Global Outlook: Escalation
Weekly PROPHET NOTES 6/8/26
Welcome to another week! Monday started with the news of strikes between Israel and Iran. Small kinetic action is back, but nothing is as it seems. The Ukraine war is also getting interesting as Zelensky asked for a meeting with Putin.
Let’s take a look at the markets and get up to speed with the world.
Weekly Outlook
US Inc.
Trump picked Bill Pulte, head of a federal housing agency, to become the acting Director of National Intelligence. He has no previous national security experience.
Comment: Pulte is not expected to be a permanent pick. However, traders project that no other pick will be announced this year. It means that effectively, Pulte is not the Director for the foreseeable future. Pulte is a Trump loyalist thus expect him to do Trump’s bidding.
Trump signed an executive order requesting AI companies allow the government to vet powerful models 30 days before their release to the public (or any other company). It’s a scaled back version of the previous proposal.
Comment: the order claims voluntary cooperation with AI companies and traders are debating whether it is enough to resolve the market. Seems like not enough considering the current price and the fact that there is no enforcement on voluntary cooperation.
Republicans in the Senate voted down a Democratic attempt to block Trump’s proposed $1.8 billion Anti-Weaponization Fund. The DOJ has already said it has abandoned the plan.
Comment: the plan to extract government money failed.
Trump insisted that raising interest rates would be the wrong thing to do after a strong jobs report raised speculation that the Fed could tighten monetary policy by the end of the year.
Comment: Kevin Warsh is in a difficult spot. Despite the pressure, there is 60% chance that he will raise the rates by the end of the year. As I’ve repeatedly written, the Fed will be very interesting to watch now.
The Americas
Mastercard and Visa are fleeing Cuba as America tightens sanctions on the country. They suspended transactions for non-American visitors. Iberostar and Melia, Spanish hotel giants, said they are pulling out of managing at least a dozen Cuban hotels each.
Comment: there are only 10% chances for an economic agreement by the end of the month. This aligns with my initial research on the topic. Cuba will take time.
Asia
Xi is visiting North Korea this week for the first time since 2019. It will be his first overseas trip this year. In March train services between the two countries resumed after a six-year suspension.
Comment: tighter cooperation is coming.
Middle East & Africa
The US and Iran continued to exchange fire last week. There were strikes on Qeshm Island, Iran, Kuwait, Bahrain and Israel. The escalation follows Israeli strikes on Beirut, an Iranian red line. This comes despite the recent extension of the Lebanon ceasefire.
Exchange of fire between Iran and Israel continues as I write this outlook.
Trump is trying to distance the US from the strikes, claiming he urged Netanyahu not to retaliate. Additionally, the US reportedly didn’t take part in the recent escalation. Iran requires a ceasefire in Lebanon to continue the negotiations.
Comment: I wrote a deep dive on the Iran war last week. This escalation is Iran forcing the Lebanon issue back on the table. Regional spheres of influence are back in play for the MoU:
The Post-War Order In The Middle East
Not a single analysis of the Iran war I read bothered to offer a forecast of the future. All of them tried to explain Trump’s actions. All of them judged these actions. All of them provided a set of supposedly better solutions. But none offered a view of the post-war Middle East.
Europe
Zelensky called for face-to-face talks with Putin. In a letter, Zelensky proposed meeting in a third country, with the starting point of the negotiations being the front line today. Zelensky also said that negotiations must involve Europe, with America’s focus on Iran. Putin rejected the proposal, seeing no point in the meeting.
Comment: something is happening. Either the rejection is performative or Russia has a new operation ready to launch.
Russia accused Ukraine of launching an unprecedented attack on St Petersburg. The Kremlin said more than 140 drones were shot down in the region. Yesterday, Zelensky met with leaders from Britain, France and Germany to discuss the war effort.
Comment: same old, same old.
JD Vance blamed the murder on Henry Nowak in Britain on a mass invasion of migrants, echoing Nigel Farage. Henry Nowak was handcuffed by police after being stabbed by a Sikh man falsely accusing him of racism. His death sparked violent protests.
Comment: never a bad day to advance your political goals.
World, Business, Finance & Economics
El Nino, the weather pattern which raises global temperatures and alters rainfall, is expected to start imminently, according to the World Meteorological Organization. It could be the strongest such event in decades. It could substantially increase the risks of extreme weather such as droughts and torrential rainfall over the next nine to twelve months.
Comment: despite the warnings, traders still believe 2026 won’t be the hottest on record. However, volatile weather, combined with the shortage of fertilizer, can be devastating for this year’s harvest.
SpaceX unveiled plans to raise $75 billion in an IPO. This would be the biggest IPO ever and it would value SpaceX at almost $1.77 trillion.
Comment: traders expect the closing market cap to be in the $2-2.5 trillion range.
Blackstone is limiting withdrawals from its $45 billion private credit fund, after investors attempted to pull out $4.5 billion in Q1. Partners Group, a Swiss private equity, limited withdrawals from its flagship fund to 5% in Q2. The move follows a similar pattern in Q1.
Comment: liquidity is in high demand.
The World Cup is coming soon, are you going to watch the games?
Wrap up
That’s all for today! It’s a travel week for me as I’m going to Manifest so no deep dive this week. But I will be back on Friday with the portfolio update and during the week with State of the PROPHET NOTES.
Stay strong and see you soon!
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.