Good morning! We are not slowing down. We saw plenty of news on Monday, especially around the Iran war. We cover the latest developments in the Strait of Hormuz section, where markets are beginning to price a significantly more severe scenario.
From the Iran war, we move to Europe as we track the markets on Hungary’s president and a seemingly impossible task of forming a new government in Romania. Lastly, we take a brief look at South Carolina, where politicians are already fighting to take over late Lindsey Graham’s Senate seat.
Let’s take a look at the markets to make sense out of the news!
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The Midterms Tracker
RED
RED is flat on the day and remains around the 90.5-91.5 range.
Senate
SENR seems to be back to the slow upward trend after a short slump. Index indicates a balanced outlook, suggesting that Republicans have a fair shot at keeping the Senate.
House
After a short period of stabilization around 75 points, HOUSER continues to trend down, indicating that Democrats are a strong favorite to win the House in the midterms.
Main Events Of The Day
#1 The Strait Of Hormuz
Yesterday, Donald Trump announced that the US blockade of Iranian ports is reinstated. Additionally, he notified Congress that the war is back on. Iran threatened to completely block the Persian Gulf, the Sea of Oman and the Red Sea in retaliation. The report is unconfirmed at the time of writing:
Whether it’s only the Strait of Hormuz, or the whole region, the main casualty is oil. In the last 12 hours only 5 ships crossed the Strait of Hormuz, meaning we are back to war level traffic:
Traders have adjusted their forecast accordingly—the end of August market for traffic normalization trades at only 13c, indicating that traders don’t see an easy way out of the situation.
Oil is reacting as well, with the main benchmarks up around 15% since last week:
#2 More Disruption
Traders are not willing to play FAFO. Once the rumor on the Bab-el-Mandeb Strait being closed dropped, they sharply updated their forecast in regards to the Houthis. Now there’s 41% chance we will see the Houthis target shipping by the end of the month.
Additionally, Saudi Arabia and the Houthis exchanged strikes yesterday, breaking a four-year truce. With the second round of hostilities, Yemen goes into play, something I underscored repeatedly.
Just when everyone was thinking that things could get back to normal, we are hit with an even bigger disruption.
#3 Hungary President Out?
Turning to Europe, the new parliament under Peter Magyar voted to remove Tamas Sulyok from office.
Traders were expecting that as Magyar has repeatedly said that he intended to remove the president. The only uncertain thing was timing, but even then the Yes price fell below 70c only once.
In Hungary, contrary to the US, a president is mostly a ceremonial function and he is appointed by the parliament, rather than by a general election.
#4 Romania Still Has No Government
In neighboring Romania the government crisis continues. Ever since the previous government collapsed back in early May, the country’s political parties have struggled to form a new government.
The current president is trying desperately to avoid a snap election. The anti-EU right-wing party AUR, led by the president’s second-round opponent George Simon, is currently leading in the polls. Their victory would complicate further Romanian integration into the EU.
At the same time, George Simon is probably enjoying the show. He was credited as the mastermind behind the collapse and now he offers to help back a new government. However, his proposal comes with strings attached.
Traders are increasingly skeptical any party can gather enough support and chances are we might see a snap election soon.
#5 South Carolina Senate Special Primary
Lastly, we move to domestic matters. Lindsey Graham’s body is barely cold, but the political machine is heating up. Politicians are already jostling to get his spot in the Special Primary and most likely take the Senate seat:
The frontrunner to take his seat with 66% chances, Russell Fry, is the current US representative for South Carolina's 7th congressional district. He’s been rumored to be interested in the position. However, it is still extremely early and a lot can happen before we know the name of Graham’s replacement.
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!
Brought to you by Stand
Stand is a prediction market aggregator and the advanced trading terminal of choice for professionals. On Stand, traders discover trends, track traders, copy trade, get whale alerts, automate trades, and so much more.
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.