107 Days Later: Peace, Panic, and a $60 Billion AI Bet

👋 ICYMI

After 107 days of war, the United States and Iran announced a peace deal.

"The Deal with the Islamic Republic of Iran is now complete. Congratulations to all!" Trump posted on Truth Social last Sunday. "I hereby fully authorise the toll-free opening of the Strait of Hormuz, and, simultaneously herewith, authorise the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!"

Pakistani Prime Minister Shehbaz Sharif, who mediated alongside Qatar, confirmed the agreement and announced a formal signing ceremony in Switzerland for Friday. On Wednesday, Trump and Iranian officials signed a memorandum of understanding establishing a 60-day ceasefire extension, the reopening of the Strait of Hormuz, and a halt to hostilities on all fronts — including Lebanon. Oil plunged — WTI fell below $80 for the first time since the first week of March, and Brent touched $83.

Markets surged Monday on the news. Then on Wednesday, Kevin Warsh delivered the most hawkish Fed debut since 1994. The Fed held rates at 3.50–3.75% as expected, but the dot plot revealed that nine of 18 officials now see at least one rate hike by year-end — a dramatic shift from March, when the median projection was a cut. Warsh abstained from submitting his own projection — consistent with his long-standing criticism of the dot plot — but repeatedly emphasised the Fed's commitment to "deliver price stability" in a press conference that lasted just 22 minutes. The post-meeting statement was just 130 words. Any mention of an easing bias was gone. The S&P 500 fell 1.21% — the worst "Fed day" under a new chair since 1994.

Thursday brought a strong recovery as investors digested the combination of peace and hawkishness. Intel $INTC ( ▲ 10.64% ) rallied after Trump announced Apple $AAPL ( ▲ 0.7% ) would design and build chips with Intel in the U.S. Markets were closed Friday for Juneteenth.

And SpaceX $SPCX ( ▼ 3.56% ) — now eight days into its life as a public company — acquired AI coding startup Cursor for $60 billion, sending its stock surging 20% and briefly surpassing Amazon $AMZN ( ▲ 2.9% ) in market value.

🔁 Market Movers

• 🕊 US-Iran Peace Deal: "Let the Oil Flow"

  The memorandum of understanding, mediated by Pakistan and Qatar, establishes a 60-day ceasefire, reopens the Strait of Hormuz, removes the U.S. naval blockade, and halts hostilities in Lebanon. Further negotiations will address Iran's nuclear programme, uranium enrichment levels, and the status of $24 billion in frozen Iranian assets. WTI crude fell below $80 — its lowest since the war began on February 28. VP Vance said: "I'm not going to say that everybody is going to sing kumbaya tomorrow… but I do think we took a major, major step tonight".

• 🏛 Warsh's Hawkish Debut: Nine Officials See a Rate Hike

  The Fed held rates steady but the dot plot shifted dramatically — from projecting a cut in March to nine of 18 officials now projecting a hike. Traders immediately priced in one quarter-point hike by year-end. Warsh announced five task forces covering communications, balance-sheet management, data usage, productivity and employment, and inflation targeting — signalling a structural overhaul of Fed operations. The 2-year yield jumped 16 basis points to 4.22% on the decision. "The wind has changed a lot in terms of the inflation picture," said Claudia Sahm, chief economist at New Century Advisors.

• 🚀 SpaceX Acquires Cursor for $60 Billion

  Elon Musk's SpaceX — just over a week into its public market life — acquired AI coding startup Cursor in a deal valued at roughly $60 billion, the largest acquisition by a newly public company in history. SpaceX shares surged 20% on the news, surpassing Amazon's market capitalization. The move signals Musk's intention to use SpaceX as a platform for AI acquisitions — not just a launch and satellite company. The AI and tech IPO pipeline is now estimated at $3.6 trillion, with OpenAI and Anthropic both eyeing public listings.

• 💻 Intel Rallies on Apple Partnership

  Intel shares jumped on Thursday after President Trump announced that Apple would design and build chips with Intel in the United States. The partnership deepens Intel's foundry ambitions and validates CEO Lip-Bu Tan's strategy of positioning the company as the domestic manufacturing backbone for AI. Intel is now up over 100% year to date.

• 📈 Eleventh Winning Week in 12

  The S&P 500's 0.9% gain extends its remarkable run — 11 of the last 12 weeks have been positive. The Dow hit its third consecutive record high intraday on Wednesday before the Fed selloff. Japan's Nikkei crossed 71,000 for the first time, and South Korea's Kospi hit fresh records as SK Hynix announced next-generation HBM technology with 20% improved power efficiency.

👀 Signals I'm Watching

• 🛢 Oil Below $80 Changes Everything

  WTI crude below $80 for the first time since March transforms the inflation outlook. Gas prices should begin falling materially over the coming weeks, easing pressure on consumers and potentially allowing headline inflation to decelerate. If oil stays below $85 through the summer, the OECD's 4.2% inflation forecast for 2026 — issued when oil was above $110 — will need to be revised sharply lower. This is the most bullish macro development since the war began.

• 📊 The Rate Hike Is Priced In — But May Not Happen

  Traders are now fully pricing one quarter-point hike by December. But Bank of America's pre-meeting survey showed analysts expect "no change in policy rates over the next 12 months". The peace deal changes the inflation calculus significantly — if oil stays below $85 and the Strait remains open, the energy-driven inflation surge that forced the hawkish shift could reverse by late summer. Warsh may have room to guide more dovishly at the July meeting if the data cooperates.

• 🇮🇱 Israel Is the Wild Card

  Israel was not directly involved in the peace negotiations, and PM Netanyahu has been at odds with Trump on multiple occasions. Israel struck Beirut on the day of the deal announcement. The MoU calls for halting hostilities in Lebanon — but Israel has said its campaign against Hezbollah will continue until its conditions are met. Reports of Israeli spying on American negotiators have elevated tensions further. If Israel violates the ceasefire framework, the entire peace architecture could unravel.

• 🤖 SpaceX as AI Platform — Not Just Rockets

  The Cursor acquisition signals that Musk views SpaceX as a vehicle for AI consolidation, not just space launch. With xAI already merged into SpaceX and now Cursor added, the company is becoming an AI conglomerate with a space division — not the other way around. Whether the market continues to reward this strategy depends on whether Musk can integrate these businesses without the xAI-driven losses that produced a $4.28 billion Q1 deficit.

⚠️ Red Flag to Note

Peace Is Priced In. Execution Is Not.

Markets have now rallied on the expectation of peace at least four times since March. This time, there's a signed MoU. But the 60-day window is just the beginning — negotiations on Iran's nuclear program, frozen assets, and Hezbollah's future in Lebanon are all unresolved. Israel is openly defying elements of the framework. And the MoU itself states that "pre-implementation discussions" must occur before any final agreement. With the S&P 500 up 11 of the last 12 weeks and tech now representing 39% of the index — the highest concentration on record — the market is priced for a smooth resolution. Any breakdown in the implementation phase could trigger a correction that's disproportionate to the setback, precisely because expectations are now so elevated.

🔍 Insider Transactions I’m Watching

📬 Closing Note

One hundred and seven days ago, the first U.S. and Israeli strikes hit Iran. Oil surged past $112. The Strait of Hormuz closed. Consumer sentiment collapsed to record lows. Gold crashed. The S&P 500 entered correction territory. And the question on every investor's mind was whether the world was heading for a global recession.

This week, the war ended — or at least, the fighting stopped. Trump and Iranian officials signed a memorandum of understanding. Oil fell below $80. The Strait is reopening. And the S&P 500 has rallied roughly 20% from its March lows, posting 11 winning weeks out of the last 12.

At the same time, the new Fed Chair made clear that rate hikes — not cuts — are on the table. Nine officials now see rates rising by year-end. The easing bias that guided markets for two years has been officially removed.

If you're looking for simplicity, 2026 isn't offering any. The war is over but the nuclear negotiations haven't started. Oil is down but inflation is still above 3%. The market is rallying but the Fed is turning hawkish. And the most valuable newly public company in history is buying AI startups at a pace that makes even the most aggressive acquirers look cautious.

But through all of it — through the missiles, the oil shocks, the rate fear, and the volatility — the underlying story hasn't changed. Corporate earnings are growing 25%. AI infrastructure demand is accelerating. And the American economy has proven far more resilient than almost anyone expected at the start of the year.

The next 60 days will determine whether this peace holds, whether inflation fades, and whether Warsh follows through on the hawkish shift. Those are big questions. But for the first time since February, investors can ask them without the sound of missiles in the background.

Stay patient. Stay selective. And let the data guide the story.

Until next Sunday —

—George ☕