Bombs away

So much for peace. Now what?

The US bombed 140 Iranian targets last night. Iran fired missiles and drones into Jordan, Oman, Kuwait and Qatar. Trump admitted two days ago the ceasefire is dead. Apparently hard-line factions inside Iran (they seem to be calling the shots) want to keep fighting America.

Meanwhile, did you catch the funeral of the Supreme Leader, bombed into bits by the Americans on Day One of the conflict?

The multi-day (July 3-9), multi-city event attracted about 500,000 into a Tehran space, with estimates of millions participating overall. Al Jazeera says 15 million. Iranian state media claims 41 million. Whatever the number, there were no protests, no pro-democracy response, just mourners.

Conclusions: getting bombed makes people defensive and patriotic. Plus, this war is far from over. If it ever will be. America truly stepped in it.

So?

Oil futures are expected to jump when trading resumes tonight. That low-$70 range will likely be shattered and more volatility erupt. The Strait of Hurmuz is closed again, which makes the mightiest military in the world look impotent and a bombed-out theocratic third-rate dictatorship seem robust. It s amazing. Five months ago this would have been a bizarre thought. The White House presumed Persia would be another Venezuelan puffball.

Well, the energy crisis looks ready to resume. Oil tankers have weighed anchor. The MOU is DOA. And as the price of crude rises, global reserves have been depleted. For example, the US Strategic Petroleum Reserve is at the lowest level in decades. If Iran succeeds to choking off supply for, say, a few months, oil-gobbling economies are somewhat pooched.

Analysts say ninety bucks is again an option. Maybe more. US gas prices should pass $4 once more. The political pressure is ramping up, and the midterm elections are but four months hence.

The result: inflation. Already it’s been moving in the wrong direction. The annual price increase in Canada was just 1.8% a few months ago. Now we’re at 3.2%, while the US has raged to 4.2%. The next reading comes on Tuesday. It is anticipated to settle to 4% reflecting lower gas prices last month – which may soon be history.

The Bank of Canada does not want higher rates. Nor, with a $70 billion deficit, does Carney. Trump sure wants a rate cut, with the US carrying $38 trillion in debt. The languishing real estate market in both countries is begging for a financing break. The big tech and AI corps now spending almost a trillion this year on data centres and development fear a rate shock. And, politically, incumbent leaders in every country being impacted (including ours and America’s) are taking a hit as the cost of living rises.

The Iranian dudes know this. Other than having a few billion more dollars’ worth of bombs fall on them, they have nothing to lose. Trump dare not try an invasion. So either Iran gets the a sugary settlement like the last one or folks there just keep it up until economic reality squishes their enemies. Then they think the deal gets even better.

So, what?

More price hikes are in the cards. Followed by higher interest rates.

Scotiabank is forecasting three-quarters of a point in hikes, starting this autumn (that’s in a few weeks). Higher commodity prices, an increase in Canadian economic growth and war inflation will be the drivers. “Developments in the Middle East suggest it would be highly premature to declare risks to energy and broader commodity markets to have diminished sustainably,” the bank says.

The next CB rate setting is Wednesday. No change.  Stuck at 2.25%.

Things could be different at the next one, on September 2nd. And almost certainly on October 28th.

Enjoy the weather. Won’t last.

About the picture: “Hey Garth, hope you’re well,” writes Andrewski. “Found a C note on the ground the other day while walking Gibson & Bala, bringing me $100 closer to retirement, haha.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2026/07/12/bombs-away-3/