Good morning! It’s Wednesday and we still have no deal in Iran. However, this is hardly shocking, as we’ve seen this movie before. Despite the lack of progress, diplomats are pushing ahead and traders appreciate that—we cover the most recent developments in the Strait of Hormuz section.
Then, we move on to politics. Today’s coverage is comprehensive, encompassing the recent primaries and their effect on the SENR index, a Fed rate forecast update and growing troubles around the Clarity Act.
Lastly, we take a look at the Paramount-Warner Bros merger timeline, where traders were forced to sharply adjust their forecast.
Let’s take a look at the markets to make sense of the news!
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Midterms Tracker
SENR
After a tight Democratic Senate primary in Michigan, El-Sayed is looking as the favorite to win. This forced the overall Michigan Senate market to reprice—traders believe that a contested primary with a controversial candidate winning is a good sign for the GOP.
Main Events Of The Day
#1 The Strait Of Hormuz
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Despite being promised a deal by today, we still have nothing tangible. Iran continues to negotiate with Oman, claiming that all the arrangements can be implemented only after the US changes its behavior:
The Strait of Hormuz traffic normalization markets are up slightly on the news, as traders still see the current situation as a step forward. Oil is also aligned with WTI below $80 per barrel:
All of this happens as the Houthis started striking Dubai after a couple of exchanges with the Saudis. However, no casualties were reported.
#2 Escalation Is Not Expected
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Even though Iran casts doubt on the imminent deal, traders still believe a new diplomatic effort is a good sign, as they give only 11% chance Israel will close its airspace by the end of the month, suggesting that strikes shouldn’t happen.
The argument is strengthened by the fact that Israel was spared in the last round of kinetic action. However, for the very same reason this market may be a weak proxy for the broader probability of a deal.
#3 Ambiguous Warsh
Leaving the war behind, the Fed September decision market flipped and now favors no change in the interest rate vs a hike.
Kevin Warsh continues to refuse to provide any guidance and traders are helpless—oftentimes a 50/50 market indicates that traders have no idea about real probabilities. And chances are the market will be in the same place come September.
#4 Clarity Act in Trouble
It’s a busy week in Washington, DC—Congress goes on recess after Friday and various interest groups are pushing their agenda hard to ensure it can pass before the midterms.
One such group is the crypto industry. Hopes are still high that a vote can happen, however traders are increasingly bearish on the prospects of the legislation passing:
Traders see that the ethics clause is a harder problem than anticipated. Additionally, the WSJ published an editorial criticizing the bill, further dampening hopes of crypto enthusiasts.
#5 Stretching Timelines
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Lastly, some news from the business world. Recently, we’ve learned that the European Union approved the merger. However, some individual states have their reservations about a deal.
They filed a lawsuit and the hearing is set for March, destroying any hopes that the deal can close before year end. Paramount will pay heavy fines for the delay, but considering the library of movies and TV shows they are buying, I believe it is worth the wait.
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.