Macrosynthesis
TLDR: Markets Drift Early, Then Plunge as Geopolitics Overtake Policy Optimism
It was a modest, event-driven start to the week—typical for a post-earnings lull—but anything but typical by the time Friday hit. After President Trump announced a provisional trade pact with China on Wednesday—including a dramatic 55% tariff on Chinese imports and rare earth export concessions—markets treaded water, eyeing upcoming inflation data and a crucial 30-year Treasury auction. With CPI coming in soft and the bond sale landing smoothly, the setup looked benign. But by Thursday, global risk appetite flipped. A hopeful Truth Social post from Trump on Iran peace talks was quickly overshadowed by breaking headlines: Israel had launched direct strikes on Iranian nuclear and military sites, sparking retaliatory barrages. U.S.–Iranian negotiations scheduled for Sunday (the 15th) were abruptly canceled following the attacks. Crude oil spiked 7% as fears of a regional escalation gripped energy markets, and by Friday, equities tumbled across the board. The S&P 500 gave back early-week gains, and the MSCI World Index suffered its worst single-day drop since April—reminding investors that in this market, macro headlines move faster than fundamentals.
Below is an image from Donald Trump’s Truth Social post at 5:09 PM EST — 3 hours and 21 minutes before explosions were reported in Tehran at 8:30 PM EST.
Strikes Across the Region: Israel Targets Iran’s Nuclear Core
Over the course of 48 hours, Israel launched the most extensive wave of attacks on Iran in decades—claiming to have struck over 150 sites tied to Iran’s nuclear program, air defenses, and command structure. Prime Minister Netanyahu declared the mission a preemptive blow to an "existential threat," confirming strikes on Natanz, Isfahan, and Tehran, and announcing the elimination of nine senior nuclear scientists.
Iranian authorities confirmed the attacks hit key military and energy sites, including the Shahran oil depot and Revolutionary Guard facilities. One of the most disruptive strikes targeted the South Pars gas field, triggering a fire that suspended output of 12 million cubic meters of gas per day. According to the IAEA, the Natanz enrichment plant sustained above-ground damage, while Iran reported fires at Isfahan’s nuclear research facilities and minor damage at Fordow.
In response, Iran launched over a hundred missiles toward Tel Aviv, Haifa, and central Israel, killing at least four civilians and injuring dozens. Israel retaliated by bombing targets in Tehran, Tabriz, and Yemeni drone-launch sites, and intercepting multiple UAVs from Iranian territory. Iran’s foreign ministry called the strikes “barbaric,” vowing continued retaliation. Tehran also announced the suspension of nuclear negotiations with Washington, declaring diplomacy “dead.”
Global Energy Artery at Risk: Strait of Hormuz in Crosshairs
Iran’s threat to close the Strait of Hormuz—where nearly 20% of global oil and over 30% of seaborne crude pass—carries serious weight. It’s also critical for LNG and container trade, connecting Gulf ports like Jebel Ali to Europe, Asia, and East Africa.
Major freight carriers are already rerouting around the Red Sea and Gulf, creating a “de facto slowdown” as ships delay or divert to avoid missile threats. Ambrey and other maritime security firms urge operators to adopt defensive protocols and flag Israel-linked cargo, while war insurance costs and port congestion climb.
Though commercial traffic continues, Iran has warned that any U.S., UK, or French involvement could lead to attacks on Western naval assets—further threatening safe passage.
A prolonged disruption would not just spike oil and shipping prices, but also strain global supply chains. During the 1980s “Tanker War,” similar disruptions triggered sustained market volatility. A full closure today could unleash stagflationary shocks across energy-importing economies.
Pressure Campaign: Israel Pushes for U.S. Entry into the War
Behind the scenes, Israel has reportedly asked the Trump administration for direct military support, specifically requesting U.S. bunker-busting munitions to strike Fordow—an underground enrichment facility too fortified for Israel’s current arsenal. So far, the White House has declined, but sources say the pressure is intensifying as Israeli officials warn that their mission will fail without deeper American involvement.
Netanyahu claimed in a televised address that Israel has “clear support” from President Trump. Yet Trump has stopped short of committing forces, instead posting vague calls for peace on Truth Social, followed by declarations of “excellent” Israeli strikes. Meanwhile, U.S. intelligence and logistics support is rumored to be flowing behind the scenes—despite public denials of involvement.
Iran isn’t buying the ambiguity. Tehran has warned that any country helping Israel repel retaliation—naming the U.S., UK, and France—will be considered a combatant. As tensions rise, regional U.S. bases and Navy assets in the Gulf are now viewed as potential targets. Trump’s latest statement promised “full U.S. force” in response to any attack on American interests, but for now, Washington is walking a tightrope—arming its ally while trying not to ignite a regional war.
Divided States: U.S. Support for Israel Grows—But with Limits
As missiles fly and airstrikes escalate, Washington is confronting a familiar but volatile dilemma: how far to go in supporting Israel without igniting a broader war. On Capitol Hill, bipartisan voices rushed to back Israel’s sweeping assault on Iran, with some—like Senator John Fetterman and Rep. Nancy Mace—calling for full-scale military and intelligence aid. Others pushed even further: “The threat from Iran will only stop when the regime is destroyed,” said Rep. Carlos Gimenez.
Yet a countercurrent is building. Senator JD Vance, at the U.S. Army’s 250th anniversary parade, gave a pointed message of restraint:
“We never ask you to go to war, unless you absolutely HAVE to... but when we do, we give you the weapons and support to kick the HELL out of the enemy and come home safely.”
His remarks, echoing skepticism across the populist right, stood in stark contrast to Washington’s hawkish drumbeat.
That tension came into sharp relief as Charlie Kirk, a prominent far-right voice aligned with Trump’s base, posted a viral poll on X asking:
“Should the US get involved in Israel’s war against Iran?”
With over 243,000 votes, 88% answered “No”—a clear signal that Trump’s grassroots supporters overwhelmingly oppose U.S. military involvement.
Meanwhile, Iran has formally ended nuclear talks with the U.S. and issued broad threats against Western countries aiding Israel, heightening the risk that any misstep—intentional or not—could spiral into a much larger confrontation. Trump has warned of “full U.S. force” if American interests are attacked, but for now, the administration is walking a tightrope—balancing political pressure at home with rapidly escalating stakes abroad.
Cooling Data Signals Relief—But Oil Could Complicate the Path
This week’s inflation and labor data suggested easing price pressures. May’s CPI rose just 0.1%, keeping the annual rate at 2.4%, while core CPI—excluding food and energy—slipped to 2.8%, both below forecasts. Producer prices followed suit, with core PPI falling to a 3.0% annual pace. Coupled with a stable 4.2% unemployment rate and modest job growth, the data points to a slow but steady disinflationary trend in core services.
But rising consumer sentiment may complicate that story. The University of Michigan’s index surged to its highest level since January 2024, and short-term inflation expectations improved. While positive sentiment reflects resilience, it also risks fueling demand-side pressure—especially if supply constraints persist.
That’s the policy tension confronting the Fed. On June 9, the Atlanta Fed’s GDPNow model projected Q2 real GDP growth at 3.8%, a level inconsistent with recessionary conditions and typically too strong to justify rate cuts. The Fed generally avoids easing policy during robust expansions, as doing so can reignite inflation and overheat the economy. Trump and JD Vance are now calling for a 100-basis-point cut, slamming Chair Powell’s caution as “monetary malpractice.” Markets are betting on a cut by September and more into 2026—but the backdrop complicates that path.
Adding to the challenge, Brent crude jumped nearly 9% this week amid Israeli-Iranian conflict. JPMorgan now warns oil could spike to $120 if escalation continues. History shows that energy shocks—especially when layered onto strong GDP growth—can quickly reverse disinflation trends and limit the Fed’s room to maneuver.
Last Week's Market Performance
Markets reversed early June gains, ending the week lower amid a spike in Middle East tensions. The S&P 500 fell -0.4% to 5,977, the Nasdaq dropped -0.6%, and the Dow declined -1.3%, with the Russell 2000 down -1.4%. Volatility spiked +24.2% to 20.82 as investors fled to safe-haven assets.
Energy led all sectors (+5.7%) on an oil price surge (+13% to $72.98) driven by Israeli-Iranian missile exchanges and supply fears. Gold rose +3.2% to $3,452/oz. Defensive sectors like Healthcare (+1.2%) and Utilities (+0.2%) held firm, while Financials (-2.6%) and Industrials (-1.6%) underperformed.
On the data front, CPI and PPI both came in softer than expected, fueling expectations for Fed rate cuts later this year. Meanwhile, Trump announced a rare earths deal with China, easing some trade tension.
Top S&P 500 gainers: Oracle (+24%), APA (+14%), Halliburton (+13%)
Laggards: Smucker (-14%), PG&E (-13%), United Airlines (-12%)
Upcoming Events This Week
Markets will stay fixated on Middle East tensions after Israel's strike on Iran, as fears of wider conflict ripple through energy markets. Eyes also turn to the G7 Summit in Canada, where global leaders will tackle trade, security, and economic policy.
On the monetary front, major central banks—including the Fed, BOJ, BOE, and PBOC—are expected to hold rates steady, joined by policy decisions from Switzerland, Sweden, Turkey, Brazil, and others.
In the U.S., Fed projections and the dot plot will take center stage alongside economic data. May retail sales are expected to decline 0.5%, likely reflecting tariff impacts, while industrial production may show a slight 0.1% uptick. Housing, manufacturing, and trade data will round out a packed macro calendar.
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Company News
LevelFields AI Stock Alerts Last Week
Sound Group (SOGP) Surges +46% on Buyback
Sound Group Inc. skyrocketed 46.3% in a single session after announcing a $4 million share repurchase program—an amount that represents nearly 50% of its total market cap. The aggressive buyback plan ignited investor enthusiasm, signaling management’s confidence in the company’s undervaluation and setting off a sharp rally in the thinly traded stock.
Casey’s (CASY) Jumps +12% on Dividend Hike and Strong Track Record
Casey’s General Stores popped 11.59% after announcing a 14% increase to its quarterly dividend, now at $0.57 per share. The hike marks the 26th consecutive annual increase, reinforcing the company’s reputation for stable, long-term shareholder returns. The move comes amid strong earnings momentum and deep investor trust in its rural footprint and growth strategy.
Quantum Stocks Jump After Huang Signals Sector Breakthrough
Quantum computing stocks surged after Nvidia CEO Jensen Huang declared the field is hitting an “inflection point,” forecasting a 10x increase in logical qubits every five years—mirroring Moore’s Law. Huang said quantum systems are rapidly becoming more robust and could soon help solve major global problems.
Quantum Computing Inc., Rigetti, IonQ, and D-Wave all rallied this week on renewed optimism.
Nvidia will run its full quantum algorithm stack on the Grace Blackwell 200 chip, aiming to supercharge AI via quantum acceleration. Huang’s remarks mark a sharp pivot from his cautious January outlook and signal that quantum-AI convergence may be closer than expected.
Chime IPO Soars, But BNPL Faces Warning Signs
Chime made a strong market debut, jumping 37% after raising $864 million in its IPO. With a $13.5 billion valuation, Chime’s growth-focused model—offering fee-free banking through partner banks—continues to attract users and investors. The company now handles over $120 billion in transactions annually and serves 8.6 million users.
In contrast, the Buy Now, Pay Later (BNPL) space is flashing red. Klarna reported a $99 million Q1 loss and a 17% rise in consumer credit losses as more users fall behind on payments. Industry-wide, 41% of BNPL users reported paying late last year, up from 34% the year before, with a growing number using loans just to cover essentials like groceries. As household debt hits a record $18.2 trillion, rising delinquencies and economic pressure are putting BNPL models under strain—especially with regulatory rollback under the Trump administration reducing oversight. Klarna's IPO remains on hold, underscoring the sector’s growing financial fragility despite ongoing expansion.
Oracle Surges to Record on Explosive Cloud Outlook
Oracle (ORCL) jumped 13% to a record high after forecasting a 70% jump in cloud infrastructure sales for FY26, driven by surging AI-related demand. Total Q4 revenue rose 11% to $15.9B (vs. $15.6B est.), with EPS of $1.70 beating estimates. Cloud infrastructure revenue surged 52% to $3B, slightly below expectations but attributed to capacity constraints, not demand.
CEO Safra Catz said Oracle is becoming “one of the world’s largest cloud infrastructure companies,” with RPOs hitting $138B and capex tripling to $21.2B this year—set to hit $25B in FY26 as it builds massive AI-ready data centers. Customers like OpenAI, Meta, xAI, TikTok, and Temu are driving this expansion.
Oracle’s bullish forecast, massive bookings, and scale-up efforts around the Stargate AI cloud project position it as a serious contender to Amazon and Microsoft in the race for AI infrastructure dominance.
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