The Swedish Parliament has officially passed a government bill to end permanent residence permits, which will offer a vastly stricter approach to the country’s immigration policy. Under the new legislation, the government “eliminates the possibility of granting permanent residence permits to asylum seekers” and other immigrant groups specified in the reform.
Set to take effect on July 12, the updated rules dictate that affected individuals will now only be eligible to receive temporary residence permits. However, those who currently hold valid permanent residence will keep their existing status and remain unaffected by the change.
While temporary permits have become standard practice in Sweden over recent years, this reform goes significantly further by preventing specific groups from converting those temporary stays into permanent ones. Through this measure, the Swedish Executive aims to tighten its oversight regarding the long-term status of foreigners within its borders.
This legislative shift takes place amid deep public and political concern over escalating violence tied to criminal networks and the cost of mass immigration. Recent data emerging from Scandinavia, specifically from the Danish Ministry of Finance and analyzed by the White Papers Policy Institute, showed that Scandinavian nations like Denmark and Sweden are spending billions on their migrant populations.
“The financial consequences of mass immigration. The White Paper Policy Institute also refers to the costs for Somalis in this context and concludes that Sweden will spend approximately 117.3 billion euros on the 102,000 Somalis living in Sweden over the next 50 years,” the MEP wrote on X.
Security is also a top concern. For years, Sweden has grappled with rampant shootings, targeted gang retaliations, and turf wars driven by drug trafficking networks, many of them made up of individuals of immigrant origin. Of course, there is also the issue of gang rape, rape, and robberies, which are dominated by foreign offenders.
🇸🇪🔴”I still feel sick when I think about it.”
A Swedish court is under fire after an African migrant raped 16-year-old Meya Åberg, with the court ruling the migrant could not be deported because the rape did not last long enough.
In some cases, lives have even been lost as gang violence spiraled out of control in many major cities. According to official police data published in May, “23 people outside these gangs have died and another 30 have been injured in shootings” linked to organized crime over the last three years. Law enforcement officials emphasize that these bystanders were not the intended targets but were rather caught in the crossfire by stray bullets, misidentified by attackers, or targeted simply due to their personal associations with gang members.
This newly approved immigration law aligns with a broader, multi-pronged crackdown targeting individuals connected to organized crime. Notably, the Swedish Migration Agency recently revoked the permanent residence permits of 11 individuals who maintained “strong connections with criminal networks and long stays outside the country.”
According to state authorities, these individuals were living abroad in nations such as “Iraq, Lebanon, Türkiye, United Arab Emirates, and Morocco.” Stripped of their permanent Swedish residency, they have lost access to the national welfare system and now face severe restrictions regarding international travel within the Schengen zone and their ability to conduct business.
Despite these measures, there are still many anti-immigration critics of the current conservative coalition government. They argue it has done little to truly stem the tide of mass immigration and reverse the radical open borders policies that dominated Swedish society for many years.
The Diversity Lottery means you can receive immigrants from almost any of these countries on the watch list for human trafficking for the sole reason that “diversity is our greatest strength.”
Lucky you!
The Immigration Act of 1965 abolished the National Origins quotas of the 1924 Act, which had favored European immigrants. As a result, America has had a flood of non-European immigrants . . . and Europeans were, in effect, discriminated against for Visas.
In 1990, the late Teddy Kennedy instituted the “Diversity Visa Lottery” with the specific intention of allowing more Irish immigrants to the U.S.
Since then, it’s been a source of many overly diverse immigrants, some of whom were terrorists or mass murderers. Recently, the Trump administration paused it after a diverse guy from Portugal, Cláudio Manuel Neves Valente, killed two students and wounded nine other students at Brown University.
This is not the first time something like this has happened:
The Brown University shooter, Claudio Manuel Neves Valente entered the United States through the diversity lottery immigrant visa program (DV1) in 2017 and was granted a green card. This heinous individual should never have been allowed in our country.
In 2017, President Trump fought to end this program, following the devastating NYC truck ramming by an ISIS terrorist, who entered under the DV1 program, and murdered eight people.
That was Uzbek bike path attacker Sayfullo Habibullaevic Saipov, below:
The November 2, 2017 op-ed by Machmud Makhmudov was titled “We Need the Diversity Visa Lottery,” and I suppose by “we” Mr. Makhmudov means the citizens of the United States.
By the way, the fact that Makhmudov, now an American citizen, got a Rhodes Scholarship, which Cecil Rhodes intended “to promote unity among English-speaking nations,” is just one more example of high-skilled immigration displacing a better class of American.
At the time of the Uzbek mass killing, Steve Sailer pointed out that he’d called out the Diversity Visa as long ago as 2002 in an article for UPI: “Analysis: The Curious Immigration Lottery” (UPI, July 29, 2002).
Oddly enough, the diversity lottery originated as a way to bring more whites to the United States. White ethnic politicians in America felt that their distant relatives in Europe had been squeezed out by chain migration from the Third World. So, natives of the 14 largest sources of legal immigrants—such as Mexico, India and China—are banned from participating. In particular, Sen. Edward Kennedy, D-Mass., saw a diversity lottery as a way to boost the number of legal Irish immigrants.
[Center for Immigrants Studies head Mark] Krikorian explained, “It was cooked up in the 1986 law to provide a way to amnesty Irish illegal aliens, since the main amnesty in that law primarily benefited Mexicans. In fact, to this day the lottery is often referred to by congressmen and their staff as ‘The Irish Program.’ But as the program evolved, and as there were fewer and fewer Irish illegals, its emphasis changed, and it’s now more accurately described as the Middle Eastern, East European and African program.”
Only 331 visas were awarded to Irish applicants this year.
But the reason Sailer was writing about this crazy visa in 2002 is because of another immigrant atrocity—when Hesham Mohamed Hedayet, below, shot up the El Al counter at Los Angeles International Airport.
If it’s proof of the sheer, homicidal insanity of American immigration policy you want, consider the case of the late Hesham Mohamed Hadayet, who achieved immortality of a kind when he shot and killed two people at Los Angeles International Airport last week on July 4. Mr. Hedayet may or may not have been a “terrorist,” actually connected to some formal terrorist organization. But he certainly was an immigrant.
Mr. Hedayet, himself shot down by an El Al security guard after he began blasting by-standers at the El Al ticketing area on Independence Day, was in this country legally, through the grace of a program known as 245(i), which is supposed to let in aliens who meet certain work qualifications and which both President Bush and a bipartisan coalition of the Open Borders lobby have been trying to expand. But the only way that Mr. Hedayet was even able to apply for legal status under 245(i) is that his wife won a lottery.
The lottery in question awards a green card, the Immigration and Naturalization Service’s ticket of legal immigration status, on the basis of “diversity” to some 55,000 foreigners every year. Once she got her green card and became legal, then her husband could apply for legal residency himself under 245(i) and stay here if he paid a fine of $1,000.
It’s now America in the second quarter of the 21st century, and it’s finally time, with the Trump administration firmly in control, to just stop doing this. While Trump can simply refuse to issue refugee visas, as head of the Executive Branch, the Diversity Visa Lottery is a congressionally mandated program, and needs to be repealed by Congress. One avenue for this would be the Assimilation Act, of which we wrote last week, whose
structure and provisions align closely with core America First priorities: it ends exponential family-chain migration, eliminates the anti-assimilation diversity lottery, imposes a national-interest gate that includes cultural considerations, and raises concrete assimilation and self-sufficiency bars. The Assimilation Act represents the strongest congressional attempt in generations to halt mass immigration and to replace it with an immigration system focused upon quality and cultural compatibility.
There are other options for repeal. The America First Policy Institute wrote in February that:
After 30 years, the Diversity Visa Program does not advance America’s national interest, nor was it ever designed to do so. Indeed, sold under the guise of “diversity,” the program was unabashedly designed to import less-educated, low-skilled workers of Irish descent to appease the constituencies of Northeast politicians. The program has been riddled with fraud from its inception, making security checks and eligibility determinations unreliable. Additionally, lax rules that fail to address the dangers posed by state sponsors of terrorism and other terrorist groups present significant national security concerns.
The Trump administration has rightfully paused the Diversity Visa Program in the wake of the shooting at Brown University. America’s immigration programs should not be designed based on the ease with which foreign nationals can use (or abuse) them. Instead, such programs should place the interests of Americans first. It is time that Congress ends the DV Program and replaces it with a program that promotes merit-based immigration, where individuals are selected to come to the United States based on education, skill, self-sufficiency, and ability to contribute to our economy and society.
SpaceX IPO Lifts Off As Data Center Race Moves From Ashburn To Abilene To Space
SpaceX surged 19% on Friday in its Nasdaq debut following the world’s largest IPO, closing near $161 after opening at $150 and valuing the company north of $2 trillion.
J.P. Morgan + SpaceX= Largest IPO
Congratulations to the @spaceX team on this milestone, we were proud to serve as a lead bookrunner on the transaction. pic.twitter.com/axxob266QP
Investor excitement over the potential commercialization of the Starship mega-rocket is certaintly a major driver, but also markets are beginning to view SpaceX as one of the most pivotal players in the emerging orbital data-center race, where launch dominance, Starlink infrastructure, satellite manufacturing scale, and plunging access-to-orbit costs could position Elon Musk’s rocket company at the center of the next frontier in AI compute.
Nearly six months ago, we read the tea leaves and told readers how to position ahead of the SpaceX IPO and the coming space-and-data center buildout race in low Earth orbit. That thesis is moving from speculative to investable, after SpaceX’s public-market debut yesterday and Starship commercialization story nears (read report).
A continuation of the space-based data center theme and how to profit comes from Barclays analyst Brendan Lynch in a new report titled “Ashburn, then Abilene, then space.”
Lynch sees the story of space-based data centers gaining ground as territorial deployment woes materialize amid intensifying constraints on power, land, and grid.
This year alone, hyperscalers plan $800 billion in capex to build out data centers. There is growing resistance to the buildout, which has already derailed nearly half of the nation’s planned 16-gigawatt capacity, with only 5 gigawatts currently under construction.
The good news for terrestrial-based data centers is that Lynch and his team don’t see orbital data centers as a likely threat over the next decade, citing launch costs, radiation-resistant hardware needs, thermal-management limits, bandwidth constraints, and regulatory uncertainty.
The big attraction in space is unlimited solar power and no permitting. Orbital data centers could use near-continuous solar energy without relying on local utilities, grid interconnection waits, land availability, zoning approvals, or water-intensive cooling systems. Lynch noted that solar panels in orbit can generate up to eight times more power than terrestrial solar panels because of constant sunlight and the absence of atmospheric interference.
However, the analyst noted that the economics of orbital data centers remain a major roadblock. He estimated that orbital data centers cost roughly $51 billion per gigawatt to build and operate over five years, compared with about $16 billion per gigawatt for terrestrial data centers.
Lynch said, “However, there is still a long way to go before the economics and engineering make orbital data centers feasible at scale. Currently, orbital capacity is ~3x more expensive per MW than terrestrial, primarily due to high launch costs. Additionally, further progress must be made on engineering challenges, such as radiation-resistant hardware, thermal management, and connectivity.”
Google estimates launch costs would need to fall below $200 per kilogram by 2035 for its orbital-compute vision to work, while SpaceX’s Falcon Heavy is currently around $1,500 per kilogram.
Given these constraints, Lynch does not see orbital data centers as a “threat to our coverage with data center exposure (DLR, EQIX, IRM, AMT) in the next 10 years.”
Now he added, “Beyond 10 years, it is harder to handicap the impact, but if space-based DCs come to fruition, it will likely be complementary to traditional deployments.”
“That said, as technology advances and costs come down, we anticipate orbital capacity will gain momentum,” the analyst noted.
The moment when launch costs plummet will likely hinge on the Starship commercialization timeline, which could see full-scale commercialization around 2027-28 and, really, at the end of the decade.
Starship is still transitioning from test vehicle to commercial platform. The first monetization wave is likely internal SpaceX demand, mainly Starlink deployment, larger satellites, orbital AI-compute demos, and NASA-linked lunar spacecraft.
Reuters reported SpaceX is aiming to begin orbital AI-computing demonstration missions by late 2027, a key validation point for the orbital data center.
Lynch added more color about the orbital data centers:
How data centers in space operate
Power
Most orbital data center plans involve many satellites in low earth orbit operating collectively to form the “data center” in space, similar to how terrestrial data centers are comprised of many server racks. Clusters of satellites are often called constellations.
Large solar panels supply near-continuous power. Satellites can be placed in sun-synchronous orbits (e.g., “terminator” orbits) to maximize solar exposure. Batteries are also required to store energy for eclipse periods when satellites pass into earth’s shadow.
Communication network
Optical laser links connect satellites so that they can share data. They are a high-speed method of transmitting data through laser beams. This is the same technology that some satellite operators use to provide broadband capacity on earth.
Satellites transmit data to ground stations, which serve as the “middleman” between the data center and users. Constellations will likely require thousands of ground stations because low earth orbit satellites only pass in range of each ground station for a few minutes per orbit. Ground stations have large antennas to communicate with satellites either through radio waves or optical laser links. Radio waves provide reliable, regulated, lower-bandwidth connectivity, while optical links enable high-capacity, high-efficiency data transfer but require precise alignment and are sensitive to atmospheric conditions. Ground stations will also have fiber optic cables to connect with users.
Compute and cooling
Advanced computing in space requires radiation-tolerant or radiation-hardened chips. Several semiconductor companies, including NVDA (covered by Tom O’Malley), are exploring specialized space-based computing infrastructure.
Liquid cooling removes heat from chips, and then radiators dissipate heat as infrared radiation into deep space. Traditional air cooling methods don’t work due to the lack of atmosphere. Compute density per satellite is primarily limited by the rate at which heat can be radiated into space.
Operations Satellites
Satellites are launched into space via rockets designed for heavy loads, similar to how traditional satellites are launched, but conceivably at much larger scale.
Physical maintenance will likely be limited, but software updates are possible. Satellites will likely have redundant components and built-in work-arounds in case of hardware failure.
Most business models assume no servicing or upgrades. Instead, satellites that reach the end of their operating life will be replaced by new ones carrying the latest technology. Most satellites are expected to have a 5-year useful life. At the end of life, satellites are typically de-orbited into the atmosphere to burn up.
Why data centers in space are attractive
Power
Space provides less constrained access to solar power with fewer bottlenecks to scale vs. terrestrial power grids. Developers are not reliant on utility companies to provide power infrastructure.
Power is generated and consumed in the same location, avoiding transmission losses and grid interconnection constraints.
Solar panels in orbit can generate up to 8x higher output due to constant sun exposure and lack of atmospheric interference (molecules in the atmosphere absorb, scatter, and reflect sunlight, reducing the solar energy that reaches terrestrial solar panels). Solar power in space is also more stable than earth because there are no clouds or weather issues.
Land
Suitable land sites with sufficient power are increasingly scarce in key data center markets globally. Space offers a solution to land constraints.
Orbital data centers avoid many challenges faced by terrestrial development, including community opposition, environmental remedies, zoning restrictions, etc.
Resilience
Infrastructure in space is less exposed to disruption from natural disasters, grid failures, and geopolitical events.
Constellations of satellites offer high resiliency because workloads can be shifted between satellites if one goes down.
Design
The modular design enables a more efficient capacity build out, where infrastructure is scaled via incremental satellite launches rather than large upfront development projects. Over time, this could reduce capital intensity and development risk.
Water usage is one of the most common critiques of terrestrial data centers, particularly as AI increases compute density and cooling needs. Orbital data centers do not require evaporative water cooling
Challenges to near-term deployment
Physical
Satellites will require very large solar panels to generate sufficient power for AI workloads. Satellites that support compute functions (instead of communications) might need to be ~10x larger to achieve attractive economies of scale.
Space requires specialized IT hardware due to radiation which can corrupt data unpredictably and degrade equipment. Traditional space hardware uses radiation hardened chips that are more than 100x less powerful than chips in terrestrial data centers and very expensive.
Thermal management limits compute density per satellite. There is no medium for heat transfer in space (i.e. no air), so satellites require a combination of liquid cooling to remove heat from the chips and radiators to remove heat from the satellite. Heat is emitted into deep space via infrared radiation. The radiators requires a lot of surface area in addition to the large solar panels because radiative heat transfer is relatively inefficient vs. air cooling.
Orbital data centers face networking and bandwidth limitations. Inter-satellite connectivity (generally via optical laser links) requires complex, precise alignment. Space-to-earth communication via radio waves (most common currently) is heavily regulated and has relatively low bandwidth. The International Telecommunication Union (ITU) coordinates global spectrum allocation, and operators require authorization in each jurisdiction where they transmit signals to/from the ground. Optical laser links (emerging technology) are higher bandwidth and higher efficiency but face atmospheric interference due to clouds and weather and require precise alignment. Additionally, space-to-earth connectivity requires sufficient ground stations to receive/transmit data.
Orbital systems have high failure rates vs. terrestrial infrastructure. When equipment fails in orbital data centers, it can’t be replaced. As a result, orbital data centers must be highly redundant and have failover measures. If the satellite fails, it must be entirely replaced.
Launch capacity is the primary constraint on scaling infrastructure due to the limited frequency of rockets launches. Size and weight are pertinent considerations for satellite design due to constraints of the rocket. Many orbital data center business plans are dependent on improvements to the launch process. In 2025, there were 330 launches globally. Each rocket can carry about 40-100 traditional satellites. However, orbital data centers could eventually exceed the size of the largest rockets that are available, highlighting the need for improved launch capabilities.
Regulatory
A primary concern is overcrowding in earth’s orbit, which increases the likelihood of collisions and long-term debris accumulation. The FCC requires that low earth orbit satellites are de-orbitted within five years of end-of-life, and companies must file orbital debris mitigation plans with regulators. There are currently ~16,000 satellites orbiting earth, but several companies have filed plans with the FCC to collectively increase this by 10x with build-outs in the late 2020s and 2030s.
There will likely be future challenges due to regulatory and jurisdiction uncertainty given the lack of standards for orbital data centers. For example, spectrum allocation and licensing is currently handled by individual countries. Broader AI regulations and data sovereignty requirements will likely also be factors.
Economic
Orbital data centers are estimated to cost up to ~$50m/MW, more than triple the cost of terrestrial data centers, at present.
The biggest financial challenge is launch costs. Google estimates that launch costs would need to fall below $200/kg by 2035 for its vision to be economically viable. SpaceX’s current launch vehicle, Falcon Heavy, is the cheapest available at $1,500/kg.
In addition to the higher build cost, the useful life of orbital data centers is only ~5 years due to limited maintenance and upgrade capabilities and the harsh environment in space (e.g. radiation, extreme temperatures). This compares to decades of useful life for terrestrial data centers which can be maintained and upgraded more easily.’
And now to the part readers care about most: how to profit from the buildout.
Axiom Space (private, not covered)
The company has been testing cloud computing capabilities on the International Space Station (ISS) since 2022 and launched its first two orbital data center nodes in January 2026. Its nodes are modular units located on the space station.
Axiom is also building a commercial space station which it plans to launch ahead of the ISS’s retirement in 2030.
Blue Origin (private, not covered)
The company announced Project Sunrise with a target of deploying up to 51,600 satellites for AI workloads. It filed plans with the FCC in March 2026, but faces an objection from NASA regarding the proposed orbit altitude (which overlaps with critical human spaceflight paths) and risk of space debris.
The company also has plans to launch a 5,000 satellite constellation for global high-speed communications infrastructure, called TerraWave. It aims to begin deploying TerraWave satellites in late 2027. TerraWave satellites are designed for networking while Project Sunrise satellites are designed to enable high-density compute.
Cowboy Space (private, not covered)
The company filed plans with the FCC to deploy 20,000 orbital data center units in a constellation called Stampede in May 2026. Each unit would repurpose the the upper stage of the rocket as a high-density compute platform. Cowboy Space aims to launch its first rockets in 2028.
The company is also working on a separate constellation that would send solar power back to earth.
Planet Labs (public, not covered)
The company partnered with Google (covered by Ross Sandler) for project Suncatcher which has a demonstration mission planned for early 2027 to test Google’s TPUs (specialized AI chips designed to accelerate machine learning and inferencing workloads) in space.
Planet Labs already operates 600+ satellites that form an imaging constellation for geospatial intelligence.
SpaceX (public, not covered)
The company filed plans with the FCC to launch a million data center satellites for ~100GW of compute capacity in January 2026.
SpaceX currently operates ~10,00 Starlink satellites and controls ~65% of active satellites globally. Starlink satellites primarily enable communication vs. data center satellites which are designed for high-density compute.
Starcloud (private, not covered)
The company deployed a ~1kW satellite with a single GPU in November 2025 as proof-of-concept. It plans to launch its next-gen satellite which is 10kW in 2027 and then launch a ~200kW satellite in 2028.
Its ultimate goal is to deploy 88,000 satellites totaling ~20GW of compute primarily for inference workloads, reaching ~5GW by 2035. Starcloud filed plans with the FCC in March 2026.
Exxon Weighs Woodside Deal As LNG Becomes Strategic Priority
Exxon Mobil is assessing a range of options to expand its global gas business, with Woodside Energy reportedly among the companies being reviewed as potential acquisition candidates, according to Bloomberg.
No formal approach has been made, and internal evaluations remain preliminary. Both companies have declined to comment.
Bloomberg writes that Woodside offers several strategic advantages for Exxon. As a leading LNG producer with established relationships across key Asian markets, the Australian company would provide immediate scale in a sector where Exxon has historically been less dominant than some of its European peers. Its growth pipeline includes the Louisiana LNG project in the US and major Australian developments such as Scarborough and Browse.
Interest in LNG assets has intensified amid ongoing concerns about global supply security, particularly following disruptions to Middle Eastern export routes. This has increased the value of producers with diversified supply bases and long-term customer contracts in Asia.
For Exxon, any transaction would follow its 2024 acquisition of Pioneer Natural Resources and further broaden its energy portfolio beyond North America. Woodside’s existing partnership with Exxon in the Bass Strait venture could also provide a degree of operational familiarity.
While Woodside is not the only company under review, it stands out as one of the few sizeable LNG-focused businesses available globally. Any potential bid would likely attract significant market attention and serve as an early challenge for new Woodside CEO Liz Westcott.
More broadly, the operating environment for oil and gas producers has improved under the Trump administration. Since returning to office in 2025, President Trump has prioritized domestic energy development through a combination of regulatory rollbacks, faster permitting processes, and support for expanded LNG exports. While commodity prices remain the primary driver of industry profitability, the policy backdrop has generally been viewed as favorable for large producers, encouraging investment, consolidation, and long-term growth projects across the sector.
This week the Bureau of Labor Statistics reported another really ugly wholesale inflation print, adding to a growing pile of evidence that inflation pressures are proving far more persistent than policymakers, economists, and investors had hoped.
The Producer Price Index rose 1.1% in May, well above economist expectations of 0.7%. On a year-over-year basis, wholesale inflation accelerated to 6.5%, the highest reading since November 2022.
Even though core PPI, which excludes food and energy, came in slightly below expectations at 0.4% versus estimates of 0.5%, that distinction shouldn’t provide much comfort. The headline figure remains extraordinarily elevated, and businesses are still dealing with rising costs that eventually work their way through supply chains and into consumer prices. CNBC reported:
Most of the acceleration in the PPI — nearly 80% — came from a 2.8% surge in final demand goods prices, the biggest increase ever in a data series going back to December 2009. In turn, 80% of that increase came from a 10.7% jump in energy.
Producer prices spiked 1.1% in May, following a downwardly revised 1.1% rise in April. That’s back-to-back months of 14% annualized increases. So far in 2026, the PPI is already up 4%. If this pace continues, it will rise 10% in 2026, matching the 2021 gain, the most since 1980.
PPI is often viewed as a leading indicator for future inflation because it measures costs before they reach consumers. When businesses face higher input costs, those costs rarely disappear into some magical accounting black hole. They generally get passed along. Companies can absorb some pain for a while, but eventually somebody pays the bill. Historically, that somebody is the consumer.
The significance of today’s report extends beyond a single monthly data point. It comes on the heels of yesterday’s CPI report, which showed inflation accelerating once again. The Consumer Price Index rose 0.5% during the month, pushing annual inflation to 4.2%. While both figures matched economist expectations, that hardly qualifies as good news.
In fact, inflation has now climbed above 4% for the first time in three years and sits at its highest level since April 2023. Personally I’m not sure how it could be made any clearer to the market that rates are going to have to hold steady or move higher than being nowhere f*cking near the Fed’s 2% “target”.
But markets seem determined to celebrate inflation reports whenever they merely meet expectations. However, there is a difference between meeting forecasts and solving inflation. The Federal Reserve’s target remains 2%. Inflation is currently running at 4.2%. That isn’t victory. It’s more than double the Fed’s target.
Taken together, yesterday’s CPI report and today’s PPI report paint a picture that should make rate-cut enthusiasts increasingly uncomfortable. Consumer inflation is accelerating. Wholesale inflation is accelerating. Energy prices are pushing higher. And the broad disinflation narrative that markets spent the better part of the last year embracing is showing signs of breaking down.
Last month, I argued that markets were underestimating how quickly the conversation could shift from rate cuts to rate hikes. At the time, that seemed like an aggressive position. Most investors were still operating under the assumption that inflation would continue drifting lower, growth would soften in an orderly fashion, and the Fed would eventually ride in with rate cuts to keep the party going.
That assumption looks considerably shakier today. And every inflation report that comes in hot further limits the Federal Reserve’s options.
At best, this data supports a case for keeping rates elevated for significantly longer than markets would like. At worst, it supports a growing argument that the next move from the Federal Reserve may not be lower rates at all…it may be higher.
That possibility still sounds absurd to many investors because markets have spent years conditioning themselves to expect monetary accommodation whenever conditions become uncomfortable. Somewhere along the way, investors became convinced that central banking was supposed to function like a customer service call center for the S&P 500.
Stocks down? Cut rates. Economy slowing? Cut rates. Credit markets stressed? Cut rates. Investors sad about the death of their pet goldfish? Cut rates. Octogenarian billionaires complaining about flatulence that investments are giving them? Cut rates.
Unfortunately for that crowd, inflation doesn’t particularly care about market expectations, portfolio allocations, or CNBC panel discussions about why six cuts are definitely coming next year.
The Fed can tolerate slower growth. It can tolerate weaker sentiment. It can tolerate hedge fund managers with gas and anchors nearly shitting themselves on financial television. What it cannot tolerate indefinitely is inflation running more than double its target while wholesale prices reaccelerate to levels not seen in years.
And that’s where this vice grip keeps tightening. This market is already facing a half-dozen serious roadblocks and questions that all investors should know about. I wrote about them earlier this week and it’s a free read here.
Now, every hot inflation report removes another degree of freedom from policymakers. Every upside surprise forces markets to reconsider assumptions about lower rates, easier financial conditions, and endless liquidity. Every month that inflation remains elevated increases the probability that “higher for longer” eventually becomes “higher still.”
That’s bad news for an economy that has spent the better part of fifteen years becoming addicted to cheap money.
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Higher rates don’t simply affect stock valuations. They tighten financial conditions across the entire economy. They pressure borrowers. They increase refinancing risk. They squeeze commercial real estate. They stress private credit. They raise funding costs. They expose leverage that only works when money is cheap. The longer rates stay elevated, the tighter that grip becomes.
Yesterday’s CPI report showed inflation running at 4.2%, the highest level in more than three years. Today’s PPI report showed wholesale inflation running at 6.5%, the highest level since late 2022.
Neither report supports the case for imminent rate cuts. Together, they strongly support the opposite conclusion. At a minimum, they reinforce the argument that rates cannot be cut anytime soon without the Fed risking what little inflation-fighting credibility it has left. At the extreme, they strengthen the case that policymakers may eventually have to consider raising rates again.
That is a conversation markets still seem remarkably unwilling to have. Instead, investors continue behaving like a rate-cut rescue package is just one meeting away. Every soft data point gets interpreted as bullish because it means cuts are coming. Every strong data point gets interpreted as bullish because growth is resilient. Somehow every possible outcome leads to the exact same conclusion: buy more stocks.
It’s a fascinating intellectual framework. Unfortunately, inflation data has a nasty habit of ruining good stories. We’re already operating in territory that would have sounded ridiculous a decade ago. Inflation remains far above target. Interest rates are sitting near multi-decade highs. Government debt continues exploding. Asset prices remain historically elevated. Consumers are increasingly stretched. Credit markets are showing signs of strain. Yet markets continue acting as though the return of free money is some sort of natural law.
At her final news conference as Fed chair Wednesday, Yellen said the Fed’s failure to bring inflation up to the central bank’s 2 percent mandate is her single disappointment.
“We have a 2 percent symmetric inflation objective. For a number of years now, inflation has been running under 2 percent, and I consider it an important priority to make sure that inflation doesn’t chronically undershoot our 2 percent objective,” she said.
The unprecedented situation we’re in isn’t stabilizing. It’s becoming more unstable. The vice grip on the economy and financial markets is tightening one data point at a time. The screws turn a little further with every inflation report that refuses to cooperate, every producer-price surprise, every CPI release that reminds everyone that inflation never actually went away—it merely stopped accelerating for a while.
The uncomfortable truth is that policymakers spent years trying to convince everyone there was a painless exit from the biggest monetary experiment in modern history. Now they’re discovering the same thing everyone else eventually discovers and the thing that Austrian economists have been screaming from rooftops: there are no painless exits, only delayed consequences.
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UBS Checks With Major Restaurant Franchisees Reveal Troubling Consumer Trends
In a continuation of our note on the health of America’s restaurant industry, we cite UBS analyst Dennis Geiger for a second straight week, as his coverage of the consumer and restaurant sectors has been spot on. Sentiment toward chain eateries remains “generally cautious,” with macro pressures, elevated gas prices, and weak demand among lower-income consumers continuing to weigh on traffic and sales trends.
Last week, Geiger warned, “Challenged traffic and sales trends likely reflect depressed consumer sentiment across several cohorts, elevated gas prices, and other macro headwinds. We are more cautious on restaurant industry trends heading into 2H26, assuming near-term headwinds persist, rebate check benefits fade, and the risk that gas prices stay elevated.”
Adding more color to the still-difficult backdrop across the restaurant industry, Geiger and his team held discussions with management teams from several leading restaurant brands to gain deeper insight into evolving consumer spending trends:
Brand & franchisee discussions highlight performance pressured by macroeconomic factors
Our latest discussions with several brands / mgmt teams and select franchisees highlight macro headwinds and elevated gas prices that continue to weigh on industry results. Select brands more exposed to lower income consumers continue to face sales pressures, with our recent discussions with Wingstop and McDonald’s franchisees highlighting the current challenges:
1. Wingstop franchisees noted continued negative sss & traffic performance, highlighting multiple potential factors, including: i) ongoing macro pressures impacting key customer cohorts; ii) challenges of lapping robust sales growth in past years, including key sales initiatives such as delivery and marketing growth & expansion into sports; iii) potential customer chicken category fatigue given focus on chicken by most QSR peers as beef costs remain elevated; iv) cannibalization in select highly penetrated markets, particularly via the delivery channel; v) broader QSR value / promo activity; and vi) potentially less social media buzz recently than in years past. However, expectations are that trends should benefit from the world cup in June & July and potentially inflect positive later this year or in early ’27. Franchisees noted opportunities exist to enhance the current marketing strategy to increase the brand’s relevance and improve messaging surrounding Smart Kitchen and the ability to increase speed / throughput without sacrificing food quality. Additionally, value remains an important focus, with opportunities to promote and highlight value. That said, franchisees indicated still elevated demand to open new stores given returns that remain attractive, without material margin concerns.
2. McDonald’s franchisees highlighted choppy performance thus far in 2Q, largely reflecting difficult April comparisons and given the current macro environment, with gas prices having a particularly negative impact on consumer demand among a core lower income cohort. Operators noted challenging macro conditions could continue, while comparisons are difficult in 2H. Despite pressures, our discussions suggest franchisees remain optimistic about the outlook for the brand and sales trends as gas prices eventually ease, with several drivers that could help lift sss including: i) recent launch of specialty beverages, including dirty sodas & refreshers which is driving avg check higher, with energy expected in Aug and other menu innovation coming (ie snack wraps news; new sandwich event around chicken); ii) strong marketing / campaigns (ie world cup meal w/ collectibles off to a solid start; Home Alone meal expected in 4Q); iii) compelling value platforms, with the Under $3 Menu and $4 Breakfast Meal Deal expected to gain guest count traction over the coming quarters; and iv) solid gains from digital / delivery & the loyalty platform. Additionally, franchisees noted an increased brand emphasis on utilizing technology & being more digital forward while also improving hospitality. Strategic plans from the Worldwide Convention appear to be focused on the right areas to drive longer-term traffic and sales share gains.
Three Important Facts About the Space
1. Restaurant inflation down slightly in May; Grocery pricing gap grew modestly
Total food inflation was down slightly for the broader food complex in May (3.1% vs. 3.2% April) per gov’t data, w/ food away-from-home (FAFH) inflation down slightly m/m at 3.5% (vs. 3.6% in April) while food at-home (FAH) price inflation also decreased to 2.7% (vs. 3.0% in April). May restaurant price inflation remained above grocery (~80 bps), w/ the gap increasing from April (~60 bps). Limited service pricing was 3.3% in May (~flat vs April), while full-service was 3.8% (~flat vs April). We expect restaurant pricing to continue to ease modestly over the coming quarters as higher pricing levels roll off.
2. Value differs by age cohort; Rising prices pressuring restaurant traffic
Recent Technomic industry insights highlighted several industry themes, including: i) value differs by age cohort w/ the Baby Boomer & Gen X consumer more focused on quick service & high quality items, while younger customers also weigh other factors including brand identity, digital convenience, and social values. ii) Rising prices are likely still impacting restaurant industry traffic, with 83% of surveyed consumers noticing higher purchase prices & 63% cooking more at home as a result. Over the NTM, 45% of respondents plan to visit restaurants less, while 38% are actively looking for promotional offers.
3. Expect greater impacts from GLP-1s drugs on restaurants over time
UBS Consumer hosted another call with Michael Yee, UBS Global Head of Biotechnology Research, that highlighted his ~$133BN global GLP-1 market forecast by ’30. Total obesity patients treated by GLP-1 in the US are projected to grow from ~5MM in ’25 (or 1% of population) to >10MM by ’30 (or ~5% of adult population), with upside to the forecasts from new drugs and potentially better convenience and fewer side effects. Specifically, the recently launched GLP-1 oral pills could grow to ~20% of the total GLP- 1 market longer-term. That said, the oral pills are not expected to be game changing near-term in the US due to lower efficacy than injectables. Affordability and accessibility of the drug should improve w/ better insurance coverage (including via Medicare and Medicaid) and lower cash pay costs. Currently, ~50% of GLP-1 users stop taking the drug after 1 yr given the high costs, however as it becomes more affordable, the length of use should extend longer. Key implications for the restaurants sector include: 1) reduced dining out frequency, with the impact likely increasing over time as drug adoption grows, 2) alcohol mix continues to decline for full-service restaurants, 3) a shift in consumer preference towards healthier food options and smaller portion, and 4) lower overall calorie intake even from GLP-1 users with the same restaurant visit frequency. Replay details and slides available upon request.
OpenTable Reservations Data by State
Food Away From Home inflation > Food At Home inflation
With the national average gasoline price exceeding the politically sensitive $4-per-gallon level for 10 weeks, consumers, mainly working-class ones, are in a real financial pinch as the tax-refund sugar is waning (read note).
“Let The Oil Flow”: Trump Declares Iran Peace Deal Complete As Pakistan PM Confirms Signing Ceremony Next Friday
Summary
Pakistan PM Confirms Peace Deal, with a signing event in Switzerland next Friday
Trump Confirms US-Iran Peace Deal “Now Complete” and says “Let The Oil Flow”
Iran’s president issues pro-MoU signing statement as Tehran is boasting of great and solid results for its side. There are reports this includes a significant release of billions in its frozen assets in the West.
White House still suggesting an electronic MoU deal to be signed with Iran on Sunday, which leaves nuclear negotiations to further date, only with commitment that Iran not pursue a nuke.
Trump: new strikes on Beirut’s southern suburbs “should not have happened” and given it was on “a special day when we are so close to a Peace Deal with Iran.
“A draft of the US-Iran memorandum of understanding included diluting highly enriched uranium within Iran & the release of $25b of Iran’s frozen assets” (Reuters).
Iranian statements characteristically cautious: Fars News Agency reported earlier that Iran has not made a final call on a potential MOU with the U.S. Iranian authorities are still reviewing the political, legal, and technical details.
Deal Confirmed By Trump, Pakistan PM, Just Ahead Of NY Futures Opening
Just 30 minutes before futures open in New York, President Trump announced on Truth Social that a “Deal” with Iran is now complete.
“Congratulations to all! I hereby fully authorize the toll-free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!” Trump said.
Pakistan’s prime minister, Shehbaz Sharif, also confirmed: “that the Peace Deal between the United States of America and the Islamic Republic of Iran has been REACHED.”
Sharif said, “The official signing ceremony will be on Friday, 19 June in Switzerland.”
Following intensive talks, we are pleased to announce that the Peace Deal between the United States of America and Islamic Republic of Iran has been REACHED. Both sides have declared the immediate and permanent termination of military operations on all fronts, including in…
Israeli journalist and Iran affairs correspondent/analyst for Israel’s Channel 14 reports that hardliners in Iran, including IRGC forces, will not derail the peace deal.
BREAKING | IRGC Commander Ahmad Vahidi Will Not Block the Deal
• According to my sources, IRGC Commander Ahmad Vahidi has agreed not to stand in the way of a deal, despite not supporting it
• The IRGC sees strategic value in a ceasefire: sanctions relief, increased oil and… pic.twitter.com/kqM7jj0CMd
— דרור בלאזאדה | Dror Balazada (@DBalazada) June 14, 2026
With futures in New York set to open momentarily, and with Brent and WTI contracts likely to panic-dump while S&P 500 and Nasdaq futures catch a bid, crypto is soaring to the moon.
S&P500 Futs up about 1%
WTI Futs tumbling to $81 a barrel level.
Earlier, Jefferies analyst David Zervos noted, “I remain hopeful on the Iran front and, when we see resolution, that oil will drop below $60 and we go back to pricing in cuts, with Fed balance sheet reduction in the spotlight. I am confident we will be bouncing around with 8 handles on SPOOs, and eying 9s in ’27/’28.”
Iran’s President Pezeshkian Cites Solid Results For Iran As MoU Signing Could Be Just Hours Away: Rare Optimism From Both Sides
It seems like a deal will really happen this time… finally… given Tehran is boasting of great and solid results for its side. There are reports this includes a significant release of billions in its frozen assets in the West.
via Fars News:
Recent diplomatic efforts have yielded positive results.
Recent developments have shown that no country cares more about Iran’s interests than ourselves
Even if my personal opinion differs, I consider myself obliged to follow the final decision of the system
Resolution of the Supreme National Security Council is the basis of action, and whatever is approved and deemed appropriate by the Supreme Leader will be mandatory for all of us.
I regret the neighboring countries being exposed to the consequences of military actions. Our operation targeted the US bases on the soil of these countries.
Issues and misunderstandings with Gulf countries are being resolved
Ties with Gulf region countries are on path to improvement.
Talks do not mean abandoning principles. Iran won’t bow to any kind of bullying or illegal pressure.
Media reports on war, negotiations do not necessarily reflect Supreme National Security Council views.
Fox News, citing President Trump, says deal could be signed in Next 2-3 Hours:
Spoke with President Trump. He says the deal with Iran is expected to be signed in the next 2-3 hours.
President Trump said he asked Israeli Prime Minister Netanyahu “what the fu*k are you doing?” on a call after the Israeli strikes against Beirut. He told Netanyahu not to…
Israeli Strike on Beirut Once Again Threatens MoU Signing: Trump says “Let’s Not Blow It”
President Trump on Truth Social has sought to brush back the Israeli Sunday strikes on Beirut’s southern suburbs, saying this morning’s attack “should not have happened” and given it was on “a special day when we are so close to a Peace Deal with Iran.
He emphasized, “We are very close to a Deal that will bring peace to the region, including to Lebanon, and all sides should stand down.” He warned not just Israel against more attacks, but said Hezbollah must refrain, after the Iran-aligned Shia group sent more projectiles on northern Israel. “This could be the beginning of a long and beautiful peace” he said, and added “let’s not blow it.”
Lebanon’s civil defense agency has indicated that the new attacks on Beirut’s southern suburbs killed at least three people. “The bodies of three martyrs were recovered from under the rubble and six wounded,” the agency announced in a statement.
Iran Weighs In on Anticipated MoU Signing Details, Potential Unresolved Issues
Bloomberg and Reuters are reporting Sunday some fresh details on Iran’s version of what the MoU to be signed – which President Trump says will happen today (albeit remotely) will inlcude.
“A draft of the US-Iran memorandum of understanding included diluting highly enriched uranium within Iran and the release of $25b of Iran’s frozen assets, Reuters reports citing a senior Iran official it didn’t identify,” writes Bloomberg in the latest. This includes:
Final deal to be discussed in the 60 days following agreement by the two sides
Also includes Iran immediately reopening Hormuz Strait to all commercial vessels and US lifting its naval blockade
Tehran in draft agrees that will neither produce nor acquire nuclear weapons
To maintain the nuclear status quo until final deal is reached, including by not enriching uranium and not expanding nuclear facilities
One potential major complication to the two sides actually signing is what’s happening in the Beirut suburbs, which the Israeli Air Force has just struck for the first time in about a week:
Israel has struck a building in Beirut’s southern suburbs in response to Hezbollah attacks on northern Israel, marking the first such strike since last Sunday. pic.twitter.com/VYv3mGFrF9
Provocative Israeli military actions previously effectively torpedoed prior Washington-Tehran attempts to get back to the negotiating table. Will the same hold-up happen again?
Pro-Israel supporters and lobbyists in the US have been raging against what they see as a ‘failure’ of a deal, and ‘capitulation’ to Iran on kicking the can on the nuclear issue… not least among them is on display in the following:
Has to be about releasing the $20-24 billion in frozen assets to Iran, the most immediately damaging concession for Trump.
I took a plunge into Mark Levin’s show–the squealing about Trump selling out Israel for Iran is rather enjoyable ngl.https://t.co/hf27AJiGuL
The usual caveats which proved all prior ‘deal imminent’ headlines to be premature and wishful thinking still apply. Some latest from Iranian state media according to Al Jazeera:
Iran’s Fars news agency, citing a source close to the negotiating team, is reporting that Iranian officials were discussing the ceasefire points with the Qatari mediators in Tehran.
The report added that the deal is yet to be finalised and “no agreement will definitely be signed at the time Trump announced”.
The comments were made to the agency prior to Israel’s deadly attacks on Lebanon’s southern suburbs today.
President Trump said Saturday that an interim U.S.-Iran deal to reopen the Strait of Hormuz and wind down the four-month conflict could be signed as soon as Sunday. However, Tehran has pushed back on that timeline, signaling that no final decision has been made while Iranian officials continue to review the terms of a potential memorandum of understanding.
“The Deal is scheduled to get signed tomorrow, and immediately after it is signed, the Hormuz Strait is OPEN TO ALL,” Trump said in a Truth Social post on Saturday, while claiming that Iran “no longer wants a Nuclear weapon.”
The president continued, “At the appropriate time, when all is calm, we will go in and get the Nuclear Dust, buried deep under the powerful sunken granite mountains, thanks to our beautiful B-2 Bombers and their brilliant pilots, and downblend and destroy it, whether in Iran, or the United States.”
Pakistan and Qatar are mediating, with technical talks expected to follow any signing and last up to 60 days. The MOU is structured as a step-by-step framework, meaning the Hormuz maritime chokepoint will reopen first, followed by economic rewards for Iran as conditions are met.
Pakistan’s Sharif Says Deal Imminent; Iran’s Statements More Cautious
Pakistan, which has served as one of the mediators, is preparing to sign the peace deal electronically, followed by technical-level talks next week, according to Pakistani Prime Minister Shehbaz Sharif. He said those talks would last two months and focus on Iran’s nuclear program.
Meanwhile, the Iranian media outlet Fars News Agency reported earlier that Iran has not made a final call on a potential MOU with the U.S. Iranian authorities are still reviewing the political, legal, and technical details, with no final decision announced as of Sunday morning.
The urgency behind securing an MOU to reopen the Hormuz chokepoint is clear: the world is drifting dangerously close toward an energy cliff. Strategic petroleum reserves are being drawn down rapidly around the world to offset the loss of Gulf production, while China’s weakening fuel demand is helping to offset some of the broader supply shock.
Iranian Foreign Minister Abbas Araghchi made clear Friday that Iran understands that terms related to its nuclear program will be finalized within 60 days of the initial agreement being signed. So in essence, this means Iran could get its wish of pushing nuclear negotiations back, only after the hot conflict has clearly ended. Iran has long sought to separate the issues of a final end to the war from consideration of its nuclear program.
Energy markets priced in de-escalation last week, with Brent crude futures sliding as much as 5.1% Friday and European gas dropped as much as 8.4% after Trump canceled planned new strikes on Iran.
IG’s weekend markets are pricing in a 50 bps decline in Brent crude when futures open on Sunday evening.
But throughput traffic through the Hormuz chokepoint remains far below pre-war levels, and a vessel was struck off Oman on Saturday. Normalization could take weeks, if not many months.
Bloomberg noted, “Roughly 140 ships passed through the narrow chokepoint each day before the conflict erupted.”
Here are the latest overnight headlines (courtesy of Bloomberg):
US-Iran Deal Progress
• Trump said on Saturday that a deal with Iran is scheduled to be signed on Sunday, claiming the Hormuz Strait will open immediately after signing and that Iran no longer wants nuclear weapons
• Iran contradicted Trump’s timeline, saying it is still reviewing the text and hasn’t announced a final decision, with authorities conducting a detailed assessment of political, legal, and technical dimensions
• Pakistan said on Saturday that an interim deal could be finalized within 24 hours and is preparing for electronic signing immediately after, followed by technical level talks next week
• A senior US official said on Friday there was an 80% or 85% chance an agreement gets signed soon, though some Iranian hardliners still want to kill any breakthrough
Draft Deal Terms
• According to a senior Iran official, the draft memorandum includes diluting highly enriched uranium within Iran and the release of $25 billion of Iran’s frozen assets
• The draft includes Iran immediately reopening the Hormuz Strait to all commercial vessels and the US lifting its naval blockade
• Tehran agrees in the draft that it will neither produce nor acquire nuclear weapons
• The draft includes a US oil sanctions waiver for Iran
• The final deal will be discussed in the 60 days following agreement by the two sides
• A central element is a step-by-step approach with the Strait of Hormuz reopened followed by Tehran getting economic rewards each time it meets US demands
Regional Tensions
• The Israeli military announced on Sunday it launched strikes on Beirut targeting Hezbollah infrastructure, with Netanyahu’s office saying the strikes were in response to Hezbollah attacks in northern Israel
• When Israel last struck the Beirut suburbs a week ago, Iran responded with attacks
• US Central Command said on Saturday it shot down Iranian drones near the Strait of Hormuz
• Secretary of State Marco Rubio spoke with India’s External Affairs Minister on Saturday after US strikes left three Indian mariners dead, stressing that all commercial vessels should immediately comply with orders from US forces
Nuclear Program Developments
• According to five sources familiar with US intelligence, Iran has sealed off its cache of near-bomb grade uranium and placed explosive mines near entrances to the site in recent weeks, making attempts to remove the uranium far riskier
Financial Arrangements
• The UAE has agreed to unlock billions of dollars for Iran, with four sources telling Reuters the total was $10 billion, more than $3 billion of which had already been delivered, though two other sources put the total at $20 billion
• The UAE denied reports on the Iran funds transfer, specifically denying allegations concerning $3 billion
Diplomatic Activity
• Trump will meet with leaders of France, Qatar, the UAE, Egypt and India at the G7 summit in France, underscoring the outsized role the war in Iran continues to play
Khamenei Burial Plans
• Ali Khamenei, Iran’s former supreme leader killed in US-Israeli air strikes on February 28, is set to be buried at the Imam Reza shrine in Mashhad on July 9, with public funeral ceremonies in Tehran and Qom in preceding days
“Any deal that kicks the can down the road on the most critical issues and is conditions-based would put the US and Iran exactly where they’ve been: a fragile ceasefire in name only that is routinely tested and prone to violence,” said Becca Wasser, defense lead for Bloomberg Economics.
One can only hope that an MOU, and eventually a credible path toward a real peace deal, is something Tehran actually follows. What was initially sold as a quick war by the Trump administration has now dragged on into its fourth month. Early in the conflict, the administration’s view was that the Hormuz chokepoint would not be sealed shut, yet that is exactly what happened. Since then, the conflict has turned into a giant game of Shahed drone whack-a-mole with the Iranians. The Trump team needs this conflict resolved quickly, not only to prevent another wave of inflationary pressure in energy markets and avert the world from sliding into an energy cliff, but also to repair the political optics ahead of the midterms.
A predictive market like Polymarket or Kalshi is a financial exchange where people buy and sell contracts based on the outcome of real-world events. The price of a contract fluctuates between one cent and 99 cents based on supply and demand, directly reflecting the crowd’s collective probability estimate that the event will happen. If the event occurs, the contract settles at one dollar, allowing accurate forecasters to profit while aggregating decentralized information into a real-time predictive tool.
Predictive markets are experiencing a massive paradigm shift. They are rapidly transitioning from a niche internet subculture into a powerhouse financial category. Based on current trading data and institutional trends, predictive markets are not just likely to continue growing; they are scaling at a pace that few financial sectors ever achieve. Monthly trading volumes topped $24 billion, and analysts project total market volume will surpass $240 billion, putting the industry on a realistic path to hit $1 trillion in annual trading volume by 2030.
To a central planner, nothing is more dangerous than an accurate, uncontrolled price signal. This fear is what is precipitating government attempts to either control or outright ban prediction markets. The public-safety explanations offered by regulators are largely a convenient smoke screen for a deeper, self-serving anxiety. When you look at prediction markets through the lens of public choice theory and recognize that government actors operate out of their own self-interest, the real concern isn’t that these markets might fail. The real concern is that they might succeed. Whether it’s an economic forecast or the likelihood of a military intervention the state wants to be the ultimate authority.
Prediction markets succeed because they bypass the echo chambers of institutional punditry and replace them with a brutal, real-time mechanism for truth. Unlike traditional polling or bureaucratic committees, where experts face zero financial consequence for being wrong, prediction markets force participants to back their assertions with capital. The result is a highly efficient forecasting tool that consistently outperforms the rigid, top-down projections of the state.
Consequently, the escalating regulatory crackdowns on these decentralized platforms are not born out of a genuine desire to protect consumers, but out of institutional panic. When a decentralized crowd can forecast economic shifts, policy outcomes, or political realignments with greater precision than a federal agency, the illusion of bureaucratic expertise shatters. Centralized regulators see these platforms as a threat to their existence because a functional market cannot be bullied into compliance. By restricting access or tying these platforms up in endless litigation, regulators are attempting to blindfold the public to preserve their own monopoly on foresight.
Even if you never risk a single dollar on an event contract, prediction markets provide immense, passive value to you as a consumer of information. For the non-bettor, prediction markets function as a highly sophisticated, open-source intelligence utility. They cut through the noise of modern life in a multiple of ways.
We live in an era of hyper-partisan media and corporate punditry designed to manufacture outrage rather than convey facts. By checking a prediction market, you bypass the emotional spin. Because the people moving those numbers face immediate financial penalties for being blinded by bias, the market price acts as a sobriety check. If a cable news host is screaming that a piece of legislation is a “certainty to pass,” but the market contract is stuck at 12 cents, you instantly know the reality doesn’t match the rhetoric.
Prediction markets also work as a more efficient aggregator of information. No single expert, federal bureau, or algorithm can possess all the fragmented pieces of information scattered across the globe. As Friedrich Hayek famously noted, a decentralized price mechanism is the only tool capable of coordinating this “local knowledge.” Prediction markets essentially crowd-source global intelligence.
Polls and bureaucratic reports are static snapshots—by the time they are published, they are often obsolete. Prediction markets are dynamic and continuous. By watching the rate of change in market prices during a major event, you are watching the world process information in real time. If a geopolitical event occurs or an economic indicator is leaked, the sudden spike or drop in a market contract tells you exactly how consequential that information truly is long before an editor can draft an op-ed about it.
When looking closely at how the early 2026 Iran conflict unfolded, prediction markets functioned exactly as the “advanced knowledge utility” they are designed to be. In late 2025 and January 2026, when the initial domestic protests and localized instability began in Iran, mainstream analysts and agencies were projecting a relatively calm energy market. They were predicting Brent crude would average a modest $55 to $60 a barrel for the year.
However, looking at the crude oil options markets and decentralized geopolitical event contracts during the first two weeks of January, a sharp divergence emerged: While talking heads on television were telling the public not to panic, people with capital on the line were actively bidding up the probability of a worst-case scenario. The market was pricing in a “war premium” based on the structural vulnerability of the Strait of Hormuz weeks before the US-led coalition initiated strikes in February, as detailed by researchers tracking informed trading in prediction markets.
When the war officially escalated and Iran choked off maritime traffic through the Strait of Hormuz in early March, legacy media was completely lagging. Prediction markets gave observers immediate clarity regarding the Strait of Hormuz shutdown on Polymarket and IMF PortWatch. Because traders were aggregating raw satellite tracking data, insurance rate spikes, and numbers from regional shipping firms, the market odds shifted columns hours before the Pentagon held press conferences to confirm that 20 percent of the world’s oil supply was effectively stranded. If you had relied solely on conventional energy forecasts in January, you would have been told that a price spike was an outlier event.
Government claims of dangers from predictive markets are at best hyperbole. If we strip away the dramatic rhetoric of politicians and look strictly at the evidentiary record, the “mountain of evidence” the government claims to have is just a few isolated incidents and a heavy dose of protectionism for established gambling monopolies. When pushed to show actual, systemic, widespread negatives rather than hypothetical “what-ifs,” the government’s case falls apart.
The federal government heavily publicized the April 2026 case against the US Army soldier who made over $404,000 using classified information about operations in Venezuela. However, it remains the only major case of its kind involving national security.
When the Commodity Futures Trading Commission (CFTC) fought Kalshi in federal court to ban congressional control contracts, the DC Circuit Court of Appeals explicitly denied the government’s request for a stay, noting that the CFTC’s concerns about market manipulation and threats to election integrity were speculative and not substantiated by concrete evidence.
This decision cleared the way for the legalization of commercial election event contracts in the United States. In the DC Circuit Kalshi v. CFTC Case it was found that the regulatory agency had exceeded its statutory authority, noting that the agency failed to demonstrate that trading on political outcomes constituted immediate harm to the public interest.
When Minnesota passed a ban, arguments leaned heavily on market share. While traditional casinos operate under tightly-controlled, heavily-taxed state frameworks. Prediction markets represent a massive regulatory end-run: because they frame themselves as financial instruments, they don’t pay state gaming taxes. The “harm” the states are pointing to is often a projected loss in tax revenue and a threat to traditional gaming monopolies, rather than documented societal ruin.
According to the American Gaming Association’s Commercial Gaming Revenue Tracker, prediction market platforms offering sports and event contracts may have cost state governments nearly $950 million in potential gaming taxes since the start of 2025. Because these platforms answer to federal oversight rather than state gambling boards, they typically pay standard corporate tax rates rather than the steep gross gaming revenue taxes imposed on traditional sportsbooks.
At the federal level, suppressing these markets is less about money and more a classic attempt to control the narrative. When the state criminalizes or restricts the voluntary exchange of information under the guise of “market integrity,” it actively chooses to promote and enforce ignorance. This intervention robs the public of a tool for navigating uncertainty, while simultaneously protecting entrenched government institutions from the embarrassment of being publicly corrected by the spontaneous order of the marketplace.
The government’s crackdown on prediction markets exposes a deep paternalistic anxiety. The state’s logic rests on the arrogant assumption that ordinary citizens cannot be trusted to voluntarily exchange risk, analyze information, or process events without a government chaperone.
By cloaking their efforts in the language of “protecting the public,” federal and state authorities are simply trying to suppress a more efficient exchange of information because they fear this mathematical mechanism that accurately reflects public sentiment—and exposes bureaucratic incompetence—in real time.
Anthropic Rushes Staff To D.C. After A National-Security Order Yanked Fable In Three Days
Senior Anthropic technical staff have been dispatched to Washington DC, after a Friday night government demand to implement sweeping export controls resulted in the company yanking its two most capable models Friday night after only a few days of public release – Mythos and Fable (Fable being Mythos with guardrails) – over the alleged ability to ‘jailbreak’ the latter. As of Sunday the models are still down, no restoration date has been set, but sources on both sides told Axios they are eager to resolve it. That said, the two parties best positioned to explain what happened are telling different stories as to how this happened.
The order is narrow on paper and sweeping in effect. It prohibits access by “any foreign national, whether inside or outside the United States, including foreign national Anthropic employees.” Anthropic has no reliable way to verify a user’s citizenship at the moment they send an API request or open a chat window, and its own staff, customers, and cloud partners are spread across dozens of countries. The company concluded it could not selectively block foreign nationals, so it blocked everyone. Anthropic’s other models, including Opus 4.8, Sonnet, and Haiku, are untouched and still running.
The US government, citing national security authorities, has issued an export control directive to suspend all access to Fable 5 and Mythos 5 by any foreign national, whether inside or outside the United States, including foreign national Anthropic employees.
The directive came from Commerce Secretary Howard Lutnick’s office, and a U.S. official confirmed to Bloomberg that the department sent the letter. Curiously, the letter did not spell out the specific national-security concern behind it. The legal mechanism appears to be the “deemed export” rule, the decades-old principle that releasing controlled technology or source code to a foreign person counts as an export to that person’s home country. Applying it to a deployed commercial frontier model is, by NBC’s account, the first time a leading AI company has pulled a publicly deployed model offline because of federal intervention.
What we do know about Lutnick’s letter; it requires a license for the export, re-export, or domestic transfer of the two models and reaches any foreign person on U.S. soil. It does not, on its face, bar U.S. citizens or the U.S. government, and the cutoff for American users is a consequence of Anthropic’s inability to filter rather than the order’s intent. Government access is murkier still: CyberScoop reports the National Security Agency had been given Mythos 5 to conduct offensive cyber operations through Project Glasswing, and it remains unclear how the directive affects that program. Foreign vetted partners were clearly swept in, with the Korea Times reporting that Korean Glasswing members including the Korea Internet & Security Agency, SK Telecom, and Samsung lost their access. In other words, the order disconnected allied security partners abroad while a U.S. agency’s separate channel to the more powerful sibling model appears, on the order’s logic, to sit outside its reach.
Confirmed cut offs:
Private/commercial users. Fable’s public, API, and enterprise users, plus the private-sector Glasswing partners (the vetted cyber firms) who had Mythos.
Foreign government and intergovernmental partners. The Korea Times reports Korean Glasswing members (the Korea Internet & Security Agency, SK Telecom, Samsung) lost access, and Security Affairs reports European Glasswing partners including NATO and ENISA (the EU’s cybersecurity agency) were cut off with no notice. Those are foreign nationals under the order, so the order reaches them directly.
The reach inside the United States is the most unusual part, and it produced an awkward result for Anthropic; their own employees can’t use Mythos or Fable now. Any non-citizen querying Fable from, say, an apartment in San Francisco is barred exactly as if they were in Shanghai – and that population includes a meaningful share of Anthropic’s own workforce, since frontier labs run heavily on foreign-born engineers. The company effectively had to lock some of its own staff out of the model it had just shipped. Dean Ball, an AI policy expert who briefly served in the current administration and has been sharply critical of its moves against the company, called the action “cartoonish” on X, pointing to the incoherence of an administration that wants to export advanced AI chips to China while moving to bar allied users, from Britain on down, from the best American models.
Tinfoil, anyone?
The national security order might be a godsend for Anthropic – which priced Fable at ten dollars per million input tokens and fifty per million output, double its Opus 4.8 flagship and, by its own description, less than half the price of Mythos Preview – the most expensive model it sells and a token-hungry one on long tasks. It was free on Pro, Max, Team, and Enterprise plans only from June 9 through June 22, with metered credits taking over after, and Anthropic was candid the staged rollout was about capacity, expecting demand “very high, and difficult to predict.”
So this shutdown, triggered by Amazon (read below), and landing three days into a two-week giveaway conveniently capped an expensive subsidy that after we’re guessing most users switched to the thirsty model.
How Three Days Unspooled
Fable 5 launched on June 9 as the first broadly available “Mythos-class” model, the public-facing version of a system Anthropic had previously kept behind a vetted-access wall because of its cyber and biological capabilities. Mythos 5, the same underlying model with some safeguards removed, stayed reserved for cleared cybersecurity partners. Fable 5 was the middle path: Mythos-grade capability, Anthropic said, with guardrails strong enough for general release. The company put it on the API, made it generally available on Amazon Bedrock and GitHub Copilot, and folded it into Pro, Max, Team, and Enterprise plans at no extra charge through June 22.
The imminent “Anthropic – White House” ceasefire is the new imminent “Iran-US” ceasefire https://t.co/byCO9mLo2h
The launch was rocky before Washington entered. Researchers complained the safeguards were overbroad and that ordinary technical work was being downgraded. A sharper backlash hit over what users called a “silent fallback,” a mechanism that quietly rerouted certain high-risk queries to the older Opus 4.8 without telling the user. Anthropic reversed it, apologized, and said flagged requests would be made visible. Then, on June 10, a well-known jailbreaker who posts as Pliny the Liberator published what he claimed was a working bypass of Fable’s safety systems, complete with lurid outputs spanning cyber exploits and chemical synthesis. It gave the controversy a public face, though it is worth noting it was not the finding the government ultimately cited. Anthropic has never confirmed which jailbreak triggered the order, the viral Pliny post or the private report described below.
🚨 JAILBREAK ALERT 🚨
ANTHROPIC: PWNED 🫡
FABLE-5: LIBERATED 🦋
let’s start with the 🐘…
the consensus seems to be that this has been one of the most disappointing model drops of all time, effectively preventing legitimate researchers from contributing their talents to our… pic.twitter.com/Z0vdPIt4vY
— Pliny the Liberator 🐉󠅫󠄼󠄿󠅆󠄵󠄐󠅀󠄼󠄹󠄾󠅉󠅭 (@elder_plinius) June 10, 2026
Anthropic says it received a Friday evening call giving it roughly ninety minutes to take the models down over a national-security threat, with no specifics attached. The Lutnick letter followed that afternoon. By late evening, users had lost access, and Anthropic posted its statement calling the situation a misunderstanding. The next day, David Sacks and Pete Hegseth offered the administration’s version in public. As of this writing, the models are still offline.
The Trigger Was Amazon
The finding that set this off appears to have come not from an anonymous internet jailbreak but from Amazon, which is to say from Anthropic’s single largest investor.
According to the Wall Street Journal, corroborated by The Information and Reuters, Amazon researchers found a way to prompt Fable 5 into surfacing information useful for cyberattacks, and Amazon chief executive Andy Jassy raised the concern directly with senior officials, including Treasury Secretary Scott Bessent. The company’s report reportedly showed Fable surfacing security bugs in at least four software programs when fed a specific set of queries, and National Cyber Director Sean Cairncross and Lutnick were both in the conversations. Sacks, in his thread, described the source only as a “highly credible trusted partner.” Amazon has declined to detail the research, telling reporters it is “not uncommon for governments to seek our counsel” on security risks and that it does not discuss the substance of those talks. AWS, which hosted Fable 5 through Bedrock, later confirmed Anthropic had asked it to revoke access for all users in all regions. Amazon was not alone in raising flags, either: at least five other companies submitted warnings in the same window.
What’s interesting is that Amazon is Anthropic’s largest backer – with a cumulative stake of roughly $13 billion and a $100 billion AWS spending commitment running the other way, plus a board seat, the cloud that serves the models, and a Trainium chip relationship. One of the companies most thoroughly entangled with Anthropic’s business helped prompt a government action that knocked Anthropic’s flagship launch offline eleven days after the company filed confidentially for an IPO. There may be an entirely straightforward explanation, that Amazon spotted a real risk and escalated it through the proper channel.
Was Amazon concerned about being legally responsible for jailbroken Fable hackings?
By Anthropic’s account, the government supplied only verbal evidence of a narrow, non-universal bypass that amounted to asking the model to read a codebase and flag software bugs – with the same result obtainable from other public models including OpenAI’s GPT-5.5. The company argues a narrow jailbreak cannot justify “recalling a commercial model deployed to hundreds of millions of people,” and that applying that standard industry-wide would “halt all new model deployments.” It is a first-party account from a company that wants its product back online, but it is the more detailed of the two, and Anthropic notes that thousands of hours of pre-launch red-teaming by the U.S. government, the U.K. AI Security Institute, and outside groups found no universal jailbreak.
It is also corroborated by the only named expert who has read the underlying report. Katie Moussouris, the Luta Security chief executive who built Microsoft’s bug-bounty program and helped design the Pentagon’s first, reviewed the Amazon findings at Anthropic’s request and told the Journal and Fortune it was “not a jailbreak” but “Defense Oriented Prompting (DOP), capabilities defenders need,” adding that if national defense was the goal the response “just scored an own goal against us.” Chris McGuire of the Council on Foreign Relations, no reflexive critic, called the across-the-board restriction “highly questionable.”
The administration’s case runs the other way, and it runs on Anthropic’s own rhetoric. Sacks, who co-chairs the President’s Council of Advisors on Science and Technology and previously served as the White House AI and crypto czar, says a trusted partner found a working jailbreak and that the administration asked CEO Dario Amodei to fix it or pull the model. “Dario allegedly refused.”
Sacks points out that Anthropic spent months calling Mythos-class models a more dangerous category needing oversight; Fable is Mythos with guardrails – so a bypass exposes “operability of a cyber weapon” to people who should not have it. His bottom line: “the ball is in Anthropic’s court.”
I’ve had a number of conversations with folks inside and outside government about the current situation with Anthropic, and here is what I believe to be true:
— As we know, Anthropic publicly released its Mythos class models earlier this week under the commercial name Fable.…
Meanwhile, a more alarming claim, that the trigger involved access from China, rests on a single Semafor source and is disputed by Anthropic, which says the issue was never raised and that it blocks access from inside China. Treasury, Commerce, and the Bureau of Industry and Security have not put a technical case on the record. Anthropic wants its model live and its safety brand intact; the White House wants to look alert rather than asleep as AI starts touching cyber operations. Nobody has shown the proof.
Secretary of War Pete Hegseth posted a “Told ya so” – writing “Three months ago, @DeptofWar kicked @AnthropicAI out of our building—forever … Every passing day proves why that was the right move.”
Sacks has explicitly denied the Fable action is retaliation, and there is no public evidence that it is. But the prior friction is real, and the administration’s own messaging keeps blurring the line between a technical enforcement action and a broader fight over who sets the terms for AI in national security.
Precedent-Setting
For the rest of the industry, the precedent is the point: a frontier model can be launched, praised, and pulled from global availability inside a week, by emergency directive, for reasons its provider cannot fully see. Reporting suggests the administration is treating this as Anthropic-specific for now, but even a one-company action pushes every lab toward pre-clearing high-capability releases. That direction is not hypothetical; Trump signed an executive order this month directing agencies to establish a voluntary mechanism for the government to get early access to powerful models before deployment. The Fable order is what the involuntary version looks like.
Enterprises are reading it as a resilience warning, with analysts urging multi-provider routing, local fallback, and a harder look at open-weight models – exactly the immunity Chinese open-source labs are now marketing. For U.S. allies the lesson is sharper, because the order cut off allied users too, sweeping European, Canadian, and Indian customers into the same blackout. The European Commission said emergency measures should not discriminate against partners; French officials reached for the language of technological sovereignty. The subtext, that AI infrastructure controlled in Washington can be switched off in Washington, is now being said aloud.
Then there’s the paradox Anthropic helped build – long arguing that governments should be able to block unsafe deployments, distinguishing itself from rivals who oppose binding rules. This is what that looks like when the process is not the “transparent, fair, clear, and grounded in technical facts” one it envisioned but an emergency directive with no public record. Its objection is not that no model should ever be stopped, but that this is the wrong way to stop one – a harder argument for a company that spent years naming the danger and marketing the restraint.
The imminent “Anthropic – White House” ceasefire is the new imminent “Iran-US” ceasefire https://t.co/byCO9mLo2h
Would undeniable evidence of alien life cause large numbers of people to abandon what they believe about God? Disclosure Day comes out in theaters this weekend, and that appears to be one of the biggest questions that this film is driving at. Much of the global population has always operated under the assumption that the only intelligent life that exists in the universe is on this planet. So how would the world respond to very clear evidence that proves once and for all that we are not alone?
Steven Spielberg is the creative force behind Disclosure Day, and he is making it abundantly clear what he believes.
Half a century after Steven Spielberg challenged audiences to think about what lies beyond the starry canopy that defines our universe in Close Encounters of the Third Kind, the director is again challenging accepted precepts of faith and singular belief in a supreme being.
His new film Disclosure Day sees him revisit the possibility of aliens: “I absolutely think that they have been here, and they are here,” he outlined in an interview with CBS News.
Wow.
Spielberg is actually convinced that aliens are here on Earth right now.
And during a different interview with USA Today, he expressed his view that there is “overwhelming” evidence that aliens exist…
When I made “Close Encounters,” I needed a lot of imagination. I believed there was other life out there, although I wasn’t quite sure if it had come here. I was really curious about UFOs and UAPs. I said, “I’m not going to call ‘Close Encounters’ science fiction – I’m going to call it science speculation.” But since the beginning of the 21st century, there’s been more and more access to the actual visual truth. We’re able to confirm our belief by showing what we shot on our devices to other people. It’s just become overwhelming to me that we’re not alone in the universe.
Disclosure Day makes it clear that Spielberg does not consider the fact that we are not alone to be a bad thing.
In fact, it appears that he is trying to get those that watch the movie to be open to whatever the “aliens” may want to teach us.
In my opinion, that is what makes this film so dangerous.
The idea is that once the “aliens” show up we should discard what we have always believed and just accept whatever new reality they have to offer.
Of course Spielberg also acknowledges that this would be very difficult for many of us.
Spielberg is convinced that if the government fully revealed everything about alien life that they have been keeping from us, it would “mess up a lot of people”…
“There’s a faction in the film that represents a pretty good position of why — possibly because of ontological shock, social dislocation — if this truth… were just known overnight, if the government announced, ‘Yes, we have been keeping this from you since 1947,’ that would mess up a lot of people.”
So exactly who are the “people” that Spielberg is referring to?
At one point in his interview with CBS News, Spielberg suggested that undeniable evidence of alien life would greatly shake the theological beliefs of those that believe in God…
During a CBS News interview, Spielberg reflected on how confirmation of intelligent life beyond Earth could affect religious faith, saying, ‘The movie also takes the position of the church.
‘What does this do to the fundamental beliefs that many of us have? Is God our God only on this planet? Or is God a god for every system where there’s civilization and intelligent life, and even developing life?’
The Oscar-winning filmmaker argued that proof of alien life would force many believers to confront difficult questions about God’s role in a universe that may be filled with other intelligent civilizations.
Obviously this is something that has been on his mind for a long time.
If you have not seen Spielberg’s full interview with CBS News yet, I would highly recommend checking it out, because it is very revealing…
Because it has so much hype, I think that Disclosure Day will be one of the biggest movies of the year.
Over time, billions of people could end up watching this film.
Just think about that for a moment.
All over the world, people will have their opinions about extraterrestrial life shaped by Spielberg, and that is extremely alarming.
One character in Disclosure Day actually suggests that when the “aliens” finally show up, people will “stop believing in God” and will instead accept the “aliens” as “deities”…
Would the discovery of alien life really be faith-shattering? One character in Disclosure Day (a former novitiate nun played by Bono’s daughter Eve Hewson) argues, “People will see [aliens] as deities. They’ll stop believing in God.”
For decades, movies, television shows, books and video games have been priming us to believe that someday the “aliens” will finally make their grand appearance.
And when that happens, much of the global population will accept whatever they have to say hook, line and sinker.
But true Christians will not have their faith shaken by Disclosure Day, nor will they have their faith shaken even if “aliens” suddenly show up in large numbers in the skies above this planet.
From the very beginning to the very end, the Bible openly acknowledges that we are not alone in the universe.
In fact, the Bible has a great deal to say about angels, fallen angels, demons and a whole host of other non-human entities.
And the final book of the Bible is far wilder than any science fiction movie that Hollywood has ever put out.
Yes, very strange creatures will someday invade our planet. You can read all about it in Revelation chapter 9.
I have been writing about all of this stuff for well over a decade, because I want the world to understand what is going to happen in advance.
Once you understand what is going to happen, your faith will never be shaken by a Steven Spielberg film.
On social media, some Christians are making this point quite eloquently…
One user posted on X in response to the director’s statements, saying: ‘I can promise you it won’t. Not even for a second.’ While another shared: ‘The Alien Psyop will definitely make people question their faith lol.’
An X user posted: ‘We’ve had 70 years of sci-fi movies with aliens. I think Christians will survive this movie with their faith intact.’
Steven Spielberg seems to think that the fact that we are not alone is some sort of grand discovery.
But the reality of the matter is that the Bible has been telling us this for thousands of years.
We were never alone.
So don’t buy into the Hollywood propaganda.
We are being set up for a deception of epic proportions, but those that hold on to the truth will be able to see right through it.
