SPEAKER_00 0:00

Over the weekend, uh missiles actually flew in the Middle East. And historically that means investors immediately panning, right? They just buy safe haven assets like gold.

SPEAKER_01 0:08

Aaron Powell Right, exactly. But on Monday morning that didn't happen at all.

SPEAKER_00 0:11

Aaron Powell No, it didn't. Gold actually dropped. Meanwhile, industrial copper just completely surged. So today we are finding out why.

SPEAKER_01 0:18

Aaron Powell Yeah, we are um really looking at this profound disconnect between physical world conflict and, well, technological momentum.

SPEAKER_00 0:28

Aaron Powell And that is exactly our mission for this deep dive. We are decoding the highly conflicting market signals from Eli Livy's pre-market briefing for June 1st, 2026.

SPEAKER_01 0:37

Aaron Powell A huge thank you to Canon Trading Company for providing these insights, by the way.

SPEAKER_00 0:40

Aaron Powell Definitely. And if you want to reach the author, you can just email Eli at CanonTrading.com. We are exploring how a weekend geopolitical shock is basically colliding headfirst with unstoppable AI demand. But before we break down the mechanics behind all this, we have a quick compliance note.

SPEAKER_01 0:57

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_00 1:25

All right, so let's look at the rapid macro reversal we just went through. Friday closed with this massive wave of optimism, you know, because Axios leaked that 60-day US-Iran ceasefire framework.

SPEAKER_01 1:37

Yeah, but then fast forward to Sunday night, the US strikes Iranian targets at uh Garuk and Keshem Island, and suddenly the war premium comes rushing right back to the markets.

SPEAKER_00 1:46

Right. But what really strikes me about Friday's initial optimism is how completely disconnected it was from physical reality. The Strait of Hormuz right now is well, it's like a clogged main artery.

SPEAKER_01 1:56

That is a perfect way to put it.

SPEAKER_00 1:58

Like you can tell the patient to calm down, but the blood still physically takes weeks to flow normally again. I mean, zero commercial shipping is actually moving through there right now, regardless of whatever the headlines say.

SPEAKER_01 2:09

Aaron Ross Powell Exactly. And that artery analogy is spot on. The analyst Helima Croft highlighted exactly that physical constraint.

SPEAKER_00 2:16

Oh, really?

SPEAKER_01 2:17

Yeah. Her analysis shows that even with a signed diplomatic deal, unbottlenecking the strait takes a minimum of six weeks. Wow. Six weeks. Right. You simply cannot teleport massive cargo ships through a military zone overnight. And when you combine that logistical nightmare with the fact that the U.S. strategic petroleum reserve continues to just rapidly drain.

SPEAKER_00 2:39

The underlying physical tightness in the energy market was basically already there.

SPEAKER_01 2:42

Precisely. The Sunday escalation just forced traders to price that reality back in. And that pushed WTI crude up 3.6% to uh $90.51.

SPEAKER_00 2:53

Okay, so oil surging makes complete sense under those specific conditions. But that brings us back to the anomaly with metals.

SPEAKER_01 2:58

Right, the really weird part.

SPEAKER_00 3:00

Yeah. If the Middle East is escalating and oil is spiking, gold is supposed to be the ultimate safe haven, yet gold retreated 1.16%, and copper in industrial metal took off, ripping 2.38% to $6.54.

SPEAKER_01 3:15

You are seeing the real-time execution of what Yardini calls the AI reflation playbook.

SPEAKER_00 3:21

Okay, let's define what that actually means for everyone listening.

SPEAKER_01 3:24

Well, the massive capital expenditure required to build out AI data centers is single-handedly re-stimulating the industrial economy. Copper is essentially the physical bottleneck of the AI cloud.

SPEAKER_00 3:35

Right, because every server rack, every cooling system, every upgraded power grid, they all require immense amounts of copper.

SPEAKER_01 3:41

Exactly. So when traders look at supply worries at the Grassberg mine in Indonesia, which is a major global copper reserve.

SPEAKER_00 3:48

That physical tech constraint suddenly matters way more than a geopolitical shock.

SPEAKER_01 3:52

Yes. The technological demand is completely overriding the traditional flight to safety.

SPEAKER_00 3:56

But wait, Goldman Sachs just raised its target for the STOXX 600, the broad European stock index citing solid nominal growth. Are institutional investors like Goldman just completely ignoring the geopolitical risks and the energy squeeze?

SPEAKER_01 4:12

They aren't ignoring the risk, they are just betting that the structural demand from electrification and AI will simply outpace it. But you know, that relentless demand creates a massive secondary problem.

SPEAKER_00 4:24

Inflation.

SPEAKER_01 4:24

Exactly. Inflation. If AI is consuming copper regardless of war and data centers are consuming energy regardless of shipping bottlenecks, that constant demand shows up in the data. We just saw the April PCE inflation numbers come in really hot at 3.8% year over year.

SPEAKER_00 4:40

Which means all this economic heat forces central banks right into a corner.

SPEAKER_01 4:43

Right. You have ECB officials like Isabel Schnabel actively warning that price pressures are spreading well beyond just the energy sector.

SPEAKER_00 4:49

Because the industrial side of the economy is just running so hot to support all this AI infrastructure.

SPEAKER_01 4:54

Exactly. And because of that, 70% of market expectations now sit at a Fed hold for June, keeping rates between 3.50 and 3.75%. The AI boom is literally keeping the global economy too warm for central banks to back down on interest rates.

SPEAKER_00 5:11

So the traditional playbook where a war shock slows down global growth and prompts rate cuts is basically broken right now.

SPEAKER_01 5:17

Totally broken.

SPEAKER_00 5:18

As you navigate these cross currents in June, it really leaves you with a staggering question to ponder. If AI and electrification demand are literally overriding active military conflicts in the commodities market, have we entered a completely new era?

SPEAKER_01 5:32

That really makes you wonder.

SPEAKER_00 5:33

An era where technological momentum dictates the global economy, completely regardless of geopolitical instability. Something to keep in mind as you watch the markets this week.

SPEAKER_01 5:41

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.