Giddyup!
By Morgan Christen
CFA, CFP, CDFA
We all have that one friend who is not really locked down to one career, always in search of the next thing – you know the one. If you are a Seinfeld fan, Kramer would be that guy. He launched a cologne line because, according to him, he ‘basically is the beach.’ Before that, he was writing a coffee table book which also functions as a coffee table, obviously and even got on Regis and Kathie Lee. For a brief period he was running a rickshaw operation, then felt too guilty about it and just started pulling people around himself. Then he gave tours of his own neighborhood like he’s a landmark.
Every single time, it’s the best idea he’s ever had. Every single time, you nod along because his enthusiasm is genuinely contagious. And every single time, he moves on two weeks later to the next thing – some new scheme that is, without question, absolutely foolproof. You never quite know what he’ll show up with next, but you already know what he’s going to say: this one is different.
That friend isn’t unique. Turns out, entire publicly traded companies have been doing the exact same thing, just with better suits and a PR department. Long Island Iced Tea heard the word ‘blockchain’ once at a dinner party and immediately rebranded to Long Blockchain Corp, sending their stock up 197% before the whole thing unraveled into delisting and investigations. Kodak launched a cryptocurrency. GameStop decided it now is a Bitcoin treasury company. And just last month, Allbirds, yes, the beloved Silicon Valley shoe people, the ones with the little wool sneakers that every tech founder owned two pairs of, announced they are pivoting to AI computing, renting out GPUs, and changing their name to NewBirdAI. The stock exploded 876% overnight. The last pair of shoes wasn’t even out the door yet.
For context, CoreWeave an actual, established AI infrastructure company, is spending $35 billion this year to stay competitive in that same space. Allbirds raised $50 million. But who needs experience or capital when you have a good story and a ticker symbol?
Every era gets the Kramer it deserves; someone bursting through the door, absolutely certain that this time, this idea, is the one that finally changes everything. The blockchain guys had their moment. The AI guys are having theirs. And somewhere out there, your friend is already working on the pitch for whatever comes next.
Chokepoints
The World Oil Transit chart tells you everything you need to know about a major structural vulnerability in the global energy system and possibly, where the needle will push to for future investment and transmission of energy.
Look at these numbers. The Strait of Malacca at 23.2 million barrels per day. The Strait of Hormuz at 20.9. Together, that’s roughly 44 million barrels a day flowing through two passages that you could practically swim across. The Cape of Good Hope at 9.1 is the detour route when everything else breaks. This is not a resilient system. This is a system held together by geography, goodwill, and naval presence.
Every single one of these choke points is a geopolitical risk that is priced into every barrel of oil on earth. The Strait of Hormuz runs right past Iran. Bab el-Mandeb at 4.2 million barrels a day; we have just watched the Houthis essentially weaponize that corridor. The Suez Canal at 4.9 million gets blocked by a single ship sideways and the global economy hiccups for weeks. We saw that in 2021 and the world hadn’t forgotten it by the time the next crisis hit.
Where could future energy investment go? Solar and wind are generated at the point of consumption. They don’t transit the Strait of Malacca. They don’t need a Navy escort. For any nation sitting downstream of these chokepoints – Southeast Asia, Japan, South Korea, India – the energy security argument for renewables is not an environmental argument. It is a national security argument. That is a fundamentally different and much more durable investment thesis.
It is one thing to generate it, but what about the grid infrastructure and battery storage? The chokepoints on this map are physical. The new chokepoints of the energy transition are electrical transmission lines, grid interconnections, long-duration storage. The country or company that solves grid-scale storage essentially eliminates the last argument for fossil fuel baseload. That’s where countries and investors should be looking.
Finally, what about nuclear, specifically small modular reactors? For nations that cannot build enough solar and wind fast enough, SMRs offer something the choke point map cannot, energy independence at scale, without needing a 20-mile wide strait to stay open.
The bottom line is this: every barrel that flows through the Strait of Hormuz is a subsidy for the renewable energy investment case. Every Houthi drone, every tanker seizure, every sandstorm that closes a canal for a day is a press release for energy transition infrastructure. The map you are looking at isn’t just a picture of how oil moves today. It’s a picture of why that system is slowly, inevitably, being engineered around.
The FED
May will bring us the end of Jerome Powell’s term as Chairman of the Federal Reserve as the term ends May 15th. However, he remains a Governor until January 31, 2028. Historically, a chairman resigns being a Governor once his chairmanship is over. But with the lawsuit against Powell by the Trump Administration, we may see him for a bit. That leads us to the (potential) new Chairman, Kevin Warsh. On April 21st, this man sat before the Senate Banking Committee and essentially auditioned for the most powerful economic job on the planet. Trump’s pick to replace Jerome Powell at the Federal Reserve. It was must-watch television.
Here is what we know about Warsh. Stanford undergrad, Harvard Law, Morgan Stanley mergers and acquisitions, then a stint at the White House under George W. Bush, then a seat on the Fed Board of Governors from 2006 to 2011. The résumé is impressive. The guy looks the part. Sounds the part. Trump himself called him straight out of ‘central casting’ which from Trump is basically the highest compliment he gives anyone.
But here is where it gets interesting. Warsh walked into that hearing and told everyone the Fed needs ‘regime change.’ Not tweaks. Not adjustments. A full overhaul down to the very definition of the word inflation. Very bold.
And then and this is the part that had everyone’s eyebrows raised when senators pressed him on the specifics of what’s actually driving inflation, he left his views deliberately vague. Senator Jack Reed from Rhode Island put it perfectly. ‘I must commend you on the way you can circularly go around questions and not answer them. It’s a skill. Unfortunately, it’s not a good skill for the chairman of the Federal Reserve Board.’ That line will be remembered.
The elephant in the room, of course, is Trump. Senator Kennedy asked him point blank are you going to be Trump’s ‘human sock puppet’? To which Warsh said ‘absolutely not.’ Strong words. The harder question is whether he can back them up when the president is publicly demanding rates at 1% and the DOJ is circling the current Fed chair.
Former Chair Janet Yellen wasn’t buying it either, saying she really doesn’t see the FOMC accepting Warsh’s vision in the short run and remember, he needs 11 votes from that committee to move rates.
So what is the bottom line? Kevin Warsh is clearly brilliant, clearly ambitious, and clearly has a plan. Whether that plan survives contact with a president who wants cheap money, a Senate that wants answers, and a Fed that wants its independence, that is the game within the game. And we haven’t even entered the first quarter.
Bring it home
Kramer bursts through the door with a new idea. A shoe company becomes an AI infrastructure firm overnight. A Fed chair nominee promises regime change while carefully saying nothing. A map full of chokepoints that the world has quietly decided it can no longer afford to trust.
What connects all of this is the same restless human impulses the belief that the next thing, the new thing, the reinvented thing, is always just around the corner. Sometimes that can produce genuine transformation. The energy transition is real. AI infrastructure is real. Monetary reform, if done right, could matter enormously. But the distance between a great story and a great outcome is wide, and that gap is exactly where risk lives.
As your advisors, that is precisely what we are watching. Not the headlines. Not the 876% overnight moves. Not the confirmation hearing sound bites. We are watching what happens after the door swings open when cologne has to actually sell, when the $50 million has to compete with $35 billion, when the new Fed chair has to walk into his first FOMC meeting and find out whether regime change survives the room.
Markets reward conviction. But they punish conviction without substance…eventually, and without apology.
The world is changing. The energy map is being redrawn. The most powerful economic institution in the world is about to have new leadership. These are not small moments. They are the kind of moments that create real opportunities and threats. The key is to make sure your map is drawn properly.
We are here to be Jerry to your Kramer.
As always, we welcome your questions and look forward to speaking with you.
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