Good morning! Overnight, the main market moves happened in European politics. Both Britain and Romania are now engulfed in the political chaos as the new PMs are being selected.
Outside of European politics, we also take a look at the Fed under the new leadership, the next Gemini model and, as usual, the situation in Iran.
Let’s take a look at the markets to make sense out of the news!
Main Events Of The Day
#1 The Strait Of Hormuz
The Strait of Hormuz continues to be effectively closed. Since the signing of the Iran MoU the traffic has seen some uptick, but it’s nowhere close to fulfilling the market rules.
Traders are still bearish on the prospects of the traffic returning, with the only market trading above 50c being the end of year market. However, energy markets are still telling a different story. Oil is down 20% on the month as if the Strait of Hormuz was open:
It looks like the energy markets are in for a rude awakening.
#2 Fed Rate Hike Coming?
As markets continue to climb, traders are slowly pricing in a rate hike.
After the first Kevin Warsh conference traders significantly increased their hike forecast. The new chair refused to provide forward guidance while 9 out of 19 Fed officials projected a rate hike this year.
Combined, it makes for a compelling case. The current consensus is a tentative hike in September, but the next 2 motnhs are bound to give us more insight.
#3 The Race For The UK PM
Starmer’s resignation opened up the leadership race. Considering that it was Andy Burnham’s victory in the by-election that tipped the scales, it is no wonder that he is considered the favorite to be the next PM.
However, the main market moves are on the new cabinet members. Despite no official confirmation, the word on the street is that Wes Streeting, who exited the Starmer Cabinet with a bang, is the frontrunner to be the next Chancellor of the Exchequer:
We are surely in for an intensive few weeks in the British politics.
#4 Romanian Political Drama Continues
Adrian Vestea failed to form a new government and the race for the next Romania PM is on again.
Dan, the Romania president, is now expected to name his third choice for the PM as the parliament has rejected his 2 prior choices. He now has 60 days to form a government or a new election can be called. And since the right-wing is polling strong right now, he will try his best to do it.
Traders bet on Sorin Grindeanu to be the next choice, but he still has only 34% chance to be the next PM. The race is essentially open, while George Simon is probably already getting ready for a snap election.
#5 No New Gemini Pro This Month
Traders are projecting that no new Gemini Pro model will be released by the end of the month after two of the top AI researchers left Google to join OpenAI and Anthropic.
Gemini has long been the top model when it comes to benchmarks, but recently it gave ground to new Claude and ChatGPT releases. Traders seem to be betting on Google postponing the release in order to work on the model and make it better.
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.