Admits initial assessment was wrong; Iran continues to fight despite military losses, political leadership remains unrepentant, and a less capable military can harass shipping in the Strait of Hormuz, potentially prolonging the conflict.

References John Maynard Keynes: 'When the facts change, I change my mind.' Compares to Houthi attacks where only diplomatic agreements kept shipping open.

Even with naval escorts, shipping through Strait will carry higher risk for foreseeable future, keeping oil prices elevated. Base case assumes flows resume in 2-3 weeks, but downside case involves much less oil at higher risk, sustaining high prices until global recession reduces demand.

Russia benefits from higher oil prices and diversion of Patriot systems from Ukraine. China benefits from large energy reserves and US naval assets diverted from South China Sea, giving Xi Jinping leverage in future trade talks with Trump.

Headlines about US troops deploying for potential land action in Iran and reinforcements arriving in weeks/months shift market scenario from short conflict to months-long uncertainty, hitting consumer confidence and spending, especially with rising gasoline prices ahead of US driving season. Treasury sell-off reflects inflation worries as conflict headwinds push against Fed's 2% target.