"The party is on"

What does the U.S. strike against Iran mean?

Soundtrack for writing.

On Saturday night, while I was sitting next to my wife trying to enjoy Mountainhead after a full day of parenting two (beautiful, delightful) kiddos, President Donald Trump confirmed that U.S. forces struck three of Iran’s main nuclear sites. The announcement was brash, theatrical—and unmistakably final in tone. “Iran must now choose peace,” Trump declared, invoking divine guidance and American strength in equal measure. His allies celebrated. Iran vowed revenge. And the world braced for what comes next.

The events of this weekend mark the official collapse of two once-viable futures for the U.S.-Iran conflict: a return to the gray-zone status quo and a sprint to a nuclear breakout. (I sketched out these scenarios earlier this week here.) Both now seem off the table. What remains are two stark possibilities: strategic compromise under duress, or regime collapse. And of course whatever I have failed to imagine.

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Israel’s War, America’s Firepower

Israel has done what many (including myself) believed impossible: crippled Hamas, shattered Hezbollah’s leadership, and penetrated Iranian airspace with chilling ease. Their preemptive strikes on Natanz and Fordow were not isolated acts of sabotage—they were the culmination of a strategic shift away from deterrence to crippling an existential threat — at any cost.

Netanyahu’s government calculated, correctly, that this U.S. administration—despite its “America First” rhetoric—would ultimately back Israel when the chips were down. The tail is wagging the dog, and the dog, for now, is letting it happen.

This is not to say Israel is in full control. On the contrary: strategic overreach is a risk not because Israel lacks power, but because it believes too much in its own. Victory can blur judgment. And unlike the Gulf monarchies or Egypt, Iran is not a paper tiger. It is a civilizational state with internal fractures, yes—but also with deep memory, territorial depth, and a history of absorbing pain and surviving it.

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Iran’s Choice—and Its Limitations

So how does Iran respond?

A full closure of the Strait of Hormuz would be economic suicide. An open attack on U.S. bases in Bahrain or Qatar risks escalation Iran can’t survive. A terror campaign in the West invites catastrophic retaliation. A cyber offensive might be more proportional, but would it be enough?

That leaves proxies. There isn’t much left of Hezbollah, but perhaps it could re-engage. The Houthis could escalate — but how much capacity do they have beyond what they are already doing? Militias in Iraq and Syria could target U.S. and Israeli assets. These are real options—but each comes with diminishing returns and rising costs. Iran’s proxy network is stretched thin, its leadership decimated, its strategic initiative lost.

The regime’s most dangerous option remains a nuclear sprint…but we’re getting to the point where that should have happened already if it was possible. With senior scientists killed, and the program’s infrastructure heavily damaged, breakout now becomes both more tempting and more difficult. It is still theoretically possible. But any such move would confirm Israel’s justification for the strikes—and perhaps trigger another, more destructive round of U.S. attacks, now that the Trump administration has staked out a position that Iranian possession of nuclear weapons is a red line.

What Tehran does next may depend less on grand strategy than on internal survival. The Islamic Republic is not monolithic. The Revolutionary Guard, the Supreme Leader’s office, the civilian ministries, the clerical establishment—all are jostling for control in a moment of existential vulnerability. Decision-making may already be fragmented. That is what makes this moment so volatile.

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Trump’s Vietnam, or His Triumph?

It is not difficult to see echoes of the Johnson era in Trump’s foreign policy. A president focused on domestic transformation pulled into a foreign quagmire by hawks who see opportunity where others see danger. But there are key differences. Johnson escalated to avoid looking weak. Trump struck to look strong. Johnson was consumed by the system. Trump is improvising around it.

What’s striking is that Trump’s own base is less united than it once was. Key figures—Musk, Bannon, Carlson—have all expressed unease or outright opposition to the strikes. The MAGA movement, forged on opposition to endless wars, is now reckoning with its contradictions. Support for Israel runs deep. But support for military adventurism does not. One contact described the situation bluntly: “Sunday services will decide MAGA’s foreign policy.”

Trump may yet try to have it both ways: one and done. A surgical strike, a new deal, and a retreat into economic nationalism. But history rarely allows clean exits. The precedent now set—of direct U.S. strikes on Iranian soil—will be remembered, and likely repeated.

There is, however, a version of this story that ends differently. If the strike is truly limited—and if Iran’s regime interprets it as a final warning rather than the start of a campaign—it could create the conditions for a strategic pivot. The Islamic Republic is already strained; a high-level decapitation strike might hasten internal change or even pave the way for a more pragmatic successor regime. That, in turn, could open space for a new regional balance—one that reduces the need for constant U.S. involvement, restores deterrence, and signals to other adversaries that American power, while erratic, is not extinct. It’s an outcome that would require a remarkable confluence of luck, discipline, and timing. But geopolitics occasionally rewards audacity when it doesn’t collapse into chaos.

Still, even regime change is no guarantee of nuclear rollback or regional alignment. Iran’s nuclear program didn’t begin with the Islamic Republic—it was launched by the Shah, arguably America’s closest ally in the region at the time. Iran’s nuclear ambitions outlived the Shah and would outlive the Supreme Leader. It was national, not ideological. Any post-Islamic Republic government—especially one born in crisis or dominated by security elites—may double down on nuclear capability as a survival mechanism or a nationalist project. The fantasy of a pro-Western, non-nuclear Iran rising from the ashes of this regime misunderstands both the history and the incentives.

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Between Athens and Jerusalem

There’s an old idea that Western civilization swings between the poles of Athens and Jerusalem—between reason and revelation, democracy and faith. The Israel-Iran conflict is not just a strategic event. It is a confrontation between two theo-political orders. The MAGA invocation of divine purpose, the clerical framing from Qom—these are not fringe theatrics. They are essential parts of the narrative.

The danger is not just escalation. It is sanctification. When wars are cast as sacred, they become harder to end. When leaders believe they are acting on behalf of God, deterrence becomes heresy. And when populations are told their suffering is redemptive, compromise becomes betrayal.

What’s made this moment even more volatile is the religious fervor surrounding it—not just in Iran, where the regime’s legitimacy is explicitly divine, but in the United States as well. Trump’s recent language about “loving God” and being guided by the Almighty, echoed by figures like Pete Hegseth, signals something deeper than campaign theater.

One contact put it bluntly: MAGA’s position on this war will be decided from the pulpit—literally. Sermons this Sunday across evangelical churches may do more to shape Republican foreign policy than any press conference or think tank memo. Already there are signs of discomfort: an undercurrent of anti-Israel sentiment among parts of the populist right that would’ve been unthinkable even two years ago. But those opinions, like the polls, are volatile—and easily reshaped by a charismatic figurehead with the right scriptural reference.

This is part of what makes the Athens and Jerusalem tension so live in American politics today. The United States—nominally a secular republic—now finds itself led by a political movement that often speaks in prophetic tones. The Islamic Republic was born in a revolution against the West’s secularism. MAGA, in its own way, emerged as a revolt against a secularized globalist elite. Both cast their adversaries as godless. Both claim divine backing. And both believe history is on their side. That is not a recipe for restraint.

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What Comes Next

Iran will respond. The question is not whether, but how—and when. The regime now faces a strategic dilemma: retaliate and risk escalation that could imperil its survival, or absorb the blow and signal weakness in a region where perception often dictates reality. The old assumptions no longer apply. For the first time in over four decades, the United States has openly bombed Iranian soil. Whatever deterrence Tehran thought it had is gone. And what comes next will be shaped less by ideology than by constraints.

We now face a new set of scenarios—not about endgames, but immediate reactions. Four primary response paths are emerging, each fraught with risk, and none offering Iran a clean way forward.

1. Attacks on U.S. Bases in Iraq

This is the most probable and familiar response. Iran’s proxy networks in Iraq—Kata’ib Hezbollah, Harakat al-Nujaba, and others—have already conducted dozens of rocket and drone attacks on U.S. installations over the past year. These operations offer plausible deniability and local political cover. But Washington’s patience has worn thin. The U.S. strike that killed Qassem Soleimani in 2020 was justified on precisely this basis: stopping attacks on U.S. personnel in Iraq. A renewed wave of proxy violence could invite retaliation—and this time, Tehran may not be able to keep the fight off its own soil.

2. Strikes on U.S. Assets in the Gulf (Qatar, Bahrain, UAE)

More dangerous—and less likely—is a direct Iranian attack on U.S. bases in Qatar or Bahrain. These are high-value targets: Al Udeid and the Fifth Fleet headquarters are central to U.S. power projection in the region. A strike here would escalate the conflict...if Iran can score significant damage, that is, which seems more in doubt judging on Iran’s military performance thus far. Theoretically, Iran has the missile capability to attempt this, but doing so would amount to regime-level brinkmanship. It would also risk turning Gulf states—some of which have been hedging—fully against Tehran. This is more doomsday card than first response.

3. Attempting to Close the Strait of Hormuz

This has long been Iran’s go-to threat when under extreme pressure: if the regime can’t export oil, no one in the region will. But the costs of actually closing the Strait are enormous. Nearly a third of global seaborne oil flows through that corridor. Mining it or blocking it—even briefly—would bring U.S. naval retaliation, economic collapse, and potentially international intervention. Iran’s leaders know this. They’ve tested the waters before with harassment tactics—fast boats, drone overflights, seizing tankers—but a full closure is regime suicide. Still, as desperation rises, irrational moves become more probable.

4. Terrorist Attacks in the West

Iran retains the capability to mount covert operations abroad, particularly through Hezbollah-linked networks in Europe and Latin America. Past incidents—including the 1994 AMIA bombing in Argentina and foiled plots in Germany and Cyprus—demonstrate both capability and intent. A direct terrorist attack on U.S. or allied soil would cross another threshold entirely, likely inviting overwhelming retaliation. But it’s not out of the question. If Iran’s leadership determines that conventional responses are too dangerous or ineffective, asymmetric retaliation becomes more attractive. It would also serve to remind the West that Iran can still impose pain far beyond the Middle East.

5. Cyber Operations and Infrastructure Sabotage

Often overlooked but increasingly central, Iran’s cyber capabilities have grown substantially over the past decade. The U.S. has already blamed Iranian actors for intrusions targeting critical infrastructure, including water treatment facilities and oil terminals. A significant cyberattack—especially one that disrupts energy flows or financial systems—would offer Iran a low-cost, deniable form of retaliation with global consequences. Unlike missile strikes, cyberattacks can be calibrated for effect and attribution. They allow Iran to punch back without inviting full-scale war, though escalation is still a risk if civilian infrastructure is hit.

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Succession, Martyrdom, and the Logic of Final Acts

There is another layer to add to the above potential scenarios, namely, succession. Iran’s Supreme Leader Ali Khamenei is 86. He has ruled Iran for ~35 years. And while rumors of his health have swirled for a decade, the stakes of his departure have never been higher than they are now. According to recent reporting in The New York Times, Khamenei has taken concrete steps to prepare for the event of his death—not just politically, but symbolically. He has reportedly asked the Assembly of Experts to vet and approve three successor candidates in advance, in case he is killed and elevated as a martyr of the revolution. Notably, his own son Mojtaba—Khamenei was controversially floating him as a successor in recent months—is now said to be out of the running.

This opens up a fascinating and dangerous possibility. Khamenei may believe that a radical final act—a direct confrontation with the United States or a high-profile escalation against Israel—could secure his legacy while smoothing the transition to a successor. Martyrdom has powerful political utility in a theocracy born of revolution. If the Supreme Leader dies at the hands of the “Great Satan,” the regime could rally around his image, suppress internal dissent, and portray any diplomatic compromise as a continuation of his divine mission—not a betrayal of it.

In this scenario, the regime doesn’t collapse. It hardens temporarily, then reforms tactically. A new Supreme Leader—less ideological, more pragmatic—steps in under the cover of national trauma. The West, eager to avoid further escalation, opens a channel. Sanctions are eased. A partial deal is reached. And the Islamic Republic survives not in spite of the strike, but because of it. This is not the most likely outcome. But it is one of the most strategically significant—and one that American and Israeli policymakers would do well to consider.

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Investment Clarity in a Blurred World

Some final rough thoughts informing what I do for a living — translating these insights into actionable insights in the investment world.

Geopolitics rarely moves markets in real time. But it shapes the conditions under which markets evolve. The Israel-Iran war—now joined, however tentatively, by the United States—is not a trade, it’s a frame. And it sharpens three themes worth focusing on in the months ahead.

First: Proliferation risk is now a baseline scenario in the Middle East. Saudi Arabia, the UAE, Turkey—none will watch Iran get bombed without revisiting their own deterrent strategies. That means more defense spending, yes—but more importantly, it means a structural shift in regional capital allocation, security partnerships, and technology transfer regimes.

Second: Size ≠ stability. Israel’s performance reinforces a view I’ve written about before: small, coherent, technologically advanced states can outperform far larger peers across military, economic, and geopolitical dimensions. That has real implications for allocators—South Korea, Taiwan, Chile, the Nordics, even parts of Eastern Europe may deserve more attention than their index weightings suggest.

Third: This is what multipolarity looks like. Regional powers acting on their own logic. The U.S. joining the fight late, not leading it. Markets will struggle to price this kind of world—but investors who build frameworks around decentralization, asymmetric capability, and resilience will outperform those still modeling the world as if it’s 2010.