Category: Countries & Regions

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US & ASX Leading Indicators

Thank you for the feedback on our new format for the weekly market snapshots.

US Stock Market

Two axes emphasize the weekly rises and falls in the composite valuation indicator, which uses the secondary axis on the right.

US Bull/Bear & Market Valuation Indicators

US Bull-Bear

We revised the bull-bear market leading indicator to improve its responsiveness, reducing it to a composite of five key indicators. Currently, two of the five indicators signal risk-off, indicating a medium risk of a US bear market.

Bull/Bear Market Indicator

The 10-year/3-month Treasury yield spread has been positive for more than 120 days, and the S&P 500 is above its 12-month weighted moving average, confirming the risk-on signal.

Treasury Yields: 10-Year minus 3-Month

The last FOMC meeting raised the fed funds rate target range to 3.75%-4.00%.

Fed Funds Rate Target (Upper Limit)

The Fed Funds Rate signal is risk-on unless there has been a rate cut in the preceding 75 days.

US heavy truck sales slowed to 36,500 units in August from 38,900 in July. The 12-month average ticked up to 33,000 from 32,800. However, it would need to reverse by 10% for the risk-off signal to reverse to risk-on.

Heavy Truck Sales (Units)

Heavy truck sales reflect the transportation industry's confidence in the economic outlook. A fall of more than 10% below the preceding peak signals risk-off, while a 10% rise above a trough indicates risk-on.

US Stock Pricing

US stock pricing remains at extreme levels. We changed the composition of the Forward PE and Price-to-Sales indicators at the end of April 2026, so earlier highs are not directly comparable.

US Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then average the five readings and convert that to a percentile. The higher the stock market price measure is relative to the historical mean, the greater the risk of a sharp drawdown.

Warren Buffett's favorite long-term measure of stock market valuation provides a stable valuation ratio largely unaffected by fluctuating profit margins.

The ratio of stock market capitalization to GDP is more than double its long-term average of 1.2. Buffett considers values above 2.0 to indicate that stock prices are dangerously high.

Buffett Indicator: Stock Market Capitalization to GDP

Robert Shiller's CAPE smoothes out business-cycle effects by comparing the S&P 500 index to a 10-year average of inflation-adjusted earnings.

The current advance on the CAPE ratio is the second-highest in history, behind only the 1999 peak during the Dotcom bubble at 44.2, with values far above their long-term average of 22.4.

Robert Shiller's S&P 500 CAPE Index

Conclusion

The US Bull-Bear indicator, led by the transportation sector, flags a bear market, while the composite Stock Pricing indicator warns that stocks are extremely over-priced.

ASX Stock Market

ASX Bull/Bear & Market Valuation Indicators

ASX Bull-Bear

The ASX Bull-Bear Leading Index signals a mild bear market.

ASX Bull/Bear Market Indicator

Australian leading indicators have a 40% weighting in the ASX Leading Index, China 20%, and the US Leading Index carries the remaining 40%.

The ASX 200 Financials Index (XFJ) is below its 50-week weighted moving average, and a breach of primary support at 9000 would signal risk-off.

ASX 200 Financials Index

The ASX 200 is above its 50-week moving average relative to Gold, but the long-term downtrend continues, with no higher troughs. The signal remains risk-off.

ASX 200/Gold in Australian Dollars

Performance of the ASX 200 Index relative to Gold (in Australian Dollars) reflects the real return on Australian Stocks.

The 3-month moving average of private housing approvals is well above its 20-year moving average (dotted line below), indicating a strong uptrend in the Australian housing sector.

Australian Private Housing Approvals

A cross of 3-month MA values (navy) below the 20-year MA (red) would signal risk-off.

The Chinese NBS Manufacturing PMI increased to 49.8 in August from 49.2 in July. Values below 50 indicate a contraction, while a fall below 49.0 would signal risk-off.

China: NBS Manufacturing PMI

ASX Stock Pricing

ASX stock pricing fell to 74.78% from 80.78% three weeks ago. Stocks are overvalued, and the decline is a bear signal.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

Warren Buffett's favorite long-term valuation indicator compares stock market capitalization to GDP, providing a stable ratio with a long-term mean of 1.03.

ASX Market Capitalization/GDP

The Price-to-Sales ratio for stocks in the ASX 20 uses a 20% trimmed mean to remove the highest and lowest readings, which tend to distort the average.

ASX 20 Price to Sales with 20% Trimmed Mean

The Forward Price-Earnings ratio for stocks in the ASX 20 uses a 20% trimmed mean to eliminate the highest and lowest readings. This avoids distortions of the average by outliers.

ASX 20 Forward PE with 20% Trimmed Mean

Conclusion

The ASX Bull-Bear indicator signals the early stages of a bear market, while the composite Stock Pricing indicator signals stocks are moderately over-priced. China is on bear watch after NBS Manufacturing PMI fell sharply to 49.2 in July, close to the risk-off signal.

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US & ASX Leading Indicators

Thank you for the feedback on our new format for the weekly market snapshots. One request was that we use a single axis for the chart below. We will display both this week. Let me know which you prefer.

US Stock Market

One axis illustrates how extreme stock pricing is, with the composite valuation indicator hovering close to 100 percent.

US Bull/Bear & Market Valuation Indicators

Two axes emphasize the weekly rises and falls in the composite valuation indicator, using the secondary axis on the right.

US Bull/Bear & Market Valuation Indicators

We revised the bull-bear market leading indicator to improve its responsiveness, reducing it to a composite of five key indicators. Currently, two of the five indicators signal risk-off, indicating a medium risk of a US bear market.

Bull/Bear Market Indicator

US Stock Pricing

US stock pricing remains at extreme levels. We changed the composition of the Forward PE and Price-to-Sales indicators at the end of April 2026, so earlier highs are not directly comparable.

US Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then average the five readings and convert that to a percentile. The higher the stock market price measure is relative to the historical mean, the greater the risk of a sharp drawdown.

Warren Buffett's favorite long-term measure of stock market valuation provides a stable valuation ratio largely unaffected by fluctuating profit margins.

The ratio of stock market capitalization to GDP is more than double its long-term average of 1.2. Buffett considers values above 2.0 to indicate that stock prices are dangerously high.

Buffett Indicator: Stock Market Capitalization to GDP

Robert Shiller's CAPE smoothes out business-cycle effects by comparing the S&P 500 index to a 10-year average of inflation-adjusted earnings.

The current advance on the CAPE ratio is the second-highest in history, behind only the 1999 peak during the Dotcom bubble at 44.2, with values far above their long-term average of 22.4.

Robert Shiller's S&P 500 CAPE Index

Conclusion

The US Bull-Bear indicator, led by the transportation sector, flags a bear market, while the composite Stock Pricing indicator warns that stocks are extremely over-priced.

ASX Stock Market

ASX Bull/Bear & Market Valuation Indicators

The ASX Bull-Bear Leading Index signals a mild bear market.

ASX Bull/Bear Market Indicator

Australian leading indicators have a 40% weighting in the ASX Leading Index, China 20%, and the US Leading Index carries the remaining 40%.

The ASX 200 Financials Index (XFJ) is below its 50-week weighted moving average, and a breach of primary support at 9000 would signal risk-off.

ASX 200 Financials Index

The ASX 200 is above its 50-week moving average relative to Gold, but the long-term downtrend continues, with no higher troughs. The signal remains risk-off.

ASX 200/Gold in Australian Dollars

Performance of the ASX 200 Index relative to Gold (in Australian Dollars) reflects the real return on Australian Stocks.

ASX Stock Pricing

ASX stock pricing fell to 74.78% from 80.78% three weeks ago. Stocks are overvalued, and the decline is a bear signal.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

The Forward Price-Earnings ratio for stocks in the ASX 20 uses a 20% trimmed mean to eliminate the highest and lowest readings. This avoids distortions of the average by outliers.

ASX 20 Forward PE with 20% Trimmed Mean

Conclusion

The ASX Bull-Bear indicator signals the early stages of a bear market, while the composite Stock Pricing indicator signals stocks are moderately over-priced.

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Global Oil Shortage – This Time It’s Different

Key Points

  • We are on the 10th day of a hot war in the Persian Gulf.
  • The Memorandum of Understanding is a distant memory.
  • Tanker traffic in the Strait of Hormuz has died.
  • Brent Crude futures rebounded to above $90.00 per barrel.
  • What is different is that China is not cutting oil imports like last time.

Tehran and Washington are doubling down on their standoff over the Strait of Hormuz, as a Red Sea blockade risks shutting another key shipping route amid an expanding war. Days of U.S. strikes have not loosened Tehran’s chokehold over the Strait of Hormuz, a vital corridor for the world’s oil supply, while tit-for-tat strikes have taken the place of a collapsed ceasefire. A tanker came under attack in the strait early Tuesday, near Oman, forcing the crew to abandon the ship on a lifeboat, the British navy’s maritime trade operations center said. Iran said fires broke out on two tankers that passed through an unauthorized route. (Washington Post)

Brent Crude futures have rebounded to above $90 per barrel.

Brent Crude Futures (ICE September'26)

Crude oil tanker traffic through the Strait of Hormuz has come to a halt.

Strait of Hormuz Tanker Traffic

Strategic Petroleum Reserves have fallen by 100 million barrels since the start of the war.

EIA Strategic Petroleum reserve (SPR)

The drawdown of reserves helped to keep a lid on oil prices, but the biggest contributor to low prices was the sharp fall in Chinese oil imports from 12 million barrels/day in March to 5 million barrels/day in early July. This enabled a recovery of imports by the rest of Asia.

Asian Crude Oil Imports

What is different this time is a sharp rebound in Chinese imports. If China resumes imports of 10 to 12 million barrels/day, then global demand has to shrink by 5 to 7 million barrels/day, which would likely trigger a global recession.

China Crude Oil Imports

Gasoline prices in the US are back above $4.00 per gallon.

EIA US Gasoline Prices

Refiners’ margins have widened, likely a result of falling inventories of finished product. The 3-2-1 crack spread increased to $68.17 per barrel, above its 2022 peak at $60 per barrel.

Energy Channel: 3-2-1 Crack Spread

10-year Treasury yields climbed to 4.63%, with rising inflation expectations driving yields higher.

10-Year Treasury Yield

The University of Michigan survey of 1-year inflation expectations averaged 4.2% in July, with the 3-month moving average at 4.5%.

University of Michigan: 1-Year Inflation Expectations

2-year Treasury yields anticipate rate hikes ahead, testing resistance at 4.25%, 50 basis points above the Fed funds target range of 3.5% to 3.75%.

2-Year Treasury Yield (CNBC)

Bitcoin1, the canary in the coal mine, continues to test primary support at 60,000. A breach of support would warn of a sharp contraction in financial market liquidity.

Bitcoin (BTC)

However, the S&P 500 is consolidating in a bullish narrow triangle below 7600. Declining Trend Index peaks above zero indicate secondary selling pressure, and a breakout above 7600 would offer a target of 8000.

S&P 500

Gold is consolidating in a narrow rectangle above primary support at $4,000 per ounce. A breakout above $4,200 would signal respect of support, with an initial rally to $4,500.

Spot Gold

Conclusion

Ongoing conflict and restricted tanker traffic through the Strait of Hormuz will likely drive Brent Crude above $100/barrel. A resumption of Chinese crude imports at above 10 million barrels/day would drive Brent towards $150/barrel.

Interest rates are rising in anticipation of higher inflation, but the S&P 500 is testing resistance at 7600, and Gold is consolidating above $4,000 per ounce. A sharp rise in oil prices and inflation would be bearish for both in the short-term, but a divergence between interest rates and inflation would be a strong bull signal. Suppression of long-term Treasury yields, through Fed QE or other means, would drive real interest rates below zero, fueling a massive speculative boom in real assets.

Acknowledgments

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The Foundations of Australia’s Housing Boom are Being Tested | Robert Burrows

by Robert Burrows
21 July 2026

For years, Australian residential property has been viewed as a one-way bet. Mention the possibility of falling house prices and you’re often met with disbelief. Population growth, constrained housing supply and a deeply ingrained belief that property always goes up have combined to create one of the most expensive housing markets in the developed world.

But markets are ultimately driven by fundamentals, and those fundamentals are becoming increasingly difficult to ignore….

Read more at Bond Vigilantes

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US & ASX Leading Indicators

We are trialing a new format for the weekly market snapshots, combining the four major indicators into a single post. Your feedback would be welcome.

US Stock Market

US Bull/Bear & Market Valuation Indicators

We revised the bull-bear market leading indicator to improve its responsiveness, reducing it to a composite of five key indicators. Currently, two of the five indicators signal risk-off, indicating a medium risk of a US bear market.

Bull/Bear Market Indicator

The Cass Freight Shipments Index 12-month moving average remains in a downtrend, signaling risk-off. The index highlights broad freight shipping levels in the mainstream economy, and a rise or fall of more than 3 basis points signals risk-on or risk-off, respectively.

Cass Freight Shipments Index

US Stock Pricing

US stock pricing remains at extreme levels. We changed the composition of the Forward PE and Price-to-Sales indicators at the end of April 2026, so earlier highs are not directly comparable.

US Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then average the five readings and convert that to a percentile. The higher the stock market price measure is relative to the historical mean, the greater the risk of a sharp drawdown.

Warren Buffett's favorite long-term measure of stock market valuation provides a stable valuation ratio largely unaffected by fluctuating profit margins.

The ratio of stock market capitalization to GDP is more than double its long-term average of 1.2. Buffett considers values above 2.0 to indicate that stock prices are dangerously high.

Buffett Indicator: Stock Market Capitalization to GDP

Robert Shiller's CAPE smoothes out business-cycle effects by comparing the S&P 500 index to a 10-year average of inflation-adjusted earnings.

The current advance on the CAPE ratio is the second-highest in history, behind only the 1999 peak during the Dotcom bubble at 44.2, with values far above their long-term average of 22.4.

Robert Shiller's S&P 500 CAPE Index

Conclusion

The US Bull-Bear indicator, led by the transportation sector, flags the early stages of a bear market, while the composite Stock Pricing indicator warns that stocks are extremely over-priced.

ASX Stock Market

ASX Bull/Bear & Market Valuation Indicators

The ASX Bull-Bear Leading Index signals a mild bear market.

ASX Bull/Bear Market Indicator

Australian leading indicators have a 40% weighting in the ASX Leading Index, China 20%, and the US Leading Index carries the remaining 40%.

NAB Forward Orders improved to zero 2026, but the 3-month moving average remains below zero, signaling risk-off.

NAB Forward Orders

The ASX 200 Financials Index (XFJ) is below its 50-week weighted moving average, and a breach of primary support at 9000 would signal risk-off.

ASX 200 Financials Index

The ASX 200 is above its 50-week moving average relative to Gold, but the long-term downtrend continues, with no higher troughs. The signal remains risk-off.

ASX 200/Gold in Australian Dollars

Performance of the ASX 200 Index relative to Gold (in Australian Dollars) reflects the real return on Australian Stocks.

ASX Stock Pricing

ASX stock pricing fell to 74.78% from 80.78% three weeks ago. Stocks are overvalued, and the decline is a bear signal.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator's current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

The All Ordinaries dividend yield is below its long-term mean of 4.1%, indicating values are on the high side. A fall below the 3.0% threshold would signal that stocks are extremely overpriced.

ASX Dividend Yield

Note: Lower yields indicate higher values, so we reverse the z-score for the ASX dividend yield.

Conclusion

The ASX Bull-Bear indicator signals the early stages of a bear market, while the composite Stock Pricing indicator signals stocks are moderately over-priced.

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Bank of Japan a Leading Indicator?

Bank of Japan

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War, Inflation & Gold to the Moon

Key Points

  • The war in the Persian Gulf is hotting up, with both sides trading missile strikes and threatening to blockade shipping.
  • Brent Crude rose to $85.40 per barrel.
  • Crude and finished product inventories are declining, increasing upward pressure on gasoline and diesel prices.
  • Interest rates are rising in expectation of higher inflation.
  • The Dollar is rising in expectation of higher rates.
  • Gold and commodities face increased selling pressure as the Dollar strengthens.

DUBAI/WASHINGTON/CAIRO, July 13 (Reuters) – The U.S. military carried out a third consecutive night of strikes against Iran on Monday and two tankers came under ​fire in the Strait of Hormuz, after President Donald Trump said the United States was reinstating its blockade of Iranian shipping in the Gulf and would ensure that the strategic waterway stayed open — for a fee.

….Soon after, the United Arab Emirates Ministry of Defense said Iranian cruise missiles struck two Emirati oil tankers, the Mombasa and Al Bahiyah, while transiting the southern lane of the strait in Omani territorial waters, killing one crew member and injuring eight others.

The ​United Kingdom Maritime Trade Operations agency said a tanker had been hit by an unknown projectile while traveling 40 nautical miles northeast of Oman’s Qalhat and that all crew were safe.

“The Hormuz Strait is OPEN, and will remain OPEN, with or ⁠without Iran. We are reinstating THE IRANIAN BLOCKADE,” Trump had said earlier on Monday on Truth Social.
“The U.S.A. will be, from this point forward, known as ‘THE GUARDIAN OF THE HORMUZ STRAIT’, but as such, and as a matter of FAIRNESS, will be reimbursed, ​at the rate of 20% on all cargo shipped.”

….The UN’s shipping agency pushed back against Trump’s proposal, saying it opposes any fees for straits used in international navigation and stressing that there is no legal basis for introducing mandatory tolls on strait transits.

….Iran’s state TV cited the Iranian army as saying that it targeted a “hostile” U.S. vessel with cruise missiles and U.S. facilities and equipment in ​Kuwait with drones. Iranian media also said the Revolutionary Guards shot down a U.S. MQ-1 drone over Hormuz, while sirens sounded early on Tuesday in Bahrain – home to another U.S. military base.

Brent Crude (September futures) jumped to $85.40 per barrel.

Brent Crude Futures (ICE September'26)

The Strategic Petroleum Reserve (SPR) fell to 319.5 million barrels on July 3, a decline of 6 million barrels for the week.

EIA Strategic Petroleum reserve (SPR)

Overall crude stocks, including SPR, declined to 1.517 billion barrels, the lowest level in 23 years.

EIA Crude & Petroleum Products Inventories (incl. SPR)

Stocks of Gasoline (blue) and Diesel (brown) are close to their floor of 200 million barrels and 100 million barrels, respectively.

EIA US Gasoline & Distillate Inventory

Gasoline prices declined to a US average of $3.777 per gallon by July 6.

EIA US Gasoline Prices

Diesel prices also softened to $4.578 per gallon.

EIA US Diesel Prices

However, the 3-2-1 crack spread3 widened to $62.17 per barrel, indicating that refiners are taking advantage of low finished product inventories to widen their margins. However, there is speculation that crude futures prices are being distorted, and refiners are paying more than the quoted price per barrel to secure supplies.

Energy Channel: 3-2-1 Crack Spread

The Dow Jones Industrial Average is tentative, with three red candles over the past five days, and a fall below 52,000 would signal a correction.

Dow Jones Industrial Average

Financial Markets

2-year Treasury yields jumped to 4.29%, more than 50 basis points above the target range for the Fed funds rate. Financial markets are anticipating higher crude prices to increase inflationary pressure, forcing the Fed to raise rates.

2-Year Treasury Yield (CNBC)

The Chicago Fed National Financial Conditions Index continues its downtrend, indicating ample liquidity in financial markets.

Chicago Fed National Financial Conditions Index

However, Bitcoin1 is testing primary support at 60,000, warning that financial markets are becoming risk averse. A fall below support would warn of a sharp contraction in liquidity in financial markets.

Bitcoin (BTC)

Treasury Markets

10-year Treasury yields jumped to above 4.6% in anticipation of higher inflation and higher interest rates. A breakout above 4.7% would offer a target of 5.0% — a third rail for the economy.

10-Year Treasury Yield

Dollar & Gold

The Dollar Index rallied in expectation of higher interest rates.

Dollar Index

The stronger Dollar triggered another Gold test of primary support at $4,000 per ounce. However, rising Trend Index troughs below zero indicate buying pressure at the support level.

Spot Gold

Energy Transition

The strong Dollar is also causing a sell-off in energy transition metals.

Sprott Uranium Miners ETF2 (URNM) is testing primary support at 50. Declining Trend Index peaks below zero warn of strong selling pressure.

Sprott Uranium Miners ETF (URNM)

Sprott Copper Miners ETF2 (COPP) crossed below its 50-week moving average, indicating another test of primary support at 32.

Sprott Copper Miners ETF (COPP)

Sprott Lithium Miners ETF2 (LITP) is testing primary support at 11.

Sprott Lithium Miners ETF (LITP)

Sprott Critical Materials ETF2 (SETM) has broken primary support at 30. A follow-through below the previous week’s low would confirm a target of 20.

Sprott Critical Materials ETF (SETM)

Conclusion

We expect a steep rise in crude prices. Lower inventory levels indicate there are fewer reserves to cushion the impact of a supply shortage. Falling gasoline and diesel inventories warn of a sharp price rise ahead.

Interest rates are rising in anticipation of higher inflation, fueled by energy prices, which in turn increases support for the Dollar.

The strong Dollar increases selling pressure on precious metals and commodities such as uranium, copper, lithium, and critical minerals.

High inflation may reduce speculative demand for Gold in the short-term because of the likely increased carrying cost, but it increases investment demand for the metal as an inflation hedge. What will light the afterburners, however, is if the Fed suppresses interest rates to support the Treasury market.

Chinese demand is the largest driver of Gold prices in the long term, and low prices will likely trigger an increase in buying, both through official channels and via backdoor non-monetary Gold purchases.

Acknowledgments

Notes

  1. Cryptocurrencies are the highest-risk asset class, and we analyze Bitcoin (BTC) solely to identify risk sentiment in financial markets. Our analysis is not a recommendation to buy or sell BTC, nor is it a commentary on the merits of cryptocurrency.
  2. We analyze exchange-traded funds (ETFs) to determine market sentiment towards a specific sector, industry, or commodity. The analysis is not a recommendation to buy or sell, nor is it a commentary on the merits of the particular ETF.
  3. The 3-2-1 crack spread is calculated by subtracting the price of 3 barrels of crude from the sum of 2 barrels of gasoline and 1 barrel of diesel. The result is then divided by 3 to reflect the refiner’s gross profit per barrel of crude.
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The Oil Crisis is Not Over Yet

Key Points

  • Iran fires missiles at shipping in the Strait of Hormuz.
  • Brent Crude futures (Sep’26) hardly moved.

July 6 (Reuters) – Iran’s Revolutionary Guards fired at least two missiles at commercial ships transiting through the Strait of Hormuz on Monday night, Axios reported, citing two U.S. officials.

Two commercial ships suffered significant damage but had no casualties, the report said, citing a U.S. official.

Separately, Britain’s maritime security agency said a ​tanker caught fire after being hit by an unknown projectile east of Oman’s Limah early on Tuesday.

The United Kingdom Maritime ​Trade Operations agency (UKMTO) said early on Tuesday that the tanker was struck on its port side while ⁠travelling southbound about 8 nautical miles (15 km) east of Limah, causing a fire. No casualties or environmental impact had been reported.

….Iran’s Revolutionary Guards warned ships via maritime radio over the weekend that “our missiles and drones are ready to fire at you,” the Wall Street Journal reported on Monday, quoting from a recording ​it obtained.

Brent Crude (September ’26 Futures) remains close to $70 per barrel.

Brent Crude Futures (ICE September'26)

Crude inventories are falling steeply as the US releases oil from reserves to keep prices low. The EIA chart below shows US crude & petroleum inventories, including strategic (SPR) reserves, fell to 1.53 billion barrels.

EIA Crude & Petroleum Products Inventories (incl. SPR)

However, low prices are not reaching the gas pump. 3-2-1 crack spreads at close to $60 per barrel indicate that refiners have increased their profit margins rather than passing on cost savings to consumers.

Energy Channel: 3-2-1 Crack Spread

Conclusion

There is no final peace deal in sight. Crude oil supplies remain under threat.

The Iranian Revolutionary Guards are attempting to establish control over shipping through the Strait of Hormuz. They see closing the Strait as their best means of deterring future attacks from the US and Israel. However, its potency as a negotiating tool will diminish after the November midterms.

Acknowledgments

Notes

  1. Cryptocurrencies are the highest-risk asset class, and we analyze Bitcoin (BTC) solely to identify risk sentiment in financial markets. Our analysis is not a recommendation to buy or sell BTC, nor is it a commentary on the merits of cryptocurrency.
Posted on

Winning the War, Losing the Peace | Lance Gordon

The United States and Israel were winning the 2026 campaign against Iran. Then Washington gave up the advantage. The June 17 memorandum it signed traded decisive leverage for a framework weaker than the 2015 nuclear deal and financed the adversary it was defeating. This analysis shows the siege was working and a disarmament settlement was within reach; addresses the “oil clock” case for a fast exit; and documents how Israel, a key partner in the campaign, was sidelined in the aftermath…. The outcome was a choice, not a necessity.

Read the full essay at Real Clear Politics

Posted on

Brent Flat, Bitcoin & Gold Sink Again

Key Points

  • Brent Crude tests support at $70 per barrel.
  • Gold tests support at $4,000 per ounce.
  • The Dow closes at a new high.
  • Bitcoin breaches support at 60,000, signaling risk-off across financial markets.

Brent Crude prices remain flat at close to $70 per barrel despite on-again/off-again peace talks.

Brent Crude

We are entering the summer driving season in the US, when demand for gasoline peaks. Gasoline prices will likely remain high as refiners enjoy wide profit margins, with the 3-2-1 crack spread2 above $60 per barrel for the first time since Russia’s invasion of Ukraine in 2022.

Energy Channel: 3-2-1 Crack Spread

Bitcoin1 broke primary support at 60,000. Expect retracement to test the new resistance level, but respect will likely confirm another decline. Falling Bitcoin prices signal a market-wide shift to risk-off.

Bitcoin (BTC)

However, the Dow Jones Industrial Average closed at a new high. The replacement of Verizon (VZ) in the Average with Alphabet (GOOGL) on June 29 may have something to do with this.

Dow Jones Industrial Average

The S&P 500 also rallied, testing resistance at 7500. A follow-through above the recent high would offer a target of 8000.

S&P 500

Dollar & Gold

The Dollar retreated slightly, but all eyes are on the Japanese Yen, which weakened to its lowest point against the Dollar in more than 40 years. Expected intervention by Japan’s Ministry of Finance would temporarily strengthen the Yen but would be self-defeating, as it would increase selling pressure in Japan’s bond market. Rising bond yields force the Bank of Japan to intervene by buying bonds. That weakens the Yen and negates the MOF’s earlier move.

Japanese Yen

This is a difficult trap to escape from. If the BOJ raised its policy rate from the current low of 1.0%, it would strengthen the Yen but increase upward pressure on bond yields, forcing the Bank to buy more bonds, thereby weakening the Yen.

Gold is testing primary support at $4,000 per ounce again, with declining Trend Index peaks warning of secondary selling pressure.

Spot Gold

Plunging open interest on Comex Gold futures indicates that speculators are losing interest in the precious metal.

Gold Futures Open Interest

However, one major player is buying the dip. Bloomberg reports:

Imports were around 163 tons last month, the highest since March 2024, according to customs data released on Saturday. Volumes for the first five months of 2026 were about 692 tons, up by about 76% from a year earlier.

China: Nonmonetary Gold Imports

Conclusion

We expect Brent Crude to remain around $70 per barrel, provided there is no interruption to shipping in the Strait of Hormuz. This eases inflation expectations, but existing pressures persist and prevent the Fed from cutting rates.

Stocks remain bullish, but Bitcoin warns of rising risk aversion.

Gold will likely remain under pressure while negotiations with Iran continue, but China has increased its imports of nonmonetary Gold, buying the dip. We expect the uptrend in Gold to continue for decades, interspersed with regular sell-offs like the present, curbing speculators’ enthusiasm and enabling long-term players to build their positions.

Acknowledgments

Notes

    1. Cryptocurrencies are the highest-risk asset class, and we analyze Bitcoin (BTC) solely to identify risk sentiment in financial markets. Our analysis is not a recommendation to buy or sell BTC, nor is it a commentary on the merits of cryptocurrency.
    2. The 3-2-1 crack spread is calculated on the theoretical refining margin if a barrel of oil is split 2:1 between gasoline and diesel. A spread of $60 indicates that refiners’ margins would have tripled from $20 in January 2026.
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