SPEAKER_00 0:00

Imagine a massive tug of war. On one end, you have this huge optimism about Middle East peace pulling really hard. And on the other end, well, stubborn inflation is just digging its heels in.

SPEAKER_01 0:10

Yeah, and that tension is incredibly real right now. Today we are looking at the May 27, 2026 pre-market briefing from Canon Trading Company.

SPEAKER_00 0:21

Right, the one put together by Eli Livy.

SPEAKER_01 0:23

Exactly. And uh just real quick, if you want to dive into the raw data yourself, you can actually reach him directly at Eli at Canon Trading.com. But his briefing basically lays out how these geopolitical peace hopes are, well, they are violently colliding with severe economic constraints.

SPEAKER_00 0:38

Which is fascinating. So the core mission today is unpacking that massive collision for you. But uh before we jump into the mechanics of that, we do have a mandatory note.

SPEAKER_01 0:46

Right, let's get that out of the way.

SPEAKER_00 0:47

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.

SPEAKER_01 1:15

Okay, so to really understand the current market tension, you have to look straight at crude oil. I mean, Brent is hovering right around $100, and WTI is sitting in the low 90s.

SPEAKER_00 1:26

Which is mainly because the market is pricing in the possibility that US Iran negotiations might actually reopen the Strait of Hormuz, right?

SPEAKER_01 1:32

Right, exactly.

SPEAKER_00 1:33

But honestly, and maybe I am being overly cynical here, is the market being a little naive? Like you cannot just sign a piece of paper and expect millions of barrels to instantly start flowing the very next day.

SPEAKER_01 1:44

Oh, absolutely not. And the data completely backs up your skepticism. Helena Croft from RBC Capital Markets points out in the briefing that even with a perfect deal signed today, the logistics of restarting those supply chains are just incredibly slow.

SPEAKER_00 1:58

How slow are we talking?

SPEAKER_01 1:59

Well, her base case is that it would take roughly four months just to recover 80% of the pre-war oil flows.

SPEAKER_00 2:06

Oh wow. Four months.

SPEAKER_01 2:07

Yeah, so that supply shock does not just magically vanish overnight. And that lingering energy shock is exactly what has the Federal Reserve completely paralyzed.

SPEAKER_00 2:16

It is like driving with two feet. On one hand, you have the 10-year treasury yield easing down to 4.465%, which is basically the market tapping the gas on peace hopes. Right. But then you have sticky CPI inflation stuck at 3.8%, which just forces the Fed to slam on the brakes.

SPEAKER_01 2:32

Yeah, they are essentially pinned down by that dynamic. I mean, the CME FedWatch tool is currently showing a 99.9% probability of a rate hold in June.

SPEAKER_00 2:41

Wait, 99.9%?

SPEAKER_01 2:43

Pretty much a guarantee. They simply cannot cut rates with that energy-driven inflation just, you know, lingering in the background.

SPEAKER_00 2:49

And because rates are essentially frozen, gold is reacting dynamically, right? It is pulling back below $4,550 an ounce.

SPEAKER_01 2:58

Aaron Powell Right. But that brings us to a much bigger structural theory highlighted in the briefing. This comes from Jeff Curry at Carlisle. He is forecasting gold to drop down to $4,000.

SPEAKER_00 3:08

Okay.

SPEAKER_01 3:09

Before shooting all the way up to $10,000.

SPEAKER_00 3:11

Aaron Powell I have to admit that forecast genuinely surprised me. Why on earth does he think it will drop like that and then just explode to $10,000?

SPEAKER_01 3:19

It sounds totally extreme, I know, but the mechanism behind it is entirely driven by artificial intelligence. Yeah. Curry argues we are actually entering an AI-driven commodity supercycle because training and running these massive AI models requires an unprecedented amount of electricity.

SPEAKER_00 3:34

Oh, I see. Which puts immense strain on an already fragile global energy grid. Trevor Burrus, Jr.

SPEAKER_01 3:39

Exactly, leading to chronic energy shortages. So the idea is that those shortages trigger a decade of structural inflation, making gold the ultimate long-term hedge. Trevor Burrus, Jr.

SPEAKER_00 3:48

That is wild.

SPEAKER_01 3:49

Aaron Powell And to play this, Curry points to what he calls the MUNESCENT Seven.

SPEAKER_00 3:52

Aaron Powell Like the Magnificent Seven, but for energy.

SPEAKER_01 3:54

Aaron Powell Right. So traditional energy giants like Exxon, Chevron, and Shell, he views them as the ultimate asymmetric trait right now. Meaning it is a setup where the potential upside of an AI energy boom massively outweighs the downside risk. Trevor Burrus, Jr.

SPEAKER_00 4:13

It's really fascinating to see how interconnected the macro picture is when you look at AI and energy. But you know, you contrast that with the agricultural and soft markets. They're living in a totally different reality.

SPEAKER_01 4:24

Aaron Powell Oh, yeah. Aaron Powell The briefing notes, they are essentially ignoring all the geopolitical noise. While metals are stressing over data centers in the Middle East, the soft market only cares about the weather. Trevor Burrus, Jr.

SPEAKER_00 4:35

Right, like Brazil's dry coffee harvest.

SPEAKER_01 4:37

Yeah, their warm, dry weather is accelerating the harvest, which keeps prices low. It is this completely isolated microenvironment compared to the rest of the market.

SPEAKER_00 4:46

Which actually brings us to something for you to think about as you follow these trends over the next few weeks. We started today by looking at the tension between Middle East peace and inflation. But if Jeff Curry is right about the immense energy demands of AI data centers, are we entirely misjudging what will drive global inflation in the coming decade?

SPEAKER_01 5:04

It is a great point. Are we too focused on the Middle East when we really should be looking at our own power grids?

SPEAKER_00 5:10

It completely shifts where you look for systemic risk. Definitely something to keep an eye on. 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.