By Peter Tchir of Academy Securities

Getting Ready for the Most Beautiful HUGE Long Weekend Ever

I hope you are all enjoying the Juneteenth long weekend and Father’s Day. It seems like we just had a long weekend (because we did) and that another long weekend is almost upon us (because it is). While the 4th of July is always special, this being the 250th celebration of Independence is a big deal. I think the President will do everything in his power to make it a big deal. More on that in a moment.

The Deal, or Extended Ceasefire, or MOU

Academy’s Geopolitical Intelligence Group weighed in on the Iran deal on Thursday in the Signing of the MOU. That followed up on the Academy Podcast (which can also be found on iTunes and Spotify), recorded before details of the MOU were known, but covered much of what happened. A good listen if you are driving anywhere today! I’m sure the kids in the back seat would appreciate it.         

Over the weekend, the fragility of the deal is there for everyone to see! If this seems even more like a band-aid solution to get oil flowing while deciding how serious Iran is to committing to terms we want, while we determine if we are willing to re-escalate, then that is probably what it is! Academy will be keeping a close eye on developments. 

The Fed and Rates 

As discussed in our post-FOMC report The Warsh Task Forces, I think he did an excellent job at his first meeting. Rather than coming across as dovish and risking losing control of the long end of the yield curve, he not only hammered home on inflation (squarely placing the blame on prior decisions by the Fed, amongst other things), but he also created task forces, that by and large made sense. If I could get picked to go on any task force, I would beg and plead to be allowed to be part of the Data Sources task force. As anyone who has read the T-Report for a long time (it has to be approaching 15 years) knows, we consistently argue about Garbage In, Garbage Out. That we make so many important decisions on data that seems jumbled together at best, and outright wrong at worst. My favorite targets are: 

• The entire collection process for the NFP data. Surveys? Really? Can’t we offer some reduction on payroll tax in return for providing timely payroll information? It wouldn’t be perfect, but would create a lot less noise around a large percentage of the work force. 
  • The Household Survey is deemed so wildly inaccurate that they don’t even highlight the job changes in that survey, but they use it for calculating the Unemployment Rate?
  • The birth/death model. We have argued again and again that this is a source of so many revisions because it does not capture what EIN (Employment Identification Number) requests mean in a “gig” or “side hustle” economy! 
• CPI, starting with Owners’ Equivalent Rent. It has built in lags that only sample a fraction each month. It is still based on single family homes, rather than apartments. It is an estimate of what a homeowner could get if they rented. With so many indices out there showing real-time rent (including one the Cleveland Fed developed) it is time to ditch this. Though, since it is in CPI, it requires an act of Congress to change, since it impacts Social Security. Seems like a no-brainer to me, but wouldn’t bet on this no-brainer being fixed any time soon.
  • According to the CPI data Urban Medical Health Insurance costs the same today as it did back in 2019. I couldn’t say that with a straight face, yet it is part of CPI. If you wonder why many argue that the inflation numbers don’t match the real world, this would be pretty high on my list. My gut feel is that for most people (and corporations) health insurance premiums have gone up at least 25% (according to Grok) and that still seems low.
  • While Truflation has its own set of potential flaws, it does offer some useful insights and seems like just one of many alternative sources the government should look at.

At the risk of burying the lede, as we published on Wednesday after the meeting, we are moving to neutral on rates, rather than being bearish. Warsh removed some near-term tail risk to the long end.

Reducing the tail risk is significant and the MOVE index (a measure of implied volatility in the bond market) dropped to pre-Iran levels (the MOU helped as well, but the steep drop Thursday can likely be more attributed to Warsh than Iran).

Space and AI

If you missed last weekend’s report on the AI Revolution and Space – The NOW Frontier, it is a great time to catch up.

The topic generated a lot of discussion, with a good mix of people hating on the AI Revolution assessment – almost equal numbers of those who argued I was too pessimistic mixed with those arguing I was too optimistic

The 250th 4th of July Celebration

Why did we use “beautiful” and “HUGE” in the title? Because those are words the President likes to use when pumping something up. Whether we are talking about the ball room, or the reflecting pool, the President has been doing and saying things to spruce up D.C. We can argue (or choose not to argue) about hosting a “sporting” event on the White House Lawn. But this President is a showman, who likes a spectacle and the 250th anniversary is real, important, and is highly likely something that the President wants to go down in history for.

The reality is that the President by almost every poll is near or at the bottom of his approval ratings. I tried to use some of the Nate Silver polling info, but it was not conducive to cut and paste so I went with the Real Clear Politics one (not because I know much about it, but it was readily available on Bloomberg).

What do we know, with a high degree of certainty, about President Trump?

• He likes winning! We all like winning, but he revels in it! He still wins club championship after club championship with a swing no one would try to mimic. He loves winning! The bigger and more beautiful the win, the better!
  • Current polls don’t show him as “winning.”
• His attention and focus have been on Iran, but he can now shift his attention elsewhere.
  • Trump 2.0 delegates better than Trump 1.0, but nothing gets done as quickly as when he shifts his attention and focus to it. With the Iran war more or less behind us (or behind him, for now), look for him to focus on the Domestic Economy and things he can do to get his numbers higher!
  • I am going to mention Intel. From ProSec 2026 we published an entire paragraph on INTC (which is unusual for the T-Report, but was important enough that we did it). Here is the line that I want to highlight on why we were so bullish on this stock:
    • I find it difficult to see a world where the government doesn’t try to support the taxpayers’ investment in this company.
  • My thesis went well beyond that, but that is the part that we wanted to highlight! I strongly believed that the admin would support the taxpayers’ investment. On Thursday, the President put out a Truth Social post linking Apple to using Intel more. I am not sure either company confirmed it, but with only 2 weeks to go before the 250th anniversary, maybe this sort of “pump” by the President is going to be the norm?
  • We mention other companies and industries in that report (far more tickers than usual). I think we should revisit all of those tickers and a renewed focus and emphasis from D.C. on ProSec.

ProSec is going global. Europe is nearing a “Whatever it Takes” moment. Initially they started that march to the precipice kicking and screaming, while being pushed by the President and geopolitical risk. Europe is still by and large being pushed in this direction, with less kicking and screaming. There is increasing evidence that there are finally elements of leadership pulling them in that direction! (This applies to Canada too).

Bottom Line

The outlook for rates is more benign than at any time in the past few months. I’m not yet bullish, but certainly not bearish here. Look for the President to make announcements and pronouncements (I think there is a subtle difference) in the coming days as he almost certainly wants stocks to be at an all-time high and his ratings to be higher, as we celebrate America’s 250th anniversary of winning Independence!

Hope you are enjoying this long weekend and Father’s Day and now the U.S. just needs to figure out a way to wedge in a long weekend in August! We could get used to monthly long weekends.

And once again, thanks for all of your support and thoughtful feedback as the world is evolving rapidly and Academy, with its Geopolitical Intelligence Group, is positioned to help navigate that evolution sectors and focus again on what areas will do well with