The discussion was illuminating and worth a rewatch if you missed it. 

The discussion featured former Bridgewater head of commodities Alex Campbell, Brent Johnson of Santiago Capital, and was hosted by Tony Greer and Jared Dillian.

The Damage Has Been Done

Even in a best case scenario where shipping lanes reopen immediately, Santiago Capital's Brent Johnson says the damage is already embedded in the system.

"If everything opens tomorrow in the strait and goes back 100% to normal, there's a five to six week open spot where ships are not arriving where they typically arrived."

The warning came during last night's ZH deep dive into a potential fertilizer and farming crisis, with possible Arab Spring-level disruptions in the Third World, but as Johnson said "the U.S. is not immune".

Johnson joined Tony Greer and Jared Dillian of the Macro Dirt Podcast and former Bridgewater head of commodities Alex Campbell who now writes at campbellramble.ai. Here were the key moments for those short on time:

"Perfect Storm"

The five to six week wartime-gap (assuming that's all) is colliding directly with the agricultural calendar.

Johnson: "The planting season is largely already over. And the fertilizers that would have normally been available were not. And those that were available were higher priced… You look at the number of bankruptcies that are being filed by farmers in the United States and it's spiked."

At the same time, weather risk is rising. "This is an El Niño year… and that throws all kinds of havoc with weather patterns." The combination, he says, raises the probability of a delayed but meaningful shock.

"You could have a perfect storm six to nine months from now."

Johnson points to prior episodes where similar conditions led to sharp price moves. "In 2007 and 2008, there was a food crisis… there was a supply disruption, a bad harvest, and policy decisions that diverted supply." The result was significant inflation in staple commodities: "In 2007 and '08, rice spiked almost 200%. In 2010 and 11, wheat price went up 130%."

"In all of these cases, you started to have social unrest" a la Arab Spring.

"When people are full and warm, they don't typically protest. But when they're cold and hungry, that's when they start taking to the streets."