilities Are Over and That Country Will Never Be the Same Again

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