Good morning! After a brief escalation of hostilities, we are back to the stalemate in the Iran war. The Lebanon issue remains central to any future negotiations.

Outside of the Iran war, today we cover the problems in forming the Romanian government, an extremely close Peru election and a possible release of Claude Mythos.

Let’s take a look at the markets to make sense out of the news!

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Main Events Of The Day

#1 Iran Peace

Iran has stopped its strikes on Israel, warning that they will resume if Israel continues its campaign in Lebanon.

Peace chances are flat on the news. For a week now we had no rumors of progress. However, the fact that the end of June market is flat indicates that there’s still an expectation of a new peace narrative by the end of the month.

Additionally, traders don’t expect the ceasefire to end:

#2 The Strait Of Hormuz

The Strait of Hormuz continues to be effectively closed. With Lebanon taking the headlines, there’s been less focus on the issue.

However, Polymarket traders are actively adjusting their forecasts; Every market, but the end of year one, continue to drop as traders price in a prolonged stalemate. There, they differ from energy markets, which dropped off after the strikes finished:

At this point we must say that energy markets are being actively manipulated to lessen the economic pain coming from the closure of the strait. However, at some point, the reality will catch up.

#3 Romania Government Crisis Continues

Romania’s president has chosen the new prime minister, Eugen Tomac. However, traders are doubtful he will be able to get enough votes in the palriament.

Eugen Tomac reportedly refused to speak with AUR, raising doubts that he won’t get enough votes. Traders are extremely bearish on his prospects, with Yes price falling from 63c to 33c.

Seems like we will hear more from Romania before the next PM is announced.

#4 Extremely Close Election in Peru

We had one of the closest election ever in Peru. After counting almost 95% of the vote, 2 candidates have only 25,000 votes between them.

However, traders are virtually sure Keiko Fujimori will be the next president of Peru. Taking into account the origin of the remaining votes, they have little doubt most of them will go towards Keiko.

#5 Mythos Is Here

The Claude Mythos market rose sharply on rumors we might get Claude Mythos as soon as today.

It’s a widely anticipated model as it’s been out of the public hands initially due to its supposed power. I imagine we will have plenty of amateur and not so amateur hackers try it out soon. You might want to check your crypto wallet connections just in case.

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Wrap up

That’s all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Good morning! Overnight there were some strikes between Israel and Iran. Both countries are clashing due to Lebanon. Additionally we had some Yemeni strikes on Israel.

Outside of the Iran war, we had a massive earthquake, as well as some rumors on the next generation of Claude from Anthropic.

Let’s take a look at the markets to make sense out of the news!

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Main Events Of The Day

#1 Iran Peace

Chances for peace dropped slightly amid the recent escalations.

While Iran and Israel are striking each other, prompted by the unresolved situation in Lebanon, Trump is urging both sides to show restraint. It seemed to have worked, as Iran announced a stop to the strikes.

However, the overnight strikes were enough to close the Iranian airspace:

#2 The Strait Of Hormuz

The Strait of Hormuz continues to be effectively closed. The recent escalation caused the short-term strikes to dip as traders understood the exchange of fire as a sign that negotiations are still at an early stage.

This is quite aligned with the view of the energy markets. Oil barley moved on the escalation and the main benchmarks are still well below $100 per barrel:

#3 Escalations In The Middle East

Yemen was also part of the strikes on Israel. Traders now see 24% chance we will see an Israeli retaliation.

Additionally, Yemen announced a closure of the Bab-el-Mandeb Strait for Israeli vessels. However, Trump’s efforts to deescalate seem to be working, for now.

#4 Earthquake In Asia

A powerful 7.8 earthquake hit Philippines. At least 15 people have died.

Traders saw a fair chance of another strong earthquake by the end of the month and the forecast delivered. Earthquake markets are extremely efficient as the data behind the forecasts is sound and proved over time.

#5 Claude 5 Is Coming

Claude Mythos is now expected to be called Claude 5, moving the market on the model’s release up.

The long-teased model is supposed to offer vastly superior capabilities. So much so, that its initial release to the public was postponed. We are looking forward to testing the capabilities of the Claude Mythos once it’s live.

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Wrap up

That’s all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Good morning! Today we got another flurry of Iran news. On the one side, Trump is teasing an imminent deal with Iran agreeing to send enriched uranium to a third country. On the other side, Iran claims no deal as long as the Lebanon war continues.

Outside of Iran, we are taking a look at Trump x Putin friendship, Canada and the UK politics.

Let’s take a look at the markets to make sense out of the news!

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Main Events Of The Day

#1 Iran Peace

Iran peace chances are flat on the news.

Prediction markets didn’t really buy the last imminent peace deal narrative, thus the lack of movement. Traders still expect at least 2 more months of the stalemate as chances of Iran’s airspace closure remain minimal:

#2 The Strait Of Hormuz

The Strait of Hormuz remains effectively closed. Prices are mostly flat across different strikes.

Same as above, traders have fully priced in a prolonged stalemate. However, the energy markets are still behind the curve. Oil prices are safely below $100 per barrel:

#3 Trump x Putin Friendship

Trump once again praised Putin to maintain his friendship, shocking traders as the market traded around 20c just before the event.

He called both Putin and Zelensky “two very good people”. These remarks come as both countries are engaged in the most deadly strikes since the start of the war. Peace talks remain stalled with chances for peace low:

Is it a start of the new negotiation process? We will see.

#4 Alberta Will Vote

The Alberta separatist movement secured enough votes for a referendum to leave Canada.

Traders expected it for quite some time now. While no specific date has been given yet, Alberta is rumored to schedule the referendum for October. We see it as a US-influenced operation aiming to undermine Canada’s strength ahead of the USMCA renegotiation.

However, traders expect the referendum to fail:

#5 Starmer Is In Trouble Again

The troubles of Keir Starmer continue. Only 2 weeks passed since the last challenge to his leadership. Now, Andy Burnham confirmed he is looking to get the top job once he wins his by-election in June.

However, traders continue to see it as a longer process. Prices on the end of July market are at 38c, while the end of year market is trading at 75%, indicating that traders have little doubt Starmer will lose his job later this year.

The wolves are circling and waiting for the perfect moment. July will be an interesting month in the UK politics.

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Wrap up

That’s all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Good morning! Today, as usual, we are giving an update on the Iran situation. We have updates on a daily basis as the situation remains volatile. However, prediction markets traders seem to have understood the game as volatility there is lower than what we got used to in the previous months.

Adjacent to the Iran war we will take a look at news from Lebanon, where a possible etension of a ceasefire happened. Lastly, we will take a look at the new US AG and a flurry of news from the South Korea local and by-elections.

Let’s take a look at the markets!

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Main Events Of The Day

#1 Iran Peace

Negotiations to end the Iran war continue. Trump is promising an imminent breakthrough while the Iranian side highlights there are plenty of issues to resolve.

Traders, reading between the lines, see that there is more time needed to achieve permanent peace, with chances for one flat this week. Same can be said about Iran closing its airspace - with no willingness to return to hostilities, we can clearly see the time decay on the airspace closure markets:

#2 The Strait Of Hormuz

The Strait of Hormuz continues to be effectively closed. Traders continue to price in a prolonged closure of the strait.

The energy markets are still behind prediction markets in that regard. Oil has been trading in the $90-$100 range for weeks now, reacting to every new peace rumor. Prediction markets are still far from being the ultimate truth arbiter, but they’ve been pricing in the reality around the war much more accurately than energy markets:

#3 Lebanon Ceasefire Gets Another Chance

Israel and Lebanon agreed to give the ceasefire another chance in a surprising move.

Traders doubted any breakthrough can be achieved in such a short time. However, Lebanon issue bing central to the wider Iran war, it must have got a priority by the US State Department. We’ll see if this one is successful, though, as al the previous ones proved to be fragile and prone to breaking quickly.

#4 The New AG Is In Town

Trump announced he will nominate Todd Blanche as the next AG, sending the market to resolution.

Todd Blanche has been the interim AG, after Pam Bondi was fired from the job. It was expected that Trump will nominate him or Lee Zeldin, however many traders were expecting some time will pass before the announcement. Another shocker as the market traded at only 10% before the announcement.

#5 Korean Upsets

The local election in South Korea left us with mixed feelings. The ruling party managed to secure some wins, including the majority in the parliament, but it got less seats than anticipated and lost the Seul Mayoral Election:

If anything, it proves that the race was closer than anticipated and that the current opposition still has some foothold after the failed coup.

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Wrap up

That’s all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Good morning! As the US and Iran continue their love taps (as Trump likes to call small strikes), we are reporting on the most recent changes in the forecasts around the Iran war.

Outside of the war, today we focus on the midterms races, where we got two upsets in the primaries. Additionally, we spotlight an election market for South Korea, where traders also got a bit surprised.

Let’s take a look at the markets!

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Main Events Of The Day

#1 Iran Peace

Peace markets were fairly stable even amid the exchange of fire.

Kuwait airport was hit in retaliation for strikes on Qeshm Island. Traders must see them as love taps, part of the negotiation process. The Iran airspace market confirms it - there is alo no move, even as some analysts forecast imminent return to hostilities:

#2 The Strait Of Hormuz

The Strait of Hormuz continues to be effectively closed. Traders don’t really see the exchange of fire as a change in status quo.

Rather, they see them as a confirmation of the difficult position of both sides, which warrants a continued double blockade. Prediction markets last faith in the imminent deal quicker and priced in a prolonged closure earlier:

#3 No Upset Here

Karen Bass won the first round of the LA Mayoral election, as expected by traders who gave her 77% chance just before the vote count.

It is expected that Spencer Pratt will challenge her in the second round.

However, it is unlikely to be a problem for Karen Bass, who has now 75% to win the final battle:

#4 But Plenty Of Upsets Here

A rather unknown politician, with no campaign funds won the Republican nomination for Senate in New Jersey.

He headed into the election with only 1% chance to win. His battle is hardly over though as New Jersey haven’t had a GOP Senator since 1972.

A similar story occurred in Montana, this time on the Democratic primary.

However, Montana is almost bound to go to the Republicans:

#5 South Korea Also Got Surprising Results

Lastly, we have another election upset in the making, this time in South Korea.

In the highly contested local elections, prices are swinging as turnout approaches 60%. In tomorrow’s Morning Brief we are bound to have an upset.

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Wrap up

That’s all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Outside of the Iran war, we have market updates on the 2028 Presidential race, Trump's recent insult spree and the election in Colombia.

Let's take a look at the markets!

Main Events Of The Day

#1 Iran Peace

Trump has reportedly sent a revised, more hardline, MOU proposal to Iran, sending permanent peace prices lower.

We've reached new lows now with only 39% chance for a deal by the end of July! After several imminent deals that never came, traders are pricing in a prolonged negotiation.

A full return to hostilities is not in the books:

#2 The Strait Of Hormuz

The Strait of Hormuz is effectively closed. Over the weekend chances for the traffic normalization by the end of July fell below 50% for the first time.

It's the first time since the market creation that we have a closed strait as the base case. However for a while now prediction markets have been running against conventional analysis from major investment banks. It seems that Polymarket traders are better than commodities analysts:

#3 AOC For President

The chances for AOC announcing her presidential run this year soared after an AtlasIntel poll placed her as a favorite to win the Democratic nomination.

AOC is only 36 years old, but she's a formidable force in the Democratic Party. However, Polymarket still has Gavin Newsom as the favorite to win the nomination:

Once we get further into runs announcements, we can expect the market to get more volatile.

#4 Trump's Insults

It's amazing that we have a market on who will Trump insult. It is even more amazing that these markets often resolve to Yes!

This time, Trump managed to insult Tucker Carlson just ahead of the deadline. However, at the beginning of May, his chances of insulting Tucker were at 90%, indicating that the action was expected.

#5 An Upset In Colombia

Abelardo unexpectedly won the first round of the Colombia presidential election.

While traders expected Abelardo to win in the run-off, it was the leftist Ivan Castro who was the favorite to win the first round. Now Abelardo has over 80% chance to win the election and nothing should stop him from getting it:

Wrap up

That's all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Outside of the Iran war, today we cover a controversial aliens.gov website, a new government in Slovenia (where traders made a terrible mistake) and Claude Mythos.

Let's look at the markets!

Main Events Of The Day

#1 Iran Peace

We are still awaiting progress on the proposed MOU. However, traders are less and less confident it will amount to anything.

Each time we get some news about the MOU, it seems to be more and more watered down. While some traders doubt there is any MOU to speak of, others just see it as a simple ceasefire extension:

It is increasingly clear that the key issues are still under discussion. The only good news coming out of it is that a return to hostilities is unlikely:

#2 The Strait Of Hormuz

The Strait of Hormuz remains effectively closed. The most recent MOU rumor specified that Iran will have 30 days to clear the mines in the strait.

Seeing that, traders are cautious to update their forecast of the traffic normalization. A deal alone won't restart the traffic and the market, with only 38% chances of the traffic normalization, understands that.

That being said, energy traders seem to be more and more bullish we will have a deal with WTI below $90 a barrel and Brent at $91 per barrel:

#3 Different Kinds Of Aliens

Ever since the Trump admin registered aliens.gov, traders have been speculating on the purpose of the site.

Initially it was clear that the website should be used to publish information on non-human intelligence. But today the website launched, and after an extraterrestrial teaser it turned out to be about illegal immigration.

Big payday for non-human intelligence deniers.

#4 A Technicality In Slovenia

Some traders got a surprise on the Slovenia government market.

For over a month now SLS has been rumored to enter the governing coalition. And it did. Traders pushed the market up to bond territory, but they failed to realize that for the party to count, it needs to have at least one minister.

SLS has only one deputy and the newly formed government features 0 ministers from SLS, flipping the market at the last minute.

#5 Claude Mythos Is Coming

After it announced Claude 4.8, Anthropic also promised to release the Mythos model. Mythos was initially restricted to a handful of big tech corporations as its capabilities were considered too strong for public consumption.

However, the AI race is unforgiving. Mythos will be released in the coming weeks, possibly to get ahead of OpenAI as they also run a dense release schedule. Initially, traders saw close to 0 chance we will see it anytime soon, but the first spike in the price happened over a week ago.

Someone definitely saw what's coming.

Wrap up

That's all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you on Monday for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Outside of the Middle East, today we showcase the Cuba crisis and a potential Trump x Diaz-Canel meeting as well as a new snapshot of the market ahead of the Colombia presidential election.

Take a look at the markets and stay ahead of the game!

Main Events Of The Day

#1 Iran Peace

Peace deal remains elusive as Iran and the US engaged in small skirmishes around the Strait of Hormuz.

Despite favorable reporting, traders no longer trust a deal is imminent. Permanent peace chances are down across the board, however so are war chances:

#2 The Strait Of Hormuz

The Strait of Hormuz remains effectively closed. Traders see a 36% chance we will see traffic normalization by the end of June; price is essentially flat since Monday.

However, energy traders are cautiously bullish a deal with oil benchmarks trading well below $100 a barrel:

#3 A New Offensive In Gaza?

Outside Iran, the whole region is ridden with tensions. Israel continues to strike Lebanon, but traders also see increased chances for a new ground offensive in Gaza.

Yesterday, Israeli strikes on Gaza City killed new Hamas head. The phase 2 of the Gaza peace plan proved to be difficult to implement as both sides have different ideas in mind when it comes to governance of the strip. The wider recognition of the Palestinian state is also at stakes.

What we are seeing here is traders pricing in increasing frustration resulting from lack of progress across all fronts.

#4 What Will Happen With Cuba?

Outside of the Middle East, we saw a sudden spike on Trump talks to Diaz-Canel by end of June market. Traders currently see 31% chance it happens.

Traders expect the high-stakes meeting as tensions around the island rise. It is still unclear whether we will have a purely diplomatic solution or military force will be required.

#5 What To Expect From Colombia Presidential Election?

2 days ago we reported that Abelardo is closing in on Ivan ahead of the first round of the Colombia presidential election.

Today we have to say that the move was short-lived. The newest poll is showing a strong Ivan lead. Despite low trust in Colombian polling, traders are cautious to not end up on the wrong side of the trade.

The real fight, though, will happen in the second round.

Wrap up

That's all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Currently, he must be asking himself one question - What do I stand to gain / lose if I end the war, vs what do I stand to gain / lose if I let the war continue?

The general assumption among analysts is that the cost of continuing the war far outweighs the benefit. From the economic implications to midterms, the conventional wisdom is clear. But is it true?

I spend my days reading and watching countless analyses. But from experts to armchair analysts, no one seems to have a proper understanding of the current situation. Forecasts lose accuracy in days, even hours. Explanations often fail to provide a complete rationale, as if the top geopolitical minds didn’t in fact have any idea what is going on.

Prediction markets’ sharps resorted to simple, generalist rationales in the face of enormous complexity; the war must end because the markets will eventually force Trump to sign a slop deal is the prevailing assessment.

What if there is a plan, however? No 5D chess type of plan that “plan trusters” pushed on us from day 1, but a plan that took shape as the initial strategic calculus failed? A ruthless calculation that yielded an uncomfortable result for most of the world, but one that offers potentially outsized benefits for the main actor, the US.

A Plan Was Born?

Today I will ask an uncomfortable question. I keep seeing signs and signals that defy a seemingly rational analysis. I don’t know yet where this journey will take me, but I want you to accompany me on it.

Conflicting Signals

The recent developments don’t really make sense. Every day of the double blockade of the Strait of Hormuz brings enormous pain to the global economy. And yet Trump does little to change the situation. The US has been slow to try to break the Iranian blockade. When they finally tried to do something, it was quickly seen as a failure.

The Operation Project Freedom, announced as an escort operation, had been immediately downgraded to a simple advice and assistance project. The US Navy’s incursion into the Persian Gulf was met with an Iranian escalation. Seemingly a perfect casus beli to restart the war, but the US backed away from answering with fire.

The deals we see being announced don’t really show signs of progress. The wording differs; sometimes it is softer, but the underlying demands hardly move. Additionally, by introducing the closure of Iran’s ports, the US only tightened the overall blockade, preventing Iranian oil from hitting the already starved-for-energy markets.

I called it the most expensive game of chicken ever played. It seems, though, that the US does not intend to blink at all. If it did, we would see some signs, eg.:

1. A concentrated effort to break the Iranian blockade.

2. Deal proposals getting materially softer on American demands.

3. Limited strikes on oil infra / decapitation strikes on key IRGC figures that oppose the current deal, especially after Iran hit the UAE.

4. Increasing US assets and troops in the region (the current airlift operation is logistics to maintain the current force, not an increase in assets as some say).

On the other hand, we see other signs that run counter to the conventional wisdom:

1. The US is actively plugging the oil & gas supply gap resulting from the SOH closure (extending the global runway).

2. The Trump admin is actively coercing Canada through the Alberta separatist movement ahead of the USMCA renegotiation (presumably pushing big American demands behind closed doors).

3. Venezuela is exporting more and more oil as Trump is forcing the US oil industry to invest in the country (extending the global runway).

4. Trump is once again active in the Ukraine x Russia peace process, getting a 3-day ceasefire as an example (potentially forcing peace to unlock Russian energy).

5. The Treasury and the Fed are actively negotiating new swap lines (and getting what they want in return).

6. The Clarity Act is being forced through Congress (unlocking wider stablecoin use).

Additionally, we have some hard truths we need to face:

1. The damage to the oil infra in the Gulf region is significant and irreversible in the short to medium-term.

2. The political cost of a weak deal is huge and it’s increasing with each day of the stalemate.

3. Iran feels too strong to fold to a deal that does not improve their position in the region and the world.

I’ve already highlighted how these 3 hard truths impact the short-term negotiations dynamics. However, I refused to look ahead as no solution made sense to me. Until now. It’s time to explore whether a long-term stalemate is in fact the optimal strategy for the US.

The Global Rupture

It is undeniable that the long-term closure of the Strait of Hormuz will completely derail the current supply chains and, with that, the global economy. But it seems that at the end of that dark tunnel, there is a future in which the US position is significantly improved.

It is hardly a perfect scenario. In fact, I doubt the war planners had it in mind when they started the conflict. They’d rather the war ended in a few days with a new regime in Iran. But since the reality didn’t go according to the plan, the plan needs to adapt.

Facing no good alternative, let’s see how a prolonged closure of the Strait of Hormuz can benefit the US. If we distill the issue enough, we have 2 main dimensions of the problem:

1. The oil & gas supply.

2. The monetary implications.

The consensus of experts is clear - the supply gap is impossible to bridge and the resulting crisis will affect every country in the world. But what if it is wrong?

Oil & Gas

Over 20 million barrels of oil per day transited the Strait of Hormuz before the war. The strait is now closed, but oil still flows through the East-West Pipeline in Saudi Arabia and we still have limited exports through the Fujairah port. In total they handle around 6 million barrels per day, leaving us with a 14.5 million barrels per day shortage.

Additionally, the gas shortage is estimated at 300 million cubic meters per day (ca. 10 billion cubic feet per day), representing ca. 20% of global LNG trade, but only 3% of the global gas supply.

The key question to answer here is how much of the gap can be bridged.

Based on my research, oil presents the biggest hurdle. If we consider the US, Canada, Mexico and Venezuela, they can provide an additional 3.5 million barrels per day in the short term.

The gas situation is more optimistic. The US can provide up to 3 billion cubic feet per day. When we include Canada, the number goes up to 5 billion.

However, in both scenarios, the situation changes when we include Russia in the equation, especially when it comes to gas. For oil, the increase is modest, with all the countries being able to provide a total of 4.5 million barrels per day. With gas, Russia can bridge the remaining gap, fully alleviating the situation.

That being said, we would need a permanent peace deal in the Ukraine war for Russian energy to be easily available for the global economy.

Russia

We know that Trump has discussed energy cooperation with Putin during his conversations with him. But any plan that includes Russia faces significant difficulties:

1. A permanent peace in Ukraine.

2. Oil shortage would still be equal to 10% of global demand.

3. Russia would need to agree to stop selling oil to China.

Outside of the mere difficulty of ending the Ukraine war in such a short time, this solution wouldn’t really solve the oil issue. Even if Russia agrees to stop selling oil to China, it would only add 2 million barrels per day to bridge the gap, getting the total gap down to 8 million barrels per day, or 7.5% of global demand. If we add to it a coordinated release from various strategic petroleum reserves, we could bridge the gap down to 5-6 million barrels per day, or 4.7-5.7% of global oil demand.

This is probably the weakest part of this theoretical plan. Even in the best possible case, the world cannot avoid a massive oil supply shock. Demand destruction is unavoidable. The scale of it will be in the range of 5-10 million barrels per day.

Who Will Take The Pain?

Plan trusters are correct in one regard. Asia, and China specifically, will bear the majority of the pain from the Strait of Hormuz closure. Thus, I need to assume that Asian economies will suffer the better part of the overall demand destruction.

If we consider that Japan, South Korea and India will get priority treatment from the US and allies, the burden will be put on China and SEA.

A 5-10% supply shock coming at a region where most of the world’s manufacturing happens can wreck havoc on the global economy. But for the sake of the argument, let’s say that the oil flows would be redistributed as such to avoid a total catastrophe, eg. a collapse of a country. It’s an optimistic assessment, but not impossible.

The Bull Case

The argument I’m deriving from what plan trusters say and post is simple. The pain for the US is minimal to none, and in fact the US can benefit from the Strait of Hormuz closure in a short to medium-term.

The first leg of their argument is energy. America becoming the main energy exporter is a clear benefit they highlight. The second leg is financial.

Make America Great Again

The allure of the plan trusters is that their core argument is aligned with the wider MAGA ideology. The America First policy aims to bring jobs back to the US. It aims to revive American industrial power. Becoming the biggest energy exporter is surely a great step towards this goal. But it’s hardly enough.

The AI narrative and a massive data center expansion also serves that goal. But to truly enable America to grow a massive amount of investment must happen. We are talking trillions of dollars. This is an investment that the markets would be wary to make. After all, it’s low margin, capital intensive and time consuming. However, from a policy point of view, it is crucial.

We’ve already seen that Trump is not afraid to use statecraft to push this investment. He’s been touring the Middle East looking for investments. He forced TSMC to invest in a brand new fab in the US. He directed the Treasury to invest in Intel. He sees the role for the government in the economic transition for the US.

At the same time, there are hard constraints on what the US as a government can do. The main one is an appetite for the US debt. For years now the Treasury has struggled to finance the US government on long timeframes. The majority of the debt is rolled over using Treasury bills and short-term notes rather than 10 or 20-year notes. The problem here is twofold:

1. Financing long-term projects with short-term debt poses a duration risk.

2. Relying on bills and short-term notes requires the Treasury to ensure there is constant (or even increasing) demand for the short-term US debt.

But how does everything here fit into the Iran war strategy? In theory, there are 2 instruments the US government can use to improve its position thanks to the Iran war crisis - top-down and bottom-up.

Swap Lines

Swap lines are a top-down instrument. They are essentially a short-term debt that the Fed or Treasury can give to a foreign central bank. The foreign central bank, in need to liquid US dollars, can lend these dollars from the Fed / Treasury and put its own currency as a collateral.

Since eurodollar is the primary global currency, foreign entities, and thus central banks, have a constant need for liquid USD. In times of a crunch (eg. an energy supply shock), there are only 2 ways to get the dollars:

1. Sell US assets (mainly debt) in possession of the foreign central bank.

2. Take a currency loan.

The first option is sub-optimal for both the US and a foreign central bank. Selling US assets can create a slight, short-term distress in the given asset. Given that the US is looking to issue more debt, not less, it can create unnecessary turbulence in the debt market. Additionally, a foreign entity can only sell these assets once. After that we are back to square one, but with no US assets.

Such a scenario can create a death spiral. A world, in constant need of USD, violently shuts down international trade due to lack of the USD. The alternative is the swap line.

You can say it creates dollars out of thin air, and you’d be partly true. The full truth is that it’s the foreign entity (a central bank) creating its own currency out of thin air to post it as collateral. In that sense, a swap line is a vote of confidence from the US that the country is good on their promise. The ECB has had such a swap line since the GFC and the Euro debt crisis. So do the BOJ, SNB, the Bank of Canada and the BoE.

Swap lines are a bit more complex, but for the sake of clarity let’s not expand this paragraph by all the other swap lines in existence. Source: Council on Foreign Relations

But it doesn’t come for free. The European central banks got the lines because the US and European economies are intricately connected. So are the Canadian and Japanese economies, with Japan also being the most important Asian ally. Any other country looking to get the swap line would need to give something in return.

Let’s have a recent example of the UAE. It’s been a staunch ally of the US in the region. It signed Abraham Accords. It promised to invest billions in the US. It willfully went through daily strikes on its territory during the kinetic phase of the Iran war. And it left OPEC. Quite a pack of gifts if you ask me.

In our scenario, an energy supply shock will create an environment of economic difficulties. Countries that are most exposed to the crisis, will start to experience capital outflows. Their currencies will depreciate, creating a death spiral strong enough to collapse the economy of a country.

India, Indonesia, the Philippines and other, smaller SEA countries will face these issues in the coming weeks. In order to protect their currencies, and their economies, they will come to the US to get a swap line (just like Argentina did recently). The US will be happy to give them, on certain conditions.

This way, the US can create a team of allied nations. These nations will be forced to cooperate and deeply entangled. Allies by necessity, but still allies.

Stablecoins

But what happens if there is no swap line? Let’s take a look at Nigeria. The country has a structural mismatch in its economy: there is a high demand for foreign goods, but the country lacks any serious export goods to bring in foreign currency. Nigeria has vast oil reserves, but lacks the infrastructure to extract and process it.

The resulting problem is a constant shortage of US dollars. Since the mismatch is structural, there is little Nigeria can do to fix the issue. The outcome is simple - there are periodical dollar shortages that result either in a massive currency depreciation or an artificial currency peg. Ultimately, both cases end in a loss of trust in the Nigerian Naira and the economy running mostly on scarce dollars. In the first case the dollars are accessible on the open market, but expensive. In the second case privileged entities get access to cheap dollars, while the rest are forced to acquire dollars on a black market.

In neither case though there is a clear benefit for the US. The de facto dollarization of the economy gives no upside to America. The situation changes when the individuals and entities are encouraged to use stablecoin dollars instead.

Stablecoins, as presented in the Genius and Clarity Act, need to be fully collateralized by Treasury Bills. If the de facto dollarized economies used USDT (USD Token), they’d create demand for US T-bills.

Usually it’s the elites of a country that reap the most of the upside from a troubled economy. Their access results in wealth extraction. If the access to dollars is democratized through the stablecoins, the benefactor of the wealth extraction is the US government through new demand for T-bills.

Conclusion

High-level, the playbook is simple:

1. Create a global energy crisis.

2. Position yourself as the main energy exporter.

3. Control energy flows.

4. Force the main troubled economies to invest in the US in return for the swap lines and energy contracts.

5. Participate in the wealth extraction from all the other distressed economies through stablecoins.

The end result? A booming domestic energy industry combined with plenty of investment money to revive the American industrial power. What can go wrong, huh?

The Bear Case

There is one problem with this thesis. Goods don’t self-appear in stores. The real economy does not run on dollars. It runs on supply chains. It runs on work being done, from the very upstream of mining to the last mile delivery of your new iPhone. The US can have all the money in the world. It won’t matter though if there’s nothing to buy.

The bear case for the plan is simple. The global supply chains are a complex system. You can introduce some chaos into a complex system and most of the time everything will work out fine somehow. But there is a threshold after which it all falls apart. We are dangerously close to this threshold.

The Strait of Hormuz is arguably the most important waterway in the world handling:

1. 20% of global oil supply.

2. 20% of LNG trade.

3. Up to 50% of global urea demand.

4. Up to 35% of global fertilizer demand.

5. 50% of seaborne sulfur trade.

6. 33% of global helium production.

7. 9% of global aluminum demand.

Are these gaps bridgeable? In isolation, maybe. But in their totality, there are cascading effects. A combined energy, food and manufacturing stress can collapse the complex system of international trade. The thing is, we have no idea when it will happen. It might happen today, tomorrow or several months from now. To be honest, it might already be too late.

The US might be mostly self-reliant on energy, fertilizer and helium. But when it comes to sulfur, not so much, as roughly 30% of supply is imported. It imports up to 80% of aluminum. But we’re barely scratching the surface.

Helium is needed for specialized semiconductors production. The US is unable to supply enough helium to Asia to sustain this production and has no domestic production yet. Fertilizer shortage will result in a massive food shortage globally. Sulfur is not only used for fertilizers, it is also used for eg. rubber vulcanization.

You could write a whole book about the complexity and interconnectedness of the global economy and it wouldn’t be enough. The core point here though is that the US cannot escape adverse effects of the Strait of Hormuz closure. Sure, they will appear further down the line, but they will. The silver lining is that any other country will be even worse off.

The bear case for the scenario assumes that Trump and his advisors are aware of this.

Bull vs Bear

The bear case is an inevitable reality. The bull case is a plan along the lines of “you can’t let a good crisis go to waste”. As these 2 clash, there are realistically 3 options Trump has:

1. Play the game of chicken and reap the energy and monetary benefits in the face of the bear case.

2. See the bear case as too strong and thus:

   1. Escalate to remove the problem.

   2. Sign a slop deal to save face.

All the while, the IRGC is highly motivated and ideological. They are fighting their holy war and they’d be happy to dance to the tune of the global economy collapsing if it means defeating the big satan.

It’s Trump’s Bay of Pigs moment. His instincts are surely telling him to sign a slop deal and move on. But the Iranians are making it impossible, demanding more than what was in the JCPOA. At the same time, it is also what the core MAGA ideologues want. In that regard, they should be aligned with the tech and industry elites, who just want to see their wealth grow.

Other MAGA ideologues will want to go with the scenario. The rise of the US industrial power, the focus on the Western Hemisphere, the wider America First ideology; they all require an almost total decoupling of the global supply chains. America changing from the main consumer of the world to the top producer of the world requires a complete reorganization of global trade.

Usually, such a change takes decades to complete. However, a global crisis, although painful initially, can help usher in a quicker change. Thus the other MAGA wing can surely see the Iran war as the ultimate, final war in the Middle East. They can use it to advance their goals and if the world burns in the process, so be it. No American life would be lost in a double blockade scenario continuing for the foreseeable future.

Lastly, I see the Pentagon and parts of the deep state wanting a full invasion of Iran. After Iraq and Afghanistan, it would be the ultimate military project in the Middle East. Years of war, equipment orders for the MIC, Iran reconstruction possibilities down the line and the eventual takeover of the oil-rich regional power.

What Will Trump Do?

The last thing Trump wants is a new forever war that entangles the US far away from home, drains resources and breaks his main campaign promise. A full invasion of Iran would be the last resort. I see Trump signing the ultimate slop deal before he puts boots on the ground. Trump sees war as a tool in negotiations, not as a goal in itself. He vastly prefers the quick n’ easy, Venezuela style approach.

As you see, despite my utmost hate for the scenario I just described, I seem to fall back on it as the only viable way forward. Boots on the ground are a big no. So is a slop deal, as there is Israel and internal stakeholders who would do everything they can to break it. Thus we are left with what we have now: a perpetual negotiations roller-coaster with a double blockade in place.

Cornered, Trump seems to fall back on playing the game of chicken and periodically checking in on Iran to see if they are ready to compromise / surrender. He will try to get the small wins through swap lines, energy contracts, promises to invest in America and growing utilization of stablecoins. The plan trusters significantly overestimate the positive impact of the energy and monetary implications, in my opinion. But they are there.

If mine and the CIA’s analysis is correct, Iran has months before it starts to feel the real pain from the American blockade. And any decapitation strikes wouldn’t change that calculus. Additionally, they risk an asymmetric escalation from Iran, targeting Gulf oil infra, undersea internet cables, Bab-el-Mandeb Strait and more.

Prediction Markets

With everything above in mind, I have a rough approximation of my fair value by the end of June:

1. Peace: 27%.

2. Stalemate: 53%.

3. Escalation: 20%.

The double blockade continuing is the base case. Looking at the markets:

The recent negotiations narrative pushed the end of June peace price above my FV assessment. However, it is not enough for me to go on No. I’ll remain on the sidelines here for now.

Here I think that the market is severely overestimating the chances for another round of escalation. Sure, there is a risk of the airspace closure without another kinetic round (it happened in January as Iran grew increasingly worried of an imminent strike) so I am conscious of my exposure. But I have a couple of positions on different strikes on No.

The Strait of Hormuz will remain closed in case of a stalemate and an escalation. The combined fair value of that is 73%. However, even in case of a peace deal, traffic normalization is not a given. It depends on the timing of the deal (the sooner, the better), the terms and the behavior of insurance companies and operators. I’m on No here on a couple of strikes.

The diplomatic meeting market is still a lottery. I don’t believe anyone can accurately price one as it can happen as part of the negotiations roller-coaster. I’ll be trying to enter the short-term market on the Yes side if I see the narrative taking us in the direction of a meeting.

What Would Need To Happen To Change The Calculus?

There are several catalysts that can change the current base case of a continuing stalemate:

1. Iran starts to feel the pain faster. In case it happens, we shall see the chances for peace increase. On the ground, we should see a diplomatic meeting and a softening of the Iranian demands.

2. There appears to be a sudden appetite for war in America. A large-scale terrorist attack. A serious assassination attempt. Generally, a big event is needed to change the public perception of the war. Then, escalation and invasion chances rise significantly.

3. The Iranian protocol for crossing the strait starts to get regularly utilized by various countries paying the toll. This makes the US blockade moot (as I explained in my previous articles, the main pain for Iran, resulting from the blockade, is lack of access to a foreign currency; this problem is solved if they get the toll) and significantly extends the runway Iran has thanks to a steady influx of foreign currency. With the American leverage denied, strikes would be back on the table to reset the calculus and enforce the closure of the SOH.

4. Trump loses the ability to threaten war due to eg. a Senate vote. In that case a quick deal is significantly more likely as Congress would essentially force an end to the war.

Wrap up

That’s all for today. It’s a funny moment when a rational analysis leads me to an irrational conclusion, but here we are. As it stands today, a prolonged stalemate is my base case. I have also identified the signals that would tell me the strategic calculus is shifting. They can appear today, next week or next month. Until then, we wait.

Stay strong and see you soon!

There were also developments in other parts of the world. From midterms, to Xi-Putin meeting, the world is moving at a staggering pace. Get up to speed with it!

Weekly Outlook

US Inc.

It’s been quite a week in the US.

Thomas Massie lost his primary in Kentucky to a Trump-backed opponent. While in Texas, Trump-backed Paxton all but won his primary.

Comment: Trump is pushing candidates that would not directly oppose him. However, he should rather focus on not losing Congress.

Tulsi Gabbard resigned as America’s director of national intelligence, citing her husband’s diagnosis with a rare form of cancer. Rumors are she’s been increasingly sidelined.

Comment: for quite some time now Gabbard’s been rumored to leave the admin. She didn’t have any serious project or a role in the recent US actions on foreign soil. Polymarket consensus is that Aaron Lukas, the current principal deputy director of national intelligence is going to replace her.

The Trump admin announced a $1.8 billion Anti-Weaponization Fund to compensate people who claim they were wrongly targeted by the Justice Department. It was created as part of the settlement of a lawsuit the president brought against the IRS.

Comment: Trump’s allies are going to get paid, but there’s a coin-flip chance some of the payouts will be blocked.

America’s acting AG, Todd Blanche, said that the IRS is forever barred from continuing any existing audits against the Trump family or its businesses. This comes as part of the settlement that created the Anti-Weaponization Fund.

Comment: one of Trump’s main motivations for being POTUS is enriching his family. By all accounts, he’s doing great in that regard.

Trump delayed signing an executive order that would have given the admin more oversight of new AI models. The AI labs would be required to share the new models before their release.

Comment: supposedly it was David Sacks who saved the day for his tech bro friends. Ultimately the most important thing for the US government is to have unobstructed access to state of the art models and it is surely getting it.

American secret service agents returned fire on a gunman near the White House, killing the individual. The suspect is a 21-year-old who is known to the service. One bystander was injured in the process.

Comment: I think the assassins fail to realize that in case they succeed, it’s JD Vance taking the throne.

The Americas

It’s all Cuba.

America’s Justice Department indicted Raul Castro on several charges, including murder. He is accused of ordering two aircraft flown by a Miami-based exile group to be shot down in 1996, killing 4 people.

Comment: with no progress in diplomacy, strikes are increasingly looking like the most likely option.

Asia

Xi Jinping is busy meeting world leaders.

Xi said China’s relationship with Russia had reached the highest level of comprehensive strategic partnership after signing a series of trade and technology agreements with Putin in Beijing. The two leaders criticized America’s military actions, but failed to reach an agreement on a long touted gas pipeline between the 2 countries.

Comment: Russia and China continue to deepen their relationship. A bearish sign for US-Russia cooperation if you ask me, but lack of progress on the pipeline issue leaves a crack in the door.

Rubio held talks in Delhi with Modi and extended an invitation for India’s PM to visit the White House. Rubio indicated ahead of the meeting that America would sell India as much energy as they’ll buy.

Comment: the US is trying really hard to get India into its sphere of influence.

A train carrying Pakistani security personnel was bombed in Balochistan, killing at least 24 people and wounding around 70. The Baloch Liberation Army claimed responsibility for the attack.

Comment: there can be several explanations. Balochs might want to use the current crisis to dash for independence. They could have been hired. But by which side? They could be getting stronger by facilitating cross-border illegal oil trade since part of Balochistan lies in Iran. Surely an interesting development.

Middle East & Africa

We have yet another peace deal narrative.

The US and Iran were exchanging MOU proposals throughout the week. There was some escalatory rhetoric along the process, but we went into the weekend with rumors of an imminent deal (visible on the Polymarket chart).

Oil fell on the news. However, it soon became clear that there are still large gaps to bridge. As of today, we are awaiting new rumors. Despite differences, both sides claim to be deeply engaged in the process.

Some of the rumors were confirmed by Marco Rubio, giving a spark of confidence to the commentators.

Iran is generally highlighting wide gaps, while the US is claiming to be close to a deal.

Comment: Marco Rubio confirming some rumors gives me only a minor confidence boost. More of my thoughts in my recent deep dive.

Politics is the art of using any situation to your advantage. A good politician is one who can extract maximum benefits, even from a crisis. And arguably, Trump is the best politician the US has seen since probably FDR. Love him or hate him - after 10 years in politics, having entered as a total outsider, he is the fiercest political force.

The Knesset voted 110-0 to dissolve itself, beginning a countdown to election in September or October.

Comment: Netanyahu is currently tied with Naftali Bennett as favorites to be the next PM. Naftali Bennett is the former PM and the leader of the new opposition alliance, Together, aiming to win the election.

The WHO raised the threat from the Democratic Republic of Congo’s ebola outbreak from high to very high. The suspected death toll in central Africa has reached 177; a further 750 cases are suspected. Scientists are working on a vaccine for the disease, but it is not expected to be ready for several months.

Comment: it won’t be a pandemic, but it’s yet another crisis in Africa…

Europe

This week Ukraine and Russia exchanged multiple missiles, including on Kiev and Moscow. Outside of that:

The European Union provisionally agreed to remove import duties on some American goods to avoid an escalation of the trade negotiation with Trump. It was done as part of a trade deal agreed in July.

Comment: I don’t think anyone doubted that.

A Turkish court annulled the results of the Republican People’s Party congress in 2023, thus removing Ozgur Ozel as head of the main opposition party. The court reinstated the divisive Kemal Kilicdaroglu, who lost a presidential election in 2023 to Mr Erdogan, as CHP’s interim leader.

Comment: seems like Erdogan is tightening his grip on power.

Business, Finance & Economics

It’s an IPO frenzy.

Google said it will introduce Spark, a new AI agent to its search engine. The bot will draw on user data from products such as Gmail and Maps to carry out tasks. The tech giant also unveiled smart glasses, a decade after it shelved Google Glass. The specs, intended to rival Meta’s Ray-Bans, respond to voice commands and can take photos and videos.

Comment: AI is being more and more integrated into our daily lives.

SpaceX filed for an IPO and is expected to debut on NASDAQ in June. Traders are fairly certain it will be the biggest IPO to date:

Comment: xAI is part of SpaceX; Elon is looking to fund his AI lab to rival OpenAI.

Hearing the news, OpenAI is reportedly also preparing to file for an IPO in the coming weeks. The company is currently valued at $831.9 billion.

Comment: Sam Altman also needs massive amounts of capital to win the AI race.

Wrap up

That’s all for today! I’m working on a next deep dive, but I’ll let you know more about it once I’m closer to publishing it.

Stay strong and see you soon!

Outside of the war news, we had some interesting developments in the midterms races. Both parties are trying their best to inch a victory in November. Lastly, Romanian PM race is heating up, with 2 serious contenders matched for the favorite position.

Check out the markets below!

Main Events Of The Day

#1 Iran Peace

Despite some naval skirmishes traders are still somewhat bullish on a peace deal.

The lack of price decay since the weekend pump indicates that traders still believe we will see some bullish news. Additionally, prices on Iran closing its airspace reached a new low:

#2 The Strait Of Hormuz

The Strait of Hormuz continues to be effectively closed. The chart here somewhat resembles the peace deal chart, with traders hoping to see positive developments in the next few days.

Energy traders are also bullish peace with WTI price falling down to $90 per barrel:

#3 Landslide Victory In Texas

Last week we highlighted how Trump's endorsement of Paxton for Senate essentially won Paxton the race. This week we see that his margin of victory was severely underestimated.

Paxton won by 28 percentage points, shocking traders that expected a 10-15 margin. If anything, it's a testament to the strength of the Trump endorsement.

#4 A Volatile Race In SC

A race for the SC-06 is a volatile one. Republicans are trying to unseat a long-standing Democrat by gerrymandering the map.

Traders expected the Republican proposal to pass, however it seems that the Democratic seat is safe for now. This is only one of many small battles across the US as both parties are trying to cling a win during the upcoming midterms:

#5 Romania PM Race Heating Up

In Romania, Eugen Tomac is wildly rumored to be the next prime minister. However, traders started to aggressively buy Alexandru Nazare.

We didn't find any news on Nazare, but considering the high amount of Romanian traders on the platform, we are confident this move is based on some Romanian domestic rumors.

Wrap up

That's all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Outside of the Middle East, today we take a look at Colombia Presidential Election and Turkey, where Erdogan is making moves to tighten his grip on power.

Take a look at prediction markets to get up to speed with the world.

Main Events Of The Day

#1 Iran Peace

Traders are starting to doubt the current peace deal effort. As we await Tuesday morning news, the chances for a peace deal by the end of May are trading in the high 20s.

Delegations from respective countries are gathering in Doha in the wake of a small exchange of fire between Iran and the US. We didn't see a single positive news since Sunday. Expectations among the sharps are that we will see a flurry of positive rumors for the market open in the US.

In the meantime, no serious escalation is expected:

#2 The Strait Of Hormuz

The Strait of Hormuz continues to be effectively closed. Traders updated their forecast with the market projecting only 43% chance for traffic normalization by the end of June.

There is a slight uptick visible in the recent hours as some traders position themselves for some positive news in the next few hours. However, energy traders are no longer so bullish deal with Brent oil flirting with $100 per barrel once again:

#3 Israel x Lebanon Diplomatic Meeting

Despite the war narrative, traders see another diplomatic meeting between Israel and Lebanon by the end of May.

Traders seem to fade the narrative. With the peace in Iran uncertain, they might think that the escalatory rhetoric around Lebanon is a last ditch effort to inflict pain before the talks.

#4 Colombia Presidential Election

Abelardo de la Espriella is closing in on Ivan Cepeda Castro ahead of the first round of Colombia Presidential Election.

Abelardo is considered to be a far-right candidate while Ivan is a left-wing candidate. Even though he's silent, Trump would surely prefer Ivan to win the election. Even Congress, while short of endorsing any candidate, finds the right-wing as more cooperative.

#5 Erdogan Is Tightening His Grip On Power

Turkey's constitutional court annulled the last opposition congress, where they elected Ozgur Ozel as their leader.

Analysts claim that the move increases Erdogan's grip on power. However, the ex-leader of the opposition is not expected to be arrested. Traders see the opposition as weak and not able to fight Erdogan.

Wrap up

That's all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Outside of the Iran war, US is still projected to draw down the SPR below 350 million barrels. If there weren't enough crises for the Trump admin, Powell cemented his decision to stay on the Board of Governors.

Lastly, we will take a look at the Enhanced Games, which results were a bit surprising.

Main Events Of The Day

#1 Iran Peace

This weekend was a volatile one. Rumors of an imminent deal, confirmed by Marco Rubio, sent the market to over 70c for a Yes share.

However, as time went on, Trump changed his rhetoric and started to signal that the process might be a bit longer. This sent the short-term market lower as we are waiting for more rumors to emerge. This is a market that trades purely on rumors, as there is nothing else.

In the meantime, the war is not projected to restart in the near term with chances for it by the end of the month hitting 22%:

#2 The Strait Of Hormuz

Initially the market took the deal news enthusiastically. However, the leaked deals involved a 30-day window to negotiate the Strait of Hormuz issue.

This detail cooled the market a bit. We are still above the last week's levels though, with the chance for traffic normalization at 50%. Energy markets are also bullish a deal. Oil is down to $90 per barrel:

#3 US Crude Oil Reserves Projection

Even with an imminent deal, the market still sees 66% chance we will see US oil reserves below 350 million barrels.

We are on a good track to beat that number. Even if the strait opens, there is still a huge backlog that would need to be filled. That's why the drop-off in price wasn't very steep.

#4 Powell Is On The Legacy-Building Mission

It's now official. Kevin Warsh is the new Fed Chair, but Powell decided to remain on the Board, defying the old tradition.

This act confirmed Powell's intentions to stay on and protect the independence of the Fed. Now, there is only 41% chance he will leave the Board by the end of the year. Many expect he will stay for the rest of his term as Governor.

#5 The Flop Of Enhanced Games

This weekend we also saw the first (and last?) edition of the Enhanced Games. The games allow athletes to use all kinds of doping. Traders were expecting many world records to be broken.

However, only 1 world record was broken, in a 50m swim. The new record shaved-off only hundreds of a second. One must wonder what did the games prove; did they show that genetics is still key? Or did they show that Olympic athletes are also doping?

Wrap up

That's all for today!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Several political decisions reversed several markets from bonds to long-shots of the week. See them for yourself!

Main Events Of The Day

#1 Iran Peace

There's still no news on the Iranian response to the latest American proposal.

Traders see it as a sign of disagreement, with the Yes price for a permanent peace deal dropping from 21c to 16c. However, a return to hostilities is also down on the week, reaching 29c for a Yes share:

#2 The Strait Of Hormuz

Traders also retracted all the gains in the Strait of Hormuz traffic normalization market.

With 31c for a Yes share going into the weekend, traders see a prolonged stalemate as the base case. They seem to be aligned with energy markets, where WTI once again flirts with $100 per barrel, while Brent is over $6 above this target:

#3 Taiwan Arms Sales Halted

In a surprising move, the US has halted the sales of weapons to Taiwan.

The market had it priced as a bond on the No side. Yes shares were trading at around 1c per share just before the announcement. The official reason is inventory management with the Iran war ongoing, but the move will surely be seen as caving to China's demands.

#4 No Reconciliation Bill

The Senate and the House were supposed to vote on the reconciliation bill this week. At the last minute, unconvinced after the conversation with the acting AG, Congress went on the Memorial Day recess without taking the vote.

It is another example of a tail event happening today as traders saw a 93% chance of the vote passing only yesterday. Politics can be volatile.

#5 No Federal AI Models Review... For Now

David Sacks managed to convince Trump to postpone the executive order on the review of the frontier AI models.

The market retraced the entire move up. David Sacks said the executive order might slow down innovation. He also mentioned that the top AI labs were already cooperating with the government.

Wrap up

We had a volatile end of the week with 3 markets reversing course from bond territory. Not everyday something like that happens!

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Outside of the Iran war, we saw strong volatility on AI regulation and OpenAI IPO market - details below!

Lastly, we are showcasing new markets on the private companies' valuations. Take a look and get up to speed!

Main Events Of The Day

#1 Iran Peace

The chances for a permanent peace deal shot up as new rumors on an intensive round of negotiations taking place hit the tape.

Traders are more cautious than before though. Only a few weeks ago a headline on Iran working to respond to a peace proposal would send the Yes price above 40c.

However, they still react to bullish news. The deal market reacted softly, but the airspace market, directly related to a new round of kinetic action, took a big hit across the board. Now, military action is not expected at least until the end of June:

#2 The Strait Of Hormuz

The Strait of Hormuz market also reacted softly. The chances for traffic normalization by the end of June hit a modest 35%.

It is a clear indication that traders need to see more hard signals, like a new round of in-person negotiations, to fully price in the positive developments. Energy markets are also modest in their response, with WTI barely dropping below $100 per barrel:

#3 AI Regulation

Based on the most recent leaks, Trump is looking to sign an executive order on AI models federal review as soon as today.

Traders see 71% chance that we will see the order signed by the end of the month. It is a strong signal that the rumor is serious.

The executive order would require AI labs to share their new models with selected federal agencies up to 90 days before the official release.

#4 New Markets Available

Since a few days ago we are able to trade on the valuations of private companies on Polymarket.

The markets, powered by NASDAQ data, track the day-to-day changes in private companies valuations based on transactions on the secondary markets. It's an interesting development as for the first time retail investors are able to trade on private companies.

#5 OpenAI IPO Imminent?

The market shot up on the rumor that OpenAI is looking to file for an IPO "very soon".

Based on the recent leak, the company might file for an IPO as soon as Friday. Initially, the IPO was planned for Q4, but we had close to no news on the progress. With filing expedited, traders see a strong chance of an IPO this year, sending the market to 74%.

Wrap up

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

US officials supposedly met with the representatives of the Cuban regime, aiming to cut a deal and avoid another war. Domestically, we had some crucial primaries results on the Republican side.

This and more in today's Morning Brief!

Main Events Of The Day

#1 Iran Peace

The war narrative is on the rise. Trump supposedly held a tense phone call with Netanyahu while Iran threatens a wide retaliation if the US were to resume strikes.

The chances for peace are flat on the week on the news. At the same time, the chances for war are once again elevated. With 48% chance of the Iranian airspace closure by the end of the month, traders essentially think we are at a coin-flip level:

#2 The Strait Of Hormuz

As the war narrative dominates the news, the chances for the Strait of Hormuz traffic normalization hit a new low.

Only a permanent peace can sustainably resume traffic through the strait. However, in theory, an effective strike campaign can bring a deal closer to reality. That's our only explanation for the energy prices being slightly in the red today:

#3 The Situation In Cuba Develops

The market on the next US x Cuba diplomatic meeting rose sharply on the news that the acting US ambassador met with the Cuban foreign ministry officials.

The situation around Cuba intensifies as the US is expected to officially indict Raul Castro over his alleged role in the 1996 shootdown of the civilian aircraft belonging to Brothers to the Rescue. We should expect further news on the matter as the pace of the developments accelerates.

#4 A Close Call In Kentucky

Thomas Massie unexpectedly lost the Republican Primaries for the KY-04 seat.

Massie is known for his rejection of the Israeli money as well as his recent rifts with Trump. The last polls before the vote showed Ed Gallrein inching above Massie and since then prediction markets' sharps had him as the slight favorite.

#5 Ken Paxton Confirmed

Ken Paxton is set to win the Texas Republican Senate Primary after an endorsement from Trump.

Outside of one moment in the mid-March, he was a rather strong favorite to win. Texas is a crucial seat for Senate Republicans who still hope to avoid a Democratic Sweep during midterms:

Wrap up

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

In Romania, we have a government forming exercise that proves to be more difficult than anticipated. Outside of politics, we are taking a look at measles in the US as the recent forecast spiked. Additionally, we look back on the Musk vs Altman market, trying to understand whether the traders saw the court's decision coming.

Main Events Of The Day

#1 Iran Peace

We've missed Trump's regular taco routine. Just yesterday, he claimed that he was postponing a planned attack on Iran due to good progress in the negotiations.

However, the market is no longer receptive to rumors. You can try to game the market only for so long. At some point, you'll lose the trust you had. Seeing how the price moved from 8c to 16c, only to fall back to 12c hours later, makes us confident that this moment was reached.

The chances for another round of strikes is flat on the news:

#2 The Strait Of Hormuz

The Strait of Hormuz continues to be effectively closed. The market has barely moved on the progress news, showing that our assessment from above is correct.

Energy markets seems to be aligned with this view as well, with Brent crude trading above $110 per barrel:

#3 No More Favorites In Romania

Delia Velculescu is no longer the favorite to be the next PM of Romania.

Rumors have it that there was no alignment between the main parties. Nicusor Dan, the president of Romania, claimed that the process would go on until there is a pro-Western majority government. Traders seem to be waiting for a new signal to move the prices on the market.

#4 Measles Forecast Update

After the hantavirus and ebola, it's time to look again at a real problem spreading in the US - measles.

Since our last update, the forecast went down. However, in the recent days we had a big spike, with traders currently forecasting 3,576 cases by the end of the year. The forecast is now pretty much aligned with Metaculus.

#5 Lost Cause

Even though Elon Musk was a slight favorite to win the case against Sam Altman, he ended up losing in the trial.

Traders had him as an underdog for 2 months now. The case was thrown out on a technicality with the jury claiming that Musk failed to file his lawsuit in time. Musk is vowing to appeal the verdict and bashed the decision as a dangerous precedent allowing charities to be robbed.

Wrap up

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

Outside of the China summit, we had quite a few developments around the world, with the Iran war not being one of them! There, a stalemate continues.

Let’s look at the markets to get up to speed with the most recent forecast.

Weekly Outlook

US Inc.

The events in the US this week revolved around Trump’s visit to China.

Trump took a wide array of business leader on the trip to China with him. The opening statement suggested a series of issues, from business dealings to the global security, would be discussed.

However, soon after it turned out that nothing of substance was achieved. The two main deals secured are the 200 planes Boeing sale and an inventory clearing exercise with Nvidia selling some of its older chips to the Chinese companies.

Trump was also short of announcing anything on Taiwan.

Comment: as you see on the markets, not a single big issue was resolved. From my POV the meeting was disappointing.

Kevin Warsh was confirmed as chairman of the Fed by the Senate in a close 54-45 vote.

Comment: Kevin Warsh is looking at a difficult beginning. He will have a hard time assuming authority with Powell still on the Board. Additionally, he is looking at a rising inflation as Trump is pushing for lower rates.

The Americas

A quiet week in the Americas outside of the surprise Cuba visit by the CIA director.

John Ratcliffe went to Cuba to meet with the regime as the US is looking to bring the country to its orbit.

Comment: another diplomatic meeting is expected by the end of June as the situation on the island deteriorates.

Asia

Dela Rosa, a Philippine senator, escaped arrest in a series of unbelievable events. Armed forces entered the country’s senate, where the senator was hiding. Wanted by the ICC arrest warrant for his action during the country’s war on drugs, he managed to flee the senate and is now nowhere to be found.

Comment: a rather inconsequential event, but in the light of increased Chinese pressure on the Philippines, it feels important to track the developments in the country.

Middle East & Africa

We had surprisingly little news from the Middle East as the Iran war stalemate continues.

Araghchi said that America’s contradictory messages erode his country’s trust in negotiations. He believes America is not serious.

With no progress in the negotiations, the Strait of Hormuz continues to be closed. However, during Trump’s China visit, over 30 ships crossed the strait, supposedly in line with the IRGC process.

Netanyahu secretly visited the UAE as the first round of the Iran war hostilities took place. Soon after a sale of the Iron Dome air-defense system was announced.

Comment: it’s a never ending cycle of pressure escalation/deescalation as the game of chicken over the double blockade of the Strait of Hormuz continues. More comments from me tomorrow in a new deep dive and on my recent video:

Israel launched strikes on a town in southern Lebanon, hours after the two countries agreed to extend their ceasefire. Six people were killed in the attack. Israel claimed it had targeted members of Hezbollah. Israel also announced elimination of Izz al-Din al-Haddad, the commander of Hamas’s armed wing, in an air strike on Gaza.

Comment: Israel’s campaign continues, slightly suggesting the whole quagmire will last for months to come.

Abu-Bilal al-Minuki, a senior leader of Islamic State, was killed in a joint Nigerian-American operation in north-east Nigeria. Minuki, whom Trump described as the most active terrorist in the world, directed IS operations across the Sahel and west Africa.

Comment: American actions in Africa continue. As I’ve repeatedly said the continent will see a lot of military action in the coming months and years.

An ebola outbreak killed 65 people in the Democratic Republic of Congo. Nearly 250 cases were reported at the border with Uganda and South Sudan. Authorities are alarmed as the region sees a lot of population movement.

Comment: hantavirus is already forgotten.

Europe

A busy week in Europe amid the ongoing Ukraine war and a turmoil in the British politics.

Russia and Ukraine swapped hundreds of PoWs as part of a deal brokered by Trump earlier this month. Overall, the swap is expected to involve 2,000 prisoners in tranches. However, fighting on the front continues.

Comment: the ceasefire markets are back and chances are low we will see a proper agreement anytime soon.

Keir Starmer is facing mounting pressure to resign. He even began the week claiming full confidence in Wes Streeting, who resigned from the cabinet days later and is expected to fight for the top job.

Andy Burnham, the current mayor of Manchester, is also expected to join the fight after he secures an MP seat in the June by-election.

Comment: the British political scene will get really intense soon.

France’s unemployment rate rose to 8.1% in the Q1, the highest level since 2021. It is also an issue for Macron, who’s been trying to lower the rate since he assumed office.

Comment: European job market is tough with little high paying jobs and close to no opportunities for the young.

Bulgaria’s Dara won the Eurovision Song Contest in Vienna with Bangaranga.

Comment: Bulgaria was not a favorite coming onto the contest, trading below 10c just hours before the announcement.

Business, Finance & Economics

An interesting week in business, despite lack of any serious deals coming out of the China summit.

Sam Altman took the stand to reject allegations that he broke a vow to keep OpenAI a non-profit organization. Elon Musk accuses Altman of trying to steal a charity by turning it into a commercial venture. Altman claims that OpenAI’s for-profit arm is a creative way to keep the lab going.

Comment: it’s just a feud of two business giants. Can be entertaining, but not consequential.

Tata Electronics, an Indian tech firm, and ASML signed an agreement to collaborate on building India’s first commercial semiconductor fabrication plant. Tata plans to invest $11 billion.

Comment: team west is looking to bring India on board. A smart bet considering India’s long-standing feud with China.

Wrap up

That’s all for today. I’m planning a deep dive on the Iran situation for tomorrow and another video on the markets later on.

Stay strong and see you soon!

We enter the week looking at Iran, Keir Starmer, who is under mounting pressure to resign, Romania, where a new PM is due to be announced soon and SpaceX, which may IPO sooner than expected.

Let's look at the markets to see the latest forecast.

Main Events Of The Day

#1 Iran Peace

The chances for peace in Iran continue to trend lower as we have no news on progress in the negotiations.

Iran is reportedly getting ready for a new round of fighting. At the same time, Trump is teasing an Iran invasion on Truth Social. However, traders reaction is somewhat muted as we've already been through several narrative escalations:

#2 The Strait Of Hormuz

The Strait of Hormuz continues to be effectively closed. Traders give only 28% chance we will see traffic normalization by the end of June.

With hardly any bullish news, there is little hope of progress. Energy prices also start to reflect that, defying the consensus view of BB banks:

#3 A Consolation Prize

The China summit was an uneventful one, but Trump got his consolation prize with the US-China Board of Trade and US-China Board of Investment.

The two entities are tasked with managing the business relationship between the two conutries. However, for now there is little to manage as China is yet to confirm any specifics of the arrangements.

#4 The Next PM Of Romania?

Delia Velculescu, the current deputy director at the IMF, is being floated as the next technocratic PM.

In order to avoid a snap election, the Romanian president is looking for a candidate that can bring 2 pro-European parties together. Traders seem bullish on her prospects of securing the job.

#5 SpaceX Record-Breaking IPO

SpaceX is reportedly targeting June 12th as the IPO date.

Traders are looking for clues on the space giant's valuation. Currently it is reported that the company is looking to raise around $75 billion with a valuation north of $1.75 trillion. However, considering the bullishness of the stock market, some traders believe a valuation over $2 trillion is possible.

Wrap up

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.

The Iran war is still at a stalemate. But while American politics and foreign affairs were boring this week, it's the UK and Cuba that really moved the markets.

Main Events Of The Day

#1 Iran Peace

Trump has boarded the Air Force 1 without any progress on the Iran war situation.

Additionally, we have reports that the US has totally rejected the Iranian counter-proposal, sending the chances for a permanent peace to their lowest level ever. However, traders see only limited potential for a new round of fighting, with chances for one by the end of June barely above 50%:

#2 The Strait Of Hormuz

The Strait of Hormuz remains effectively closed. Even the recent surge in traffic was not enough to sustainably move the market as traders quickly realized there is no plan.

The recent surge fully complied with the Iranian rules and consisted mainly of Chinese vessels. If anything, this might have been a gesture towards China during Xi's meeting with Trump.

As we enter the last day of trading, energy prices are on the rise again:

#3 An Uneventful Meeting

Trump's China visit has ended and if you feel like you missed some big news, I can tell you you didn't.

The visit produced a few minor business deals (Boeing to sell 200 planes to China and Nvidia to sell some chips), but other than that we had no breakthrough, either on tariffs or on the Iran war.

Traders were forecasting a breakthrough, especially on the tariff issue with prices on a tariff agreement reaching over 75c on the day of the meeting.

#4 First Cuba Meeting

Markets were a bit shocked to learn that John Ratcliffe, the director of the CIA, met with representatives of the Cuban regime.

Trump recently teased a diplomatic meeting, sending the prices slightly higher. However, many traders assumed that the China visit must conclude before any progress can be made.

That being said, a spook meeting with a foreign government is not highly indicative of any deal being imminent:

#5 Starmer's Roller Coaster

Keir Starmer has had a roller-coaster ride this week. At one point, chances for his resignation or removal reached over 75%, only to fall back to 27%.

He might have avoided the inevitable again. But the chances for him being out by the end of the year are still at 72%. In British politics, once your opponents sense weakness, it's extremely difficult to stop them from trying to get you.

Wrap up

We are a bit disappointed by Trump's visit to China. But maybe our expectations were too high for an event that was done for the PR purposes.

We will continue to monitor the situation on prediction markets.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. These are only my opinions and I encourage anyone to do their own research before putting any money anywhere.