Markets believe there is a deal - seen in stock rebound and crude oil price fall. What matters is flow of oil and commodities. Even with deal, won't return to pre-conflict levels - risk premiums will remain embedded in interest rates, volatility, and oil prices.

Contrasts with Cuba situation which doesn't impact markets. Makes distinction between political issues and market issues - Strait of Hormuz blockage is what makes it a market issue.

Worse situation if we go back. Need defensive shield against drones like Ukraine has developed. Without deal, ships stay stuck, oil stays constricted, drags on. Price of crude oil goes up $3 a day until movement resumes.

References Bloomberg's Javier Blas analysis. Explains military challenge: decentralized drone warfare makes offensive solutions ineffective. Ukraine example shows defensive technology exists but scaling takes time.

Russia gets monetary boost from higher oil prices but Ukraine's drone warfare has changed conflict - killing 30-35,000 Russians monthly. First war since 19th century where primary killing method is drones, not bullets/shells.

Cites NATO exercises where 10 Ukrainian drone operators wiped out 2,000 NATO soldiers in simulation. Russia hasn't adapted to drone warfare techniques.

Fed minutes show two-sided argument: some say cut rates if war slows economy, others say raise rates if it increases inflation. Best viewed from nominal GDP perspective - real growth vs inflation tradeoff.

Argues Fed becoming more decentralized with 12 independent voters. Believes nominal growth will probably increase, interest rates trend higher, Fed may hike rather than cut.

Inflation will stay elevated - in 3-ish% world, not 2%. Five years without Fed hitting target. Interest rates probably go higher to hit fair value, maybe closer to 5%. 7% mortgage may become normal.

Cites March CPI consensus of 0.9% driven by gasoline. Even if war ends, reversal takes months. Deglobalization and changing alliances create structural inflation pressures. Risk premiums must be added to markets.