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Rabo On Regime-Change At The Fed: What Warsh Can (And Should) Do First

The honeymoon period for Warsh is over.

The FOMC could have given him the professional courtesy of allowing him to settle in, but in recent weeks several Committee participants have staked out their position.

They want to drop the FOMC’s easing bias and instead take a more neutral stance.

This means it will be more difficult for Warsh to convince the Committee of cutting rates anytime soon.

Against that internal pressure, WSJ's Fed whisperer, Nick Timaraos reports that Warsh has tapped two outside associates to advise him while he settles into the job, one of whom previously helped write a conservative blueprint that recommended a radical restructuring of the central bank.

The manifesto drew attention for floating ideas well outside the mainstream of monetary policy, including a menu of overhauls whose top-ranked option was “free banking” - effectively abolishing the Fed in favor of privately issued, commodity-backed currency.

The report included a disclaimer that said the ideas shouldn’t be attributed to any individual and instead synthesized the views of a panel of contributors.

Winfree later distanced himself from the chapter’s more provocative proposals.

“I do think the Fed should be reformed,” he told Roll Call in 2024. “But I would not subscribe to the idea of nuking the Fed.”

As Rabobank details below, the shifting dynamics in the FOMC cannot be seen separately from the developments in the Strait of Hormuz.

As the conflict drags on, energy prices will remain elevated and high inflation sustained for longer.

We flagged repeatedly that given the developments in the Middle East, we were more likely to drop a rate cut from our forecast for 2026 than add one.

Because of the shifting FOMC dynamics and their changed house view of the conflict and its resolution, Rabobank is now adjusting our Fed view.

Shifting FOMC dynamics

As we noted last week, in just a few months, the situation into which Warsh is parachuted has changed dramatically.

At the start of the year, we still expected that the new Chair could convince the FOMC of making three rate cuts before the year had ended.

After the outbreak of the war with Iran, we dropped one rate cut from our forecast.

However, the Strait of Hormuz is still disrupted today and gasoline prices and inflation have continued to rise.

Therefore, we repeatedly flagged that because of the developments in the Middle East, we were more likely to drop a rate cut from our forecast for 2026 than add one. Meanwhile, nonfarm payroll growth has been solid and the unemployment rate has remained at 4.3%.

As a result, the center of the FOMC has moved away from rate cuts.

What’s more, in recent weeks several Committee participants staked out their position.

Governor Waller’s conversion was the most notable. Last summer, he positioned himself as a Trump-loyalist, leading the charge to cut rates, because of increased downside risks to the labor market. After losing out to Warsh in the race for Fed Chair, he is shapeshifting again. Coincidentally, Waller jumped ship on the same day that Warsh was sworn in, making Warsh’s mission even more difficult than it already was.

Moreover, by staying on as Governor, Powell is effectively blocking the addition of another Trump-loyal Governor.

To the new Fed Chair it may feel as if he has been dropped behind enemy lines.

More inflation and less room to cut

Not completely unrelated, the situation in the Strait of Hormuz has dragged on.

RaboResearch has changed its view of the conflict and its resolution and now thinks that the Strait will be closed until September.

This has led to an upward adjustment of our energy price forecasts, which also means that we will adjust our forecasts for US inflation. More details will be provided in our Monthly Outlook next week. With our outlook for inflation higher and more persistent and the FOMC taking defensive positions against the new Chair, we now change our Fed view as well.

Instead of a rate cut in September 2026 and another in December 2026, we now forecast the first cut in October 2026 and the second in January 2027.

So we shift our expected rate cuts one meeting into the future. This means that we now forecast only one rate cut in 2026, instead of two.

At the same time, we add a rate cut to 2027 (previously none). The reason why we still expect the Fed to cut before the end of the year is that the conclusion by many Fed speakers that the labor market has stabilized may be a bit premature. After all, we have only just seen the first back-to-back positive nonfarm payroll growth figures in almost a year. What’s more, the fallout from the war with Iran could have negative repercussions on the real economy, even in the US. It is still a long way to the end of the year and we could easily see a return of downside risk to the labor market before we are there. In this case, the FOMC may reintroduce its easing bias.

For example, in his May 22 speech, Governor Waller said: “With regard to future rate cuts, I am going to need to see improvement on inflation or a significant deterioration in the labor market before I would consider reducing the policy rate.”

Note that he uses “or” instead of “and”, which implies that even without improvement on inflation, the labor market could be a reason to cut.

The Fed may be talking tough now, but they have a history of getting wobbly knees when the economy starts to falter. The reason why we do not shift the previous September cut beyond October, is the midterm election.

If downside risks to the labor market rise in Q3, Warsh will have a strong incentive to push for a rate cut prior to Election Day.

Therefore, the October meeting is his last chance to help boost the chances of the Republican candidates for the Senate and the House of Representatives by cutting rates and giving the stock market a lift.

Conclusion

Instead of delivering the rate cut that President Trump would have preferred, Warsh will likely have to remove the easing bias from the Fed statement at his first FOMC meeting as chair.

A sensible approach for Warsh would be to refrain from pushing for rate cuts in June and July, but instead introduce the analytical framework that will allow the FOMC to resume its prewar path of rate cutting later in the year.

If the current surge in inflation is purely a supply shock, the Fed should be able to look through the high headline inflation figures and focus on core inflation and inflation expectations.

If core inflation picks up substantially and inflation expectations become unanchored, then inflation pressures could become persistent.

However, if we see only a modest rise in core inflation and long-run inflation expectations remain stable, the Fed could resume its pre-war interest rate path, which was sloping downward.

Our forecast is now that the Fed will cut in October 2026 and January 2027, instead of September 2026 and December 2026.

So we move the rate cuts one meeting into the future.

This will still get the federal funds rate to what the median FOMC participant sees as the neutral level, only a little later.

The direction of Warsh’s mission is clear, but he may get there later than the administration might like.

Tyler Durden Wed, 06/03/2026 - 11:55

Goldman Sits Down With Anduril As 'War Unicorns' Reshape Defense Tech

Palmer Luckey’s defense startup, Anduril, is emerging as the Department of War’s answer to the urgent need for affordable, scalable advanced weaponry produced at lightning speed, rather than through the slow, over-budget procurement cycles that have long defined the legacy primes.

The twin conflicts raging across Eurasia and the Middle East, from the Russia-Ukraine war to the U.S.-Iran war, have forever altered modern warfare, with drones, seaborne drones, ground robots, and AI kill chains now reshaping the battlefield.

The quick rise of Anduril, something we call a “war unicorn,” has attracted the attention of Goldman analysts, who recently felt compelled to sit down with Anduril executives to better understand the story and how it will play a major role in the next phase of rebuilding America’s defense-industrial base.

Analyst Noah Poponak recently hosted Anduril co-founder and CEO Brian Schimpf and head of investor relations Allison Lazarus in New York to gain more color on how the defense company is solving the defense industry’s biggest bottleneck, speed.

Oculus headset creator Palmer Luckey, who founded the company in 2017, has focused on building lower-cost, scalable systems in categories such as drones, counter-UAS, and missiles, positioning itself against a legacy defense-industrial base that includes Lockheed Martin, Boeing, and many others.

Here are Poponak's top takeaways after speaking with Anduril executives:

What is Anduril solving for? The U.S. defense industrial base is currently geared towards producing low numbers of expensive, bespoke assets. While these assets are very capable - they have extremely high specifications and performance requirements - they have historically been used in limited quantities, often utilize sole-source specialty materials and components, and have complex manufacturing processes, all of which makes scaled production ramp-ups difficult. More recently, the rate at which these assets have been used in modern conflicts relative to their respective manufacturing footprints and stockpile levels has proven to be high. This has prompted the United States to 1) increase the production rate of these assets, but 2) develop and procure lower-cost alternatives that can be mass-manufactured. This is where Anduril steps in. The company designs its products with affordability and scalability in mind ("affordable mass").

In the long-run, Anduril believes its capability set can be a differentiator, but right now it is prioritizing scalability and speed by focusing on these principles:

1. Vertical integration. When it makes sense to do so, Anduril brings component and module production in-house, decreasing its reliance on external vendors to meet production targets. When the company does rely on external vendors (e.g. Anduril owns the design for a component, but does not produce it in-house), it seeks strategic relationships with commoditized component manufacturers, aiming to avoid the supply chain risks sometimes posed by sole-source suppliers (although this is hard to avoid with modules). Importantly, Anduril is not looking to completely vertically integrate. When the industry has many suppliers of a common item (such as small turbo jets or bolts), Anduril will source that item externally.

2. Component and process commonality across product lines. By utilizing the same components (bearings, bushings, washers, electronic components, materials) across product lines, Anduril simplifies its supply chain and can flex a common inventory pool across products. Having similar production processes allows for an easier manufacturing switch between products.

3. Product simplification and production automation. By designing simpler products, Anduril creates more opportunities for automation, lowers cost, and enables higher production output. A simpler product often times comes with a lower capability set, but there are increasing use cases for these products, as best-in-class assets are not always needed to achieve mission outcomes.

4. Flexible manufacturing facilities. By designing production lines and facilities to rapidly switch between different products, Anduril is able to more quickly meet demand when and where it occurs. This also lowers the risk of idle, dedicated manufacturing space for products not currently in a procurement cycle.

Internal investments create product adoption and margin upside. In our meeting, Anduril stated a near 25% total company operating margin over time is possible. The company derives a high percentage of its revenue from fixed-price work (we estimate that to be between 70-80%), and invests substantially in internal R&D, which, per the company, could allow it to command much higher margins than traditional defense primes over time. Investing ahead of customer demand does entail risk, but the company believes it is advantageous to compete with actual in-production assets versus hypothetical assets or designs when industry RFPs are released, combined with an ability to deliver to schedule. The DoW is increasingly requesting that industry participants invest their own capital into R&D and production, as it fosters faster product iteration and more competition.

DoW acquisition reform - showing early signs of progress. While acquisition processes at the DoW are still complex and can be difficult to navigate, Anduril stated it is seeing improvement at the customer, noting an increased willingness to try new testing, prototyping, and procurement strategies across the services. At an industry-wide level, the DoW is implementing acquisition reform (see our notes here and here), negotiating multi-year framework agreements, prioritizing fixed-price contract terms, investing in companies via equity stakes, and establishing more open test and procurement strategies like the Drone Dominance Program.

What products in the portfolio are seeing momentum?

• Anduril's Fury (YFQ-44A) continues to progress through the USAF's Collaborative Combat Aircraft (CCA) program as it performs aerial testing and enters the production phase at Arsenal-1.
• The company's Dive-XL product is being manufactured for the Royal Australian Navy's Ghost Shark XL-AUV program.
• Anduril recently entered into a framework agreement to produce thousands of Barracuda low-cost cruise missiles in the coming years.
• Anduril's CUAS products continue to gain momentum domestically (USMC) and internationally (to protect critical infrastructure abroad).
• Lattice is critically integrated into Anduril's hardware, but is also used for enterprise-wide / system-wide applications in the military (U.S. Army, U.S. Space Surveillance Network).

Anduril portfolio

Anduril notable awards and programs of record

Anduril fundraising rounds and implied valuation

Anduril M&A timeline

Professional subscribers can read the full Anduril note here at our new Marketdesk.ai portal. 

Tyler Durden Wed, 06/03/2026 - 11:35

Quantum Computing: Hype Or The Real Deal?

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

The word “quantum” is defined as “an amount,” with its Latin root meaning “how much.” In physics, a quantum is the smallest discrete unit of any physical property. The adjective form, as in “quantum leap,” describes a sudden, significant, and fundamental change. It is also a perfect adjective for coining the next potential technological innovation—quantum computing.

Quantum computing is being hailed as the next technology to revolutionize computing, following in AI’s footsteps. The headlines below, though confusing for non-quantum experts, are quite impressive:

• Google Unveils ‘Mind-Boggling’ Willow Chip, Solving 10-Septillion-Year Problem in Minutes

• World’s First 10,000-Qubit Processor Achieves 100x Leap in Qubit Count

• JUPITER Supercomputer Breaks World Record with 50-Qubit Quantum Simulation

• Caltech Physicists Build Massive 6,100-Qubit Neutral Atom Array

• A Photon Was Teleported Across 270 Meters in Stunning Quantum Breakthrough

But promising headlines loaded with industry jargon have a long history of appearing well ahead of reality. Accordingly, let’s better understand what quantum computing is, why it matters, and whether the hype is justified and worth investing in.

Classic Computing & Moore’s Law

To understand quantum computing, we need to first understand what bits are.

Every classical computer, from your smartphone and the laptop on your desk to El Capitan, the world’s most powerful supercomputer, operates using bits.

A bit is the fundamental unit of information: it is either a 0 or a 1. Every email you send, video you stream, and game you play is the result of billions of 0s and 1s switching on and off.  Over the last 50+ years, innovations have continually optimized the performance of these binary operations. However, continuing down this path becomes increasingly harder.

Moore’s Law describes computing innovation, while the law’s limits best describe the problem. Moore’s Law states:

The number of transistors on a microchip doubles roughly every two years, while the cost of computers is cut in half.

As the graph below shows, Moore’s law has resulted in exponential growth in computing power at increasingly lower costs. Note that the y-axis is on a log scale, with each tick representing a 100 times improvement in computing power per dollar.

The problem with Moore’s law is that it is limited by physical barriers. Specifically, the ability of chip manufacturers to continually shrink transistors. While there have been many innovations that extend the lifespan of Moore’s Law, the limits dictated by physics are becoming harder and more expensive to overcome.

Quantum Bits

Quantum computing takes a fundamentally different approach than the binary bits used by classical computers. Instead of bits, it uses quantum bits, or qubits.

Unlike bits, which exist only as a 0 or a 1, a qubit can be a 0 and 1, but it can also exist in three additional properties as follows:

• Superposition: A qubit can exist as a 0 and a 1 simultaneously, allowing a quantum computer to explore multiple solutions at the same time.

• Entanglement: Two qubits can become linked such that the state of one instantly determines the state of the other, regardless of the distance between them.

• Interference: Quantum algorithms exploit wave-like behavior to amplify correct answers and cancel out incorrect ones, steering the computation toward the right result.

Confusing? Absolutely, but the critical takeaway is relatively simple.  Quantum computing doesn’t process information sequentially. Instead, it explores many possible solutions simultaneously.

To help better appreciate the difference, let’s consider the task of solving a maze. A classical computer will try one path and, if it fails, try a second, third, fourth, and so on, until it stumbles upon the correct one. A quantum computer explores all possible paths at the same time, thus finding the correct path much more quickly.

For certain applications, such as cryptography, drug discovery, materials simulation, and financial optimization, where the number of potential “paths” is astronomical, quantum computing can significantly reduce computation time. To wit, consider the stunning quote below, courtesy of the New York Times:

Excitement Vs. Reality

Now we must quell the excitement and explain why patience is warranted.

Traditional bits, 0s and 1s, are robust. For instance, they operate efficiently regardless of room temperature or vibrations, like a Wi-Fi signal.

Conversely, qubits are fragile and need to be isolated from the outside world. Any contact with its environment, even something as subtle as a slight temperature change or a vibration, causes it to behave like a classical bit and lose its quantum characteristics.

Accordingly, quantum processors are cooled to temperatures near absolute zero, roughly -460 degrees Fahrenheit. For context, that is about 100 degrees Fahrenheit colder than Pluto’s typical temperature range.

To overcome these obstacles, they are housed in elaborate dilution refrigerators and shielded from interference. Even with these expensive controlled conditions, qubits can make errors at rates that would be unacceptable in classical computing.

Quantum Reliability

The quantum industry measures progress toward reliability using the ratio of logical qubits to raw physical qubits.  A logical qubit is one that has been error-corrected to behave reliably, as opposed to a raw physical qubit, which is prone to mistakes. It currently takes somewhere between 1,000 and 10,000 physical qubits to produce a single reliable logical qubit. To put that in perspective, useful quantum computing requires thousands of logical qubits. Therefore, the total physical count of qubits needs to be in the tens of millions.

Increasing the number of logical qubits is a massive task that engineers are working to overcome.  Accordingly, many researchers think that fault-tolerant machines capable of solving real-world problems are still many years away.

The challenge in building qubits lies in two competing demands. They need to be isolated from the environment to maintain superposition and entanglement. But at the same time, practical enough to build, control, and scale into the millions needed for a useful computer.

No one has figured out the best way to build a qubit; accordingly, scientists are at various stages of developing numerous qubit types.

The graphic below, courtesy of Aliro, summarizes three approaches.  

The answer may be that a hybrid approach or something not yet in development overcomes these challenges.

Investing In Quantum

Despite the potentially long timeline and technological hurdles, the industry is making substantial progress. Accordingly, the investment possibilities are slowly coming into focus.  To help you get started with your research, we provide a snapshot of the publicly traded quantum computing companies.

Keep in mind that IBM, Alphabet, and Microsoft are large companies with numerous streams of substantial revenue. While those cash flows help fund quantum R&D, the ultimate impact of quantum computing on their bottom lines will be diluted by other business lines. IonQ, D-Wave, and Rigetti are quantum-centric companies. Any significant breakthroughs could be extremely valuable to shareholders. However, while they have some revenue to fund R&D, they will be much more dependent on debt and dilutive equity offerings. 

IBM (IBM)

IBM is arguably the most experienced builder in the field. Its Quantum roadmap continues to evolve. The 2026 roadmap below, courtesy of IBM, shows the company is targeting fault-tolerant systems with thousands of logical qubits by 2033. IBM is not solely a quantum computing company. Cash flows from its mainframe and hybrid cloud businesses help fund quantum research and development.

IBM has actively researched quantum computing since the 1970s and launched the IBM Quantum Platform, the first accessible quantum computer on the cloud in 2016. Their long-term commitment and prior successes provide them with a knowledge and infrastructure advantage over their competitors.

Hot off the presses: IBM and the US Commerce Department announced the US’s first purpose-built quantum foundry, supported by a proposed $1 billion chips grant. The funds are part of a $2 billion total going to nine quantum computing companies.

Google (GOOG)

Google achieved one of the field’s most important milestones in December 2024 when its Willow chip surpassed a key threshold. The chip demonstrated what the company called below-threshold quantum error suppression, meaning that adding more qubits reduced error rates rather than compounding them as was the case. In October 2025, Google announced “verifiable quantum advantage,” claiming its Willow chip completed a specific algorithm roughly 13,000 times faster than classical supercomputers. Google’s deep integration with DeepMind and its classical AI capabilities gives it a unique hybrid research platform.

Microsoft (MSFT)

Microsoft has pursued a different technical path, betting on topological qubits. While these qubits are much more stable than those in other approaches, they are incredibly difficult to create and verify in a laboratory setting. Microsoft released its first topological qubit chip in early 2025. Azure Quantum, its cloud platform, has become an important interface layer connecting users to multiple quantum hardware providers, including IonQ and Quantinuum.

IonQ (IONQ)

IonQ is the most prominent pure-play quantum company in the public markets. Rather than producing superconducting qubits, IBM and Alphabet’s approach, IonQ uses trapped-ion technology, in which individual ytterbium ions serve as qubits. The approach runs more slowly but is generally more accurate. In 2025, IonQ became the first quantum company to exceed $100 million in GAAP revenue. It has also been aggressively acquisitive, purchasing Oxford Ionics for approximately $1.1 billion and adding quantum sensing and networking capabilities through several smaller deals.

D-Wave (QBTS)

D-Wave takes a narrow but commercially pragmatic approach. Rather than pursuing universal quantum computing, D-Wave specializes in quantum annealing, a technique to optimize problems in logistics, supply chains, and scheduling. Its products may appeal to a relatively small number of clients, but it is the one generating the most near-term commercial traction. D-Wave’s Advantage systems are in active production use with real enterprise customers today, not just in a lab.

Rigetti Computing (RGTI)

Rigetti is a smaller pure-play competitor focused on superconducting systems. Its Ankaa-3 processor has shown improved interconnect performance. It has faced financial pressure, but it retains a dedicated engineering team and a growing cloud customer base.

Summary

The quantum computing story is real. The question is not whether we will see quantum computers widely used, but when. The underlying physics is sound, the engineering progress is documentable, and the potential applications are significant.

The investment case requires patience and a realistic view of the potentially long timeframe. By most industry estimates, fault-tolerant quantum computing capable of broadly outperforming classical computers on a commercially viable basis is, at least, a decade away. The companies best financially positioned to survive that long a wait are those with diversified revenue streams (IBM, Alphabet, and Microsoft) or near-term niche players like D-Wave.

Given the long development time horizon, the associated financial burden, and the uncertainty about which qubit types and companies will be the winners, we recommend a portfolio approach. A diversified approach ensures greater stability and improves the odds of success. Last, and maybe most important, patience is required, as quantum computing companies, especially the smaller ones, are likely to have fits and starts as they progress.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of ZeroHedge.

Tyler Durden Wed, 06/03/2026 - 11:15

Ukrainian Drone Smashes Into Russian Passenger Bus, Killing 8 Civilians

The last 48 hours have seen massive, devastating Russian missile and drone attacks on the Ukrainian capital and other cities, which left at 18 dead and over 100 injured. Russia said this was in response to the Starobelsk dormitory attack of last month and other drone attacks targeting Russian territory.

But Ukrainian forces have upped the ante once again, this time with a mass casualty event in Russian-control Donetsk region. "A Ukrainian drone strike killed seven people and wounded 11 others in the occupied Donetsk region after crashing into a passenger bus, Kremlin-installed authorities said Wednesday morning, as overnight attacks killed at least two people in Russia," The Moscow Times reports. State media later revised the death toll up to eight killed.

Widely circulated social media image of bus after drone attack in Donetsk.

The strike happened in the town of Yenakiieve, while the group was being bussed to Simferopol in Crimea, all the way from Moscow on a long-distance route.

"According to preliminary reports, seven civilians were killed," Denis Pushilin, the Kremlin-installed head of the Donetsk People's Republic (DPR), wrote on Telegram. "At least eight people have been killed and 11 others wounded," RT later cited him as indicating.

"The Ukrainian fascists have committed another act of unprecedented, inhumane aggression," Pushilin additionally said. The bus itself was subsequently shown to be utterly destroyed and left as a burned, charred shell.

Perhaps seeking to preempt possible Ukrainian explanations of the bus attack being 'unintentional' - officials have insisted it could not have been an accident:

Russia’s human rights commissioner, Yana Lantratova, asserted that the attack was “not a tragic accident” but rather a “vile, deliberate, and inhumane crime” against non-combatants.

“There are no military objectives that could justify the bloodshed of civilians. There are no arguments that can absolve those who issue and execute such criminal orders from responsibility,” she stressed.

This could invite even greater airstrikes on Kiev, after it has already been hit hard in the latest attacks.

Russian embassies and foreign ministry-connected channels have circulated footage of the attack aftermath:

⚡️ Russian MFA Spox #Zakharova:

The Kiev regime has once again exposed its inhuman Nazi nature by attacking a passenger bus in the DPR, killing 7 civilians.

❗️ We call on all responsible governments & international organizations to condemn this crime.https://t.co/kxslpuGu4Q pic.twitter.com/QacSn2lft5

— MFA Russia 🇷🇺 (@mfa_russia) June 3, 2026

President Putin and top military brass had last month said strikes would be initiated against "decision-making centers" in response to the dorm attack in the Russia’s Lugansk People’s Republic on May 22, which killed 21 people - mostly teenage girls - and injured 70 others.

Kremlin officials now say that Russian forces have "a right to dismantle any infrastructure that supports terrorism." This new bus attack strongly suggests there's no off-ramp or de-escalation on the horizon, but that tit-for-tat strikes will only grow and become more violent.

Tyler Durden Wed, 06/03/2026 - 10:55

Oil Prices Hold Gains As Gasoline Stocks Hit 12 Year Lows, Cushing 'Tank Bottoms' Loom

Brent crude prices are rising back toward $100 per barrel this morning following the latest flare-up in fighting to threaten the U.S.-Iran ceasefire

Prices rose after the U.S. military said Iran fired missiles toward Kuwait and Bahrain, which failed to hit their targets.

The United States said it then struck an Iranian military ground control station on an island in the Strait of Hormuz.

 

API:

• Crude: -6.8MM

• Cushing: -279k

• Gasoline: +3.5M

• Distillate: -214k

DOE:

• Crude: -7.97mm - biggest draw since Feb

• Cushing: -583k

• Gasoline: +3.36mm - biggest build since Jan

• Distillate: +1.50mm

US crude stocks fell for the sixth straight week with Cushing inventories testing tank bottoms once again. The week saw an unexpected jump in product inventories with Gasoline's biggest build since January...

Source: Bloomberg

Today's rise in gasoline stocks lifts them off their lowest level for this time of year since 2014...

Source: Bloomberg

Cushing 'tank bottoms' are in sight once again...

Source: Bloomberg

The Strategic Petroleum Reserve saw another huge drawdown this week (down 58mm barrels since the start of the war)...

Source: Bloomberg

Rig counts are on the rise as US crude production drifts back towards record highs...

Source: Bloomberg

US crude and product exports jumped back towards record highs...

Source: Bloomberg

WTI was trading around $95 ahead of the official data...

Finally, economists at Macquarie wrote in a note this morning that crude oil’s muted reaction to the closure of Hormuz has mainly been a function of the oversupply seen before the war, .

The analysts suggested that “the market will be ok for another month or two, especially given commercial crude stocks have been cushioned by SPR/product draws."

However, if the Strait remains closed at the end of the northern summer (Labor Day is Sept. 7), physical availability will tighten materially.

“If the Strait reopens soon, we expect prices to fall sharply. However, with stocks drawing rapidly, if the Strait remains closed, at some point prices will need to move much higher.”

'Tank Bottoms' are in sight around the world.

Tyler Durden Wed, 06/03/2026 - 10:39

"Next Month, Next Quarter, Next Year"

By Molly Schwartz, cross-asset macro strategist at Rabobank

In a tense Congressional Hearing before the foreign relations committee, Marco Rubio defended the Trump Administration’s war in Iran, praising the success of US military operations destroying Iranian military and nuclear facilities. He also said that a deal with Iran could happen “today, tomorrow, or next week.” However, the recent military escalations between the US and Iran, the refusal of Israel and Hezbollah to cooperate, and reports of Pezeshkian’s resignation — leaving Iran in the hands of the IRGC — mean that a deal seems to lie more on the horizon of next month, next quarter, or maybe even next year.

Our base case that we see passage through the Strait disrupted for at least three more months still stands as we have yet to see any tangible headlines to suggest an accelerated timeline. The negotiations currently lie in Iran’s hands, as Bloomberg reports Iran’s Mehr news saying that “officials in Tehran are discussing their ‘final text’ to send to the US.” One might be hesitant to truly deem this text as “final” (if it even exists), as it may be more of a “final_v3.doc”, or a “final_FINAL_v6.doc”, or even a “final_FINAL_totallyforrealthistime.doc”.

The most promising resolution right now is that the IRGC remains in power, but enriched uranium is handed over to an executor, like China, though we have yet to see any confirmed updates that this is a feasible solution that Iran would actually agree to at this juncture. The extended 60-day ceasefire is still ongoing, while both the US and Iran are dedicated to keeping the Strait closed and exchanging fire. CENTCOM posted on X today to show off the USS Abraham Lincoln enforcing the US blockade, which has apparently redirected 122 vessels to “ensure compliance.”

Yesterday, Trump slammed Vulcan’s Hammer on the AI industry, signing an executive order, “Promoting Advanced Artificial Intelligence Innovation and Security.” The executive order lauds how the administration has “unleashed tremendous technological growth and economic investment in AI by slashing the bureaucratic constraints that the prior administration placed on America’s AI developers and researchers, and by instead encouraging AI innovation and accelerating responsible AI adoption across government and industry.”

Part of the executive order is intended to support the AI industry, seeking to utilize AI in federal cybersecurity programs, and utilize AI models (potentially Mythos?) to pinpoint vulnerabilities. However, the order also seeks to impose new restrictions, likely in response to the emergency meeting triggered by Mythos a few months ago. This includes lots of classified processes and frameworks to make sure that an evil AI model, the likes of that in a Philip K. Dick novel, doesn’t usurp the American government as the presiding force leading the world’s global hegemon (or more likely, making sure these models can’t be used to hack into sensitive government websites). The process is referred to as a “voluntary framework” so that AI developers can submit their new models to the government 30 days before release to the public. Though the order also clarifies that “nothing in this section shall be construed to authorize the creation of a mandatory governmental licensing, preclearance, or permitting requirement for the development, publication, release, or distribution of new AI models, including frontier models.”

While innovation in the US is so hot that the government is now pulling in the reins a bit, officials in Canada are turning a blind eye to sluggish growth. Last week it was announced that Canadian GDP shrunk by 0.1% in Q1 of 2026, marking the second consecutive quarter of contraction and signalling a technical recession. Worse yet, the Q1 GDP estimate missed expectations of seeing growth at 1.5%, suggesting that the health of the Canadian economy has been overestimated by economists for the past few months.

Prime Minister Carney partially attributed the contraction to “uneven data” as the Canadian government “has been in the process of laying the foundations for a stronger, more resilient, more independent Canadian economy.” But at the same time, this comes less than a week after Carney celebrated close US-Canadian economic ties when speaking to the Economic Club of New York, saying that “Canada Strong will help make America great again.”

Bank of Canada Deputy Governor, Carolyn Rogers, has also brushed off the technical recession, saying that we need to “look past technical recession indicators” in favor of more leading economic indicators. But for some, the technical recession is a flashing red light, screaming that the current trade situation with the US is unsustainable and it’s time to sit down at the negotiating table.

Canadian trade minister LeBlanc sat with USTR representative Greer yesterday in Washington to discuss the USMCA. Prior to their sitdown, LeBlanc sent a letter to both Greer, and Mexico’s economy secretary Ebrard, asking to see the USMCA renewed for another sixteen years, as the USMCA review is currently underway. While the likelihood of the USMCA being renewed in its current form is slim to none—which LeBlanc is likely painfully aware of—he highlighted that conversations pertaining to the sectoral tariffs (Section 232 hitting steel, aluminum, automobiles, etc.) will be “essential.”

Tyler Durden Wed, 06/03/2026 - 10:20

US Services Surveys Signal Surging Prices, Mixed Growth

Following the dramatically better than expected rise in US Manufacturing PMI surveys, analysts expected stability in the Services side of the economy in May.

They were somewhat correct but the message was mixed with one survey improving while the other deteriorated...

• S&P Global US Services PMI dropped from 51.0 (April) to 50.9 (flash May) to 50.7 (final May) - dropping back towards March lows.

• ISM US Services PMI rose from 53.6 to 54.5 (better than 53.8 exp)

Source: Bloomberg

Under the hood, both surveys signaled rising prices with employment weaker and a mixed picture for orders (ISM higher, S&P lower)...

Source: Bloomberg

"While the US manufacturing economy is reporting a surge in demand as war-related supply and price worries drive precautionary stock building, it’s a different story in the service sector," says Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

"Demand for services has been largely stalled over the past three months, losing the strength seen earlier in the year."

The sluggish services economy is acting as drag on overall economic growth, which the PMI data signal to be running at a modest annualized pace of just above 1% so far in the second quarter...

Williamson notes that consumer-facing service sectors were the hardest hit, where orders are now falling at the steepest pace since the pandemic in 2020, with respondents blaming the decline on a combination of squeezed spending power from energy prices hikes and customers pushing back on higher prices being charged for services.

However, business services are also seeing reduced order book growth compared to earlier in the year and financial services firms are coming under pressure from higher interest rates.

"Rising costs and cooling demand are meanwhile causing service companies to cut staff at the fastest rate seen since the early months of the pandemic," warns Williamson.

This is not a good sign for CPI...

The increase in input cost inflation being signaled by the PMI points to a further rise in consumer price inflation in the coming months, but, Williamson notes that, on the other hand the "weakening of demand growth and downturn in the labor market being indicated could help allay concerns over any inflation spike becoming more entrenched."

Respondents are almost universally worried about energy costs...

But tariff fears are gone?

credittrader Wed, 06/03/2026 - 10:07

Trump Says He'd Like To Meet Iran's New Supreme Leader: 'We Probably Will'

After US-Israeli strikes assassinated the last longtime Supreme Leader, Ali Khamenei, President Trump says he would like to meet the new one.

Trump said he "would like to meet" Iran's Ayatollah Mojtaba Khamenei, in an interview published Wednesday. In surprising remarks, Trump told the New York Post's Pod Force One: "I would like to meet him, and we probably will meet at some point, depending on how it all works out."

AFP via Getty Images

Trump reasoned that "They've ‌already agreed ‌they're ‌not going to have a ‌nuclear weapon" - suggesting this could be the basis for new direct diplomatic engagement.

And yet the Iranians have already for years consistently stated they were never intent on achieving a nuclear bomb. All recent high level US intelligence community assessments have tended to support the claim that Iran was not seeking a nuke before the attacks of June as well as March into April, under Operation Epic Fury.

But Trump has also dismissed the intelligence, insisting that Iran was 'very close' before the US-Israeli interventions.

While Trump is now expressing openness to meeting the Ayatollah - who is said to be in hiding and only having limited, low-tech communications with his officials, for fear of being tracked by the CIA or Mossad - the Supreme Leader himself has not voiced a desire for such a meeting.

Tehran at this moment doesn't appear in the mood for 'talking' - and has lately said it is ready to let its military retaliation and response do the 'negotiating'.

The US President once again made claims about the text of the possible agreement. He claimed that "Iran has agreed not to acquire nuclear weapons." --Bloomberg

This seems another element of confused messaging from the White House, which has many times denounced the Ayatollah and his regime as 'murderous' and 'evil' and a 'tyrant' - and yet now Trump apparently wants to sit down with him for tea time or something.

Trump in the NY Post interview actually addressed the general atmosphere of confusion and contradictions from his administration, and from him personally.

"It's good if they’re confused, and the Iranians are confused," Trump stated.

He added: "But no, it’s just the way I am. It changes. I could leave here, I could give you an answer, and then in 20 minutes go into the Oval Office and I’ll realize my answer is now incorrect. Facts change and things change quickly."

In this context, he went on to defend the controversial decision to go to war in the first place, saying it could not have been delayed as Iran was on the brink of having a nuclear weapon.

"I couldn’t, I know because this is too important. If I did that, they would have had a nuclear weapon. They would have had a nuclear weapon two weeks after the B-2 bomber struck. So if I did that, they would have had a nuclear weapon."

Trump: "He's missing a lot of different parts."

Trump:

I haven't had the privilege of meeting the Ayatollah.

He is not doing great; he is missing a lot of different parts. pic.twitter.com/8e9ROInZeb

— Clash Report (@clashreport) June 3, 2026

He again in the interview called it a necessary "excursion" - saying, "They’re not going to have a nuclear weapon, lots of other good things are going to happen." From the interview, on the question of boots on the ground in Iran...

"You don’t need boots on the ground right now. We wiped out much of their military with just bombing. After three days their military was virtually wiped out. … And then if you read the New York Times you think they’re doing fantastically."

Trump elsewhere addressed the controversial Axios report which said Trump 'steamrolled' Israeli PM Netanyahu in a phone call. Per Bloomberg, "Trump said he swore at Benjamin Netanyahu in a call this week as the president tried to deescalate fighting in Lebanon and keep peace talks with Iran on track."

"I did," Trump said, acknowledging he chastised his ally. "I ‌wouldn’t say angry. I was a little ‌bit perturbed at his constantly fighting with ⁠Lebanon, ⁠you know."

Tyler Durden Wed, 06/03/2026 - 10:00

Step Aside Private Credit: Partners Group Is First Private Equity Fund To Gate Investors

The private credit gating-gate is spilling over to private equity. 

Partners Group Holding AG has capped withdrawals at one of its evergreen private equity funds amid heightened redemption pressure, as the investor anxiety that hit private credit vehicles is now spilling over to other asset classes within private markets, Bloomberg reported.

The Swiss firm, one of Europe’s largest listed alternative asset managers, said its $8.6 billion Global Value SICAV fund was limiting redemptions to 5% of net asset value per quarter after withdrawal requests surged to an estimated 9.8% in the second quarter, according to a letter to investors seen by Bloomberg News.

Amid the surge in redemptions targeting private credit funds, a spokesperson for Partners Group told Bloomberg that there’s been a pick-up in redemption requests from private wealth clients across the firm’s evergreen portfolio. Such clients, who are typically "far more skittish than institutional investors", make up about a fifth of assets under management across its platform and a particularly large proportion of Global Value’s investor base.

Partners Group is one of the pioneers of evergreen funds, which operate indefinitely and typically allow investors to withdraw at least a portion of their investments quarter-by-quarter rather than locking up the capital for a set period. It has more than 30 such funds across five asset classes with more than $56 billion combined AUM, the spokesperson said.

“There are some idiosyncratic factors for this fund in particular, but indeed you do see investors broadly, after having redemption pressure within private credit for a number of quarters, now starting to redeem other asset classes,” Chief Executive Officer David Layton told Bloomberg Television on Wednesday. Most of the redemptions in the Global Value fund are coming from Asia and Australia, he said.

Macroeconomic shifts and geopolitical conflicts have strained private markets in the last few years, with industry-wide volatility starting in private credit vehicles spilling over into private equity, Partners Group said in the letter. “These flow dynamics have recently accelerated” and impacted the fund, it added.

Partners Group “believes that redemption limitations are an indispensable feature of private markets investing to protect long-term investors in an inherently illiquid asset class,” it said in the letter. “Acting in the best interests of all investors in an evergreen fund means balancing the needs of those seeking liquidity while preserving investment capital for long-term investors who want to capitalize on market opportunities.”

In April, the company said it saw “positive fundraising momentum” for its private markets strategies in the first quarter, as it sought to distance itself from mounting concerns over the health of the private credit market.

The gating by Partners Group comes despite the fund’s liquidity standing at around 15% of net asset value. “In addition, the fund has access to an undrawn credit facility equal to 15% of the fund’s size,” the letter said.

Shares of the asset manager, which oversees about $185 billion across private equity, credit, real estate, infrastructure and royalties, tumbled as much as 18.2% in Zurich trading on Wednesday, the biggest intraday loss on record. They are down about 30% for the year. Shares in EQT AB and CVC Capital Partners Plc, two firms that are also know for such strategies, both fell more than 5%. 

The redemptions are the latest challenge confronting Partners Group, which a few weeks ago denied allegations of systematic asset over-valuation made in a report by short-seller Grizzly Research. 

Private credit funds have largely been in focus in recent months, suffering large outflows amid broader worries over debt quality and also rising concerns that many are overly exposed to software companies facing the risk of being upended by artificial intelligence. With investors scrambling to yank billions of dollars from such funds, some of the biggest money managers that have capped redemptions recently include Apollo Global Management Inc., KKR & Co., BlackRock Inc. and Blue Owl Capital Inc. Last night, we reported that Cliffwater was the first fund to report 2nd quarter redemption requests, which surged to 17%, up from 14% in Q1. The company imposed a 5% gate for the second consecutive quarter.

“The disease is spreading across private markets asset classes,” said Pierre-Yves Gauthier, CEO and head of strategy at AlphaValue. “There is presumably a case to trim earnings expectations on contracting AUMs.”

The 19-year-old Partners Group - which last enacted some liquidity restrictions during the pandemic - remains open to subscriptions and distributions for the full year are expected at 15%, one percentage point less than in 2025, the firm said.

In April, Grizzly Research targeted Partners Group saying it was shorting the stock, citing alleged valuation inconsistencies in evergreen funds, where it estimated as much as 40% of investments may be significantly mis-marked. Grizzly said it had identified discrepancies between reported valuations and underlying performance. In response, Partners Group, based near Zug, Switzerland, has said valuations are validated by third parties and broadly termed Grizzly’s claims as “frivolous, defamatory and highly misleading.” 

Layton said the short-seller report “certainly doesn’t help,” but it was hard to tell how much of a role it has played. “We don’t think it is significant but certainly it is one of the factors that’s leading to increased redemption pressure in this fund in particular,” he told BTV. 

Tyler Durden Wed, 06/03/2026 - 09:20

SpaceX Reportedly Targets $135 IPO Price As Morningstar Says Valuation Should Be Halved

Last week, Elon Musk called Bloomberg's "SpaceX Said to Cut IPO Value" story "false," marking the latest clash between Musk and the MSM over coverage of his companies.

Reuters has released a new report, which, based on sources, says SpaceX is planning an IPO at a price of $135 per share, aiming to raise a record $75 billion by selling about 555.6 million shares at an estimated $1.75 trillion valuation.

SpaceX's roadshow is expected to begin Thursday, with a potential Nasdaq debut under the ticker SPCX on June 12. Goldman Sachs, Morgan Stanley, BofA, Citigroup, and JPMorgan are leading the deal.

Sources said the IPO is "structured as an all-primary offering," which means the proceeds will go to SpaceX rather than existing shareholders. Musk will reportedly be subject to a 366-day lock-up period.

At a $1.75 trillion valuation and projected 2025 booking revenue of $18.67 billion, SpaceX would trade at roughly 94 times trailing sales. The company also reported a $4.94 billion net loss in 2025, compared with a prior-year profit, with Starlink internet as the major profit engine.

Beyond Reuters' reporting, there was a separate report from Morningstar analysts stating that SpaceX's valuation should be less than half of the $1.75 trillion figure, and closer to $780 billion.

Morningstar equity analyst Nicolas Owens wrote in a note that his team "doesn't see Grok as one of the leading AI labs today," adding:

"We think the company has been significantly overvalued and investors will have opportunities to buy the stock at more attractive levels after the IPO."

Polymarket odds for "SpaceX IPO closing market cap above ___ ?" currently stand at 89% for a market cap above $1.8 trillion.

//--> //--> SpaceX IPO closing market cap above $1.8T?
Yes 89% · No 12%
View full market & trade on Polymarket

Related:

• SpaceX IPO Update: New Filing Reveals Friends & Family Share Allocation, Anthropic AI Deal, And Water Risk

SpaceX is preparing a record-setting IPO that would test public-market appetite for Musk's empire, space, and AI. This listing is expected to pave the way for other mega IPOs, such as those of chatbot makers OpenAI and Anthropic.

Tyler Durden Wed, 06/03/2026 - 09:00

Family Of Henry Nowak's Migrant Killer Sparks Outrage After Asking For "No Further Pain" In Tone-Deaf Statement

Via Remix News,

The family of Vickrum Digwa has been accused of adding insult to injury after issuing a statement asking that Henry Nowak’s murder not be used to cause “further pain,” despite fierce public anger over the way the 18-year-old was stabbed, falsely accused, handcuffed and left dying in the street.

Vickrum Digwa was sentenced to life in prison with a minimum term of 21 years on Monday after stabbing 18-year-old Henry Nowak multiple times in Southampton. According to the account provided, Henry was stabbed five times, including twice in the back of the legs, once in the face and once fatally in the chest.

The case has caused national outrage not only because of the killing itself, but the wider context. After the stabbing, Digwa’s brother phoned police and claimed that “some White guy” had racially insulted his brother. Henry had not done so, a court ruled. Instead, Digwa had used a ceremonial knife to stab him repeatedly.

Police then arrested Henry purely on the basis of the report of racial assault against him. Bodycam footage released by the Crown Prosecution Service after the sentencing showed Henry lying motionless on the ground while being arrested on suspicion of assault. He told officers he had been stabbed and could not breathe.

🇬🇧 The distressing bodycam footage of Henry Nowak's final minutes has been released by the Crown Prosecution Service.

Henry was stabbed by Vickrum Digwa, with an 8-inch blade he said he carried as part of his Sikh faith, while walking home alone in December last year in… pic.twitter.com/mIM1BgGdkj

— Remix News & Views (@RMXnews) June 1, 2026

“I don’t think you have, mate,” one officer replied.

Henry died minutes later.

Against that background, the Digwa family’s statement has been met with disbelief. The statement said, “The loss of a young life is a grief that no family should ever have to carry. We are deeply sorry for the pain and suffering the Nowak family has had to endure.”

“We love Vickrum. We will continue to love him. That love does not stand in opposition to the sorrow we feel for the Nowak family. Both are real, and both will remain with us for the rest of our lives.”

But the line that has drawn particular anger came later, when the family said: “We would give anything to turn back time so the path of both Henry and Vickrum never crossed that night. We cannot change what has happened; we just hope that no further pain is caused in its name.”

Rather than calling an ambulance, Digwa filmed Henry. The murder weapon was given to his mother, and police later found it at the family home along with more than 20 other weapons. His mother is due to be sentenced for removing the murder weapon from the crime scene.

“We ask that this tragedy is not used by anyone to inflame division or hostility towards any community. We now ask for privacy as we come to terms with what lies ahead,” the family added.

The Digwa family ask for privacy so they can ‘come to terms with what lies ahead’. F*** off. They didn’t call an ambulance, they lied to police, they played the race card, they also raised a monster. They get to visit their son in prison, the Nowaks will never see their son again pic.twitter.com/2QG7sHsEs6

— Patrick Christys (@PatrickChristys) June 2, 2026

GB News anchor Patrick Christys wrote in response, “F*** off. They didn’t call an ambulance, they lied to police, they played the race card, they also raised a monster. They get to visit their son in prison, the Nowaks will never see their son again.”

Political commentator Connor Tomlinson wrote, “The Digwa family aren’t sorry. They just wish they hadn’t been caught.”

“Note that they laundered this face-saving statement through a ‘Sikh Press Association’ account,” he added. “I can’t name a white advocacy organisation that would publish a statement from a family who conspired to cover up a murder.”

GB News presenter Michelle Dewberry said she had heard what members of the Digwa contingent had said and done in court towards the Nowak family.

“It didn’t sound like the behavior of people who are ‘deeply sorry’ to me,” she wrote.

Dewberry was referencing the conduct of the Digwa family at the court during Monday’s sentencing hearing, in which they continued to claim they were being racially discriminated against.

Presenter Dan Wootton also condemned the statement, writing.

“This is a revolting and reprehensible statement from Henry Nowak murderer Digwa’s family.”

The conduct of Digwa’s relatives is now under wider scrutiny. Reform UK MP Robert Jenrick, a former Conservative Home Office minister, asked why Digwa’s brother and father had not yet been charged.

I hope Hampshire Police and the CPS have a good explanation as to why Digwa’s brother and father have not yet been charged.

His mother is being sentenced soon for removing the murder weapon from the crime scene.

If his brother and father knew Henry had been stabbed, are they…

— Robert Jenrick (@RobertJenrick) June 2, 2026

“I hope Hampshire Police and the CPS have a good explanation as to why Digwa’s brother and father have not yet been charged,” he wrote.

“His mother is being sentenced soon for removing the murder weapon from the crime scene. If his brother and father knew Henry had been stabbed, are they not accessories too?

“The brother called 999 to falsely report Henry for racially attacking the murderer. The father physically detained a dying Henry until the police arrived. None of them informed the police that Henry had been stabbed. All watched him die, handcuffed, on the ground,” he added.

Henry’s family issued statements outside court after the sentencing. They described his treatment by police as “inhumane and degrading.” His father said Henry “did not die with dignity.” His sister, Olivia Nowak, said, “The day we got the knock on the door to say my brother had passed, I don’t think there are any words to describe that type of pain. A lot of myself died when he died.

“Henry was the most wonderful, funny, handsome, kind, precious, smart boy. He lit every room he walked in,” she added.

The fear of being called racist was greater than dealing with Henry Nowak’s murder.

We should respond to this with pure cold rage.

Britain’s historic way of life is being thrown away. pic.twitter.com/4N6vL76q1F

— Nigel Farage MP (@Nigel_Farage) June 2, 2026

On Tuesday, Reform UK leader Nigel Farage said people should respond to Henry Nowak’s death with “pure cold rage,” calling it evidence of a “two-tier culture.”

Restore Britain leader Rupert Lowe said Digwa should face the death penalty. “A Restore Britain Government, with the British people’s approval, would put Vickrum Digwa to death,” he wrote. “Henry Nowak was stabbed by Digwa five times, including twice in the back of his legs, once in the face, and a fatal wound to the chest.”

Enough is enough - a deep line needs to be drawn in the sand. Talk is weak. Britain needs to say no more, and mean it.

A Restore Britain Government, with the British people's approval, would put Vickrum Digwa to death.

Henry Nowak was stabbed by Digwa five times, including… pic.twitter.com/GXFp8WnmFA

— Rupert Lowe MP (@RupertLowe10) June 2, 2026

“Rather than calling an ambulance, Digwa filmed Henry. Digwa gave the knife to his mother and it was found by police at their home along with more than 20 other weapons. Keeping this savage alive serves nobody,” he added.

Lowe also said the police officers at the scene “who allowed Henry to die” would face criminal charges for gross negligence manslaughter under a Restore Britain government, and that “Digwa’s foreign family will be deported.”

Read more here...

Tyler Durden Wed, 06/03/2026 - 08:45

Futures Drop, Yields And Oil Rise On Latest Middle East Hostilities

US equity futures are mixed as oil prices, bond yields, and USD move higher in response to the latest overnight attacks in the Middle East with no public progress on a deal. As reported previously, the US struck Iran’s Qeshm Island, which was then met with retaliatory Iranian strikes on US bases in Kuwait; explosions were also reported in Saudi Arabia, and air sirens were set off in the UAE. US Centcom said that the Iranian drone attacks were “successfully defeated.” As of 8:00am ET, S&P futures were down 0.1% but off session lows: absent the now daily gamma squeeze, the S&P is poised to halt a nine-day rally; Nasdaq futures rose 0.2% with semis bid premarket led by MRVL, INTC, AVGO, and AMD as Mag7 names are weaker. Some pockets of tech exuberance are seen in the US pre-market with Marvell adding 12% to Tuesday’s near 33% surge. Tech enthusiasm was once again on display in Asia with the MSCI APAC index hitting yet another record high. Mag7 have been used as a funding trade to buy Semis and to make room for deals, according to JPM. Cyclicals ex-Energy are lagging Defensives. Brent rose 2.3% to top $98 a barrel. The yield on 10-year Treasuries climbed four basis points to 4.48% as crude prices stoked concerns about inflationary pressures; the yield curve is bear flattening with yields up 3-4bp as USD is poised for its strongest week since mid-May.  Data calendar includes May ADP employment change (8:15am), S&P Global US services PMI (9:45am), and April factory orders and May ISM services index (10am). Fed speaker slate includes Barr (9am) and Logan (4pm), and Beige Book is slated for 2pm release.

In premarket trading, Magnificent Seven are mixed (Meta +0.6%, Apple -0.2%, Alphabet -0.7%, Amazon -0.05%, Nvidia +0.3%, Microsoft +0.2%, Tesla -0.7%)

• Cognyte Software (CGNT) slumps 21% after the Israeli company posted disappointing first quarter earnings.
• GameStop (GME) is up 13% after the video game retailer reported net sales for the first quarter of $835.3 million, marking a 14% increase from the year prior. The company also said its board approved a discretionary $2 billion share repurchase authorization.
• Iren Ltd. shares rise in premarket trading after it signed a transmission connection agreement to support a planned 800-megawatt data center campus in Bundey, South Australia.
• Macy’s (M) climbs 3% after the department-store operator boosted its adjusted earnings per share forecast for the full year.
• Marvell Technology (MRVL) gains 10%, putting the stock on track to extend Tuesday’s 33% rally, after Nvidia CEO Jensen Huang predicted that the semiconductor and networking company would be the next business to hit a $1 trillion valuation.
• Medtronic (MDT) rises 2% after posting fourth quarter revenue that beat expectations.
• Palo Alto Networks (PANW) falls 2% after the security software company reported results following a 61% year-to-date rally.
• Sherwin-Williams (SHW) climbs 3% after the company and Nippon Paint abandoned efforts to acquire the Dutch paintmaker Akzo Nobel.
• Sprinklr (CXM) falls 3% after the software company trimmed its full-year revenue outlook.

In other news, SpaceX plans to set the terms of its IPO offering as early as Wednesday afternoon, ahead of what’s expected to be the biggest ever listing. Reuters later reported that SpaceX aims to sell 555.6 million shares ​at $135 apiece. Uber set usage caps on some AI-powered tools used by its staff. The move, meant to manage costs after the company blew through its AI budget, may be a concern for investors tracking the explosive growth in the industry. GitLab is cutting about 14% of its workforce and exiting 22 countries as part of a restructuring aimed at streamlining operations and sharpening execution. Google must make changes to its AI-generated search summaries after the UK’s antitrust watchdog ordered it to give publishers more control over how their content is used.

US stocks struggled to build on record gains as growing strains on the ceasefire between the US and Iran sent oil prices higher for a third straight day and lifted bond yields. The cautious mood in markets follows flare-ups in the Middle East that are testing a fragile truce between Washington and Tehran, with US forces intercepting ballistic missiles and drones aimed at neighboring countries and striking an Iranian command center in response. 

The mitigating factor is higher SoH throughput; According to JPM EM Strategy, energy export volume have risen to ~3.6mm bpd over the last 2 days with the 7dma ~2.5mm bpd and refined chemical throughput now >50% of pre-conflict levels. The OECD flags global growth downside risk from a prolonged US / Iran Conflict while hiking its inflation estimates.

Trump said the US was continuing to work with Iran on a deal. Tehran has agreed it won’t have a nuclear weapon and the parties’ leaders “probably will meet at some point,” Trump said. Traders are watching whether the S&P 500 can extend its winning streak to the longest in more than three decades. A narrow rally has seen technology stocks, and chipmakers in particular, leave the rest of the market far behind.
“I don’t think this is the top, there’s still room to run,” said Amanda Lyons, head of research at Energy Group Capital. “The fuel is just quietly shifting from earnings to excitement; that’s fine on the way up, it only matters when the music stops.”

The S&P 500 may have just matched its best winning streak since 1995, but that run included five days in a row when decliners outnumbered advancers. The pattern, which was snapped on Tuesday, is described as a “breadth paradox,” by BTIG technician Jonathan Krinsky. Yet over the past three years, periods of weak breadth failed to alter the overall picture, Bloomberg notes. 

Investors are also awaiting SpaceX’s disclosure of the terms of its initial public offering that is set to be by far the largest in history. Reuters reported that Elon Musk’s rocket launch, satellite and AI company aims to sell more than 550 million shares at $135 apiece for a $75 billion IPO.  The share sale forms part of a pipeline of potential offerings from high-profile tech companies in the coming months. AI rivals OpenAI and Anthropic PBC look to forge ahead with listings of their own, while Alphabet Inc. revealed plans for a record $80 billion equity offering on Monday.

“The IPO wave is a strong confidence indicator for markets,” said Nataliia Lipikhina, head of EMEA equity strategy at JPMorgan Private Bank. “We think there is enough capacity in the market to absorb them, and the renewed issuance pipeline is additive to the broader market story.”

Private credit is back in focus, with Partners Group limiting withdrawals at one of its evergreen private equity funds amid heightened redemption pressure. It’s a sign the investor anxiety that hit private credit vehicles may be spilling over to asset classes within private markets. It follows Cliffwater’s flagship private credit fund capping redemptions at 5% in the second quarter after investors looked to pull about 17% of shares.

In political news, Republican Steve Hilton and Democrat Xavier Becerra surged to the top of California’s crowded gubernatorial primary. Meanwhile, the US is proposing tariffs of 10% on imports from the EU as Trump looks to rebuild the tariff wall struck down by the US Supreme Court. China, India, Japan, South Korea, Brazil and Switzerland would be subject to a 12.5% levy. Fed Chair Kevin Warsh is said to have hired conservative policy analysts Paul Winfree and Daniel Heil as temporary advisers. 

Bitcoin’s selloff extended into Wednesday after Strategy’s sale of a tiny portion of its massive cryptocurrency stockpile rattled sentiment and widened the token’s divergence from record-setting technology shares. 

Turning to earnings, Broadcom will offer investors another snapshot into AI spending when it reports after the close, with Bloomberg Intelligence expecting accelerating revenue from XPU chips and growing demand for networking.

European equities continue to lag global peers with the Stoxx 600 down 0.4% as higher energy prices weigh on sentiment. Here are the biggest movers Wednesday:

• Inditex shares advanced 5.6%, the third-best performance on the Stoxx 600 Retail Index, after the Zara owner reported earnings that analyst calls “reassuring,” while a strong start to 2Q has been aided by calendar effects
• B&M shares rose as much as 16%, the largest intraday gain on record, after the discount retailer reported earnings that beat consensus expectations
• Boohoo shares rose as much as 16%, trading at a 12-week high, after the online retailer returned to growth following a rise in gross merchandise value in the first quarter, with much stronger growth delivered in May
• Douglas gained as much as 7.9%, the most since Aug. 2025, as Berenberg initiates the stock with a buy rating, saying the German beauty retailer offers a compelling risk-reward based on its single-digit adjusted P/E valuation and double-digit free cash flow yields
• Sodexo shares gained as much as 3.6% to trade at a seven-month high after Barclays lifted its price target by almost 10% and said upcoming third-quarter results can provide a positive short-term catalyst for the food services company
• Howden Joinery Group’s shares rose as much as 5.2%, the most in almost two months, after it agreed to acquire the parent company of Ultima Furniture Systems, which trades as DIY Kitchens, for an enterprise value of £390 million
• Akzo Nobel shares fell as much as 22%, their steepest drop on record, after Nippon Paint and Sherwin-Williams abandoned efforts to acquire the Dutch paintmaker
• Partners Group fell as much as 13% to the lowest in more than six years as the alternative investment manager caps withdrawals from one of its evergreen private equity funds amid heightened redemption pressure
• Norwegian Air shares slide as much as 9%, the most in over a year, after Danske Bank cut its recommendation on the airline to sell from hold, saying proprietary fare data indicate demand for its routes is weaker than expected
• Clas Ohlson fell as much as 11%, the most since December, after the Swedish home improvement retailer reported its latest earnings and presented new financial targets
• DiscoverIE shares fell as much as 7% after earnings broadly met expectations but failed to extend a rally that had lifted the electronics manufacturer more than 50% over the past two months
• Ninety One fell as much as 8.2% in London, to its lowest intraday level since April after the asset management firm reported net flows for the full year that missed the average analyst estimate

Asian stocks rose to yet another record, with Japan leading gains as optimism over the region’s growing role in the artificial-intelligence ecosystem boosted tech shares. The MSCI Asia Pacific Index climbed as much as 0.9%, heading for a fourth day of gains. Japan’s Nikkei also surged to an all-time high as investors piled into chip and technology shares following a surge in US equities. Taiwan’s benchmark was the second-biggest gainer in the region. Markets in South Korea and Thailand were shut for a public holiday. Meanwhile, Indonesian stocks were the biggest losers as oil prices extended their advance to a third day. The Jakarta Composite Index plunged to its lowest level in five years and the rupiah hit a record low in another stark reminder of the multi-faceted challenges confronting Southeast Asia’s biggest economy. Investors who continue to buy into the AI trade are increasingly bullish on the region, with several Asian semiconductor shares rising. In particular, Japan’s AI industry is offering renewed appeal due to its lower cyclical risk compared with Taiwan’s and South Korea’s markets, according to Barclays Plc.

“Korea is a memory trade. Taiwan is a foundry trade. Japan is an economy trade, with an AI kicker,” Barclays global chairman of research Ajay Rajadhyaksha wrote in a note. “That distinction matters enormously if the memory cycle turns.”

In FX, USD/JPY touched 160 before remarks from PM Takaichi briefly guided the pair lower. Subsequent comments from BOJ Governor failed to support the yen.

In rates, treasury futures sit near day’s lows into the early US session amid deeper losses in European bonds as rising oil prices put upside pressure on yields globally. Oil is higher for a third straight day as strikes between the US and Iran cloud outlook for a peace agreement. US yields are 3bp-4bp higher on the day with curve spreads little changed; 10-year is near 4.48%, 3.5bp cheaper with bunds and gilts in the sector lagging by an additional 0.5bp and 1bp. US session includes ADP employment change and ISM services index, both for May, and April factory orders. 

In commodities, brent crude is up 2.6% near session highs, and on a $98/bbl handle amid a lack of a breakthrough in US-Iran negotiations and Iran launching missile and drone strikes at multiple US sites. Spot gold and silver are on the backfoot, with respective losses of 1% and 1.2%.Bitcoin is off its worst levels but has extended its recent slide, down 1.2%.

US economic data calendar includes May ADP employment change (8:15am), S&P Global US services PMI (9:45am), and April factory orders and May ISM services index (10am). Fed speaker slate includes Barr (9am) and Logan (4pm), and Beige Book is slated for 2pm release.

Market Snapshot

Top Overnight News

• Iran launched missiles at Kuwait — where one person was killed, according to the country’s foreign ministry — and Bahrain, as the US conducted new strikes on Qeshm Island. These came after the US military said it struck an oil tanker heading for an Iranian port. President Donald Trump has ruled out the prospect of “boots on the ground now.” CNN
• Trump said he swore at Benjamin Netanyahu in a call this week as the president tried to deescalate fighting in Lebanon and keep peace talks with Iran on track. The president also said in an interview on the Pod Force One podcast that Iran has agreed it won’t have a nuclear weapon. BBG
• Donald Trump is moving to rebuild his tariff wall, with the US proposing duties of at least 10% on imports from major trading partners including the EU, Canada and Mexico following a forced-labor probe. Products from China, Japan, Brazil and several other economies would face a higher 12.5% rate. BBG
• Even as the piles of capital secured have grown ever larger, the ability to deploy it in the artificial intelligence race has become less certain. Supply-chain backlogs, permitting fights and availability of power supplies are among the issues that have caused the construction of data centers to fall behind targeted timelines, with the gap growing wider in recent months. WSJ
• Nvidia’s Jensen Huang outlined the “insane” returns offered by AI during an address to wealthy family offices that sought to dispel lingering concerns around the big spending that’s accompanied the boom. BBG
• US Acting Attorney General Blanche confirmed the Trump administration is not moving forward with the weaponisation fund.
• US Senate Democrats are reportedly privately urging GOP leaders to pressure President Trump to withdraw his appointment of Pulte as acting director of national intelligence, threatening to tank a bipartisan FISA deal if Trump refuses: Punchbowl 
• Federal Reserve Chairman Kevin Warsh has tapped two outside associates (Paul Winfree and Daniel Heil) to advise him while he settles into the job, one of whom previously helped write a conservative blueprint that recommended a radical restructuring of the central bank. WSJ
• Federal Reserve watchers expect Kevin Warsh to begin revamping the central bank’s rate guidance as soon as this month, as the newly appointed chair embarks on a sweeping overhaul of the institution. Several former top officials said that they expected Warsh, whom President Donald Trump swore in to succeed Jay Powell as Fed chair in May, to begin rolling back the central bank’s “forward guidance” on interest rates as soon as the mid-June Federal Open Market Committee meeting. FT
• China’s services activity jumped in May, according to a private survey, a positive sign amid still weak consumer sentiment as price shocks from the conflict in the Middle East ripple through economies. The RatingDog China services purchasing managers’ index rose to 54.4 from 52.6 in April. BBG
• India is considering tax cuts for foreign bond investors to attract more overseas capital, people familiar said. The cabinet is expected to today weigh a significant reduction in taxes paid by global funds on Indian debt, including eliminating or cutting the current 20% levy on interest income. BBG

Iran War News

• Explosions were heard near Qeshm Island in Iran on Wednesday morning.
• Kuwait's Army announced its air defences were intercepting hostile missile and drone attacks, while reports noted that two US bases were targeted in Kuwait, with explosions in the Ali al-Salem and Arifjan bases where US soldiers are stationed. Furthermore, air raid sirens sounded in the UAE and Saudi Arabia, with explosions also reported in Saudi Arabia, while explosions were heard in Qamishli, Syria, and earlier reports noted multiple explosions in the centre of Iraqi Kurdistan with the headquarters of anti-Iranian separatist groups targeted.
• IRGC said the US attacked Qeshm Island, and in response, Iran carried out precise and intensive missile strikes on US bases in Kuwait, while it warned further US aggression will be met with a seismic, crushing and decisive response.
• IRGC said the headquarters of the US 5th Fleet in Bahrain was attacked by missiles and drones from the IRGC Aerospace Force, while it targeted a US-affiliated vessel named Panaya with missiles and clarified the recent attack was in retaliation for the US targeting an IRGC communications tower in the south of Qeshm Island.
• US CENTCOM said Iran launched several ballistic missiles towards neighbours and that forces successfully defeated multiple Iranian missiles, while US forces had conducted strikes on Qeshm Island in response to attempted attacks by Iran. CENTCOM stated that forces shot down three one-way attack drones launched by Iran toward civilian mariners that were rightfully transiting regional waters, and US forces also conducted self-defence strikes on an Iranian military ground control station on Qeshm Island. Furthermore, it denied IRGC claims that Iran struck the 5th Fleet HQ in Bahrain and a US airbase in the region, and stated that all Iranian attacks on US forces failed.
• US CENTCOM says forces disabled a Botswana-flagged unladen oil tanker that was attempting to sail toward an Iranian port on the Arabian Gulf on June 2nd. Says: US aircraft disabled the vessel by firing a Hellfire missile into the ship’s engine room, preventing the tanker from reaching Iran.
• US President Trump is pushing Iran to make firmer nuclear commitments and wants nuclear concessions in writing from Iran, according to ABC News.
• US Secretary of State Rubio said that Iran has mined large segments of the Hormuz Strait. Rubio stated that nuclear negotiations with Iran were highly complicated and technical, which would therefore take time, while he added that the war with Iran had made interactions with Tehran more complicated, but also commented that the "war in Iran is over".
• Iran's Foreign Ministry condemned the US attacks on Iranian tanker and Qeshm island. The Foreign Ministry "notes the direct and clear responsibility of the rulers of Kuwait and Bahrain for last night’s aggressive acts."
• Hardline Iranian lawmaker called for stronger military response to US strikes, Al Jazeera reported.
• Kuwait’s General Civil Aviation Authority said an emergency plan at Kuwait International Airport was activated after Terminal 1 was targeted by Iranian drones and missiles.
• Hezbollah attacked an Israeli command post in southern Lebanon with a drone strike, which wounded eight Israeli soldiers, according to SNN.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks mostly gained as the region took its cue from Wall St, where the S&P 500, Dow and Nasdaq 100 printed fresh record highs, which has helped regional bourses shrug off the geopolitical escalation, in which the US struck Qeshm Island, and Iran targeted US bases in neighbouring countries. ASX 200 was led by outperformance in materials, mining and resources sectors, but with gains capped as tech, telecoms and defensives lagged, while participants also digested weaker-than-expected GDP data. Nikkei 225 took inspiration from US peers and printed a fresh all-time high after climbing above 68,000 for the first time. Hang Seng and Shanghai Comp were mixed, with the Hong Kong benchmark dragged lower by profit-taking following recent earnings and mixed fortunes among the key tech stocks, while the mainland found support from the better-than-expected Chinese RatingDog Services PMI data.

Top Asian News

• Japanese PM Takaichi said FX policy is important to support the economy and trades including speculation have a big impact on markets. She further stated that they are prepared to take appropriate measures in the FX market at any time if needed while deepening international cooperation, including with the US, on FX.
• Japanese Finance Minister Katayama said they are prepared to respond appropriately on forex as needed, while she won't comment on specific FX levels.

European bourses (STOXX 600 -0.4%) start Wednesday's session with modest losses due to the introduction of new levies on US imports related to its 301 investigations. A 10% tariff has been applied to imports from Canada, Mexico, the EU, Taiwan and the UK, while some countries, including China and Japan, have received a higher 12.5% levy. European sectors highlight a negative bias. Financial Services (-1.7%) and Autos (-1.6%) are the laggards, with Chemicals (-1.1%) rounding out the bottom three. At the top end lies Retail (+1.8%), the sole sector printing decent gains, helped by gains in Inditex (+3.9%) after the Co. reported Q1 earnings that came in line with expectations, while sales in May rose 11.5%.

Top European News

• UK S&P Global Composite PMI Final (May) 49.7 vs. Exp. 48.5 (Prev. 52.6).
• UK S&P Global Services PMI Final (May) 49.3 vs. Exp. 47.9 (Prev. 52.7).
• EU S&P Global Composite PMI Final (May) 48.5 vs. Exp. 47.5 (Prev. 48.8).
• EU S&P Global Services PMI Final (May) 47.7 vs. Exp. 46.4 (Prev. 47.6).
• German S&P Global Composite PMI Final (May) 48.8 vs. Exp. 48.6 (Prev. 48.4).
• German S&P Global Services PMI Final (May) 48.1 vs. Exp. 47.8 (Prev. 46.9).
• French S&P Global Composite PMI Final (May) 44.9 vs. Exp. 43.5 (Prev. 47.6).
• French S&P Global Services PMI Final (May) 44.3 vs. Exp. 42.9 (Prev. 46.5).
• Italian S&P Global Composite PMI (May) 50.4 (Prev. 50.5).
• Italian S&P Global Services PMI (May) 49.4 vs. Exp. 49.1 (Prev. 49.8).
• Spanish S&P Global Composite PMI (May) 50.2 (Prev. 48.7).
• Spanish S&P Global Services PMI (May) 50.1 vs. Exp. 48.

FX

• G10s are mostly lower against the Buck (DXY +0.1%) as flare-ups continue in the Middle East. Since the close on Tuesday, the US struck Iran’s Qeshm Island, which was then met with retaliatory Iranian strikes on US bases in Kuwait, and explosions were also reported in Saudi Arabia, and air sirens were set off in the UAE.
• The Dollar crept higher overnight in tandem with oil/yields, and now looks towards the 99.40 mark in DXY (session high 99.40). Tuesday saw firm JOLTS jobs data which rose to the highest level since May 2024. Today sees the release of ADP’s monthly employment figure, expected to rise to 110/120k depending on which consensus you look at.
• JPY is the best G10 performer after sharp strength seen among comments from Japanese PM Takaichi and BoJ Governor Ueda. At around 08:30 BST, Japanese PM Takaichi said: “prepared to take appropriate measures in the FX market”. USD/JPY moved sharply lower from 159.91 to a trough of 159.55 within three minutes. The move pared around 20 pips, then around an hour later, comments from BoJ Governor Ueda resumed Yen strength. Ueda said the “BoJ’s basic stance is to continue raising the policy rate”, helping the pair mark a fresh session low of 159.36, though ultimately proving fleeting and returning to pre-Ueda levels. USD/JPY -0.1% at 159.80, a moving target at the time of writing.
• Antipodeans are the worst G10 performers. Aussie fares a little better than the Bird despite soft growth data overnight, which contracted at a faster rate than anticipated on a quarterly basis. AUD/USD (-0.3%) immediately fell around 8 pips, pared the move, then resumed lower as the Buck picked up. AUD/NZD +0.3%.

Fixed Income

• Global fixed benchmarks are broadly lower as the complex takes leads from the strength in energy prices, after yet another US-Iran flare-up. In brief, the US struck Iran’s Qeshm Island, which was then met with retaliatory Iranian strikes on US bases in Kuwait; explosions were also reported in Saudi Arabia, and air sirens were set off in the UAE.
• USTs (-5+ ticks) are lower this morning and trade at the lower end of a 109-15+ to 109-24+ range. And unsurprisingly, yields are firmer across the curve, with mild outperformance in the short end. Much of the action recently has been dictated by geopolitical developments, but attention this week will turn back to domestic data. Thus far, ISM Manufacturing topped expectations, whilst Prices Paid slipped from the prior (though still remains elevated); on the jobs front, JOLTS Job Openings topped expectations. Both are factors which play into the hands of the hawkish members at the Fed. Attention today now shifts to ADP, ISM Services and then the NFP report to end the week.
• Bunds (-30 ticks) follow the bearish bias and hold towards the bottom end of a 125.64 to 126.03 range. Today saw the release of PMI Final metrics from various EZ countries, which were subject to very mild upward revisions. The EZ-wide figure remained in contractionary territory at 48.5; the inner report suggested that whilst the ECB may provide an insurance hike at the June meeting, it may find it hard to deliver more tightening if the economy continues to weaken.
• Gilts (-45 ticks) underperform vs peers, given their high sensitivity to rising energy prices; currently holding at the mid-point of a 87.74 to 87.90 range. Yields are firmer across the curve, but with mild outperformance in near-term yields. Some attention recently has been on comments made by BoE’s Greene in the prior session, where she stated that “the case for hiking rates grows as the conflict continues”. Markets assign a 92% chance of a hike in September, and fully priced in by November.

Commodities

• Energy prices have bounced back following the flare-up in the Middle East since yesterday’s European close. To briefly recap, Iran and the US reported strikes against each other's assets. US CENTCOM said Iran launched several ballistic missiles toward neighbouring countries, with the UAE, Saudi, and Kuwait among the targets. Kuwait’s General Civil Aviation Authority said an emergency plan at Kuwait International Airport was activated after Terminal 1 was targeted by Iranian drones and missiles. IRGC said the US attacked Qeshm Island and that Iran responded with precise and intensive missile strikes on US bases in Kuwait. IRGC warned that any further US aggression would be met with a seismic, crushing and decisive response. On negotiations, US President Trump said reports that US-Iran communications had stopped were false and that conversations had continued continuously, while US Secretary of State Rubio said nuclear negotiations are highly complicated and technical and will take time (Full recap available on the Newsquawk headline feed).
• WTI Jul and Brent Aug futures are on firmer footing and near highs, with upside seen this morning as European traders entered the market and shortly after the aforementioned Kuwait civilian infrastructure strike. The former resides in a USD 93.45-96.56/bbl range whilst the latter sits at the top of a USD 96.44-98.68/bbl range. Dutch TTF trades higher by almost 3.5% at the time of writing.
• Spot gold and silver trade softer in lockstep with the gains in crude and hence the USD as inflationary woes remain ripe. The former dipped under yesterday’s USD 4,463/oz low to trade towards the bottom of a USD 4,451-4,497/oz range, with Monday’s low at USD 4,448/oz. Spot silver fell below USD 75/oz to trade in a USD 74-75.33/oz range.
• Base metals are also across the board amid similar inflationary/stagflationary woes arising from elevated crude prices. 3M LME copper fell back under USD 14,000/t to trade in a USD 13,871.90- 14,025.13/t range.
• US Private Inventory Data (bbls): Crude -6.8mln (exp. -3.6mln), Distillates -0.2mln (exp. -0.6mln), Gasoline +3.5mln (exp. -0.1mln), Cushing -0.3mln.
• White House economic advisor Hassett commented that gasoline prices are expected to decrease as the US receives additional oil supplies from the Gulf.
• Citic Securities says copper peak could test USD 15,000 per tonne this year, adding the timing of the US copper tariff assessment is approaching, reviving tariff trades and inventory hoarding in the copper market

Trade/Tariffs

• US Trade Representative made findings and proposed action on 60 economies under Section 301 investigations relating to failures to take action on trade in forced labour goods. Furthermore, the 60 economies involved included Australia, China, India, Japan, the UK, the EU, Mexico, Canada and many others.
• US Appeals Trade Court reportedly ordered broad IEEPA tariff refunds.
• US Deputy Agriculture Secretary said China has started placing orders for soybeans that are being planted right now across the US, according to WSJ.

Central Banks

• BoJ Governor Ueda said the BoJ needs to keep raising interest rates in response to developments in the economy and inflation. Ueda also stated that upside risks to prices appear to be greater overall and are likely to emerge sooner, while the Bank must consider taking action if there is a chance of second-round effects. To add, he said that there are no signs that past rate hikes are curbing corporate fund demand and an accommodative financial environment is supporting the economic activity.
• SNB Chair Schlegel reiterated an increased willingness to intervene in FX.
• ECB's Elderson said he do not yet see second round effects.
• ECB's Wunsch said an Iran peace deal won't derail the case for an ECB rate hike, according to FT.
• Fed Chair Warsh told staff he will conduct clear-eyed discussions about reform while upholding the best of the Fed's traditions, according to a memo.
• Fed Chair Warsh tapped two outside associates, Paul Winfree and Daniel Heil, to advise him while he settles into the job, according to WSJ citing sources.

Geopolitics

• Russia said it downed three drones and continued repelling a drone attack over the Leningrad region.
• Ukrainian President Zelensky said targets struck included a St. Petersburg oil terminal, with the Russian oil facility roughly 1,100 km from the Ukrainian border.

US Event Calendar

• 7:00 am: May 29 MBA Mortgage Applications, prior -8.5%
• 8:15 am: May ADP Employment Change, est. 120k, prior 109k
• 9:45 am: May F S&P Global US Services PMI, est. 51, prior 50.9
• 9:45 am: May F S&P Global US Composite PMI, est. 51.7, prior 51.7
• 10:00 am: Apr Factory Orders, est. 4.6%, prior 1.5%
• 10:00 am: May ISM Services Index, est. 53.8, prior 53.6
• 10:00 am: Apr F Durable Goods Orders, est. 7.9%, prior 7.9%
• 10:00 am: Apr F Durables Ex Transportation, est. 1.1%, prior 1.1%

Central Banks

• 9:00 am: Fed’s Barr in Moderated Discussion
• 2:00 pm: Fed Releases Beige Book
• 4:00 pm: Fed’s Logan in Moderated Discussion

DB's Jim Reid concludes the overnight wrap

This morning, I’m opening our annual European Leveraged Finance conference in London which has over a thousand issuers and investors attending…..  and one football manager! If I’m the opening act, Arsenal manager Mikel Arteta is doing the lunchtime address. As a Liverpool fan this is going to be a tough watch but I’m looking forward to hearing Mikel’s views on spreads, covenants, defaults and the rules around corners. 

Talking of defaults, yesterday saw Steve Caprio and team take on my baton and publish the annual 2026 Default Study. I first started this document back in 1999, and it's been dear to my heart since. In its 28th edition the study builds on the theme that we have expressed since 2022: The era of the ultra-low default regime is behind us. That does not imply default rates are spiking, nor that credit markets can't provide healthy returns. But the main message is to not let aggregate data and market prices make you think dispersion is going to disappear. Despite rather euphoric markets over the last 12 months, US spec-grade default rates are still at 4%, well above 20-year median levels of 2.9%. In Europe, spec-grade default rates of 4.6% are easily above 20-year median levels of 2.3%. There is lots and lots in the study so please take a look here.

Also this week, we published our latest semi-annual World Outlook, which is called “1999 meets 1990”. The title reflects the interplay of AI-driven optimism and the disruptive effects of the Middle East conflict, which makes it feel like those two years are now coinciding. 

The 1990 versus 1999 tug of war between Iran uncertainty and AI exuberance continued over the past 24 hours. Oil prices are grinding higher, with Brent +0.81% at $96.78/bbl this morning following a +1.07% rise yesterday with renewed clashes between the US and Iran overnight. But this hasn’t stopped US and Asian equities from posting new record highs, with the Nikkei (+2.96%) racing ahead this morning after outsized gains for chipmakers saw the S&P 500 (+0.13%) reaching its joint longest run of daily gains since 1995.

Starting with the Middle East, we’ve seen increasing pessimism that a US-Iran deal to re-open the Strait of Hormuz is imminent. New clashes took place overnight as US forces conducted strikes against Qeshm Island while Iran fired missiles and drones towards Kuwait and Bahrain, with the IRGC saying it targeted the US 5th Fleet headquarters in Bahrain. Meanwhile, further Israel-Lebanon talks are expected today, according to the US.

Prior to that, we saw little sign yesterday of concrete steps towards an imminent deal. For instance, Iran’s Mehr reported that “The final text from Iran is still under discussion in Tehran and no response has been sent yet”. Then later on, US Secretary of State Marco Rubio said that when it comes to a deal “it could happen today, it could happen tomorrow, it could happen next week”. This backdrop means WTI crude is now $7/bbl above Friday’s close, with a +0.92% rise at $94.62/bbl overnight.

Despite the rise in oil, the S&P 500 (+0.13%) just about posted a 9th consecutive advance yesterday, taking the index to a fresh record once again. For reference, we’re getting into historic territory, as it’s the longest run in the last year, and a 10th gain today would be the longest daily run since 1995. Moreover, the index is on the verge of several records, as it’s currently on track for a 10th consecutive weekly gain, which would be the longest run since 1985 if it manages it. On a monthly basis too, Henry pointed out yesterday (link here), that there’s only been 5 times since WWII when the index was up more than +16% in two calendar months, as happened in April and May. Three of them came at the end of recessions, but the one other non-recessionary instance was a few months before the Black Monday crash in 1987. So there’s been a stellar performance recently, but these runs haven’t always proved sustainable in the past.

Once again, chipmakers were in the driving seat for that advance, with the Philly Semiconductor index (+5.87%) extending its YTD gain to +94%.

This helped the NASDAQ (+0.03%) eke out a 9th consecutive gain to hit a new record of its own, even as software stocks (-3.55% within the S&P 500) saw their worst day since April. The Mag-7 (-0.99%) also underperformed, as Alphabet (-3.86%) fell back after its $80bn equity offering announcement with Microsoft (-4.17%) also slumping. Outside of the intra-tech dispersion, the rally was still a broad-based one, with the equal-weighted S&P 500 (+0.34%) hitting a new record too.

This morning, optimism surrounding AI continues to be prevalent in Asian markets. We've already discussed the Nikkei (+2.96%) at the top which is also being helped by additional Japanese stimulus (details below). In other markets, the S&P/ASX 200 (+0.80%) is experiencing gains as softer GDP figures have reduced expectations for interest rate hikes. Overall, broader Asian markets are largely positive, with the CSI (+1.55%) and the Shanghai Composite (+0.56%) also making advances, propelled by a robust services PMI reading. Conversely, the Hang Seng (-1.68%) stands out as an exception following a strong performance in the previous session. Outside of Asia, US stock futures are flat and 10-year USTs have increased by +1.4bps, trading at 4.46% as we prepare this report.

Turning to China, services activity expanded at its fastest pace in three months during May, as the RatingDog Services PMI rose to 54.4 from 52.6 in April, surpassing analysts' expectations of 52.3, driven by stronger domestic demand and new client acquisitions that enhanced business activity.

In another development, the Japanese cabinet has approved a draft supplementary budget of ¥3.1 trillion ($19.4 billion), which includes a newly established ¥2.5 trillion reserve fund aimed at addressing rising commodity prices through subsidies. Prime Minister Sanae Takaichi’s administration is seeking parliamentary approval for this budget by Friday. Although the specific applications of the fund have yet to be detailed, it is anticipated to help assist in alleviating high living costs resulting from the Iran conflict. Elsewhere in the region, early morning data indicated that Australia’s GDP grew by +2.5% year-on-year in the three months leading up to March 31, which was below the anticipated +2.7% increase and a decline from the +2.6% growth recorded in the previous quarter, as persistent inflation and escalating fuel prices due to the Middle East conflict have impacted private spending.

In an overnight development, the Office of the US Trade Representative (USTR) proposed new tariffs, ranging from 10% to 12.5%, targeting goods from major trading partners. This initiative stems from an investigation into the alleged use of forced labour in production. A 10% tariff is suggested for imports from nations including Canada, Mexico, the European Union, Taiwan, and the UK, with a higher 12.5% rate for economies like China, India, Japan, South Korea, Brazil, and Switzerland. Implementation of these levies is not immediate and is contingent on a public comment period (ending July 6th) and subsequent public hearings (starting July 7th). As a reminder the 150-day window for the current 10% Section 122 tariffs expires on July 24th so the timings can be seen to broadly match up.

Otherwise yesterday, speculation about a potential Fed rate hike continued, with futures taking the probability of a hike by December up to 71% by the close. In part, that followed the April JOLTS report, which added to recent signs that the labour market was in solid shape. Most notably, job openings hit their highest level since May 2024, at 7.618m in April (vs. 6.866m expected). And it also meant that the ratio of job openings per unemployed individuals reached 1.03, the highest since January 2025. So some positive signs on the US labour market, even if the overall ‘low hiring-low firing’ regime is continuing, with both quits and layoffs edging lower in April.

The other hawkish factor was comments from Cleveland Fed President Hammack. She had already dissented at the last meeting, calling for the easing bias to be taken out of the statement. But she also said in a speech yesterday that “it may soon be appropriate for policy to act to address the growing risks of persistently elevated inflation.” So that added to expectations that the Fed might hike, and we saw a clear flattening in the Treasury yield curve as a result, with the 2s10s curve down -2.0bps to 40bps by the close, which is the flattest it’s been in over a year. That came as the 2yr yield (+1.0bps) edged up to 4.04%, but the 10yr yield (-1.0ps) fell to 4.44%.

Earlier in Europe, markets had generally put in a stronger performance yesterday. However, that was because they were catching up to the more optimistic newsflow on Monday evening after they closed, rather than any fresh positive news yesterday. So equities rallied across the continent, with the STOXX 600 (+0.66%) paring back Monday’s losses. And sovereign bonds also rallied, with yields on 10yr bunds (-2.7bps), OATs (-3.4bps) and BTPs (-4.8bps) moving lower. As in the US however, there was a decent round of yield curve flattening, with pricing of an ECB rate hike next week up to 99%. That came as the flash Euro Area CPI print for May showed inflation at +3.2%, the highest since 2023, whilst core CPI also ticked up to +2.5%, a tenth above consensus expectations. In yesterday’s other notable market moves, Bitcoin fell -5.41% to $67,489, its biggest decline in almost four months. Interestingly it's probably the first time we've mentioned it for several weeks. It sits nearly half the value it peaked at in October last year.  

Looking at the day ahead, data releases include the final services and composite PMIs for May from several countries, and in the US we’ll get the ISM services index for May, the ADP’s report of private payrolls for May, and factory orders for April. From central banks, we’ll hear from the Fed’s Barr and Logan, and the ECB’s Rehn, Dolenc, Elderson and Cipollone, whilst the Fed will also release their Beige Book.

Tyler Durden Wed, 06/03/2026 - 08:24

ADP Reports US Economy Added The Most Jobs In 16 Months In May

Following a shockingly strong JOLTS report, ADP just reported a stronger than expected rise in jobs added in May.

ADP says 122k jobs were added in May - better than the 120k expected - and the biggest monthly addition since January 2025

Source: Bloomberg

"Hiring was more broad-based in May than we've seen in the last few years," said Dr. Nela Richardson, Chief Economist, ADP.

"The labor market continues to show sustained momentum going into the summer hiring season."

Small businesses added the most jobs...

The Trade & Transportation  industry added the most jobs while Information services suffered the biggest losses (AI?)...

Year-over-year pay growth for job-stayers was steady at 4.4 percent. For job-changers, the pace of growth slowed slightly, to 6.5 percent from 6.6 percent in April.

And yet amid all this... we are supposed to believe (according to UMich) that Americans' consumer sentiment is at record lows?

Tyler Durden Wed, 06/03/2026 - 08:23

These Two Things Are Not The Same...

Authored by Steve Watson via Modernity,

Viral images of a grand classical arch and a twisted modernist one reveal the unbridgeable divide between leaders who celebrate America's heritage and those who seem determined to replace it with something cold, crooked, and alien.

The contrast could not be clearer or more deliberate. On one side stands towering marble, golden eagles, and inscriptions evoking "One Nation Under God." On the other, a bent, leaning metal structure that looks like a giant wire hanger or a failed piece of iron work. One lifts the spirit. The other drains it.

Arch at the Obama Presidential Library. This is not AI. pic.twitter.com/cBfsFYhI50

- End Wokeness (@EndWokeness) June 1, 2026

Trump's Arch vs. Obama's Arch https://t.co/SG5Xfo4LOk pic.twitter.com/rdjKmhqFCB

- ALX ?? (@alx) June 1, 2026

These side-by-side images, now racing across platforms, capture two fundamentally opposed ideas of what a presidential legacy should look like and what America itself should feel like.

One draws from the classical traditions that built the great monuments of Washington. The other embraces the brutalist and deconstructivist styles that have produced so many unloved public buildings in recent decades.

The Obama Presidential Center in Chicago, set to open its doors this month, has long been criticized for its looming tower and heavy, fortress-like forms.

It has been described as a "Tower of Doom," an eyesore that clashes with its surroundings and burdens taxpayers while delivering questionable public value.

The 'arch' featured in the viral posts fits perfectly into that pattern: asymmetric, industrial, and devoid of warmth or grandeur.

It is the physical embodiment of a worldview that treats traditional beauty as suspect and replaces it with abstract statements about power and disruption.

In stark opposition, President Trump has advanced plans for a 250-foot classical triumphal arch to mark America's 250th anniversary. Designed in the timeless style of great national monuments, it will feature soaring proportions, eagles, and a golden figure symbolizing victory and the enduring American spirit.

The project sits alongside another classically inspired initiative: a grand new ballroom at the White House that restores elegance and scale to the People's House rather than subtracting from it.

These are not minor aesthetic disagreements. They reflect two different convictions about what a nation owes its citizens visually and culturally.

Classical architecture communicates permanence, order, and aspiration. It says the republic is worth celebrating in stone and gold. Modernist and brutalist experiments often communicate the opposite: transience, alienation, and a deliberate break with the past.

You'd think the classical architecture would be more expensive. Wrong.

Nowhere is the difference between the two visions more visible than in Washington, D.C. itself. In just over a year, the capital has been transformed from a city plagued by graffiti, encampments, and neglected infrastructure into a place where historic monuments gleam again and water flows freely in fountains for the first time in years.

Decline was a choice. Not anymore.

In just 14 months, @POTUS has restored our nation's capital, making it SAFE & BEAUTIFUL.

? 500+ instances of graffiti cleaned, 153 homeless encampments removed, 22 fountains restored, 28 statues cleaned, & more. Check out some of the wins ?? pic.twitter.com/uXTFyHNeS9

- The White House (@WhiteHouse) June 1, 2026

Statues that rioters once tried to topple now stand polished and proud. The Andrew Jackson statue in Lafayette Square, targeted during the 2020 unrest, has been cleaned and restored to its rightful prominence.

Trump has cleaned and polished the Andrew Jackson statue in the park in front of the White House.

Rioters tried to topple this statue during the BLM riots of 2020. pic.twitter.com/1iynHYYzom

- johnny maga (@johnnymaga) June 2, 2026

President Trump just dropped this gem!

BEAUTIFUL!

The Andrew Jackson statue standing strong with the Washington Monument in the distance.

This is what American greatness looks like. pic.twitter.com/RqBP3amvYq

- Gunther Eagleman™ (@GuntherEagleman) June 2, 2026

Fountains at Columbus Circle, Meridian Hill, Dupont Circle, and the World War II Memorial are operating once more.

Freedom Plaza pic.twitter.com/Sc8HGNgRvl

- The White House (@WhiteHouse) June 1, 2026

Taras Schevchenko Statue pic.twitter.com/vmAzDVRBHp

- The White House (@WhiteHouse) June 1, 2026

General Phillip Sheridan Fountain pic.twitter.com/J2gQ6va70J

- The White House (@WhiteHouse) June 1, 2026

Lincoln Statue in Lincoln Memorial pic.twitter.com/QaBLnP2P6j

- The White House (@WhiteHouse) June 1, 2026

Korean War Veterans Memorial Fountain pic.twitter.com/TBNdKwmkFi

- The White House (@WhiteHouse) June 1, 2026

The reflecting pool has received a proper deep cleaning and mirror finish, not a superficial coat of paint.

The work is projected to save roughly 16 million gallons of water annually while restoring a landmark to its intended splendor.

Certain media outlets have responded to these tangible improvements by framing them as trivial or even suspicious. Stories have suggested the administration is merely "painting" the reflecting pool or engaging in cosmetic gestures, downplaying the removal of hundreds of graffiti tags, the clearing of encampments, and the return of families to public spaces.

The same voices that once ignored or excused the decay now treat its reversal as somehow controversial.

Progressive aesthetics and governance often treat classical beauty and ordered public spaces as relics of a past that must be overcome. The results are visible in both the Obama Presidential Center's grim forms and in the years of neglect that turned parts of Washington into an open-air exhibit of decline.

Trump's approach rejects that premise. It restores what was broken and builds what will endure.

Two arches. Two visions. One celebrates the American inheritance with stone, light, and proportion. The other offers a twisted metal abstraction that seems to apologize for the very idea of grandeur.

The American people can see the difference with their own eyes. They are choosing beauty, order, and pride over the alternative. The fountains flow again and the monuments stand tall.

And don't even get use started on Obama's statue at his tower of doom...

Looks like a kid made it from plasticine. https://t.co/F5Ngf2tDXC

- m o d e r n i t y (@ModernityNews) June 2, 2026 Tyler Durden Wed, 06/03/2026 - 08:05

Trump Team Proposes New Tariff Round On 60 Countries Over Forced Labor Practices

The U.S. Trade Representative has issued an overnight statement and proposed a new round of tariffs of at least 10% on imports from 60 trading partners, marking the administration's largest attempt yet to rebuild its tariff empire after the Supreme Court struck down earlier levies.

The new duties stem from Section 301 of the Trade Act of 1974, which investigates whether trading partners are failing to block products made with forced labor - or slave labor. 

Those tariffs would apply to Canada, Mexico, the EU, Taiwan, and the UK, while goods from China, India, Japan, South Korea, Brazil, and Switzerland would face a higher 12.5% rate. The USTR explained that the higher rate targets countries that have failed to impose or effectively enforce forced-labor import bans.

"The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field," U.S. Trade Representative Jamieson Greer wrote in a statement.

Greer added, "We will no longer tolerate this disparity. Some trading partners have taken initial steps to prevent the importation of forced labor goods, including through the USMCA and commitments in Agreements on Reciprocal Trade. However, each of our trading partners must do more to ensure that trade does not perversely encourage and entrench forced labor globally."

The proposed new levies will enter public review in the coming weeks, with hearings scheduled for June 22. Written comments are due by July 6, and public hearings will begin on July 7.

Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, told Bloomberg in response to the development that "trading partners will be understandably upset by this determination."

"You've opened a door now for a whole lot of new tariff and non-tariff adjustments," Elms said.

She added, "It's very impactful because Section 301 is an extremely powerful tool, and it's unlikely to be overturned." 

In February, President Trump's protectionist trade agenda to rebuild America's industrial core suffered a sharp blow when the Supreme Court struck down levies he imposed under the International Emergency Economic Powers Act, ruling that the statute did not authorize the president to impose sweeping tariffs without congressional approval.

Related:

• Here's How Trump Can Immediately Ignore Supreme Court Tariff Decision, Including The "Nuclear Option"

That decision by the High Court forced the Trump team to pivot to longer-lasting but slower trade authorities, such as Section 122 and Section 301 of the Trade Act of 1974. Section 122 can be used to impose temporary import duties, while Section 301 requires investigations into unfair foreign trade practices, providing a legal pathway for the forced-labor probe to make tariffs great again.

Tyler Durden Wed, 06/03/2026 - 07:45

Bass Advances To Runoff In LA Mayor's Race; Pratt Leads Contenders

Authored by Jackson Richman and Beige Luciano-Adams via The Epoch Times,

Los Angeles Mayor Karen Bass advanced to the November runoff election for Los Angeles mayor.

The Associated Press called Bass’s advancement after 1:30 a.m. ET on June 3. Reality TV star Spencer Pratt and Los Angeles City Councilmember Nithya Raman lead 11 other candidates in the race for runner-up.

The runner-up will face Bass in the runoff election on Nov. 3.

Bass campaigned on issues including affordability, public safety, and homelessness. Pratt focused his campaign on crisis management, fiscal responsibility, government reform, public safety, homelessness, infrastructure improvements, support for small businesses, and oversight of the Los Angeles Department of Water and Power.

Raman’s platform emphasized ending homelessness, expanding housing, protecting renters, improving public safety and transportation, environmental protection, immigrant rights, animal welfare, and support for small businesses.

Both Raman and Pratt have criticized Bass for her response to recent wildfires sweeping Los Angeles. Pratt’s home was destroyed in the Pacific Palisades fire in 2025.

A distinctive feature of Pratt’s campaign was the widespread use of artificial intelligence-generated videos created by supporters.

One of the most widely viewed videos opens with scenes of Los Angeles engulfed in flames, with Bass as a Joker-like villain and Pratt as a Batman-style hero promising change. In another, Bass is portrayed as Darth Vader from Star Wars, and in a third, she appears as the villain Thanos from Marvel’s Avengers franchise.

Former Florida Gov. Jeb Bush praised the Joker-themed video in a May 5 post on X, calling it “maybe the best political ad of the year.”

Bass has publicly criticized the AI-generated videos.

“Actually, I think it’s a very dangerous trend,” she said during a May 13 interview with CNN.

Los Angeles mayoral candidate Spencer Pratt visits 'Fox & Friends' at Fox News Channel Studios in New York City on May 28, 2026. Dimitrios Kambouris/Getty Images

She argued that some of the imagery, including scenes showing tomatoes thrown at her character in the Joker video, resembled blood and contributed to an increasingly hostile political atmosphere.

Bass warned that portraying political opponents as villains could influence unstable individuals and escalate tensions.

Los Angeles city councilwoman Nithya Raman speaks in Los Angeles on Aug. 7, 2024. John Fredricks/The Epoch Times

At the same time, she acknowledged that many voters are frustrated with current conditions and that Pratt has tapped into those concerns by presenting himself as a solution to the city’s challenges.

“I think that plays into people’s desperation, and I think oftentimes we look for someone superhuman to save us,” Bass said. “The reality is it never happens. Those are fictional characters.”

Voters Sound Off

In interviews with The Epoch Times, many voters at polling stations across L.A. County on Tuesday described a deep dissatisfaction with incumbent Karen Bass’s handling of the fires and the homelessness crisis.

Some embraced Pratt, while others said they would have preferred a more progressive candidate in the style of New York City’s Zohran Mamdani.

“Bass has failed us,” said Tom Perez, 69, a resident of East Los Angeles who said he has been a lifelong Democrat since he began voting in the 1970s. “It’s not that I don’t trust them as individuals, I just don’t trust the Democratic Party.”

Perez said he found Pratt empathetic, and his AI-fueled guerrilla campaign effective. “I feel for him, he lost his house. Even his commercials, who could not vote for him?”

Eduardo Cardenas, 28, also an East L.A. resident, a self-described political pessimist, said he was simply voting against the worst of what he’s seen.

“Like the Mayor [Bass], when the fires happened, I just didn’t like how she handled it. So I’ll pick a candidate that is most likely going to be the contender against that person. Basically, my preference is for anyone but her.”

Elizabeth, a 56-year-old West Adams resident who asked to be identified by her first name only, said her main priority was to ensure Pratt didn’t make it to the general election.

“I was struggling between Karen Bass and Nithya Raman, and I ultimately voted for Raman in a strategic vote, because I will do anything to keep Spencer Pratt off the ballot—I find him dangerous, unqualified—every negative thing possible,” she said.

“I used to live in New York City, and I would love a Mamdani here for mayor. Maybe Raman is that, I don’t know,” she said, adding that she has leaned more progressive in recent years as a result of rampant corruption among both parties.

A 31-year-old West Adams resident who goes by the name “Zochi” expressed a similar sentiment.

“I moved here recently. … I was in New York last year, so I got to experience Zohran and I was like, ‘Oh my God, this is amazing.’ And then I come here and I’m like, ‘Oh, there is not a lot going on here,” he said, referring to a “pretty weak ballot” in the primaries.

Meanwhile, residents in unincorporated areas and other cities in L.A. County who can’t technically vote for L.A. mayor but are impacted by the office’s policies, also weighed in on Bass.

“She’s doing a great job, but she didn’t do enough for the homeless, because you can see the shift—they’re now in other cities, and who’s tracking them? They’re in Montebello, where I live,” Lydia Leon, 67, told The Epoch Times at the L.A. County Registrar’s Office in Norwalk.

“If you go down any freeway, you’ll see tent after tent after tent. They’re all over the place. And maybe they’ve shifted out of downtown L.A., but they’re now all here and in the other cities.”

Joseph Trevisu, 20, said he was rooting for Pratt.

“I think anyone who lives in L.A. County and frequents the city of L.A. knows it’s a mess,” Trevisu said. “They need an outsider who’s going to come in and clean house.”

Trevisu, a college student, said his professors have drilled in him that the definition of insanity is doing the same thing over and expecting a different result.

“For a long time, us Democrats have been electing Democrats because they have a ‘D’ next to their name and expecting a different result,” he said. “The party is out the window. I think we’re all sick and tired of this stuff.”

Tyler Durden Wed, 06/03/2026 - 07:20

"Dramatically Less Accessible To The Average Fan": Knicks Finals Tickets At MSG Sell From $3K To $280K

For the first time since 1999, the New York Knicks are heading to the NBA Finals. For fans, it's a dream decades in the making. For anyone hoping to attend a game at Madison Square Garden, however, that dream comes with a staggering price tag in the thousands of dollars. 

The 2026 NBA Finals between the New York Knicks and the San Antonio Spurs have produced some of the most expensive basketball tickets ever recorded. Secondary-market prices have surged to levels that rival — and in some cases exceed — major championship events such as the Super Bowl.

The cheapest tickets available for Knicks home games in the Finals have generally been listed between $3,600 and $4,100. Reports from TickPick, SeatGeek, and other ticket marketplaces showed get-in prices exceeding $3,800 for some Madison Square Garden games, while average ticket prices in New York have hovered around $6,000.

Even compared with the already-expensive games in San Antonio, Madison Square Garden stands in a category of its own. While some Spurs home games have had entry prices closer to $1,200-$2,000, New York's home games have consistently commanded much higher premiums.

The biggest shock has come at the luxury end of the market. One pair of courtside Knicks Finals tickets reportedly sold for nearly $280,000 on the secondary market. Individual premium seats have been listed for well into six figures, with some season-ticket holders reportedly considering offers approaching $100,000 per seat.

To put that into perspective, the cost of sitting courtside for a Knicks Finals game can exceed the price of a luxury automobile or a down payment on a home in many parts of the United States.

Several factors are driving the unprecedented demand. First, the Knicks have not appeared in the NBA Finals since 1999, creating nearly three decades of pent-up demand among one of sports' largest fan bases. Second, Madison Square Garden has a relatively limited seating capacity compared with many newer arenas. Finally, the New York metropolitan area contains one of the world's largest concentrations of affluent sports fans and corporate buyers willing to pay premium prices for marquee events.

The combination has created a perfect storm in which demand dramatically exceeds supply.

The difference between today's prices and those from the Knicks' previous Finals appearances is striking. According to reporting comparing 2026 prices with the 1994 NBA Finals, upper-level seats that once cost roughly $35 now carry prices well above $1,700, while even the least desirable seats for the current Finals often cost several thousand dollars.

In inflation-adjusted terms, Knicks Finals tickets have become dramatically less accessible to the average fan.

Tyler Durden Wed, 06/03/2026 - 06:55

Commodity Markets Are Living On Borrowed Time

Authored by Helen Thomas via City AM,

• Governments and industry have softened the impact of energy and commodity supply disruptions by releasing reserves, reducing inventories, and increasing operational flexibility.

• These measures are temporary, and continued inventory drawdowns are pushing oil and metal markets toward historically tight conditions.

• Once inventories become critically low, higher prices may become the primary mechanism for balancing supply and demand, leading to weaker economic growth and lower consumption.

Commodity markets have spent the past three months performing an extraordinary balancing act. Despite one of the most significant disruptions to global energy flows in decades, the global economy has continued to function remarkably smoothly. After an initial spike, prices for several key commodities have stabilised or even eased. Yet this apparent calm is deceptive. The reason the system has held together is due to governments, producers and consumers drawing down the buffers that normally protect the global economy from disruption. Those buffers are now approaching dangerous limits.

Inventories are being depleted at a remarkable pace. Global oil stockpiles have fallen to levels that senior industry executives describe as unprecedented. Aluminium markets are facing a similar squeeze. Bloomberg recently calculated that combined stockpiles tracked by the London Metal Exchange, CME Group and the Shanghai Futures Exchange would cover less than five days of global supply. 

The surprising resilience of commodity prices reflects the fact that the global economy has proved far more adaptable than many expected. Strategic reserves have been deployed on a large scale. The United States and Japan have both released oil from emergency stockpiles to cushion the loss of supply. American jet fuel output has reached record levels. Even China has managed to reduce crude imports without any obvious drawdown of its strategic petroleum reserves, which a recent report from the Oxford Institute for Energy Studies suggests is due to changing refinery yields and industrial flexibility. In effect, China has been extracting greater flexibility from its industrial system rather than relying solely on inventory releases.

All of these developments demonstrate a market responding exactly as economic theory would predict. When a critical input becomes scarce, producers seek substitutes, inventories are drawn down and existing capacity is pushed harder. These adjustments can be remarkably effective. They buy time. But time is ultimately what inventories represent. Every barrel released from a reserve, every tonne withdrawn from a warehouse, and every industrial workaround implemented today simply postpones the moment when supply and demand must once again be reconciled.

The US Strategic Petroleum Reserve is a case in point. The United States entered this crisis from a significantly weaker position than prior energy shocks. Having peaked at more than 700 million barrels in 2010, the SPR had already been reduced by roughly a third before the disruption in the Middle East began. Recent releases have helped stabilise markets, but they have done so by consuming the very buffer that exists to absorb future shocks. The critical question is not whether the SPR can technically be depleted. It cannot. The more important question is whether markets begin to doubt that policymakers possess sufficient reserves to continue cushioning disruptions indefinitely. Once that confidence disappears, the existence of barrels underground becomes less important than the perception that the shock absorbers are running out.

At some point, the arithmetic becomes unavoidable. The world cannot permanently consume more commodities than it produces. Strategic reserves can only be released once. Inventories can only be drawn down once. Refineries can only be reconfigured so far. Eventually, the familiar supply-and-demand framework begins to reassert itself, and a new equilibrium must emerge between available supply and desired consumption.

Demand destruction

Economists have a sanitised term for this process: demand destruction. The reality is more painful. Demand destruction occurs when prices rise to a level that forces consumers and businesses to reduce their consumption. Households spend more on fuel and less on everything else. Airlines reduce routes. Manufacturers delay investment. Energy-intensive industries curtail production. Consumption falls not because people choose to consume less but because higher prices leave them no alternative.

This is why inventory levels matter so much. As long as stockpiles remain available, markets can postpone the adjustment. Once they are exhausted, prices become the primary mechanism through which balance is restored. Neil Chapman, senior vice-president at ExxonMobil, recently described the situation with unusual candour. Oil prices, he argued, have remained relatively contained because inventories have been drawn down. Yet those inventories are now approaching levels rarely seen in modern markets. Once those buffers disappear, the economics change rapidly. As Chapman put it, “a model would say Brent will shoot up” towards $150 or even $160 per barrel.

Many governments will inevitably seek to shield consumers from the consequences. Price caps, subsidies and emergency fiscal packages are politically attractive when energy costs surge. Yet such measures do not eliminate the underlying economic loss. They merely redistribute it. If consumers are protected from higher prices, then taxpayers, bondholders or currency holders must absorb the cost instead.

Japan offers an early illustration of this dynamic. The government has proposed additional fiscal support while simultaneously insisting that it will not require higher borrowing over the calendar year. Markets appear sceptical. Yields across the Japanese government bond curve have risen as investors attempt to identify where the cost of these interventions will ultimately fall. The pressure has not disappeared; it has simply been transferred elsewhere within the system.

This is the uncomfortable reality confronting policymakers around the world. There is no financial engineering solution that can replace missing barrels of oil. No accounting adjustment can create aluminium inventories that do not exist. No subsidy can transform a scarce commodity into an abundant one. The shock emanating from the Middle East is real, and while the global economy has responded impressively through substitution, efficiency gains and inventory drawdowns, these measures are temporary expedients rather than permanent solutions.

When inventories become critically low, markets force a new equilibrium. And a new equilibrium in a poorer world means exactly what it sounds like: higher prices, lower consumption and lower living standards. The commodity markets are not forecasting a poorer world. They are enforcing one.

 

Tyler Durden Wed, 06/03/2026 - 06:30

Iran Sends Missiles, Drones Targeting Airbases Across Gulf After US Nighttime Attack On Qeshm Island Summary:

• Two bases come under fresh missile attack in Kuwait, Fars and Reuters report. Iran state media says retaliation for night US attack on Qeshm Island.
• Explosions & air raid sirens also being reported in Saudi Arabia, UAE, and Bahrain. It seems that war is popping off once again.
• rump insists reports that Iran & US have not been talking for days is 'fake news'; Rubio also tells Congress talks are ongoing, despite fresh Iranian denials, and even claims the nuclear file is part of it.
• Washington has seen the Lebanon partial truce as opportunity enough to press forward on broader talks, with Trump saying he expects a broader Iran deal "over the next week".
• But Fars denies this Tuesday: "exchange of messages between Iran & the US has been stopped for at least a few days" on MOU.

*  *  *

War Returns? More Missiles Fired On Kuwait, Sirens & Explosions In KSA, UAE

In the overnight hours local time, Kuwait is reporting inbound missiles and drones, with Fars reporting that two American bases were targeted. Explosions and air raid sirens also being reported in Saudi Arabia, UAE, and Bahrain. It seems that war is popping off once again.

Per a breaking Reuters report:

Kuwait’s army says that air defenses are intercepting hostile missile and drone attacks and urges the public to follow security and safety instructions issued by the relevant authorities.

Any sounds of explosions heard are the result of interceptions, the army adds.

Tasnim: "Blasts reported at Kuwait's Ali al-Salem US airbase" after three missiles were fired. And the latest from CNN:

Kuwait says it is intercepting enemy missile and drone attacks. While it has not yet identified who it believes is behind the attack, the news comes shortly after Iranian media reported “explosion-like sounds” near Iran’s Qeshm island. Meanwhile, the US military said it “disabled” an oil tanker heading for an Iranian port by striking it with a Hellfire missile.

Unconfirmed emerging footage:

Dashcam footage shows the potential interception of an Iranian ballistic missile or the self-detonation of Patriot surface-to-air missile interceptor earlier over Kuwait, during tonight’s attack by Iran. pic.twitter.com/V184MEncnF

— OSINTdefender (@sentdefender) June 2, 2026

Sirens have also been activated in Bahrain, for unknown cause. New IRGC statement:

IRGC statement:

- The US attacked Qeshm Island
- In response, Iran has carried out "precise and intensive missile strikes" on US bases in Kuwait
- Further US aggression will be met with a "seismic, crushing, and decisive response" pic.twitter.com/GBaDd9Bthy

— Faytuks News (@Faytuks) June 2, 2026 US Military Fires on Non-compliant vessel

In fresh action CENTCOM has announced it has fired on another vessel which was non-compliant to the US blockade:

• CENTCOM SAYS DISABLED NON-COMPLIANT VESSEL IN ARABIAN GULF
• CENTCOM: DISABLED VESSEL W/ HELLFIRE MISSILE TO ENGINE ROOM

Trump: It's 'Fake News' That Iran & US Stopped Speaking Days Ago

President Trump in a fresh Truth Social post has again insisted that Washington and Tehran are talking again. "The conversations between us have been going on continuously... where they lead, one never knows, but as I told Iran, 'It's time, one way or another, for you to make a Deal.'"

Throughout the morning Secretary of State Marco Rubio was fielding questions on Capitol Hill. He too insisted that talks are ongoing, despite a Tuesday Iranian denial. He claimed the regime is 'fragmented' and because of this, back-and-forth messaging is extremely slow-going. "Iranian people would make a deal tomorrow if it were up to them," Rubio said. "The Supreme Leader and the IRGC are a bit more immune to pressures."

He also generally acknowledged that Iran has effectively shut down the Strait of Hormuz, and then said this justified the US naval blockade of Iranian ports in turn. There was also this interesting exchange when he echoed Trump's line that the war is actually 'over' at this point...

— You keep telling us how we're winning this war — Senator

— Well, the war IS OVER now — Rubio

— The war IS NOT OVER. We still find ourselves spending billions of dollars a week on war — Senator pic.twitter.com/WuofatTvoQ

— RT (@RT_com) June 2, 2026

Hawks like Ted Cruz want to know of any other regime change tactics going on...

Marco Rubio:

I'm not aware of any program to arm civilians in Iran to overthrow their government.

I mean, there may be other countries doing it, or other groups doing it, but certainly not the U.S. government. pic.twitter.com/tYVeSbWVqE

— Clash Report (@clashreport) June 2, 2026

A potential new nuclear framework regarding Iran was also a central topic to Tuesday's Congressional testimony:

Marco Rubio:

Iran would be like North Korea, but worse, if they got nuclear weapons.

They would destroy the State of Israel, and you wouldn't be able to do anything about it because they have a nuclear weapon. pic.twitter.com/5TDGPNBY1W

— Clash Report (@clashreport) June 2, 2026

Big if true, there is still too much smoke and noise:

Secretary of State Marco Rubio said Tuesday that Iran has agreed to discuss previously off-limits aspects of its nuclear program, raising hopes that ongoing negotiations could pave the way for the reopening of the Strait of Hormuz and a broader diplomatic breakthrough.

Speaking at a Senate Foreign Relations Committee hearing on the State Department's budget request, Rubio said: "We are in talks... There is the prospect before us, which could happen today, it could happen tomorrow, it could happen next week, that for the first time, certainly in my memory, they have agreed to negotiate aspects of their nuclear program."

He said the U.S. hopes such negotiations could lead to a broader understanding that would include the reopening of the strategic waterway.

"We're hopeful that something like that could happen, in which the straits would reopen, we would enter into a period of negotiations on very specific topics, delineated negotiations, in the hope of reaching an outcome that's acceptable to us and something they would be able to do as well," he said.

The above was spoken with a few too many caveats... "which could happen today, it could happen tomorrow, it could happen next week..."

Rubio in the hot seat over Iran war:

.@SecRubio shuts down @SenBooker: "No one's 'begging' for anything here. The Iranians might be begging — because their economy is losing hundreds of millions of dollars a day."

"I don't know where you're getting this perception that Iran is stronger. Iran has no navy left.… pic.twitter.com/XHVerZeo8D

— Rapid Response 47 (@RapidResponse47) June 2, 2026 Iran Denies Progress, Halt in Talks Still in Effect

State media has belatedly responded to Trump's Monday claim that talks between the US and Iran are back on. Trump has even said Tuesday that he expects an agreement for an extended ceasefire to take place "over the next week" - along with the reopening of the Strait of Hormuz. 

"An informed source says that the exchange of messages between Iran and the US has been stopped for at least a few days for what is called the initial memorandum of understanding between Tehran and Washington," Fars reports. So this is Iran in effect saying 'not so fast' - as it seeks to 'hold the cards' and maintain some leverage. Trump has not indicated a willingness to resume bombing the Islamic Republic, but his patience has seemed to be wearing thin over the last several days, as the White House is boxed in to only choosing among several 'bad options' in the wake of launching a war of choice 95 days ago.

Oil spikes on the negative news from Tehran, extends:

And more confirmation via newswires:

An Iranian source says there is currently no message exchange with the U.S., contradicting claims of ongoing progress. The source reports talks on an initial understanding have stalled for several days. It also noted Iran’s last communication with Washington concerned Lebanon and drew international attention, despite President Trump stating negotiations are advancing rapidly.

Latest on the Lebanon front:

"American sources for AI Hadath: Proposal for a 60-day plan during which Israel withdraws gradually from southern Lebanon": AI Hadath reports.

• "Negotiations propose the deployment of the Lebanese army and UNIFIL in southern Lebanon after Israel's withdrawal."
• "Lebanon seeks to resolve Hezbollah's weapons file politically, but after Israel's complete withdrawal."

Lebanon Fighting Persists Amid Nominal Ceasefire

Various regional and international reports have documented serious ongoing fighting in Lebanon, despite President Trump the day prior having declared that the shooting will cease and that Hezbollah and Israel were forging a limited ceasefire. Trump had said of both sides that "they agreed that all shooting will stop" - after Iran announcing it had suspended peace talks with the US over Israeli military action in Lebanon.

Israeli Prime Minister Benjamin Netanyahu did affirm he would adhere to the agreement, and reports say that planned new airstrikes on Beirut were called off, but he also warned the attacks on the capital would go ahead "if Hezbollah does not stop attacking our cities and civilians" - and that forces in the south would continue operating.

BBC has freshly written that "While the ceasefire appears to be largely holding, there was further violence overnight." The same report details:

Hezbollah said its fighters had targeted Israeli tanks in the southern Lebanese towns of Haddatha and Bayada with missiles and shells. The Israeli military said it had intercepted two projectiles that had been fired from Lebanon in the early hours of Tuesday. No injuries have been reported.

Lebanon's state-run National News Agency reported Israeli strikes on several southern areas and said a "very violent" explosion from a large-scale demolition rocked the town of Debbine.

Tuesday has witnessed some ongoing attacks on south Lebanon, as well as Hezbollah drone attacks on Israeli troop positions, wounding some. According to some of the latest from Al Jazeera:

Israeli forces have carried out multiple air raids on the city of Nabatieh, one of the largest in southern Lebanon, our colleagues on the ground report. The city, a strategic hub for Hezbollah, has been encircled by Israeli forces in recent days as troops continue pushing north.

Israeli attacks were also reported across the wider Nabatieh district as Israel deepens its occupation of surrounding areas. Drones hit the towns of Kafr Sir and Aabba, while a strike targeted the road leading to Houmine al-Fawqa. The outskirts of Yahmour al-Shaqif were also hit.

There's also been a lot of explosions in the southern city of Tyre, with Israeli jets active in the airspace above on Tuesday. And rescuers have recovered six bodies from another town, with Lebanese civil defense agency having said in a statement: "Since yesterday evening and continuing until this morning … personnel have been carrying out search and rescue operations in a residential building that was targeted in the town of Marwaniyah – Sidon district."

#WATCH: Israel conducts strikes over south Lebanon, Hezbollah fires into northern Israel after US @POTUS @realDonaldTrump announces agreement to halt attacks that neither side has publicly accepted https://t.co/vgbtbZ2sm8 pic.twitter.com/jx5O69Knfo

— Arab News (@arabnews) June 2, 2026

Hezbollah's fiber-optic drone attacks have at the same time not ceased: "Two Israeli soldiers have been wounded in a Hezbollah drone attack in southern Lebanon, the military says, describing their injuries as minor," Al Jazeera reports Tuesday. This is after "Two other Israeli soldiers were killed over the weekend, also in drone attacks, bringing to 26 the number of soldiers killed since fighting escalated three months ago. Four Israeli civilians have also been killed."

Impact of Trump's 'Steamrolling' Netanyahu in Monday Call

President Trump's angry dressing down of Netanyahu may have had very limited effect, it appears. To review, per Axios during a Monday call Trump was reportedly heard cussing at the Israeli leader and essentially 'steamrolled' him - angry over breaking the Lebanon truce and demanding that Israel's military not attack Beirut.

Trump is said to have told Netanyahu "you’re fucking crazy’" while demanding Lebanon truce: "I’m saving your ass," he also reportedly said. Iran early Monday said it halted talks with Washington because of Israel's escalation in Lebanon. 

There's been some reaction from Iran to the Axios report, with Iran’s Deputy Foreign Minister Kazem Gharibabadi having remarked, "In this regard, the US president’s claim of having dissuaded Netanyahu from launching a major attack on Beirut is more than a sign of Washington’s peace-seeking, it’s confirmation of America’s direct role in managing the Zionist regime’s aggressions."

How many times have they sold and resold this same story about Biden and now Trump being secretly VERY VERY mad at Netanyahu https://t.co/uGpSULbhhM

— Krystal Ball (@krystalball) June 1, 2026

The Iranian official continued to offer Tehran's vew: "If the decision to attack the capital of an independent state can be changed with a single phone call the main question is: why did months of ceasefire violations, aggression against Lebanon, the displacement of its people, and threats to this country’s sovereignty – backed by Western political and military support – continue unabated?" he remarked.

Mark Levin rages over White House leaks of Trump-Netanyahu call...

Mark R. Levin, a close ally of both U.S. President Donald J. Trump and Israeli Prime Minister Benjamin Netanyahu, appears to confirm the veracity of the report earlier by Axios on today’s heated call between Trump and Netanyahu regarding peace negations with Iran as well as… pic.twitter.com/46qmYBJsJZ

— OSINTdefender (@sentdefender) June 2, 2026 Trump Returns to Optimism: Agreement 'Over the Next Week'

But Washington has seen the Lebanon partial truce as opportunity enough to press forward on broader talks. While there's hasn't been full confirmation from Tehran's side, Trump has declared the talks as back on:

US President Trump told ABC News he thinks he will have an agreement with Iran to extend the ceasefire and reopen the Strait of Hormuz over the next week, while he also stated that a peace agreement with Iran could be better than a military victory. Trump also stated that it's not simple for both sides, but they're getting what they need to get and that he still has to get a few more points.

The very same network points on Tuesday morning:

Israeli and Hezbollah forces continued their attacks on Tuesday despite President Donald Trump's claim that the warring sides had "stopped shooting each other" after his intervention to prevent escalation on Monday.

Lebanon's state-run news agency, NNA, reported three Israeli strikes in separate areas in southern Lebanon. One person was killed, NNA reported. ABC News has contacted the Israel Defense Forces to request comment.

So, once again Trump touting the likelihood of a deal to reopen Hormuz by next week seems extremely wishful and ambitious, to say the least. And we've heard all this before, and been here many times over the past 95 days of war.

Tyler Durden Wed, 06/03/2026 - 06:15

Reactor Developers Advance Sweden's Nuclear Ambitions While State Puts Up $3.7 Billion

Sweden advanced its nuclear revival with two major filings for new capacity and a government proposal to commit up to $3.7 billion in state capital for SMR projects.

On May 18th, Blykalla submitted the first application for an advanced reactor park under Sweden’s new siting process. The Norrsundet site would host six 55-MWe SEALER lead-cooled reactors, for 330 MWe total. 

CEO Jacob Stedman called it a historic first for Sweden, and linked the technology to meeting AI and electrification demand with reliable baseload power. Blykalla has a prototype facility underway at Oskarshamn with Uniper and partnerships with Oklo and ABB.

Studsvik filed in May for 600-1400 MWe of SMR capacity at its Nyköping site. This follows the Studsvik group’s earlier March application for Valdemarsvik. CEO Karl Thedéen highlighted the site’s decades of expertise and the intention to deliver real grid capacity in the 2030s as part of the company’s ReFirm program.

The government also recently proposed to acquire a 60% stake in Videberg Kraft AB, the Vattenfall-led project company for up to 1500 MWe at Ringhals. Vattenfall is the state-owned utility company. 

The support package includes an initial SEK 1.8 billion ($193 million) injection and up to SEK 34.3 billion (~$3.7 billion) during construction, plus a share of SEK 122 billion (~$13 billion) baseline waste system costs. The structure aims to de-risk the first mover so later projects share fixed costs. Videberg is choosing between five GE Vernova Hitachi BWRX-300s or three Rolls-Royce SMRs, with selection later this year and investment decision in 2029.

Goldman provided some additional color on Swedish nuclear projects in their recent industry summary. We also touched on Studsvik’s acquisition of Kärnfull Next, which highlights the ongoing skilled engineering manpower bottleneck.

Timelines for first power remain in the early 2030s, with visible construction still months or years away. Sweden shows what policy certainty and state capital can achieve in spurring applications, but China’s pace of actual reactor builds remains the benchmark for delivery.
 

Tyler Durden Wed, 06/03/2026 - 05:45