War Surprises

Almost a month into the US-Iran war.

I want to look back at the initial market reaction versus where we are now. Four things are challenging my previous views.

1. Gold Is Falling

Gold is down 16% from baseline. Not acting as a safe haven. This is the biggest contradiction to everything I believed.

I had a structural case for gold - central bank buying, Triffin Dilemma, debasement - that I thought war would only strengthen. The opposite is happening.

The classic safe haven view is too simplified. I need to understand why.

2. BTC Is Rising

Complete opposite of gold. An asset that structurally seemed to be in a bear market, that consensus views as a high-beta tech stock, is rallying like a safe haven.

BTC is often cited as a liquidity smoke alarm - selling off when liquidity tightens. It's doing the exact opposite. Up 7.5% while gold collapses.

I don't know what this means yet.

3. UK Gilts Are Breaking

UK isn't fighting this war. But UK bonds are seeing the biggest sell-off among major economies. UK gilts are up +59 basis points. German bunds are up +34bps. Japanese bonds are up +18bps.

I get the story: high energy dependence, EU gas prices suffering the most. But if that's the case, I'd expect a comparable move in Japanese bonds. Instead, UK gilts have moved three times more than Japanese bonds.

There's something else going on here.

4. US-EU Energy Separation

I'm not talking about the usual spread between TTF and Henry Hub. I mean the rate of change.

EU gas is up nearly 80% from baseline. US gas is basically flat.

This raises the importance of something I haven't thought enough about: the US became a net energy exporter after the shale revolution.

This challenges two of my strategic views:

• US vs China AI race: China is said to have an energy advantage due to a much better grid. But China is also the world's biggest energy importer. During a crisis, energy security matters more than grid efficiency. This doesn't square.

• Poland's shale reserves: Poland has the highest estimated shale reserves in the EU. It also has one of the highest energy prices in Europe. If shale reserves mattered strategically, this wouldn't be the case.

I usually don't trade oil and gas commodities, so I have no strong view on prices. But this war is making me rethink the strategic importance of energy independence versus energy infrastructure.