The United States strikes military targets on Iran’s main oil island… Trump warns that “an entire civilization will die tonight”… Luke Lango’s framework for what comes next… and how it is now
As I write on Tuesday, we are just hours away from President Donald Trump’s 8pm deadline for Iran to open the Strait of Hormuz.
Over the course of weeks, Trump issued a series of ultimatums demanding that Iran reopen the Strait – the narrow waterway through which nearly 20% of the world’s seaborne oil flows every day.
Every previous deadline came and went with diplomatic cover to justify the extension. This time, Trump set a strict deadline of 8pm tonight – and warned that failure to comply would lead to massive US strikes on Iran’s power plants, bridges and civilian infrastructure.
Last night, US forces struck dozens of military targets on Kharg Island – the small island off the Iranian Gulf coast through which nearly 90% of Iran’s crude oil is exported. Most importantly, US officials stressed that the strikes did not target oil infrastructure, but only military installations. The administration appears to be holding Iranian energy assets as the ultimate bargaining chip.
Then, this morning, Trump posted this on Truth Social:
An entire civilization will die tonight, never to be brought back.
I don’t want that to happen, but it probably will.
He added that tonight would be “one of the most important moments in the long and complex history of the world.”
The Iranian Revolutionary Guard responded by warning that it would “deprive the United States and its allies of oil and gas in the region for years” if further strikes occurred.
The officials called on young Iranians to form human chains around the country’s power plants. Tehran says the ceasefire talks are still at a “critical and sensitive stage” – although Iran has explicitly rejected any temporary ceasefire and has demanded a permanent end to the war.
As tonight’s deadline approaches, the question is whether Trump will continue strikes against power plants and civilian infrastructure — a new and more serious move than anything we’ve seen so far.
What does this mean for investors?
Yesterday, our technology expert Luke Lango, editor Innovation investorestablish a framework for thinking during this moment. His analysis has become more compelling since he wrote it.
Luke’s starting point was the Easter ultimatums that President Trump issued on Sunday and how different that deadline looked from those that came before. His conclusion is that this will be resolved in one of three ways – not by another extension.
Here’s Luke:
Outcome 1 – Agreement: Acceptance of some form of ceasefire framework… reopening of the Strait of Hormuz at a specific timing for the verification period. Both sides claim victory. The war ends.
Outcome 2 – TACO Withdrawal: Trump unilaterally withdraws the United States without a formal agreement. He announces the achievement of goals — destroy the nuclear program, destroy the navy, reduce the missile stockpile, and decapitate the military leadership.
Result 3 – Power plant strikes and escalation: The deadline is real, Iran does not move, Trump implements the ruling. The worst case scenario that markets have priced in as a tail becomes the base case.
Luke assigned outcomes 1 and 2 a combined probability of 80-85% when he wrote this yesterday morning.
But the Kharg Island strikes, Trump’s “entire civilization” stance, and Iran’s refusal to budge suggest the needle has moved…
We may already be inside score 3.
What score 3 means – and what to do about it
Back to Luke:
If Trump carries out strikes on power plants — and oil gaps range to $130-140 in public — the calculus changes dramatically.
The consumer, who has already reached the breaking point, will not be able to absorb another $20 to $30 per barrel on a sustainable basis without real destruction of demand. We will look at an economy that goes from recession risk to actual recession with a lag of 60 to 90 days.
In this scenario: the bullish hypothesis is paused, not abandoned.
The basic state of the AI infrastructure remains sound… but the plateau during a recession extends from months to a year or more.
We will move to maximum defense – heavy cash, overweight energy, hard assets – and wait for the third outcome before redeploying into AI infrastructure at more imbalanced prices.
In this regard, WTI jumped more than 2% as I wrote on Tuesday afternoon. Brent crude oil is trading near $110.
Meanwhile, the three major stock indexes fell, although they were off this morning’s lows.
The market is on edge but not panicking yet. But that may change tonight.
Why can’t the American consumer handle more of this?
Here’s what makes tonight’s deadline so urgent economically — and why Locke believes the pressure to reach an agreement is intense on both sides of the negotiating table.
The ISM report for March was released yesterday, and it was truly alarming.
Here’s a look at the details:
This is the most worrying US economic data in the entire conflict.
uncomfortable. It’s not about it. Worrying.
The headline index fell to 54 – down 2.1 points from February – marking its largest single-month drop in a year. The component of prices paid rose to 70.7 – the highest reading since October 2022, when inflation was above 8%. This single component jumped 7.7 points in one month, its largest rise in nearly 14 years.
But the biggest eye-catcher was the employment index, which collapsed from 51.8 to 45.2. As Luke makes clear, this is not slow reading. It’s a recession reading:
The ISM Employment Index has only been at or below 45 during three periods of recent economic history: the dot-com bust, the global financial crisis, and Covid.
Not the 2018 price scare. Not the 2025 liberation day.
The three actual recessions in the past 25 years.
Adding these two numbers together – the rise in prices paid and the collapse of employment – Locke says we have “the textbook definition of real-time stagflation.”
This puts the Fed in a terrible dilemma. Lowering interest rates leads to higher prices paid accelerating inflation. A rise to 45.2 risks employment turning a sharp contraction into a complete collapse.
So, what is the solution?
Back to Luke:
Only ending the oil shock – which is not in the Fed’s toolbox but is very much in Trump’s toolkit – addresses both problems simultaneously.
This is why Luke believes that political mathematics has become impossible to ignore:
The ISM employment rate of 45.2 flows into the May and June payrolls with a lag of two to four months.
If the war continues and the price of oil remains at $110 or above, payroll reports in May and June could show negative results – actual job losses – during the period when the midterm election campaign reaches its maximum intensity.
Printing negative jobs with $5 gas is not a difficult political environment to analyze. It’s a disaster.
In other words, the potential economic fallout may be our best shot at preventing a greater escalation tonight than any diplomatic proposal.
Bottom line
What happens tonight could have a profound impact on our economy and the stock market.
If the 8pm deadline passes without an agreement, triggering infrastructure strikes, the next few days will be volatile and uncomfortable for most portfolios.
On the other hand, if a last-minute agreement is reached, Locke says it will lead to “the rebranding of AI infrastructure that we have been waiting for. The Liberation Day playbook is implemented. A multi-month bull market in AI names follows.”
For now, we’ll end by borrowing the way Luke ended his daily notes:
Watch (tonight). The next 24 hours are the most important for this entire conflict.
We’ll have a full update tomorrow digest.
I wish you a good evening,
Jeff Remsburg
