Whose Existential Crisis is it, Anyway?

There has been much ballyhoo surrounding Iran's existential fight during this conflict. But what about America's?

The market has been fighting nonstop, around the clock, to hang in there, and paper oil has been fighting to stay contained during that time, too, as markets simply do not want to accept that they may be operating under a false bill of goods.

Earlier today President Trump gave his usual, daily remarks and said (among many other things) that we do not "need" the Strait of Hormuz. Putting to one side the oil issue, there can be little doubt that we certainly do need the chemicals and fertilizer-adjacent products which typically pass through the Strait during a normal day in normal times. 

We have already profiled, both here and with Members, the strength in a fair amount of charts in the chemicals space. For reference, the XLB ETF houses many names related to chemicals. 

But what if we do, perchance, get the awful scenario of food shortages in the coming months? It is not as far-fetched as you might think, given the squeeze chemicals and fertilizer firms are already feeling and will definitely pass along in terms of price hikes. 

You will note that Tyson Foods is one of the top two movers in the XLP ETF today. On the TSN daily chart, below, you can see the rally this week off recent pullback lows. Overall, TSN is in an uptrend. Tyson makes relatively lower cost proteins, frozen, prepared, and otherwise. This is precisely the type of product in extremely high demand with unique pricing power during a food shortage. 

To be sure, shortages with respect to gas and food would be an ugly outcome. But we have seen gas lines in America before, and it can happen again, especially with a President who fancies price controls and price control methods (back then it was Nixon) when the market acts in a way contrary to his desires. 

Simply put, Iran is not the only country here in an existential fight. The markets in America seem to be slowly coming around to the truth, and the reckoning will likely be a violent recalibration.