Transcription
All right, guys. So, Trump is finally in panic mode, and that's probably the only real explanation for what just happened. Why stocks did a mini reversal, closing almost 2% higher out of nowhere. It's not because the economy suddenly got stronger overnight. That didn't happen. It's because Trump saw the devastation in the stock and the bond markets and he couldn't take it anymore. So, he's selling investors another fantasy. Trump did another taco. He talked big said that the deal is coming. So the markets they bounce briefly upwards.
"There will be a signing this weekend because you have come close to sealing a deal but at the last minute it has fallen apart. And it'll be it'll be soon. Maybe this weekend. And has the supreme leader approved this deal? Sir, I understand the answer is yes. And when the um and when this deal is signed, is the United States going to immediately lift the blockade? Yes, that's true. That's part of the deal."
And this is the same playbook as before. And half of the world doesn't believe a word of it. I don't believe it. Now, CPI inflation came in hot at 4.2%. And that number is already alarming. But here's what most people are missing. The real pain hasn't even arrived yet.
Now, US producers are being absolutely hammered by higher input costs from the war. PPI for May hit at insane 6.5%. Even core PPI stripping out energy completely is running at almost 5%. Producers are absorbing the pain right now rather than passing it on. Their own inflation is insane, but they cannot afford to forever. Margins only stretch so far. And when companies finally pass those costs down to consumers, headline CPI could easily fly past 5% by July or August. So the inflation shock the US has experienced so far is just the opening egg. This is just the tip of the iceberg.
And that's the real reason why Trump panicked and he tackled. He understands what five or 6% inflation is going to do to consumer demand. It crushes it. And a crushed consumer demand means crash earnings, crash stocks, and basically a crash of the entire strong economy narrative.
Now since mid-2025 PPI has been rising higher every single month without stopping. The combination of the Iran war driving energy costs higher and the tariff war driving import costs higher. All this is a lethal combination and if both continue unchecked, PPI could push past eight or even 10%. And consumer inflation is going to follow PPI with a lag. It more or less always happens.
Now the correlation between bond yields and stock prices has also flipped negative. That is a critical signal. Rising yields used to indicate a strong growing economy. Now rising yields signal inflation is out of control and borrowing is becoming unsustainable. Higher yields now predict a stock market meltdown, not a bull run.
Now Trump has been celebrating new stock market highs almost every week. He can't afford to let that narrative collapse, so he's watching the bond market obsessively. The moment yields threatened to spike, he tackles. He has done it before during the trade war back in 2025 because the alternative is a market implosion. He can't survive it. At least not politically.
Now, can anyone trust what Trump is saying at this point? Well, half of the world, probably more, has stopped believing him entirely. Every deal announcement sounds like Groundhog Day. The same old promise, different week, but no delivery at the end of the day.
"I said before that Iran and the United States were close to a deal. It has not happened yet. Why are you so convinced that this time is different?"
"Uh because they've taken a pounding. They've taken a pounding like very few people could take and they want to make the deal a lot more than I do. And uh we could have had it done the other way, I guess, but it would have taken longer. They uh they got hit very hard recently, as you know. And major economies aren't waiting for Trump to save the day. They are making their own hard decisions right now."
Japan is on the brink of hiking rates to a 31-year high. They kind of have no choice. Their currency is collapsing. Domestic inflation is rising. Oil prices are punishing an economy that imports 90% of their own energy. Remember, intervention also isn't working. So, hiking rates is the last tool left.
But Japan isn't the only domino falling. The European Central Bank, the ECB, has hiked rates for the first time since 2023. That just happened. The benchmark rate has now risen to 2.25%. Eurozone inflation has climbed to 3.2%. The ECB decided inflation is the bigger threat and they acted.
"Now Christine Lagarde knows full well what this does to an already struggling and beleaguered economies like Italy, Germany and France but she still hiked it anyways."
"It is a sensible monetary policy decision. So I don't need to characterize it as credibility insurance or anything else for that matter. It's a monetary policy decision that stands and that is as we say in the monetary policy robust across all scenarios."
Germany is going to get hammered even harder. The industrial sector was already suffering from high energy costs and weak export demand. So higher borrowing costs on top of that is another body blow to manufacturing competitiveness. And here's something that tells you exactly how desperate the EU has become about energy. Germany is now running to Canada to sign major LNG deals, not from the US, but from Canada because Canadian LNG prices are probably much cheaper. Europe is shopping globally for any affordable energy source that is non-Russian they can find because survival really depends on it.
Now Europe hiking rates is just the beginning. This is going to become a global trend. Central banks everywhere are being forced to choose between inflation control and economic growth. At most, they will choose inflation control and when that happens globally and simultaneously, global growth is going to get hammered.
Now the World Bank is already projecting the weakest global growth since 2020. Average global growth, including China and India, will only hit 2.5% in 2026. And that projection assumes oil stays around $94 a barrel. If rates keep rising on top of that oil price, the real growth number could be far lower.
While the world hikes rates and growth collapses, Scott Besson is about to make a decision that could detonate the Iran peace process entirely. This is going to get even uglier than before. He's not just moving to seize Iranian assets. We all understand he has at least taken away $1 billion worth of crypto from the Iranians. But this time he wants to use them.
Now according to Besson, Iran now faces two specific financial threats. Whatever damage Iran inflicts on Gulf allies will be paid for by drawing down on their frozen funds and any tolls collected at Hormuz will be offset by extracting money from the evident accounts.
Now on the surface that sounds like clever financial warfare, but in practice it really opens an enormous can of worms, multiple cans of worms. Iran might simply ignore the threat entirely. Because if the Hormuz tolls continue in perpetuity, the ongoing revenue could far exceed whatever frozen assets Besson can reach over time. Every ship that pays a toll is money Iran earns forever. And the frozen assets are just a time-limited pool. The math heavily favors Iran waiting it out.
Now, Besson genuinely believes the financial blockade combined with the naval blockade is enough to break Iran. So, he's doubling down on a strategy that has now run for over 100 days without achieving much. The real objective has not been achieved. I really think it's the economic blockade, you know, of funds and the physical blockade of the ships not going in or out of the Iranian ports. Kara Island is shut down. That's their big...
"And here's the view scale of what's at stake. Iran has roughly $100 billion frozen across various accounts and oil revenues globally. Qatar alone might be holding around 12 billion of debt. Now, Besson wants to deviate that money up and distribute it to Gulf allies as compensation for war damages. But touching that money is the exact opposite of building goodwill for any peace negotiation. Iran has been crystal clear. Their frozen assets is not a bargaining chip. They want 12 billion unfrozen as a baseline condition plus a pathway to release even more funds. So if Scott Besson reaches in and starts spending that money, Iran might walk away from the table completely, the peace deal collapses and Hormuz, well, it's going to stay shut."
Now the geopolitical consequences extends far beyond Iran as well. Every country will be watching this drawdown and the exact conclusion they're going to draw is the same thing they thought about when Russian assets were frozen back in 2022. Dollar assets are no longer safe and any country that crosses Washington risks losing their reserves.
Now, the message gets louder every time the US does this. The response globally has always been the same. More countries, they're going to move assets out of the dollar system.
Now, Besson seizing assets isn't just a diplomatic problem. It has direct consequences for the US bond market. And the broken bond market means a broken AI bubble.
Now gold is already the largest reserve asset held by global central banks. US treasuries have fallen to just 22% of total central bank assets. Gold is at 27% and that crossover happened exactly because of this pattern over the last 3 to 5 years. Every time the US weaponizes the dollar system, another wave of money flowing to gold happens. And if Besson actually uses Iranian assets, that gold percentage is going to spike even higher in the years ahead. We're going to be talking about 30 to even 35% down the road.
Now, lower treasury demand means higher yields and higher yields are absolutely lethal for the AI buildout that's holding the entire US stock market up. Hyperscalers alone have already issued nearly $160 billion in copper bonds this year. Globally, that number is heading towards $570 billion. Every basis point yields rise is going to make the debt more expensive and even more dangerous to service.
And the AI bubble is now facing a separate internal crisis that has nothing to even nothing to do with interest rates. Chinese AI models have locked up the top four spots in global usage rankings. We have Mimo V2, Quen, Deepseek, and Minimax. All Chinese and dramatically cheaper than US alternatives.
Now, Mimo V2 alone is three to five times cheaper than Entropic's Sonnet or Opus models per token. And the pricing gap between the US and Chinese AI is so wide that any cost-conscious company, they're going to choose an AI provider that makes an obvious decision. They go Chinese. They want to save money.
US AI companies can see the IPO window closing fast. They need to go public before investors fully price in the Chinese competitive threat. So, OpenAI is now considering massive price cuts to poach Entropic's customers before the IPOs happen. Now both companies are racing to show growth metrics that justify trillion-dollar valuations before the market really figures out that AI is just becoming a commodity like what we have seen for weeks, for months now.
Now JP Morgan just issued a warning that should terrify every AI investor. They are seeing a slowdown in the growth of AI revenues. Demand for AI solutions is growing more slowly than supply. Too many providers, not enough customers willing to pay premium prices. So, the bubble is built on an assumption of endless demand that is starting to crack.
Now, AI token prices have fallen for seven consecutive days, seven days in a row of declining prices for the fundamental unit of AI development, AI commerce. And if demand was genuinely robust and growing as advertised, this wouldn't have happened. Prices fall when there's too much supply, chasing too little demand. That has always been the way.
Now, the race to IPO from SpaceX to OpenAI to Entropic is not a sign of confidence. It's a sign that insiders know the window is closing. So, they are cashing out while retail investors, they are still buying the story.
Now, the setup Trump has created for markets is genuinely dangerous. He just promised a war settlement that could come as soon as this Sunday. That's a crazy, specific, and bold claim.
"We just made a great settlement of the war with Iran and we're going to be uh subject to finalization of documents which should get done over the next few days. Probably have a signing maybe in Europe and uh it's a great thing. Stock market's up a thousand points. That means they like the deal. See, that means they the market goes down, that means they don't like the deal."
Now, if somebody comes and goes without any deal, the market reaction will be brutal. Investors who bought the bounce will sell everything and the credibility heat compounds every previous failed promise. No one is going to believe Trump anymore.
Meanwhile, the structural pressures is going to keep building underneath. The EU has hiked rates. Japan is just days away from the biggest hike and PPI is now at 6.5%. Let's not forget Scott Basson might be touching Iranian assets and potentially blowing up the last chance of a peace deal.
So let me know what you think in the comments below. Will the global inflation crisis force many other countries to hike rates in 2026 and 2027? And will Scott Basson actually reach into Iran's frozen assets and trigger the unthinkable? Let me know what you think. Stay safe. Smash the like button. Subscribe as we navigate through these crazy times.