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Then with the new Cubo One Capsule Machine from Chibo, it's up to you to meet with the café from special applications. Full Monday Arômen, thanks to Innovative PressBrew technology and over-sip-sip-sinceorten café for every market. Elébe Premium Café is already on the 29th of July.
And here's the Cubo Capsule Machine in your Chibofiale and on Chibode E. Welcome to Prophecy Market. I'm Ed Nelson. It is June 16th. Let's check in on yesterday's market vitals. The major indices rallied on news that the US and Iran have an agreement more on that in a second. The Dow hit a fresh high-bred crude fell below $80 on hopes that the straight will finally and truly reopen. Meanwhile, Treasury yields and the dollar fell.
SpaceX shares sword 20% in their first full-day trading and fox tumbled 15%
after announcing its acquisition of Roku for $22 billion.
Okay, what else is happening? The US and Iran have reached a deal again. After 107 days of war, the two sides agreed to a memorandum of understanding. It includes a 60-day ceasefire, the reopening of the straight-of-war moves, and a halt to fighting in Lebanon. A formal signing is set to take place on Friday, in Geneva, but the big negotiations, like Iran's nuclear program,
sanctions relief and frozen assets are all deferred to the next two months. Meanwhile, Israel says it is not bound by the deal, and its forces will stay in Lebanon indefinitely. Still, Brent crude fell more than 5% on the news of the pending peace deal. Here to help us unpack what this deal actually means. We're speaking with Karim Sajipur, seeing your fellow at the Carnegie Endowment for International Peace. Karim, thank you so much for joining us on the show today.
“This is really important news. I think the place I'd like to start is a place that's skepticism.”
And that is, we've had deals with Iran before. Trump said we had a ceasefire back in April, then he said we had a framework of a ceasefire. He said that the deal was in its final stages in May. He said it was all largely negotiated. We've had plenty of false alarms. And so the question on this news is, is this also a false alarm or is this different? I'm not going to try to disabuse you of your skepticism because I share it. I think there's a couple of big questions.
Number one is whether indeed we do have a memorandum of understanding. At the moment, you could call it a memorandum of misunderstanding because the U.S. version of this MOU is very different than the Iranian version of this MOU in terms of what kinds of economic relief are going to be provided.
“What are Iran's nuclear commitments going to be the future of the state to promote?”
Virtually every single major issue appears at the moment on resolve. So that's one of the
big questions. The second is, if indeed the two sides can agree on a common memorandum of understanding,
what happens next? The most difficult questions have been deferred for future negotiations.
The two sides are given themselves 60 days to resolve those issues of tension...
the nuclear issue. But there's very little chance that those issues are going to be resolved over
“60 days. So bottom line for me, this isn't a resolution of the U.S. Iran conflict. We may have”
temporarily paused the hot war and gone back to a cold war. But unfortunately, these two sides are going to remain adversaries. We haven't resolved the U.S. Iran conflict. In fact, as President Trump alluded to today, there's even a possibility we could go back to conflict that the doesn't see any flexibility from Iran on the nuclear flow. It's really fascinating that you say that. The first thing I was going to mention was that disagreement over these reconstruction
costs, because Iran says that the U.S. is going to pay $300 billion in reconstruction costs that
they were going to release $24 billion in frozen assets. And then JD Vance goes and denies those claims. So memorandum of misunderstanding sounds accurate to me. And I guess the question then becomes
“what actually is this deal? Like we don't we don't know yet because they've said it's happened and”
and to be fair to Trump, Iran has said they're going to sign it on Friday. But I guess my question is like, what actually is it? What are we even agreeing to? Well, phase one of this deal is supposed to essentially be a lifting of the mutual blockade in the States of Formals. So over the last almost four months, Iran has been strangling the global economy, trying to spike the price of oil with their blockade of the States of Formals. simultaneously the U.S. has been strangling Iran's
economy with the naval blockade. And Iran has suffered as a result of that. It's losing as much
as $450 million daily. It can't get its oil exports out of the country. So even though you hear
a lot of blaster and bravado from the Iranian side, it's an economy which has been decimated even more decimated than it was before the war. So what phase A of this deal is meant to be is to lift that blockade. And virtue of the entire world wants to see the blockade of the state of Formals lifted with one exception perhaps, which is Vladimir Putin's Russia who has really experienced the cash when full over the last several months. But then as we talked about, the blockade is meant
to facilitate a nuclear deal. And it actually could serve to do the opposite because once Iran gets some economic relief as a result of this lifting of the blockade, it may actually feel less inclined to make nuclear compromises. And likewise, President Trump, I feel I can actually go back to war now that oil prices have dropped. This is exactly where my mind is going. Despite that oil prices did fall 5%. So clearly traders and investors are more optimistic
about the notion that the straight will be unblocked. I guess my question, do you think it will be opened up? And if so, toward extent for how long, I mean, how optimistic are you when it comes to the straight of home, who is specifically which is the thing that impacts Americans the most in the form of inflation? The Iranian regime has been saying consistently that the straight of Hormos will not go back to status quantity to be what it was before the war, which was an
international waterway. They want to figure out a way to establish a fixed revenue stream over the straight, whether that is tolling, perhaps that's too ambitious for them to toll individual ships,
“but perhaps some type of administrative fee over the straight. That's what they've been talking,”
but I haven't seen any statements from senior Iranian officials saying they're going to go back to status quantity. The other way in which they want to use the straight is as a deterrent to essentially have the sort of dameccles hanging over it to send a signal to America Israel and others that if we're attacked again, we're going to take this straight hostage and we've done it once, we can do it again and we can wreck the global economy. So it's my view that it is a major US priority and it's obviously
a enormous priority for our partners in the Persian Gulf to have the straight be an international waterway, but I don't take it for granted that Iran is going to accept that. Do you think it would be an overstatement to say that Iran is strengthened coming out of this? I mean, of course, their economy has been damaged, many of their military leaders have been taken out, but it
Sounds as though they now have a point of leverage that they have realized in...
they perhaps didn't know they had before. And it sounds like potentially this could mean higher oil
prices forever, or at least a suppression on demand that lasts for the foreseeable future. Do you
“think that they are coming out of this feeling, I guess, strengthened or optimistic?”
I think psychologically, they certainly feel that they have been strengthened. It's been a major psychological boost for this regime that they were able to defy the greatest military power in the world, the greatest military power in the Middle East, Israel and the United States and survive. For them, the bar was that pretty low. They didn't need to thrive. They just needed to survive,
and they achieved that. At the same time, it is a country. It's a deeply unpopular
theocracy ruling over society, which very broadly dislikes it. They have a decimated economy, so if you're looking at this from the outside, Iran isn't a country UNV, a few crunchers would want to be Iran, but by virtue of the fact that they've survived and they've discovered this newfound form of leverage and closing the strait of hormones. I do think that they feel they've emerged from this stronger, what we know from history and from wars is that it oftentimes takes
years if not decades to really understand the true impact of them, but certainly in the immediate term, Iran looks stronger than it did going into the world. You mentioned that you thought that this was more of a temporary pause in the hot war that we've gone back to sort of a cold war state,
but that implies that we might return to a hot war, and this is probably the most important
question in the markets right now, arguably in the world. It is the multi-trillion dollar question, which is will we go back to fight it and if so for how long? I know that we can't predict the future, but if you had to make an estimate, what would your estimate be on the probability that this is resolved permanently? In my view, the probability that this is resolved permanently, I'd put it at less than 20%. If we look at the probability of a return to conflict, there's a couple,
there's a few triggers at least. One is that negotiating phase two of this deal, which is to get Iran's highly enriched uranium out of the country and to get Iran to see sits in Richmond over uranium, to big priorities for President Trump that the regime shows no flexibility. In that case, he may feel that he being President Trump may feel obliged to return to conflict. And remember, this is a president who on two occasions, in the middle of negotiations with Iran,
launch military strikes on them, last June's 12-day war, and then this year's war.
“So, I think the Iranian regime certainly feels that President Trump is capable of returning to war.”
Another potential trigger could come from the back and forth missile and rocket bodies between Israel and Lebanese, Hasballah. If, you know, Hasballah continues its attack on Israel, or Israel continues its retaliations, at some point Iran may get in and launch attacks again. On Israel, Israel may respond inside Iran in territory, and that could again trigger another attack. I should say there's one additional trigger, but I don't think it's a near-term trigger,
and that is if we have any intelligence that Iran is making a mad dash for nuclear weapon. I think that would like the trigger military action, but I don't think that's an immediate term possibility. Just before we wrap up here, what do you expect the messaging will be from Trump? I mean, part of me is trying to understand why he appears to be trying to pull out of this, or at least say that we have a deal. I assume that it's related to inflation and the fact that his approval
ratings are just tanking right now. But do you think that this is enough for him to go out there
“and claim victory? Do you think that that will be the strategy going forward?”
It already is his strategy. I saw his statement today with in a press conference with President Macron in which he's declared victory, and his benchmark is public benchmark for success, as to say that this was better than Obama's 2015 nuclear deal. And if you compare the two
Objectively, you know, in the 2015 deal, there was no war that was long.
is caused to American taxpayers perhaps more than $100 billion. Second, in Obama's nuclear deal
“in 2015, the United States handed over about $1.7 billion in economic relief to Iran,”
which is why President Trump called that the worst still in history. But what is being talked about now is to provide Iran perhaps tens of billions of dollars in economic relief. And then finally, the actual terms of the agreement between President Trump's potential deal and Obama's deal in 2015 are not that dramatically different. So in essence, it's, you know, will President Trump's potential deal vindicate the cost of this war? And in my view, the answer to that is almost
unequivocally no. The other concurrent approach he may take is to essentially transition a
accountability for this deal to, to Vice President Vance. I saw it was Vice President Vance this morning who was trying to sell the deal. And you know, last thing I'll say before we part that is that
“what's interesting, if you look at the 47-year US Iran conflict, Iran has played a major role in”
essentially sabotaging American presidency since 1979. They ended Jimmy Carter's presidency with the hostage crisis. They tainted Ronald Reagan's presidency with the Iran contra. And then, you know, after that, you can count one by one, George Bush's efforts to bring democracy to Iraq
were sabotaged by Iran. The Iran nuclear deal consumed a latter part of Obama's presidency
October 7th, the Hamas attack, Hamas being in Iranian proxy, consumed Biden's presidency. So so this is another example of Iran consuming an American presidency and perhaps sabotaging the presidential campaign of J.D. Vance. Blame it on Vance. Let's go. That's the new strategy. Karim Sajipur is seeing a fellow at the Carnegie Endowment for International Peace.
“Karim, we really appreciate your time. Thank you. Thank you at my pleasure.”
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With it doesn't different apps that don't talk to each other. Introducing Odo,
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that makes your work easier. CRM, accounting, inventory, e-commerce, and more. And the best part, Odo replaces multiple expensive platforms for a fraction of the cost. That's my over thousands of businesses have made the switch. So why not you? Try Odo for free at Odo.com. That's OdoO.com. We're back with Proftory Markets. The feud between Anthropic and the White House
has escalated yet again. Last week Anthropic released its powerful Mythos 5 model to a small group
of cyber defenders. It also rolled out Fable 5, a more secure version of Mythos to the general public. But on Friday, the Department of Commerce imposed export controls on both of those models, restricting access for foreign nationals. Because the ban also applies to foreign nationals inside the U.S. Anthropic decided to pull the models offline all together. Anthropic disagreed publicly with the administration's decision, wanting that restrictions like this could freeze AI
development across the industry. Here to discuss the latest in this saga between Anthropic and the White House, we're speaking with Reed Albagotti, tech editor at San Francisco. He's the one
who broke news on this story. Reed, thank you for joining us on Proftory Markets. There's a lot of
drama going on here between Anthropic and why there were these export controls and what was the actual reasoning and what was going on in the White House in the administration. Could you just give us sort of the simplified version of what actually happened here, the sequence of events leading
“to Anthropic pulling these models offline? The simplified version, I think, is that Anthropic did a”
great job of marketing this model, that mythos model back in April when they announced it and they said this thing is a danger to the world because it is so good at finding software vulnerabilities and bugs that hackers will be able to use this thing. I mean, I was in DC in April right after
they announced it. I mean, people were genuinely scared. And I think when the White House started
to get reports from companies like Amazon, which is a big investor in Anthropic, an important partner saying people who have been able to jailbreak feeble five, I think it actually scared them and then I think Anthropic saying, you know, we're not, we don't think these jailbreaks are that serious, not responding with enough urgency, you know, just led to, I think this kind of cascading series of events that led to the export control and it didn't help that they have just had
one conflict after another with the White House for the past year, which I've been covering. I've been reading about this a lot. It's really interesting that as you mentioned, Amazon goes to the White House and says there's a problem over at Anthropic. They say that this model has a security issue. It can be jailbroken into as the term that is used, which looks a lot like Amazon is, I don't know, trying to screw over on Anthropic in some way.
Saying, hey, you guys, you can need to go figure this out. But as you point out, they're also a major investor and Anthropic. So maybe it's coming from a genuine place. What do you think? Is that was that a sabotage move or something else? No, I don't think this is a sabotage move, but there were lots of companies. It wasn't just Amazon. And actually, I think from what I hear, it was kind of outgoing, like the White House,
they were going out to people. Obviously, Amazon is an important vendor for the U.S. government. So whatever, whatever has happening on AWS is going to be important for the government.
“So this, I think this is again. If you remember, Amazon was a little bit like in the middle of”
the Pentagon and Thropic Clashes, well, they just find themselves in the middle of this thing. And it's what's so strange about this whole situation. It just creates a very convoluted network of friends and foes and frenemies. I mean, it's fascinating and confusing. On the one hand, I kind of understand the White House's argument, which is Anthropic is saying, how dangerous their model is. People tell the White House, hey, there might be a secure
an issue in the security here. The White House then says you need to go fix it to which Anthropic says it's not a big deal. And then the White House goes, well, three months ago, you told us this all was a big deal. And that we should be figuring this out. And now you're saying,
It's fine.
administration, the White House's motives. When I saw a tweet that was posted by Pete Heggseth,
Secretary of War, he said, quote, three months ago, the Department of War kicked Anthropic out of our building forever. Every passing day proves why that was the right move. So I read that. Now I'm thinking maybe they're targeting Anthropic because they've decided we don't like them,
“we're going to go off to them. Do you have a view on who might be in the right all the wrong?”
I wouldn't read too much into the Heggseth tweet. I mean, look, it doesn't help for sure. It doesn't help that Anthropic has been on the other side of the White House when it comes to state preemption of AI regulation laws. You know, the certainly the Pentagon fight. I think there's a lot of like distrust that is built up between these two groups of people and that needs to be fixed, especially if you're Anthropic and you're trying to go public soon. I mean, they need the government for lots of
different reasons. So, but I don't think this is like, oh, we're going to get back and Anthropic. I mean, this can't be a policy, right, because what it says is like any AI company that builds something, there's now like a benchmark if it's more powerful than mythos than, you know, we need to shut this
down if there are jail breaks, et cetera. They're always going to be jail breaks. Like that is just
the nature of these things. So you're basically shutting down progress on advanced frontier AI models, which cannot be the policy of this White House. So, no, I mean, I don't think they're sitting there going, like, let's wait for an opportunity to like, snipe Anthropic. This is, you know, this is clearly like a one-off situation and it has to get worked out, too. What do you make of the fact that Anthropic said, we don't think that there is a security risk here,
because on the one hand, you might say, well, figure it out and explain to us exactly why. But on the other hand, you might say, Anthropic knows best. They know their technology. They probably understand cybersecurity better than the White House does. It would be my guess when it comes to AI and their
“models specifically. I mean, why didn't that cut it for this administration?”
I think Anthropic is actually correct. Like, I don't think that it doesn't sound based on everything that I've heard and read. It doesn't sound like these jail breaks. We're going to be some massive security threat on their own. I think, though, this thing has been sort of overblown from the beginning. I don't think, you know, that these new models are going to come out and the world is going to have to adjust to them. Like, we're going to have to figure out how to
deal with cybersecurity in the age of AI writ large. But I don't think one new model coming out shifts the threat landscape so dramatically that we need to take these rash steps. But if you go back to what Anthropic said, I also can understand why people who are not in technology who are not cybersecurity experts would go wait a minute. Like, I'm thinking of the worst case scenario here where all of a sudden cyber threats just just bring our economy to its knees and I get it. I get the fear.
Before you go, does this dispute affect either one Anthropic's business or two its IPO
“timeline, which is, of course, what is on every investist mind right now?”
Yeah, I mean, for sure if it stands, it will affect their business because now they can't sell
their, their most powerful model. Of course, I don't know what percentage, you know, mythos in
Fable 5, we're going to sort of make up there for their revenue. It might be very small. I mean, Anthropics also, you know, struggling with a lack of tokens, token availability of compute power. So, these things use up a ton of that. So, I don't know if this immediately affects their bottom line in any way. I'm sure it does a little bit, but if it's a long-standing thing, it would be catastrophic. So, I think they have to get through this, especially if they want to IPO this year.
All right, read all the glossy tech editor apps. I'm a full read. Thank you for joining us. We appreciate it. Great to be here. Thanks. So, you're on and the US supposedly have a deal. If you're a regular listener, you know that I am incredibly skeptical of Trump's deals, especially when it comes to Iran. This was, in fact, the basis of my prediction on our previous episode, before this news came out,
my base case was that we would remain at war for many more months and that as a result, inflation would remain high for the foreseeable future. Well, my reaction to this deal is
Cautious optimism.
this one does have a bit more credibility. Why? Because the counterparty in this case, Iran says,
“"Yes, we have a deal." Several Iranian officials have said publicly that they're ready to sign it,”
and Iran's deputy foreign minister said it will be signed on Friday. And that level of approval from Iran is new. At the same time, though, there are still plenty of reasons to be pessimistic. For example, Israel just bombed Lebanon again. And despite being a huge part of this war, they still have no part in this agreement. In addition, there appears to be disagreement
“between Iran and the US over whether the US will pay for reconstruction. That is a huge problem as”
well. And finally, there's still just a lot that we don't know about this deal. We don't really
know what it means for the nuclear program or what it means for the straight or what it means for Iran's leadership in some, not much has actually changed. So my economic take away from this news is this. I'm less concerned about inflation than I was before the weekend, but not by much. There are still huge questions surrounding the straight of our moves and the war itself. So to say this thing is done or complete or over would be a categorical misnomer.
Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Chalon. Isabella Kinsel, Chris Nodon, Hugh, and Mia Solverio and our social producer is Jake McPherson. Thank you for listening to Prof. E. Markets from Prof. E. Media. If you liked what you heard, give us a follow. I'm Ed Alison. I will see you tomorrow.
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