Good morning! Today’s brief is filled with domestic and global politics. The recent ceasefire in the Iran war is on the brink of collapse and Iran itself was close to striking Ukraine. We cover the recent chaos in the first two sections.
We continue our tour of geopolitical markets with the US-Cuba economic deal, which recently spiked—we found the news that caused the move. Then we turn our heads to the Fed as today is the big day and markets are still unsure of the decision.
Lastly, we take a look at Congress, where Clarity Act faces mounting problems.
Let’s take a look at the markets to make sense of the news!
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The Midterms Tracker
RED
RED moved to 96.5 following the addition of new constituents to the HOUSE indices.
Senate
SENR is once again stable in 100-101 range. It. is likely that the recent escalation in the Iran war pushed oil higher and GOP Senate chances lower!
House
After the new additions, HOUSER is pretty much aligned with SENR—let’s see how the index will behave next week.
Main Events Of The Day
#1 The Strait Of Hormuz
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The Strait of Hormuz continues to be effectively closed. Of course, some traffic goes through, but barely—Iran just shot at three tankers trying to cross the strait. Short-term traffic normalization markets dipped on the news. The end of year market stayed flat at 56%, hardly an optimistic forecast.
Overnight we also had joint Saudi-American strikes on Iranian-backed militias in Iraq. Iran retaliated by sending missiles at Jordan. With tensions sky-high between the Saudis and the Houthis, you could say we are at the brink of an all-out war. However, traders still see some hope:
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America is yet to strike Iran directly and traders give a 36% it will stay that way for the next nine days.
Oil seems to share the optimism with Brent below $90 per barrel:
#2 Can the Two Wars Merge?
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Staying on the topic, after Ukraine struck an Iranian vessel on the Caspian Sea, killing one sailor, Iran reportedly decided not to retaliate.
However, it seems that it wasn’t easy—rumors are that there was a feverish diplomatic effort to prevent Iran from responding. Thankfully, it also had another effect—traders now see little chance Ukraine will continue to strike Iranian targets:
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#3 No Deal
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Amid all the Iran war chatter, traders missed an important development in the Western Hemisphere. The State Department published a 99-page report on Cuban influence on American society and politics:
The report echoes Trump’s recent warnings about a renewed communist influence in the region.
Traders who noticed interpreted this as a sign that America is not looking for another Venezuela-style regime change. Rather, they are looking to properly take over Cuba. Chances of a deal collapsed from 45% down to 20%.
#4 FOMC Day
Back in America, all eyes are on Kevin Warsh. Today we will know if the Fed chair surprises everyone and hikes. Prediction markets are not sure of the decision for the first time in many months, giving a hike 21% chance.
Traditional finance is no different—FedWatch gives 35.8% chance of a hike hours before the meeting:
Today’s decision should provide the clearest indication yet of Warsh’s policy preferences. And maybe it will make some lucky traders rich.
#5 Clarity Act in Trouble
Lastly, we turn towards Congress. The Clarity Act market spiked recently on the news that Russian sanctions package gets priority.
Senators remain divided over the ethics clause. Trump’s compromise is not enough for them. However, some Democrats can benefit from crypto industry donors if they agree to push the legislation through. While the odds got longer, the Clarity Act is still alive.
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.