SPEAKER_00 0:00

Imagine you are watching a radar screen, right? And a massive inflation spike is just heading straight for a geopolitical shockwave. That is exactly what we are digging into for you today on this deep dive.

SPEAKER_01 0:13

Yeah, we are unpacking the uh the really violent market whiplash of May 29, 2026.

SPEAKER_00 0:19

Aaron Powell Right. And to make sense of it all, we are using a fantastic pre-market briefing by Eli Levy over at Canon Trading Company. You can actually reach him at Eli at Canon Trading.com if you want to follow up. The core conflict today is really just hot inflation slamming into these massive geopolitical swings.

SPEAKER_01 0:35

Oh, absolutely. I mean, it is quite literally ripping traditional market models apart right now.

SPEAKER_00 0:40

But uh before we get into the actual mechanics of all this chaos, we do need to read this quick note. 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 all 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 1:13

Okay, so the root of today's whiplash really starts with the April PCE print. You know, that's the primary inflation metric the Fed watches.

SPEAKER_00 1:21

Aaron Powell Right, the PCE.

SPEAKER_01 1:22

Exactly. But you really have to look at the split here. Core PCE, which uh strips out the volatile stuff like food and energy that came in at 3.3%. Yeah. But headline PCE, which includes absolutely everything, jumped all the way up to 3.8%.

SPEAKER_00 1:34

Yeah. So that completely isolates the culprit right there. I mean, it is obviously the energy shock from the Iran conflict driving that surge and not just, you know, underlying everyday inflation.

SPEAKER_01 1:44

Yeah, precisely.

SPEAKER_00 1:45

But wait, here is the real trap. While that headline inflation is spiking, Q1 GDP was just revised down to what, an anemic 1.6%? Is this basically like trying to accelerate your car with the parking brake on?

SPEAKER_01 1:59

That is a perfect way to put it, actually. It is a massive stagflationary headache for Fed chair Kevin Warsh right now. Like, think about the economic mechanics he's dealing with.

SPEAKER_00 2:10

He's kind of trapped, right?

SPEAKER_01 2:11

Totally trapped. If he cuts interest rates to help that sluggish 1.6% growth, he basically pours gasoline on the 3.8% inflation. But if he holds rates high to fight the inflation, he risks choking out growth entirely.

SPEAKER_00 2:24

And his hands are tied largely because of what is happening with oil. I mean, let's look at the U.S. benchmark, WTI crude, it violently reversed, shooting back over $91 a barrel after that U.S. strike on Iranian assets.

SPEAKER_01 2:35

Yeah, assets that Washington flagged as direct threats to commercial shipping. Yeah. But then uh then we get this sudden twist.

SPEAKER_00 2:41

Oh, right. The truce.

SPEAKER_01 2:42

Right. Reports of a tentative 60-day truce that is just waiting for President Trump's signature.

SPEAKER_00 2:47

Okay, wait, let me stop you right there though. Because if we get a signed diplomatic truce tomorrow, shouldn't the physical oil market just instantly cool off? Like the military threat is gone.

SPEAKER_01 2:57

Well, you are kind of confusing diplomatic speed with physical logistics there.

SPEAKER_00 3:01

Yeah.

SPEAKER_01 3:01

Eli's briefing cites Halima Croft's analysis, and she points out it takes at least six weeks just to unbottleneck the Strait of Hormuz.

SPEAKER_00 3:10

Six weeks just to clear the backlog.

SPEAKER_01 3:12

At least six weeks. You have massive tankers that have been rerouted all the way around Africa, and uh maritime insurance premiums that need to be completely renegotiated. You cannot just flip a switch and magically teleport millions of barrels of crude.

SPEAKER_00 3:27

Ah, okay. So the paperwork doesn't actually put the oil in the pipelines. Plus, according to Jeff Curry's notes in the briefing, Asian inventories are already stripped down to bare minimum operating levels. So the physical market is starving right now, regardless of what a truce says.

SPEAKER_01 3:42

Which means energy prices stay elevated, keeping that headline inflation hot.

SPEAKER_00 3:46

And because inflation stays hot, the Fed has to keep interest rates high. Which brings us to the currency markets, right? High US rates are a magnet for global capital.

SPEAKER_01 3:56

That is the exact chone reaction. Global capital flows into the U.S. seeking those high safe yields, and the US dollar just surges. The DXY index, which measures the dollar against a basket of other currencies, just topped 99.

SPEAKER_00 4:11

Man, and a dollar that strong acts like a global wrecking ball. Gold is priced in dollars, so as the dollar gets more expensive, gold dropped to 4390, which is its weakest point since March.

SPEAKER_01 4:21

And it is even more severe overseas. Look at the Japanese yen. The dollar surge pushed USD JPY to 159.59.

SPEAKER_00 4:30

Wow, almost 160.

SPEAKER_01 4:31

Yeah, and that level of currency depreciation imports massive inflation into Japan. It put Tokyo on extreme high alert for emergency market intervention.

SPEAKER_00 4:39

So pulling Elay Levy's main takeaway together for you, the markets are currently caught in a total vice. You've got a surging dollar on one side, chaotic straight headlines on the other, and an unsigned truce dangling right in the middle. Expect intense two-way headline risk.

SPEAKER_01 4:53

Yeah, every breaking news alert is going to force a violent repricing because the market doesn't know which narrative to trust yet.

SPEAKER_00 4:59

Exactly.

SPEAKER_01 5:00

Yeah.

SPEAKER_00 5:00

Which leaves you with this thought to mull over. If it physically takes six weeks to move oil and clear shipping lanes, even after a peace deal is signed, how much peace is actually priced into our global economy right now?

SPEAKER_01 5:12

That is the multi-trillion dollar question.

SPEAKER_00 5:15

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.