The S&P 500 is currently sitting near an all-time high.

Equity traders seem to have decided that a war in the Middle East, one that has effectively

closed the world's most critical energy choke point, is simply a great opportunity to buy the dip.

And buying the dip has become such a winning strategy in recent years that dips don't really happen

much anymore.

The average consumer is a bit less convinced.

US consumer sentiment has recently fallen to a 74 year low.

To put that in perspective, those 74 years included the assassination of JFK, the 1973 oil embargo,

September 11th, the global financial crisis and a global pandemic. And people are

more miserable now than they were during any of those times. That is not a great number

if you're an incumbent politician running for office.

The immediate cause of this collapse in sentiment is the closure of the Strait of Hormuz.

Though, as we'll see, the problems run much deeper than that. In late February, an assault on Iran

shut down the transit of roughly 20 million barrels

of oil a day, about a fifth of the global supply.

Martin Wolf, writing in the Financial Times, points out that the strait is a vital artery

of the world economy, a place in which one starts a war only after careful consideration

of goals, means and risks. He goes on to say, that's not what happened. Brent crude has,

as of the time of this recording, been pushed above $125 a barrel.

As I mentioned in last week's video, oil prices feed directly into the cost of food, fertilizer and shipping,

so that increase is rapidly working its way into everything you buy.

Politicians would very much like to blame our current cost of living problems entirely on this geopolitical bad luck.

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