Hey everybody,
Normally I don't talk about the weather but we need to take a look at the horizon. The strongest El Nino in a decade is peaking into planting season on five continents. This puts strain on a world which is already reeling from an energy crisis and rising global conflict.
In this issue we're talking about two transnational events. Things that move the world without originating from the decisions of a single nation. These are are wicked problems to solve… especially those involving AI.
Let's get to it.
Eric
P.S. I've been made aware that some folks don't know about The Under Report Podcast. Here is one of my favorite episodes about how Water Makes God-Kings.
Bottom Line Up Front (BLUF)
El Nino peaks across major planting seasons. One Pacific anomaly is about to change the prices on harvests and test brittle systems.
Treasury's D-Day lands light. Operation Economic Outcast promises to sever Iran's last lifelines. Markets and world leaders are unimpressed and this makes the situation dangerous.
Flooding in Nepal reveals what we don't know about China. A disaster began across the border and no one sounded the alarm. (Paid)
Somali pirates are back. Hijackings hit a ten-year high, and the prizes are sanctioned tankers no navy will rescue. Behind the pirates comes the water. (Paid)
OpenAI reveals nightmare hacking case. AI agents are collaborating to commit felonies. Problem is you can't charge a piece of code. (Paid)
1. Bad Weather Ahead
What Happened
NOAA declared a strong El Nino in June and the unusually hot summer in Europe is confirming the prediction. This divides the globe between places which will get way too much rain and way to little. Indonesia, the Philippines, Australia, India, and Central Africa will be subject to dry weather during agricultural seasons. In fact, Australian agricultural insurance requests running four times normal. Meanwhile in East Africa, we're expecting major flooding in Kenya, Uganda, and Somalia. A wetter-than-normal October-December across the Greater Horn strains struggling governments.
Why It Matters
The FAO food price index sits at its highest since December 2025, past El Ninos added 3.9 points to non-energy commodity prices. Since food is globally produced and globally priced, everything goes up.
USDA sees Australian wheat shrinking, and Asia's monsoon crops run on rains this system rations which stand to be blown out. The war multiplies the problem. Crops which went into the ground are already expected to yield less.
Wealthier nations have buffer for this, but it will be felt at the price register. Poor countries like those in East Africa stand to have their economies affected for decades.
What We're Watching For
Kenyan preparations for massive flooding, the government says they are prepared, but what does this look like in practice?
Turkish disaster relief initiatives in Somalia, Israeli and UAE relief in Somaliland. Never let a tragedy go to waste.
Australia's spring rainfall and the FAO's next food price print, the market's first harvest signals.
2. Treasury's D-Day Doesn't Do It
What Happened
On August 24, Treasury Secretary Scott Bessent announced Operation Economic Outcast. The goal, according to him, is to 'sever the economic lifeline of a tyrannical regime.’ The State Department implemented sanctions the same day, some 60 targets from procurement rings to oil movers. Bessent named five sectors for the opening phase: digital assets, technology, gold, aviation, and shipping.
Why It Matters
This is one of those things that only works if everyone buys in. China had the only vote that mattered. The CCP said that the sanctions were illegal and stated they would not end trade with Iran. Since they're the biggest trading partner and also holding the US supply of rare earths they lead the way and others will follow suit.
So, if this was an ineffective measure then why mention it?
Operation Economic Outcast represents one of the final soft power tools that the US can reach for. The IRGC barely blinked which means that the US is likely to return to kinetic operations. However, its likely that will happen after the midterm elections. My forecast for a return to fighting by October stands.
What We're Watching For
Which financial institution is targeted by Operation Economic Outcast, if its Chinese then the US is doubling down.
Any move forward with tolling the strait. If we see terms, price lists, and shipping companies agreeing then Iran has upped the ante.
Moves made by Turkey and Iraq. Turkey needs US cover, but it's possible that Iraq can help Iran evade sanctions.
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"Where Was China?"
"Somali Pirates are Back"
“The Bots are Working Together”
Eric's Tinfoil Hat prediction 👀
The weekly podcast note
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