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With you Yong and Wall Street Window. On March 16, 2026, Ray Dalio published a prophetic article about President Trump's war with Iran and its consequences . At that time, the war had lasted less than 3 weeks, and few people understood what was happening. Fox News simply cheered the war on , declaring it had already been won, while other commentators simply shamed anyone who asked questions about it, calling them unpatriotic.
However, war has consequences for everyone, and what was needed at that time was a truly honest analysis of what was happening. Ray Dalio attempted to do this in his article, and it's worth taking a look at what he said now, as it has implications for financial markets going forward. We have a link to his article in the description of this YouTube video.
Ray Dalio's analysis is distinguished by its historical validity and impartiality. Amidst the partisan hubbub, his ideas offer important implications for financial markets and global capital flows, providing a clear perspective on the impact of the US-Iran conflict. The central issue is control of the Strait of Hormuz.
This bottleneck is critically important for global energy flows . Governments and experts agree that whoever controls Hormuz dictates the narrative of American power and the outcome of this conflict. Two outcomes are possible. If the United States gains control of the Strait of Hormuz, global confidence in its power and currency will be strengthened.
On the contrary, if Iran retains control, the authority of the United States will be shaken, allies will lose confidence, and the dollar's reserve status will be threatened. Dalio sees this as a decisive moment without compromise. Dalio compares the potential loss of control of Hormuz by the United States to the 1956 Suez Crisis for Great Britain.
This event marked the decline of British rule, leading to the loss of its reserve currency status and global financial authority. Similarly, the defeat of the United States could signal a turning point in the global power dynamics. Empires often fall due to overexertion, as was the case with the Dutch, Spanish, and British empires.
A smaller state challenges a critical trade route, exposing military and fiscal weaknesses. This leads to a loss of credibility as allies and creditors withdraw support, rewriting history and financial markets. When a dominant power loses financial and military control, expect allies and creditors to lose trust.
This could lead to a sell-off in debt assets, a weakening of the reserve currency, and increased demand for gold as a safe haven. Watch for selling pressure on US Treasuries and a weakening of the dollar against hard assets and rival currencies. Iran's strategy exploits a critical asymmetry— their high tolerance for pain.
For Iranians, this conflict is existential, driven by honor and survival. Instead, Americans are more concerned about gas prices and political polls. Dalio emphasizes that in war, the ability to endure pain is more important than the ability to inflict it. Trump's call for a coalition to secure the Strait of Hormuz is a crucial test of US influence.
Allies in the Persian Gulf face existential threats, and Asian economies have strong incentives to join. The success in forming this coalition demonstrates American power. The failure signals a deeper erosion of United States leadership. Iran's military is threatening to strike regional oil facilities that are allies of the US.
If Trump succeeds, the Iranian threat will diminish, which will strengthen confidence in the US and the markets. Failure would leave allies in the Gulf vulnerable, causing fragmentation of the world order. Dalio emphasizes that only the real outcome at sea will determine the true winner. Ray Dalio identifies five forces shaping global dynamics.
Long-term debt cycle, political cycle, geopolitical cycle, technology and natural disasters. Each power affects global stability, and the United States is deeply involved in these cycles. The conflict with Iran demonstrates the convergence of these forces, highlighting the complex interplay of economic, political, and technological factors.
Pay attention to the Strait of Hormuz as an indicator of the dynamics of US influence. Gold, US Treasuries and the dollar are key indicators of market changes. Watch coalition formation as a measure of United States naval influence. These elements are crucial to understanding the implications for the market. We left a link to Dalio's article in the description of this YouTube video.
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