Weekly Macro Note: Where do we go from (MOU) here?, A Deeper Look at SpaceX

In this Weekly Macro Note - we discuss the MOU and wide gaps between both sides - take a deeper look at SpaceX, discuss energy prices and why the risk is still tilted to the upside, and more.

Don Johnson (@DonMiami3), Chief Economist

Good Sunday evening MacroEdge Readers & Community,

This will be somewhat of a brief note, given that we have yet to see concrete and final details of the MOU between the US and Iran. Of note, this deal/MOU does not include Israel, who was a very important player in the conflict. While I hope this conflict is finally in the rear-view mirror - on Tuesday - we’ll dive into the details further as they come available. With oil inventories plummeting, and countries like Singapore just weeks away from running out of oil (US ~45 days of supply), it was clear in my mind that the President was going to walk away from this timebomb given his track record. In addition to the oil and bond market action, he is also responding to the looming massive IPOs that are dead ahead in Q3 and Q4, where I expect that timelines get accelerated on some of them due to the rates of cash burn that we’re seeing.

Markets are enjoying the announcement that the conflict is officially halted between the US and Iran, which will contribute to a gradual reopening of the Strait of Hormuz, and the lifting of the US blockade on Iran. It appears that based on the terms, between $12 and $24 billion will be transferred - which is currently *frozen* or in the process of being released, and there are other material details that we’ll cover on Tuesday. Technology equities are leading the move higher this evening, especially with WTI retreating to the $80 level. It appears that this marks somewhat of a *last stand* point for WTI prices as warned in my technical coverage a few weeks ago - and a bounce could happen now for any number of reasons - but specifically for the fact that the market may actually pay attention to inventory levels and data rather than Axios and AlArabiya headlines that were deployed to control oil and natural gas prices over the past 3 months with decent success. Bitcoin is leading the risk on rally, and I flagged this at the end of last week after a member of our internal team chat noted that Bitcoin had not made a new low - and I hope that we can now transition our attention back to the things that matter - like the actual hard data in the energy sector, and the AI bubble - which poses a large risk to valuation and tech equities where it currently stands. This war period has been an exhausting one, and one that has demanded tremendous attention from myself and others - and while we’ve performed fantastically through it for the most part - with our portfolio strategies and commentary, to have to worry about headlines every 5 seconds is not sustainable, nor, after some point, as we saw, does it become useful for anyone.

With the Nasdaq and other indices set to open fairly close to ATH levels Monday, we get to now see how oil and gas prices hold up, and how the associated equities hold up as well. With the dated curve still well-elevated versus pre-war levels, the market has to assess how this data is actually going to matter - given that we saw little to no demand destruction from the elevated prices during the conflict. A failure to see a new high on the Nasdaq - and other major bubble indices like the KOSPI (below) would be a red flag:

… to all-time high, or to stall? The latter would be a significant red flag:

Trump just so happens to end the war for FOMC week… and a potential hike in Japan? Watch that yen…

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Report Schedule for the Week

Tuesday: War Note & MOU Update

Thursday: Midweek Macro Note

Friday: Federal holiday

Sunday: Weekly Macro Note

Macro Week Ahead - Rate Decisions

Monday: NY Fed Empire State Index, Industrial Capacity

Tuesday: BoJ Rate Decision (final hike of the cycle?)***, permits and housing starts

Wednesday: FOMC and Rate Decision under Warsh, Advance Retail Sales

Thursday: Japan National Core CPI

Friday: Federal holiday - USA

***of note: if this is the final BoJ hike, keep an eye on that cutting date, since that usually signals global trouble

The Gasoline, Oil, and Natural Gas Situation

… another day as an oil and gas investor (and owner) in 2026

Materially, it will take quite some time for flows in Hormuz to get ‘normalized’ from their absolute lows. If the market has really been forward-looking, then some of this is priced in, and given the curve, it appears that downside will be limited, barring any summer demand destruction, which looks increasingly unlikely. SPR releases will continue for a time, and Cushing is near operating minimums, and we have to see what happens in China (as well as SE Asia)... If I was a betting man, which I am, the move is probably way over done in the short term, and there ends up being some kind of whiplash either due to the MOU falling through, the data catching up, shortages, or a combination of many of those elements in one.

Continued below: The Gasoline, Oil, and Natural Gas Situation … Why I learned to love the SpaceX IPO - John Galt