Authored by Victor Davis Hanson via American Greatness,

By any measure, California is a failed state—and a national embarrassment.

• Taxes? It has the highest income and gas taxes in the nation.

• Roads? A Reason Foundation survey ranks it 49th among the states.

• Mass flight? Between 250,000 and 350,000 more Californians leave the state than move in each year. Housing, gas, insurance, and electricity prices? The highest in the continental U.S.

• Illegal aliens, the poor, the homeless, the foreign-born, and welfare recipients? The largest numbers in the U.S.

• Public K–12 schools? Test scores in the bottom quartile.

• Poverty? Twenty percent live below the poverty line.

So, what happened to the nation’s most richly naturally endowed—and once best governed—state?

The Left took total control—after millions of the embattled middle class fled.

Millions more impoverished immigrants, legal and illegal, took their place.

Left-wing Silicon Valley spawned some of the wealthiest elite liberal enclaves in the world.

The result was a neo-feudal society that was hardly democratic.

Millions of subsidized poor compose the bottom.

A beleaguered middle continues to shrink.

An ultra-rich apparat of left-wing coastal professionals and investors rules from the top.

As upper-bracket taxpayers fled, taxes rose on those who remained to fund expanding entitlements for newly arrived poor would-be residents. In turn, even more of the middle class left.

The remaining pyramidal economic structure ensured a Democratic monopoly—further entrenched by changing balloting laws, gerrymandering voting districts, vote harvesting, fueling public employee unions, and ignoring or undermining popular referenda.

In 2014, Californians voted for Proposition 1, a $7.5 billion water bond designed to solve the state’s chronic water storage deficit.

Included was $2.7 billion specifically designated for new reservoirs, as the last major reservoir had been built in 1980, when California had roughly half its current population.

Despite the people’s vote, bureaucracies, elected officials, and green activists blocked all new reservoir construction.

Adding insult to injury, Governor Gavin Newsom instead used $250 million from the Proposition 1 fund to blow up four dams on the Klamath River. They had once provided storage, electrical generation, recreation, and flood control.

Californians have twice voted in referenda (for Proposition 209 and against Proposition 16) to bar the use of racial preferences for contracting, admissions, and promotion in public institutions.

Most public universities simply ignored the law. They continued their “diversity” quotas under new names, relying on left-wing elected officials and judges to ignore again the will of the people.

Preferential admissions, along with racially segregated dorms and graduation ceremonies, continued under euphemisms and denials. “Theme” houses, “affinity” graduations, and “safe spaces” practice “affirmative” discrimination.

California voters in 2008 passed Proposition 11 to stop political gerrymandering by creating a supposedly nonpartisan state redistricting commission of five Democrats, five Republicans, and four Independents. Two years later, the commission took over redrawing congressional districts as well.

But Democratic lobbyists and lawyers sabotaged the goal of disinterested redistricting according to population and geography. Instead, racial preferences and the interests of the Democratic majority of incumbents prevailed to warp the intent of the voters.

Although Republicans usually achieved nearly 40 percent of the California vote in national elections, two decades later there were only seven Republicans in the 52-person congressional delegation, or a mere 13 percent of the state’s representatives.

But even that tiny contingent was considered too generous by the Left. Thus, in 2026, it will likely be further redistricted down to four or five seats.

The balloting mess in the recent Los Angeles mayoral race further reminds the nation and the world just how dysfunctional and anti-democratic California has become.

Democrats warp elections without the need for the old Chicago way of outright ballot theft or destruction. Instead, they do so in a “legal” manner by passing insane laws that ensure fraud and Democratic victories.

The winners in the strange jungle primaries—usually both Democrats—were not announced until a week after the polls closed. One of the eventual winners in mayoral race, the socialist Nithya Raman, had already given her teary concession speech after coming in well back at third on election night.

The Republican Spencer Pratt was comfortably ahead of her in second place on Election Day—only to lose, as expected, when large numbers of late ballots that broke roughly 90 percent Democratic were counted.

Remember, every registered voter is sent a mail-in ballot. If it is postmarked on election day, it can arrive at vote centers up to seven days after the election.

No one really knows whether the ballots are mailed to the dead, to former or nonexistent addresses, or to legally eligible voters—by design. In 2024, when losing presidential candidate Kamala Harris won the state by 20 points, only 0.09 percent of all ballots cast were rejected.

Anyone can register and receive a provisional ballot on the same day.

Ballot harvesting and ballot curing are legal.

Campaign operatives can round up voters, gather their ballots, and deliver them en masse to a voting center.

They can register anyone to vote, provide a ballot, and then deposit it immediately afterwards.

There is no requirement to provide proof of U.S. citizenship to get a driver’s license. Yet a license is not even needed to register.

Any credit card without a picture suffices.

And it gets worse still.

If the potential voter has no license, no Social Security number, no proof of U.S. citizenship, and no credit cards, he still will be registered—once harvesters provide him with a “unique identifier” number.

He can then vote that very day without any ID at all.

If, in California, you claim you are illiterate and cannot write your name—no problem.

You simply make a mark—anything from an X to a happy face. No one asks whether an illiterate can read the names on the ballot.

Then your handler serves as a “witness” and signs his name. Such witnesses are almost always vote harvesters, and they can sign as many ballots as they wish.

If all that doesn’t work, ballot “curers” can be called in help remedy rejected partisan ballots post facto.

Democrats now rely on the system to ensure supermajorities in both houses of the state legislature, no statewide Republican officeholders, a tiny vestigial Republican congressional contingent, and almost exclusively Democratic-appointed liberal judges.

The more Democrats control the state, the more socialist, anti-democratic—and autocratic—California becomes.

Their gift to the nation is a third-world failed state, now in danger of societal collapse.

• Fires rage—given ideologically driven prohibitions on brush and forest management, cuts in fire departments, and sheer bureaucratic incompetence.

• Multibillion-dollar boondoggle rail projects rust.

• Billions of welfare dollars are stolen with impunity. Illegal aliens who cannot speak or read English are given passes to obtain commercial trucking licenses—as if California’s critical road signs are written in some language other than English.

• A quarter of residents can’t pay their sky-high power bills on time—and correctly assume that the state and the utility companies will mostly foot their delinquent bills.

• Since 2020, over 100,000 criminals have been released early from state prisons—and most have little fear that their present and future crimes will earn them another prison sentence.

• Half the state’s births are paid for through state-supplied welfare coverage.

• And now the homeless without addresses or IDs can determine elections.

In sum, import poverty; romanticize illegal immigration; demonize the middle class; drive out private-sector capital; and exempt elites from the consequences of their own ideology—and you’re left with a state where democracy dies, along with everything else.

Chip stocks tumbled even further in late Tuesday trading following a report that Microsoft just walked away from talks with Oracle about leasing the company’s cloud infrastructure because of concerns over security and compliance. 

The deal, according to Business Insider, would have been worth over $3 billion – as large Silicon Valley tech companies are running short on computing power (more on that later). 

The plan was to move some Microsoft workloads to Oracle Cloud Infrastructure, but Oracle’s public cloud did not have the Federal Risk and Authorization Management Program (FedRAMP), a standardized security framework that ensures cloud services are secure enough to handle U.S. government data. Oracle was not willing to add this framework, one of the people said. -BI

Oracle has denied the scoop.

“The details mentioned in the article are inaccurate,” an spokesperson said, declining to specify the inaccuracies. “Microsoft is both an OCI partner and a customer. We have a tremendously collaborative and fruitful partnership, where we often talk about ways we can expand upon our ongoing work together.” 

The report sent Oracle and the semiconductor basket lower in what was already a dismal day for the sector.

Developing…

Via American Greatness,

Federal investigators executed search warrants at the headquarters of a Soros-aligned voter mobilization organization in Ohio as part of what sources described as an ongoing fraud investigation.

FBI agents searched the offices of the Ohio Organizing Collaborative on June 11 and conducted interviews with members of the organization across the state, according to reports. Some agents reportedly served subpoenas or sought to seize electronic devices during the operation.

Multiple sources familiar with the matter later told CBS News that the federal action was tied to a fraud-related investigation.

The Department of Justice declined to discuss the specifics of the case.

“Search warrants are authorized by a judge and anything said by any organization or others in the media is unfounded speculation, as the target of any investigation is not privy to the search warrant affidavit until after indictment,” a DOJ official told Fox News Digital.

The Ohio Organizing Collaborative is a nonprofit group involved in voter registration and voter mobilization efforts and works closely with Democrats in Ohio. The organization has also played a prominent role in statewide ballot campaigns and referendum efforts.

The investigation is part of the Trump administration’s effort to increase enforcement of election-related laws and allegations of voter fraud.

Tax records show the organization reported more than $10 million in revenue during 2024.

Funding for the group has come from several major Democratic-aligned organizations and labor unions, including entities connected to the Soros family, the New Venture Fund, the Tides Foundation, the American Federation of Teachers and the Service Employees International Union.

According to the report, the Soros family’s Foundation to Promote Open Society provided approximately $1.9 million to the organization between 2019 and 2020.

The Open Society Action Fund later contributed an additional $1 million to a related organization in 2021 and another $1 million in 2023.

The organization has been active in recent Ohio political battles.

It spent $250,000 in 2023 opposing a Republican-backed effort related to abortion policy and another $300,000 the following year opposing a Republican redistricting proposal.

Organization leaders criticized the federal investigation and suggested it was politically motivated.

“How can they distract and intimidate civil rights leaders and voters and community leaders who are helping people get registered to vote, and create a national spectacle about it?” OOC board member Prentiss Haney told MS Now.

“That is the only reason why they would choose to do that, do it now, in the middle of a contested political election in the state. There’s no other reason. They have no evidence of that.”

The group has previously faced scrutiny related to voter registration activities. In 2017, a paid canvasser working with the organization pleaded guilty in connection with a fraudulent voter registration operation.

California Gov. Gavin Newsom has launched an aggressive counteroffensive against a federal investigation he calls a politically motivated “fishing expedition” – for a probe which was opened under the Biden adminisgration. 

In a video posted to X and a formal letter to the Department of Justice, Newsom demanded all internal communications since January 2025 that mention him or his wife, Jennifer Siebel Newsom. The Freedom of Information Act request targets top DOJ officials, including former Attorney General Pam Bondi who was dismissed in April 2026, and Acting officials Emil Bove and Todd Blanche. It sets a July 6, 2026 deadline.

Newsom claims federal agents have been questioning family members, friends, and former employees not because a crime has been identified, but because the Trump administration is trying to manufacture one. He attributes the scrutiny to his vocal criticism of President Trump and the possibility that he may run for president in 2028.

The DOJ has not confirmed or commented on the existence or scope of any investigation. What has surfaced publicly points to two tracks: whistleblower allegations concerning Siebel Newsom’s taxes and a separate corruption inquiry linked to Newsom’s former chief of staff, Dana Williamson.

The Behested Payments Pipeline

At the center of much of the speculation is California’s long-standing practice of “behested payments,” which are donations that politicians solicit from private interests on behalf of nonprofit organizations. Following 2021 ethics reforms, amounts above $5,000 must be disclosed, yet the rules remain relatively permissive. Critics, including Republican gubernatorial candidate Steve Hilton, have called the mechanism “literally corruption in plain sight” and pledged to ban it.

Reporting has established that Newsom directed more than $4.4 million in behested payments to the California Partners Project, a nonprofit founded by his wife that focuses on gender equity. Siebel Newsom takes no salary from the organization, but the donations have been described as essential to keeping its operations running. The group has also collaborated with Siebel Newsom’s other nonprofit, The Representation Project, which pays her $150,000 annually, and has worked with her private-sector film production company.

One transaction stands out. The Washington Free Beacon reported that Newsom asked a Native American tribe to make two separate $500,000 donations to the California Partners Project. Contemporaneously, he took that tribe’s side in a dispute with another tribe over a proposed casino. The juxtaposition of large directed donations to a family-linked nonprofit coinciding with favorable official action has fueled questions about whether donors with business before the state were effectively paying for access or goodwill through the governor’s wife’s charity.

What Might the DOJ Be Examining?

Speculation about the investigation’s focus falls into several overlapping categories, none of which have been confirmed by federal authorities.

Investigators may be testing whether the pattern of soliciting large donations to a spouse’s nonprofit, especially from parties with active regulatory or licensing matters before the state, crosses into improper use of public office. Federal prosecutors have pursued cases involving gratuities or implicit quid pro quos even when no explicit bribe was demanded. The casino-related donations are the most concrete example cited so far.

Even if Siebel Newsom draws no direct salary from the California Partners Project, overlapping activities with her compensated nonprofit and production company could raise questions about whether behested funds ultimately supported her professional ecosystem or lifestyle. Tax whistleblower allegations could relate to how such flows were reported on personal or organizational returns.

The separate corruption line involving former chief of staff Dana Williamson suggests investigators may be mapping relationships, communications, and decision-making processes around the time the behested payments occurred. Former aides often become key witnesses or targets in public corruption probes.

Newsom’s team frames all of this as baseless harassment. They note that no charges have been filed, that the investigation appears to rely heavily on interviews rather than documentary smoking guns, and that the timing aligns with Newsom’s rising national profile as a Trump critic and potential 2028 contender. The sweeping FOIA request itself functions as both a transparency demand and a political weapon intended to expose internal deliberations, force the administration to justify its actions, and rally supporters around a “witch hunt” narrative.

Political and Legal Stakes

The coming weeks will test both the durability of Newsom’s counteroffensive and the substance behind the reported probe. If the DOJ produces evidence of systematic steering of donor money to family-controlled entities in exchange for official acts, it could seriously damage Newsom’s national ambitions. If the investigation yields little beyond aggressive but legal fundraising practices common in California politics, Newsom will likely portray the entire episode as further proof of Trump-era weaponization of federal law enforcement.

Behested payments occupy a gray zone: legal under current California rules, yet ethically fraught when the ultimate beneficiary is the soliciting politician’s spouse and when donors have simultaneous business before the state. Whether that gray zone contains federal crimes remains the open question the DOJ appears to be probing.

For now, both sides are playing to their audiences, as usual.

By Michael Every, global strategist at Rabobank

After pricing in nearly 40 pronouncements of US victory since early April, markets have naturally embraced a US-Iran ‘deal’ now e-signed —with a thumbs up emoji?– so all that’s left is a ceremony to mark the event on Friday. That and the details of what was signed, which are still lacking from the US. In their absence, we get more polymetis spin from both sides.

• Iran is saying they got everything they wanted, and there are signs of that. Weeks ago, it was floated Iran would receive a $300bn reconstruction fund, a fanciful idea for a country that lost the war. However, it’s true – though the GCC will pay for it. Some see that behind IRGC rhetoric this could be a perestroika moment, e.g., if US firms win big contracts. Or it could just be the US making the GCC give Iran $300bn.
• There is shock and fury in Israel at the deal, which they don’t have the details of either, and the prospect of having their hands tied against Iran and Hezbollah in Lebanon. PM Netanyahu is taking a political hit ahead of elections he was already behind in the polls in.
• We also aren’t hearing anything about regime change anymore; or ballistic missiles; or Iran’s proxies; and Trump has watered down his ‘nuclear dust’ demands so that Iran can down-blend its 60% highly enriched uranium to a civilian level under supervision.

What we are hearing about is the reopening of Hormuz, which Trump claims has already happened: however, ‘mine your language’ on what that means. A US official says it might take 1-2 weeks to get energy flowing through the strait again. Other maritime experts suggest it could take 40-50 days. Japan, the UK, and some European states may send mine-sweepers to help speed that process, but they would take weeks to arrive. Recall it then takes weeks for energy cargoes to arrive at their final destinations if/when an exodus of trapped ships begins. That said, this morning three Iranian oil tankers and two ships carrying essential goods reportedly passed the US naval blockade.

Iran also states ships can transit Hormuz freely for the 60-day negotiation period with the US, but after that it will charge de facto tolls. That’s something the US opposes and is a significant flashpoint – alongside many others. If you are a crude carrier, once you finally escape Hormuz, do you return knowing a geopolitical deadline is ticking down, or opt for new routes?      

In short, this isn’t a deal: it’s a “page and a half general” MoU (says VP Vance) to try to get a deal via performance-related incentives – but with equal ones to blow it up at different times.

From Israel’s perspective, the sooner this deal collapses the better. The PM has just restated that preventing an Iranian nuclear weapon remains his life’s mission, and that struggle isn’t over yet.

🔴Israel requested to see the US-Iran MoU document and was rejected – report

— i24NEWS English (@i24NEWS_EN) June 16, 2026

His defence minister says Israel won’t leave the security zone it has seized in south Lebanon, and Hezbollah is firing at it there today; and a former PM and leading opposition candidate says the clock for Iran regime change to start as soon as the government in Israel changes.

The Iran deal has hammered Netanyahu’s re-election chances on Polymarket, now 2% below Eizenkot for next Israeli PM, after being in the lead all year pic.twitter.com/VyVYuJuONG

— zerohedge (@zerohedge) June 16, 2026

From Iran’s perspective, there is a case to see the deal collapse within months. Indeed, if Tehran cannot get the benefits promised by the US because it won’t take the steps required of it, then it arguably has little incentive to keep Hormuz open. Why allow energy to flow freely, taking pressure off the US and the world, while the GCC and others build alternative supply chains that reduce the strait’s strategic threat? Use it or lose it makes more sense, geopolitically.

From Trump’s perspective, the deal needs to hold until the midterm elections. However, on the other side of that, anything goes. On Monday the president reiterated that if Iran won’t buckle on his (revised) nuclear terms, he will restart bombing and would make the US “the guardian of the Middle East” in return for 20% of the region’s oil revenues.

In short, The Hormuz Odyssey continues, but we are monitoring the situation closely and will reassess once more details are available.

Meanwhile, there are other important developments that might once have been headline news.

The EU officially launched a Ukraine and Moldova accession process, as Moscow once again escalates its attacks on Kyiv. Obviously, this process could run for years, but like Hormuz, it is a development of vast geostrategic significance. That’s as the EU’s Kallas claimed China trained Russian troops and the Union is weighing sanctions and tariffs. Four days ago, The Economist argued, ‘A trade war between the EU and China seems inevitable’: some said the same four years ago. While the EU perhaps following the US stance towards China might not be as market-moving as the original (and sustained) US effort, it is hugely significant for the physical economy.

In related data today, Chinese retail sales dropped 0.6% y-o-y in May vs. -0.2% expected and rose just 1.4% y-o-y year-to-date (YTD), nearly negative in real terms, and underlining the parlous state of local consumption. Investment spending was -4.1% y-o-y YTD vs. -2.3% consensus, and property investment was -16.2% y-o-y YTD. By contrast, industrial production was 4.5% y-o-y and 5.4% y-o-y YTD, which logically has to flow abroad to find demand, raising trade tensions.

That backdrop raises the question of how much the EU and US want to fight each other at the same time. There, the US will use the G7 meeting today and tomorrow to push its ‘no-China’ critical minerals plan to decouple western supply chains upstream… which will logically argue for further decoupling downstream over time. It remains to be seen if others will line up behind it, however.

Lastly, two days ahead of a crucial UK byelection in Makerfield, where a victory for the would-be Labour Prime Minister Burnham would only be possible via a split on the right between the anti-EU Reform UK and the even more deeply anti-EU Restore UK, a Financial Times op-ed argues ‘Britain’s return to the EU is only a matter of time.’ That odyssey also continues on and on…

Summary:

• Iran Says Peace Deal Requires Israeli Withdrawal From Lebanon
• Hormuz Fears Ease As Trump, Ghalibaf Virtually Sign US-Iran Deal, But Energy Flows Remain Months From Normal

Polymarket:

Lebanese Parliament Speaker Nabih Berri and his Iranian counterpart, Mohammad Bagher Qalibaf, held a call earlier, urging the U.S. to compel Israel to end its bloody war on Lebanon, stop home demolitions, and withdraw from occupied Lebanese territory, according to Turkey’s state-run Anadolu Agency.

Iranian officials earlier said that any agreement with the US aimed at peace requires Israel to withdraw its forces from southern Lebanon. 

AA continued:

The call came during a phone call between Berri and Qalibaf in which they discussed the latest regional developments following a US-Iran agreement to end their war all on fronts, including Lebanon, according to the Lebanese state news agency NNA.

The two officials also reviewed “the military and political developments related to the memorandum of understanding between the US and Iran, particularly the clause concerning ending the Israeli war on Lebanon,” the agency said.

They stressed “the need for the United States, the guarantors of the memorandum of understanding and the international community to assume their responsibilities by compelling Israel to end its war, stop demolishing villages, respect Lebanon’s sovereignty and immediately withdraw from the territories it has occupied.”

Meanwhile, I24NEWS Hebrew reporter Guy Azriel wrote on X, “I can now confirm that Israel formally requested access to the Iran MoU and was denied. A remarkable and highly unusual development between close allies on an issue of such critical national security importance.”

I can now confirm that Israel formally requested access to the Iran MoU and was denied. A remarkable and highly unusual development between close allies on an issue of such critical national security importance.

— גיא עזריאל Guy Azriel (@GuyAz) June 16, 2026

President Trump has criticized Israel’s handling of its combat operations against Hezbollah as too bloody.

Hormuz Fears Ease As Trump, Ghalibaf Virtually Sign US-Iran Deal, But Energy Flows Remain Months From Normal

President Trump, Vice President JD Vance, and Iran’s Parliament Speaker Mohammad Bagher Ghalibaf have virtually signed a peace deal to end the U.S. naval blockade of the Strait of Hormuz, Iranian ports, the general Gulf region, and begin 60 days of nuclear negotiations, according to CNN, citing US senior sources. 

The text of the so-called memorandum of understanding, a 14-point document that should lead to a two-month extension of the ceasefire and the start of negotiations over Iran’s nuclear program, has yet to be published.

But Trump stated overnight the deal terms will be released “pretty soon,” likely after the formal signing ceremony in Geneva on Friday. Trump, who is attending the G7 club summit in France, suggested that he would not attend the signing event at the end of the week. 

VP Vance is expected to lead the American delegation in Switzerland on Friday to formally sign an interim peace deal with Iranian Parliament Speaker Mohammad Bagher Ghalibaf.

Trump pushed back on MSM reports that his administration is considering a $300 billion fund for Iran as part of an agreement to end the war.

“Iran has agreed to never have a Nuclear Weapon! Also, the story that the U.S. is paying Iran 300 million Dollars is Fake News, put out by the Dumocrats!!!” Trump wrote in a Truth Social post.

Trump’s Truth Social comments came shortly after VP Vance, the Iranians “could have access” to a $300 billion reconstruction fund. 

“That’s the sort of thing they could have access to, funded by the Gulf Coast coalition, so long as they honor their end of the obligation,” Vance told CBS News in an interview. 

The interim peace deal signals a major diplomatic breakthrough, though Israel remains opposed. Prime Minister Benjamin Netanyahu said he and Trump “do not always see eye to eye.” Conflict between Israel and Iran-backed Hezbollah continued Monday in southern Lebanon. 

With the Strait of Hormuz set to open on Friday, blockades and the clogged maritime chokepoint could soon be in the rearview mirror, but the effect on physical markets could last for months, if not longer. 

Barclays commodities/energy research analyst Amarpreet Singh maintained his $100/b forecast for Brent this year. 

Singh explained:

• If the tentative agreement to ease the dual blockade of the Strait of Hormuz is realized, the timing of the restoration of freedom of navigation through the Strait of Hormuz could fall largely in line with our end-June baseline. We maintain our view that Brent should average $100/b in 2026 in that scenario.
• This marks the 16th week of the Iran war and the first eleven weeks led to a more than 350 mb decline in global total oil inventories. Last week, US commercial total oil inventories were already below the trough of early 2022 and declining at a fast pace.
• We forecast a small deficit in Q3 26 in our baseline, as the cyclical demand vector is the strongest since 2022. We recommend going long the Dec 26 minus Dec 27 calendar spread in Brent futures, at $4.67/b at the time of writing.

Normalization of physical energy markets could take many months.

He continued:

The US and Iran have reached an agreement to ease restrictions on trade flows through the Middle East Gulf, with formalization expected by Friday. While early indications suggest that freedom of navigation through the Strait of Hormuz could be restored by month‑end, this does not imply an immediate normalization of physical oil supply chains. Despite this, oil prices have moved sharply lower: prompt‑month Brent and WTI are down around 5% on the day, and the forwards‑implied 2026 Brent average has fallen to $86/b, well below our $100/b forecast. We maintain our view. Inventories are already extremely tight and continue to draw, and our balances point to a modest deficit in Q3 2026 – conditions that are inconsistent with the magnitude of the current price pullback.

This marks the 16th week since the Iran war began. We have inventory data for 14 of those weeks, with the latest observation for the week ending 5 June (Figure 1). Adjusting for shipping lags – typically two to three weeks for Middle East Gulf flows based on last year’s trade patterns – and using pre‑pandemic seasonality (2017–19 average), the first 11  weeks of the conflict resulted in a cumulative 352 mb decline in global total oil inventories, based on our weekly global total oil inventory indicator (Figure 2).

Translating the observed ~4.6 mb/d cumulative inventory draw over this period using the historical beta between inventory changes and market imbalance implies an underlying deficit of roughly 7.3 mb/d on a seasonally adjusted basis. This compares with our non‑seasonally adjusted estimated deficit of 6.6 mb/d for Q2 26. Given that Q2 typically runs a small surplus, realized outcomes to date remain broadly consistent with our balance estimates.

A common pushback to our view is that a significant share of recent inventory draws reflects releases from strategic reserves, which would limit price implications (Figure 3). Our response is that, adjusted for long‑term seasonality, US commercial total oil inventories stood 7 mb below the early‑2022 trough as of 5 June and have been declining at a weekly rate of 11 mb over the past four weeks (Figure 4). Even if the Strait normalizes by month‑end, we expect this tightening trend to persist at least through July. Moreover, unlike in 2022, current US SPR releases are structured as loans rather than outright supply additions.

This raises a key question: with commercial inventories entering peak demand season at historically tight levels and the cyclical demand impulse the strongest since 2022, why should prices not be materially higher? Around 60% of oil demand is tied to the production and movement of goods. While a gradual easing toward $80/b Brent by end‑2027 appears plausible, we see near‑term risks to prices as skewed to the upside.

Key overnight developments (courtsey of Bloomberg):

US-Iran Deal Framework

• The US and Iran are preparing to formally sign their interim peace deal in Switzerland on Friday, with a 14-point memorandum of understanding that should lead to a two-month ceasefire extension and the start of negotiations over Iran’s nuclear program
• The text of the memorandum of understanding has yet to be published, though a senior US official said it’s possible that happens in the next two days 
• Iran claims the lifting of the US naval blockade has begun and entered the implementation phase, according to Deputy Foreign Minister Majid Takht-Ravanchi
• Iran will allow free Hormuz transit for 60 days under the pact 

Trump Administration Statements 

• President Trump said the US is dealing with ‘rational’ people in Iran now and described Iran’s current leadership as ‘nice’ to deal with 
• Trump stated that Iran will suffer if it tries to attain a nuclear weapon and that Iran will not develop or buy a nuclear weapon 
• Trump said the deal with Iran can survive if Israel attacks Lebanon, though he is ‘not happy with the way Israel has handled themselves with Lebanon and with Hezbollah’ 

Israel-Lebanon Tensions

• Iran’s Foreign Minister Abbas Araghchi said the deal ending the war with the US would require Israel to withdraw from Lebanon 
• Iran’s foreign minister said any Israeli forces remaining in southern Lebanon, or any strikes on the country, would constitute a violation of the US-Iran deal 
• Israeli officials said Monday that troops would stay in Lebanon, as ‘Trump’s agreement does not bind us’ 

Netanyahu Political Impact

• Benjamin Netanyahu has staked his political future on his relationship with Donald Trump, but that’s become a liability now that the US president has cut a deal with Iran that much of Israel opposes •
• Netanyahu is preparing for an election this fall and must contend with an agreement that will leave the Islamic Republic intact, an unpalatable prospect to Israelis of all stripes 

Strait of Hormuz Reopening 

• Two Iran-linked tankers are sailing eastward through the Strait of Hormuz ahead of the US and Iran signing an interim peace agreement on Friday that would re-open the waterway 
• Qatar is planning to rapidly boost LNG production once the Strait of Hormuz reopens, aiming to restore most of its export capacity within two months 
• QatarEnergy told buyers it expects to raise output to about 50% of capacity a month after safe passage through the strait is restored, and to roughly 80% within two months

Regular readers know that the threat of suicide drones has expanded beyond the modern battlefields of Ukraine and the Middle East – with potential targets including data centers and critical infrastructure. Given this potential, it was only a matter of time before an FPV-style attack was attempted on the homeland.

Today, Fox News’ reports that federal agents and law enforcement partners foiled an alleged FPV attack plot targeting this past weekend’s UFC Freedom 250 event in Washington, D.C.

According to the report, five people were arrested and 23 others were identified as part of a potential network of plotters. The group allegedly planned to use explosive-laden drones to hit buildings near the event, force a mass evacuation, and steer crowds toward a pre-staged sniper team.

A “second wave” was then allegedly planned to storm the White House gate, according to officials. -Fox News

FBI Director Kash Patel posted on X:

On June 10, FBI and our law enforcement partners became aware of a potential threat to the UFC America 250 event in Washington, D.C. involving individuals outside of the National Capital Region – and thanks to the rapid action of this FBI, our partners, and the Department of Justice in a multi-state operation, multiple individuals are now in custody and allegedly planned attacks were stopped cold.

On June 10, FBI and our law enforcement partners became aware of a potential threat to the UFC America 250 event in Washington, D.C. involving individuals outside of the National Capital Region – and thanks to the rapid action of this FBI, our partners, and the Department of… pic.twitter.com/PbWkIk1Lr5

— FBI Director Kash Patel (@FBIDirectorKash) June 16, 2026

Seeking comment from America’s counter-drone detection industry, we reached out to DZYNE Technologies CEO Matt McCue, who told us:

“This is exactly how layered defense is supposed to work. Intelligence and interdiction upstream, counter-drone technology downstream. They are partners, not competitors. The FBI reached this one early, and that’s the ideal outcome. For the threats that don’t surface in advance, that’s where the detection and mitigation layer has to be ready.” 

McCue continued: 

“It is a relief that the FBI reached this one early, because the real problem is the back end. Once one of these is in the air over a crowd, the defender’s window is measured in seconds, and every option to stop it carries its own risk to the people underneath. The advantage swings hard to the attacker the moment it launches.” 

Joe Francescon, former National Security Council Senior Director for Counterterrorism Defense, told us:

“What makes this category of attacks so concerning is how little it demands of the people behind it. The technology is commercial, off-the-shelf, and everywhere. There is no meaningful legal or financial barrier to obtaining it, and no special access, insider knowledge, or training required to use it. The planning for an attack like this can happen out in the open, which is a very different threat profile from what the U.S. is used to worrying about.” 

Of course, while we aren’t getting names or photos for some reason, one of the suspects allegedly told investigators the aim was to target “capitalist elites,” “billionaires,” or politicians who received donations from the American Israel Public Affairs Committee (AIPAC).

BREAKING: Details via federal arrest affidavit reveal that a California man named Michael Alan Thomas was one of the alleged organizers of the alleged UFC White House terror plot. Feds say he admitted he believes the U.S. government is run by elites who sacrifice and eat… pic.twitter.com/L8i1bTR9Em

— Bill Melugin (@BillMelugin_) June 16, 2026

And while we don’t know if this was just douchebags larping on Signal chat from mom’s basement or radical militants who had secured hardware (because the FBI hasn’t told us), we do know that some of the most vocal groups in America bashing “capitalist elites” and “billionaires” have been associated with the rise of socialist and communist movements. 

These groups were allowed to thrive by their ‘comrades‘ in the Biden and Obama administrations, who instead went after parents opposing woke indoctrination, Catholics, and free speech. 

Now, we’re back to combating radical left-wing terror – which even The Atlantic had to admit is ‘on the rise.’

And of course, they deny they’re violent – and yet;

Hasan Piker calls on his followers to kill capitalists:

“Yeah kill them! KiII those motherfuckers and murder those motherfuckers in the streets. Let the streets soak in their fucking red capitalist blood, dude.”

Democrats are campaigning with him. pic.twitter.com/YiZxGgRkgc

— Eyal Yakoby (@EYakoby) April 9, 2026

Left-Wing NGO Coverage:

• “No Longer Tolerate Radical Marxists”: Rubio Sanctions Revolutionary Cuban Influence Network Tied To U.S. Left-Wing NGOs

• Bessent Signals Crackdown On Dark-Money Funded NGOs In “Weeks, Months Ahead”

• How Bad Is Foreign Influence In America’s Nonprofit Universe?

They want you dead…

As widely expected, the BoJ raised the policy rate by 25bp to “around 1%” (there was one dissent from newly appointed dovish board member Asada for a hold) taking the cost of borrowing to its highest level in 31 years as the country adjusts to sustained inflation. The 0.25% increase, which was widely expected, takes Japan to what analysts said was a critical milestone in the central bank’s effort of normalizing monetary policy after years of ultra-low interest rates and deflation. The BoJ’s policy rate was last at 1% in 1995, when the central bank was in the process of lowering borrowing costs in the wake of the Japanese asset bubble burst in the late 1980s. The Board also opted to make no changes for now to their planned pace of QE taper, also in line with expectations, but likely disappointing some expectations for a shift to a higher planned pace of purchases to support JGBs

In a statement accompanying the decision, the BoJ signalled that it intended to continue that normalization process, raising the policy interest rate and degree of monetary accommodation “in response to developments in economic activity and prices as well as financial conditions”.

The policy statement showed no material change other than the view that the major downside risks to the economy have “decreased compared with a while ago”. On inflation, it pointed to “a risk of underlying CPI inflation deviating upward to a level above the price stability target of 2%”, but this is not new information given that the April Outlook Report’s BoJ core inflation forecast (ex. fresh food and energy) already implies inflation above 2% throughout the projection period through FY2028. As Deputy Governor Uchida also noted at the press conference, in terms of what has changed since the April meeting, the decline in downside growth risks appears to have been the backdrop to the decision to proceed with a rate hike this time.

Offsetting the hawkish taste of the rate hike, the BoJ also said that from April 2027 it would stop reducing its monthly purchases of Japanese government bonds, leveling off at a pace of about ¥2tn ($12.5bn) per month. That move was also widely expected by the market. The Bank noted that this decision could be changed depending on circumstances; however, if this policy is maintained, the BoJ’s balance sheet will continue to shrink, though the pace of contraction will ease from 2028 onward.

The BoJ said that while higher crude oil prices were weighing on economic activity, “the risk of a significant slowdown in the economy appears to have decreased compared with a while ago”.  It also noted that the price pass-through from higher fuel prices had been progressing relatively quickly, and could spread from business-to-business transactions to push underlying consumer price inflation above its target of 2 per cent.

Since lifting Japan out of negative interest rates in 2024, the BoJ raised rates twice last year. It has been expected to settle into a pattern of gradually tightening every six months or so. Some economists believe a further 0.25% rise could come as soon as October.

The decision to raise interest rates this week was reached by a 7-1 vote of the Monetary Policy Committee, which was down to eight members after governor Kazuo Ueda was admitted to hospital last week.  The dissenting member, Toichiro Asada  – the first member appointed under the dovish Takaichi administration – argued that the situation in the Middle East presented Japan with greater downside risks to production and employment than the upside risks to prices.

“The distribution of votes is interesting and reflects that the board is a bit more balanced now when previously it skewed comfortably hawkish,” said Stefan Angrick, head of Japan at Moody’s Analytics. “The fact is also that the BoJ has no good choices,” he added. “They can hike to stem inflationary pressure by strengthening the yen, but that would hurt the economy.”

As reported previously, BOJ governor Ueda is receiving treatment for a liver condition and did not attend the meeting or cast a vote. This week’s meeting, the first held without the governor since 2010, was chaired by one of the BoJ’s deputy governors, Ryozo Himino. In Ueda’s absence, the afternoon press conference was presented by the BoJ’s other deputy governor, Shinichi Uchida. He noted that the major difference between this week’s meeting and the one in April, when the BoJ held rates, was the memorandum agreed between the US and Iran to extend their ceasefire

“That is a welcome move,” Uchida said. “Having said that, there is uncertainty on the pace of improvement in [oil] distribution.”

Deputy Governor Uchida chose his words carefully throughout the press conference, but most questions focused on the Bank’s assessment of upside inflation risks and the implications for future rate hikes. He reiterated the policy of continuing rate hikes as underlying inflation approaches 2%, reinforcing that stance by emphasizing the perceived upside risks to inflation. He also stated that going forward, “keeping inflation stable at around 2% will be important”.

That said, differences of opinion were evident within the Board regarding the state of underlying inflation. While the statement and the press conference conveyed the view that underlying inflation is now in the process of moving toward 2%, Takada and Tamura objected, indicating that they believe it has already reached that level. In contrast, Deputy Governor Uchida said at the press conference that many of the remaining members think it will be achieved between the second half of FY2026 and the first half of FY2027.

Another notable point was Deputy Governor Uchida’s remark that “the neutral rate estimates have too wide a range to be usable for actual policy decisions”, clearly downplaying the Bank’s published estimates of the neutral rate. Governor Ueda has long pointed to the uncertainty surrounding the estimates, but Uchida made this point more explicit. He characterized the current rate hikes as “policy adjustments toward a neutral level”, while adding that “it is not clear at what point we can judge the stance to be neutral; we won’t know until we reach it”. This likely implies that, although the policy rate has now reached the lower bound of the BoJ’s published estimates of the neutral rate, that fact does not mean the Bank will become materially more cautious about further rate hikes.

Deputy Governor Uchida avoided answering a question about consistency with the fiscal policy pursued by the Takaichi administration. Still, despite his otherwise rigorous focus on logic, his explanation for JGB purchases remained somewhat coarse – namely, that “market functioning has been steadily improving, so we decided to continue with this for the time being”. Moreover, even though the decision was made after substantial prior coordination and was almost fully priced in by the market, the fact that a member appointed under the Takaichi administration cast a dissenting vote may suggest that strong resistance to the BoJ’s policy normalization may remain within the administration.

Finally, he was also asked why Governor Ueda did not have voting rights this time, even though Deputy Governor Uchida retained voting rights when he participated remotely during his hospitalization through the previous meeting. Uchida limited his response to saying it was “for reasons related to medical treatment”.

According to JPM, this rate hike will not exert significant downward pressure on the economy, and the bank continues to expect the BoJ to deliver an additional rate hike in October in response to inflationary pressures that are likely to become more apparent towards the summer.

The yen held steady at about ¥160.2 versus the dollar following the announcement, while the Nikkei 225 stock average breached 70,000 points, a record level, before falling back.

“Traders were content that there were no overtly hawkish surprises” from the BOJ, said Tim Waterer, chief market analyst at KCM Trade. “The rate hike was fully anticipated and priced in.”

Chengxin Memory Technology, China’s leading maker of DRAM (dynamic random-access memory) chips, has had its initial public offering approved by the country’s securities watchdog, clearing the way for the Chinese mainland’s biggest stock market listing since 2022.

CXMT’s registration to go public on Shanghai’s Nasdaq-style Star Market became effective on June 12. The Hefei-based company is planning to raise CNY29.5 billion (USD4.4 billion) by issuing 10.6 billion shares, which would also make it the Star Market’s second-largest IPO.

As the only Chinese integrated devices manufacturer that has achieved large-scale DRAM production, CXMT’s IPO has attracted investment from several leading brokerages, including China Merchants Securities and Huaan Securities, as well as from insurers, through a mix of alternative investment subsidiaries, private equity funds, and industrial funds.

CXMT has three 12-inch DRAM wafer fabs in Hefei and Beijing, giving it the largest production capacity in China and the fourth-largest globally. The firm’s industrial chain includes multiple links, such as equipment, materials, packaging, and testing, and its suppliers include more than 30 mainland-listed firms with a total market value of over CNY3 trillion (USD444 billion).

Last year, CXMT bought CNY11.5 billion worth of raw materials, including CNY4.3 billion of chemicals, CNY1.4 billion of photoresists, CNY980 million (USD145 million) of silicon wafers, CNY590 million of electronic specialty gases, and CNY250 million of target materials.

The listing is expected to further strengthen China’s self-sufficiency in memory chips, while also driving coordinated growth across the full industrial chain, from upstream materials, equipment, and components to downstream applications.

While investor attention has been centered on memory makers and other key AI component suppliers in Korea, Japan and Taiwan, Chinese AI infrastructure stocks have quietly underperformed. 

Commenting on the latest developments, Goldman’s Peter Slater writes that last week’s headline that the Chinese government plans to spend upwards of $300bn on a network of interconnected data centers may bring Chinese AI names back into focus. 

Noting that just like in the US, technology independence remains a key tenet of China’s national security policy, Slater writes that not dissimilar to what we’re seeing in U.S. capital markets, China’s fast-tracked IPO pipeline will bring several high-profile AI leaders public as soon as next month: 

• CXMT: China’s leading DRAM maker, #4 globally (received CSRC approval)
• Unitree: China’s leading humanoid robotics pioneer (received CSRC approval)
• YMTC: China’s leading NAND flash maker, #4 globally (formal application expected this month)  

The Goldman trader’s conclusion is that “Investors may want to consider rotating into Chinese laggards with cleaner positioning and similar end-demand growth profiles in such areas as advanced packaging and optical networking and transceivers.” Those who have access, may want to consider the following baskets: GSXACMEM (GS China Memory), GSXACSEM (GS China Semis) and GSXACHRO (GS China Humanoid Robots). The latter is especially pertinent in light of our recent analysis that “Goldman’s Big Call Is That AI’s Next Leg Is Shift From Chips To Humanoid Robotics; Here’s How To Trade It”