Breaking bad...
Key Markets report for Thursday, 18 June 2026
The news cycle must be hitting the escape velocity, running beyond most people’s ability to keep up with everything that’s going on. Some of the news that would otherwise be front page headlines are almost crowded out with all the noise, reminding of that Confucian saying about great trees falling with huge noise and destruction…
Deescalation in Middle East
Yesterday’s most significant and positive development (though not for Israel) was certainly the signing of the Memorandum of Understanding (MOU) between the US and Iranian presidents. President Trump signed the MOU in hard copy at Versailles during his G7-related visit with President Macron. Iranian President Pezeshkian signed his copy separately, in Iran. The agreement extends the ceasefire by 60 days (inclusive of Lebanon) and provides for the reopening of the Strait of Hormuz without tolls or fees.
Despite this, many view the MOU as a US capitulation and a win for Iran because it includes lifting the US naval blockade, allowing Iran to export oil freely, waivers of certain anti-Iran sanctions, unfreezing about $24 billion of Iranian funds, and a framework for a $300 billion reconstruction fund. Compared to US/Israeli terms from only three months ago, this is a dramatic climb-down indeed. Trump was asked to explain the radical turn and he attributed it to oil-related energy issues: “We would have run out of [oil] reserves in about 4 weeks.”
Another explanation could relate to Iran’s military deterrence, which proved much more effective than expected. Israeli General Eliezer Marom, quoted by Al Mayadeen said that, “We have seen what even limited Iranian missile barrages can do. The damage here in Israel is enormous; enormous. A significant portion of this damage is not visible to us and we are not aware of it due to military censorship.”
In spite of this, Trump surprised many by stating that it’s OK for Iran to have their ballistic missiles: “I’m saying that if other countries have them, it’s a little unfair for them not to have some.”
Anger rising in Britain over rape gangs
Meanwhile, fury and disgust appear to be gathering momentum among the British people over the rape gang inquiry released on Tuesday. In about 24 hours, the report got over a million click-throughs and the comments in social media seem very scathing. At the same time, the British establishment seems determined to ignore the whole affair. Neither the mainstream media nor the royal family issued any statements about the inquiry. Given that this is the greatest crime in British history, their silence is a self-indictment which could ultimately galvanize a social uprising.
It is important to recognize, however, that this is not merely a British affair. The same crimes have been reported in many European nations as the following chart illustrates:
The problem seems to be concentrated in Northwest Europe, and the governments of Sweden, Norway, France and Germany appear to have adopted the same general response as the British government. If anger boils over in the UK, it will likely impact European countries too.
Apocalypse in Moscow
This morning Moscow woke up to apocalyptic scenes after the largest Ukrainian (and British) drone attack:
Ukraine’s “president,” whose term expired in May 2024 proudly announced the attacks in this morning’s tweet:
As discussed here earlier this month, Ukraine’s increasingly frequent drone attacks against Russia are fully supported by the UK according to their “One Hundred Year Partnership Agreement,” and by this point the British no longer bother concealing this fact. More likely, they are keenly hoping that Russia will strike at them so they could finally create the conditions to mobilize the British people for war. Winston Churchill did the same when he launched repeated bombing raids against Germany, striking civilian targets until Hitler finally responded in kind. It’s a tired old playbook and Mr. Putin will probably decline them this gift, but the provocations will continue.
Markets as high as a kite!
Meanwhile, the markets couldn’t be happier as though everything in the world is just awesome! US equities are only slightly below their all time highs, prices of oil and precious metals are plummeting and even interest rates have come down a bit. Is this all because Trump and Pezeshkian signed an MOU? It’s hard to say. The fact that the US (and other nations) might have to take advantage of the cessation of hostilities to rebuild their very depleted oil reserves doesn’t seem to spoil the optimism. These are truly strange times and very difficult to interpret.
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Today’s trading signals
With yesterday’s closing prices we have the following changes for the Key Markets portfolio:
