MacroVoices #535 Michael Every: NAFTA and NAPTHA – Warcraft & Fartcraft
MacroVoices Episode 535 (June 4, 2026) features Rabobank's Michael Every and Commodity Context's Rory Johnston discussing the ongoing Strait of Hormuz closure, now three months into the Iran crisis. Key themes include the shift from economic policy to economic statecraft, the puzzling underreaction of oil prices despite massive supply disruptions, and China's mysterious drawdown of invisible oil reserves that appears to be buffering global markets.
Summary
The episode opens with host Eric Townsend noting that the Strait of Hormuz remains effectively closed, with President Trump suggesting the blockade could last until Labor Day (September), roughly 95 days away. Market scorecard shows WTI crude at $96.02, gold at $4,467, copper at $6.50, and the S&P 500 near all-time highs at 7,553.
In the first feature interview, Michael Every of Rabobank argues that Trump's administration is executing a deliberate shift from traditional economic policy to 'economic statecraft,' where energy, swap lines, stablecoins, and supply chains become tools of national strategy. Every introduces the concept of 'NAFTA' — North American Petroleum and Hydrocarbons Trading Hub Association — as a hypothetical closed-loop energy alliance among the US, Mexico, Canada, Venezuela, Guyana, and key Asian allies that could allow the US to weather the energy crisis while leaving adversaries exposed. He also discusses how incoming Fed Chair Kevin Walsh's comments about dollar swap lines being 'geopolitical transactions' signal a Fed that will increasingly align with Treasury and presidential statecraft objectives rather than operating as a purely technocratic institution.
Every outlines what 'losing' the Iran war would look like for the US: a cascading loss of credibility demonstrating that America is in a 'post-heroic' state — casualty-phobic and unable to resolve certain geopolitical problems — effectively downgrading the US from hyperpower status. He argues the US cannot afford a 'TACO' (total abandonment, cut and run outcome) because it would hand Hormuz to an Iranian nexus and shatter US geostrategic positioning. On gold, Every suggests the unusual weakness reflects Middle Eastern wealth holders liquidating gold for more portable dollar assets during the crisis, combined with uncertainty about what the post-war financial architecture will look like.
In the second feature interview, Rory Johnston of Commodity Context provides detailed flow statistics: approximately 2,000 vessels remain trapped in the Persian Gulf, with only 1-12 ships transiting daily, drawing down the trapped oil stockpile at 1-3 million barrels per day. The core supply shock remains the 13-15 million barrels per day of shut-in production that cannot be exported. Johnston identifies China's behavior as the single most anomalous and important factor: Chinese crude imports have collapsed roughly 50% from pre-war levels (from ~12 million to ~6 million barrels per day), yet Chinese economic activity data shows no corresponding demand collapse. Johnston hypothesizes China is drawing from underground/invisible strategic reserves and may be strategically buffering Asian allies from the worst of the supply shock, possibly as a geopolitical play to demonstrate multilateral leadership while letting the Trump administration absorb reputational damage.
Both Johnston and Townsend agree that speculative positioning was repeatedly knocked out of the market by Trump's Truth Social posts that jawboned prices lower, but argue that once physical market buffers are exhausted — potentially by late June or July — no amount of social media intervention will prevent a sharp price spike, potentially to $150+ if the strait remains closed through Labor Day.
The postgame segment features Patrick Ceresna's Trade of the Week: a long position in the PAVE infrastructure ETF ($57.24) paired with a July 17 $55 protective put ($1.25) to express the industrial rebuild/economic statecraft theme while hedging near-term market exhaustion risk. Ceresna notes the S&P 500 has rallied nearly 20% from trough to peak in two months, creating poor asymmetry for further upside and making hedging logical. Chart discussion covers gold's failure to reclaim all-time highs (bearish consolidation below moving averages), copper trading at 52-week highs with momentum, uranium in seasonal weakness ahead of the September WNA conference, and 10-year Treasury yields potentially heading toward 5% as oil-driven inflation expectations persist.
Key Insights
- Michael Every argues that Trump's administration has deliberately shifted from 'economic policy' to 'economic statecraft,' using energy, swap lines, stablecoins, and supply chains as instruments of geopolitical coercion rather than purely economic optimization.
- Every hypothesizes a 'NAFTA' (North American Petroleum and Hydrocarbons Trading Hub Association) scenario where the US forms a closed-loop energy alliance with Mexico, Canada, Venezuela, Guyana, and key Asian allies, allowing the US coalition to weather the Hormuz crisis while leaving adversaries with catastrophically higher prices.
- Rory Johnston reports Chinese crude oil imports have collapsed roughly 50% from pre-war levels (from ~12M to ~6M barrels/day) without any corresponding collapse in Chinese economic activity or visible inventory drawdown, suggesting China is drawing from unobservable underground strategic reserves.
- Johnston argues China's mysterious market buffering may be a deliberate geopolitical strategy to shield Asian allies from the worst of the supply shock, position Beijing as a multilateral 'good guy,' and allow the Trump administration to absorb maximum reputational damage from the crisis it created.
- Every characterizes the risk of a US 'TACO' (total abandonment/cut-and-run from Iran) as equivalent to a '1956 Suez Crisis moment' for America — not destroying US hyperpower status, but demonstrating firm limits on US willingness to use force, fundamentally changing how adversaries calculate future confrontations.
- Kevin Walsh's public comment that Fed independence does not apply to dollar swap lines because they are 'geopolitical transactions' signals, according to Every, that the Fed will increasingly function as an instrument of Treasury and presidential statecraft rather than a purely independent technocratic body.
- Every argues the entire central banking infrastructure — designed to manage demand-side shocks through interest rate adjustments — is fundamentally unfit for supply-side structural shocks like a prolonged Strait of Hormuz closure, and no central banker has models that work in this environment.
- Johnston identifies Trump's Truth Social posts as the primary reason oil prices have not reacted to the supply shock as expected: repeated jawboning knocked speculative long positions out of the market, but argues this mechanism will fail once physical inventory buffers are exhausted because real-time supply-demand balancing cannot be tweeted away.
- Every suggests stablecoins function as a 'buy one get one free' mechanism for extending dollar hegemony — countries that accept US digital tokens are self-sorting as geopolitical allies willing to split supply chains from China, while refusal self-identifies adversaries, creating an automatic sorting and alignment effect.
- Johnston estimates that if the Strait remains substantially closed through Labor Day (as Trump suggested), oil prices would likely need to reach $150+ to ration demand sufficiently, representing a major upward revision even from the already-elevated current levels around $96-98.
- Every frames the paradox of US dollar hegemony as self-defeating: the eurodollar system gave the US enormous power but simultaneously de-industrialized it by making dollar financial assets more attractive to produce than physical goods, thereby undermining the industrial base that funded the military that maintained the rules-based order the dollar system depends on.
- Johnston argues the surplus of commercial oil inventories that existed before the war was larger than analysts appreciated because a significant portion of China's apparent strong pre-war demand was actually strategic stockpiling rather than real consumption, meaning the market's buffer against the supply shock was larger but is now being rapidly exhausted.
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