SPEAKER_00 0:00

Imagine waking up, right, and you read that the U.S. military is actively bombing missile sites and uh boats overseas.

SPEAKER_01 0:09

Yeah, heavy stuff.

SPEAKER_00 0:10

Right. And then you watch the stock market just shoot up 300 points.

SPEAKER_01 0:14

It's wild.

SPEAKER_00 0:15

It is exactly the bizarre upside-down reality we are unpacking today. Welcome to this deep dive.

SPEAKER_01 0:21

Aaron Powell Yeah, we're looking at a post-Memorial Day landscape that is practically defying gravity. I mean, the market is totally gripped by these cross-asset geopolitical ripples. Where, you know, overseas headlines are instantly rewriting the playbook for everything from domestic interest rates to like the global copper supply.

SPEAKER_00 0:39

Aaron Powell So our mission today is dissecting the core market drivers from the May 26, 2026 pre-market briefing. Aaron Powell Right.

SPEAKER_01 0:46

The one by Eli Levy at Canon Trading Company.

SPEAKER_00 0:48

Exactly. But uh before we jump into how missing oil is secretly hijacking the Federal Reserve, we do need to cover the legalities really quickly. Disclaimer: Trading futures, options on futures, and retail off-exchange for currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

SPEAKER_01 1:26

All right, with that out of the way, we really have to look at how traders are behaving right now because they're completely ignoring those immediate military strikes.

SPEAKER_00 1:33

Okay, let's unpack this because it feels like a massive paradox.

SPEAKER_01 1:36

Oh, absolutely.

SPEAKER_00 1:37

The Dow just popped 305 points despite literal missiles flying. How?

SPEAKER_01 1:42

Well, the market is hyperfixated on President Trump's comments that the peace talks are proceeding nicely.

SPEAKER_00 1:47

Oh, so Wall Street is just betting heavily on a détente within days.

SPEAKER_01 1:51

Yeah, exactly. And you can see the optimism directly suppressing energy markets. I mean, West Texas intermediate crude actually dropped 4% following the strikes.

SPEAKER_00 2:00

Wait, really? It dropped?

SPEAKER_01 2:02

Yeah. But what's fascinating here is the massive glaring disconnect between market sentiment and physical reality.

SPEAKER_00 2:09

Aaron Powell Right, because the briefing points out that global oil inventories are rapidly approaching 35-year lows.

SPEAKER_01 2:16

Yes. Production losses could top a billion barrels by the end of May alone.

SPEAKER_00 2:20

That is just it's like celebrating that the fire department finally put out a kitchen fire while completely ignoring the fact that all your groceries just burned up.

SPEAKER_01 2:28

That's a great way to put it. The market is pricing in the expectation of a signed peace treaty, but they're just completely ignoring the physical scarcity.

SPEAKER_00 2:36

Yeah. Even if a deal lands tomorrow, it takes months for global shipping flows to normalize.

SPEAKER_01 2:41

Right. A treaty doesn't instantly teleport a billion missing barrels of oil back into the system.

SPEAKER_00 2:46

Here's where it gets really interesting, though. How is this energy volatility effectively rewriting central bank policy?

SPEAKER_01 2:53

Well, if we connect this to the bigger picture, that physical scarcity of oil is triggering a domino effect. And it lands right on the Federal Reserve's doorstep.

SPEAKER_00 3:02

Because you'd normally think central bankers set the rules, but right now a barrel of crude is effectively dictating policy, right?

SPEAKER_01 3:09

Exactly. The mechanism here is energy pass-through inflation. Trevor Burrus, Jr.

SPEAKER_00 3:13

Right. The April Consumer Price Index jumped to a three-year high of 3.8%.

SPEAKER_01 3:18

Yeah, and that spike wasn't from consumers going on shopping sprees. It was driven entirely by the Iran conflict and energy costs. Higher oil makes shipping more expensive, which forcibly drags up the price of literally everything.

SPEAKER_00 3:31

Which is why the Fed is effectively sidelined.

SPEAKER_01 3:33

Yeah. The market is pricing a 99.9% probability that they hold rates steady in June.

SPEAKER_00 3:40

But look at December. Because of this oil-driven inflation, expectations have completely flipped, haven't they?

SPEAKER_01 3:46

Totally. The market went from pricing in rate cuts to pricing in a 40% chance of a rate hike by year's end.

SPEAKER_00 3:53

Oh wow. So the yield curve isn't being skewered by the Fed, it's being hijacked by oil. Exactly. So what does this all mean for the physical economy? Like outside of energy.

SPEAKER_01 4:02

What's fascinating here is that if you strip away the geopolitics, the structural deficits remain. Take copper.

SPEAKER_00 4:09

Right. Copper just printed its highest level since January, nearing an all-time high.

SPEAKER_01 4:14

And that is completely independent of the Middle East. It's entirely driven by the AI hyperscale build-out. We're looking at a projected global refined copper deficit of up to 330,000 tons in 2026.

SPEAKER_00 4:26

Aaron Powell Because AI needs physical wire, not just code.

SPEAKER_01 4:29

Yeah, exactly. But we have to contrast the hard physical certainty of that metals deficit with the mirage we're seeing in agriculture. Trevor Burrus, Jr.

SPEAKER_00 4:37

Oh, you mean that touted $17 billion U.S.-China grain deal?

SPEAKER_01 4:42

Aaron Powell Yes. You saw the market get a huge upward spike in corn the second the White House announced it as a firm commitment.

SPEAKER_00 4:48

Right.

SPEAKER_01 4:48

But don't buy the headline just yet. That move is already unwinding. If you look at the fine print, Beijing is actively softening the language.

SPEAKER_00 4:55

Wait, how so?

SPEAKER_01 4:56

Well, China's Ministry of Commerce won't confirm the actual dollar amount. They're calling it merely a guiding target.

SPEAKER_00 5:02

Aaron Powell Oh, I see. So it's injecting incredible volatility because traders are suddenly realizing this massive deal might just be a press release.

SPEAKER_01 5:10

Right, not actual tonnage moving across the ocean.

SPEAKER_00 5:13

It all comes back to a core truth, you know. Geopolitics and actual physical supply chains are currently steering the global economy. They really are. A huge thank you to Canon Trading Company and Eli Levy for the insights driving today's deep dive. You can reach the author at Eli at Canon Trading.com.

SPEAKER_01 5:31

Yeah, it definitely forces you to question where the real leverage lies in the markets today.

SPEAKER_00 5:35

So what does this all mean for you as an investor? If global oil inventories are scraping historic 35-year lows and the AI boom is utterly draining the global copper supply, are we entering a new era where sheer physical scarcity permanently overrides anything a central bank can do with interest rates? Something to keep you thinking. Disclaimer Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.