A wide-angle look at the three forces colliding in the market: oil supply through a contested Strait of Hormuz, the AI capex boom propping up the economy, and a US healthcare system whose broken incentives now intersect with an unsustainable federal deficit. Pull up the Cash Flow Memo at telltales.us and follow along with Exhibits A (US government finances), B (natural gas), and C (oil).

The Cashflow Memo

Key Takeaways

* Hunt models a ~2M bbl/day inventory draw from the Iran disruption but expects no price spike: near-month crude rising to ~$95, 2026 average ~$84, with the $120–140 bear case unlikely because Straits of Hormuz volumes (~20% of global supply) are being rerouted via the Red Sea, Turkey, and Fujairah. He puts ~50% odds on the US–Iran impasse persisting indefinitely, with the Revolutionary Guards now the real arbiters in Tehran.

* AI capex is the macro tailwind holding up the economy: hyperscaler spending (Amazon, Microsoft, Google, Meta) is approaching ~$1T in a ~$31T economy, and Google issued equity for the first time since its IPO to fund it. Q1 earnings were strong and Hunt sees no recession despite $90 oil.

* The ACA created a zero-risk insurer model where a guaranteed 15–20% margin on cost actively incentivizes payers to pay more, not less (15% of $200 beats 15% of $100). Section 6001’s ban on new physician-owned hospitals (no new entrants since 2010) plus certificate-of-need laws structurally foreclose competition — McAllen vs. El Paso showed 2x cost for worse outcomes years before the ACA.

* Cost-conscious payers can break the cartel: Montana’s reference-based pricing at 2x Medicare cut costs with no benefit reductions before lobbying reversed it. Mike’s fix needs all three legs at once — enforced price transparency (the unenforced 2021 rule), expanded low-cost supply (repeal 6001), and a cost-conscious payer. Surgery Center of Oklahoma and ICHRA show market mechanics already working at the margin.

* The real forcing function is the deficit: new Fed chair Warsh wants to shrink the Fed’s ~$7T balance sheet toward ~$1–1.5T, which on top of a ~$1.5T deficit means finding buyers for ~$2.5T/year of Treasurys against uncertain demand. With US healthcare at ~18% of GDP vs. <12% elsewhere, Hunt argues an ’08-style debt crisis could force bipartisan Medicare-for-All — and warns against selling quality cash-flow names (MSFT, AMZN, XOM, CVX now better credits than the US government).

Show Notes

[00:00:30] Oil, Iran & the Inventory Draw (Exhibit C) Hunt sizes a ~2M bbl/day inventory draw and explains how Straits of Hormuz volumes are being rerouted through the Red Sea, Turkey, and Fujairah.

[00:04:15] Crude Price Outlook (Exhibit B) Near-month moving toward ~$95, 2026 average ~$84, future strip ~$76 — and why the $120–140 spike scenario is unlikely.

[00:06:03] Who Actually Runs Iran The Revolutionary Guards as the real arbiters, and why Hunt puts ~50% odds on an indefinite US–Iran impasse.

[00:08:14] No Recession, and the AI Capex Engine Strong Q1 earnings, ~$1T of hyperscaler capital spending in a ~$31T economy, and Google’s first equity issuance since its IPO.

[00:09:22] The Deficit Problem (Exhibit A) Why holding Medicare and Medicaid spending flat is the non-negotiable lever for the FY27 budget math.

[00:11:00] Healthcare’s Broken Incentives: McAllen vs. El Paso Two Texas border towns, 2x the Medicare spend, worse outcomes — and why this predates the ACA.

[00:13:17] The Zero-Risk Insurer How a guaranteed 15–20% margin on cost incentivizes payers to pay more, not less.

[00:14:20] Foreclosing Competition: Section 6001 & Certificate of Need No new physician-owned hospitals since 2010, and why you have to ask your competitor for permission to compete.

[00:15:30] Montana’s Reference-Pricing Experiment A $23k vs. $103k knee replacement, pricing set at 2x Medicare, and how lobbying unwound the savings.

[00:17:43] Price Transparency That Nobody Enforces The 2021 rule, two administrations that ignored it, and why you still can’t get a quote.

[00:19:55] Opting Out: Surgery Center of Oklahoma A cash-only, menu-priced model — and why it can’t legally undercut Medicare.

[00:21:00] Hunt’s Solution: Medicare for All A bipartisan Trump–Bernie path to anyone entering Medicare at any age.

[00:22:58] Mike’s Three Fixes & Jason’s ICHRA Transparency, low-cost supply, and a cost-conscious payer — plus the employer-budget model that puts patients back in the driver’s seat.

[00:26:02] Vertical Integration & UnitedHealthcare The monopoly that sets the price, accepts the payment, and provides the care.

[00:27:43] AI in Healthcare: Upcoding vs. Real-Time Auditing From gaming medical codes to the Johns Hopkins finding that 21% of care is unnecessary and 60% is shoppable.

[00:28:54] The Debt Crisis Endgame: Warsh & the Fed Shrinking a ~$7T balance sheet, ~$2.5T of annual Treasury supply, and why post-’08 was deflation, not inflation.

[00:33:17] Closing: Don’t Sell Quality Cash Flow Why Microsoft, Amazon, Exxon, and Chevron are better credits than the US government right now.

Get the Cash Flow Memo at telltales.us, and subscribe for next week’s continuation on healthcare reform and the deficit.

Cashtags

$AMZN $MSFT $GOOGL $META $CVX $XOM $UNH

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