Sell in May and Go Away

The week ended on June 19, 2026, interesting news items to look at for the past fortnight are:

Sell in May and Go Away: There is an age-old Wall Street adage that says, “Sell in May and Go Away” meaning that summer will follow and investors should close their books, have a bit of R&R then come back in November when action starts again. This adage certainly does not apply in 2026. (Fig. 1)

The fragile US/Iran Ceasefire MOU was finally electronically signed on Friday but not without Israeli sabotage of the deal through bombing in Lebanon. (Fig. 2).

 Washington was reluctant to officially disclose the details of the MOU but a senior U.S. Official read out loud on a conference call with reporters of what was purported to be the full text of the MOU. The official spoke on condition of anonymity under ground rules set by the White House. Details can be found in the link below: https://arabcenterdc.org/resource/memorandum-of-understanding-between-the-united-states-of-america-and-the-islamic-republic-of-iran/  .

In summary, the MOU contains:

(a) Military & Security - Full permanent ceasefire – Iran, the US, and allies halt all military operations on all fronts (including Lebanon).Respect for sovereignty – Both sides pledge non-interference in each other's internal affairs. Lifting blockade & troop withdrawal – US to lift naval blockade within 30 days; troops to withdraw from the region within 30 days after the final agreement is signed.

(b) Economy & Sanctions -  $300 billion reconstruction fund – Led by the US and allies (but the US will not contribute funds). Sanctions removal – Commitment to eventually terminate all sanctions; oil export waivers to be issued immediately after signing. Unfreezing assets – US to release roughly $24 billion in frozen Iranian assets after Iran fulfills its commitments.

(c) Nuclear & Implementation - Iran commits to “never build nuclear weapons" – Agrees to dilute existing high-enriched uranium, but key details are deferred to the 60-day talks. Status quo maintained – During negotiations, both sides keep the nuclear status quo; the US will not add new sanctions or troops. UN endorsement – Final agreement to be approved by a UN Security Council resolution.

On the surface, Iran had prevailed with its 14 points demand, the U.S. TACO and Israel put on its backfoot. The risks is whether the MOU would be implemented in full. The sudden and abrupt retreat by Trump begs the question of why. We have in the April 12 blog titled “Stone Age and Cease Fire” opined that a logical conclusion to the hostility should come in June and subsequently offered 4 areas of depletion that will lead to a US TACO. Another important milestone is that China restriction on exports of rare earths and critical minerals has begun to bite hard on the MIA in both the US and Japan. In the case of tungsten, which China controls over 80% of global supplies, not only are exports for military use restricted, but Chinese buyers have also moved to buy up scraps in US recycle yards to complete a chokehold against US weapons and munition manufacturing. (Fig. 3).

Without the ability to replenish its depleted armory, US may find it hard even to defend her own shores, much less to be a global bully with impugnity. One telltale sign of a more permanent peace in the ME is when the US aircraft carriers are pulled out; it would be difficult to send them back into the fray.  

(ii) Japan Re-militarization - China has moved against Japan in her military use of rare earths and critical minerals of Chinese origin. (Fig. 4)

Shin-Etsu Chemical has stopped accepting new orders for dysprosium-containing magnets, affecting high-end applications such as radar systems and electric vehicles. Kanto Denka & Central Glass: Have notified clients like Samsung of an indefinite suspension of production of tungsten hexafluoride (a critical chip material) starting July. Toyota & Panasonic: Rely on China for nearly 100% of the dysprosium (Dy) and terbium (Tb) used in their motors. If the supply cutoff persists, production lines could halt within weeks. A top executive at a major Japanese manufacturer has publicly warned that "factories may be forced to shut down." At the G7 meeting in France on June 16, Prime Minister Sanae Takaichi warned that China’s measures against Japan risked disrupting partner nations’ supply chains and called on G7 members and multilateral development banks to build more resilient mineral supply chains. G7 leaders agreed to coordinate stockpiling of critical minerals and reduce dependence on any single dominant supplier outside the G7. They also agreed to launch a new coordination platform with an expanded role for the International Energy Agency (IEA) to monitor markets and flag supply risks. Yes, all well and good for photo ops, but Takaichi truly left reeling.

(iii) Space X - Space X IPO was initially oversubscribed by only 2 times, but late institutional demand, on news of an end to the Iranian war, pushed demand to 3.5 times. There were every sign of Wall Street skimming the top at a very late hour of the tech bull run. Retail investors were allocated 30% (instead of the usual 5%-10%). The stock was fast-tracked into CRSP Index, MSCI-Global Standard, Basdaq-100, FTSE-Russell and S&P 500 without a waiting period, thereby ensuring that retail retirement funds heavily invest in passive investment vehicles like Index Funds and ETF were duly stuffed.  With the usual trick of over-allotment and early trading stabilization purchases, I am sure SPCX share price won’t disappoint for the first two weeks; thereafter, who knows.

(iv) Fed Chair Warsh first FOMC Meeting - Key Takeaways from the June 17, 2026 Meeting: (a) Rate Decision: The Fed maintained the status quo by holding rates steady. (b) No Dot Plot Projection: In a break from tradition, Warsh refrained from offering his own personal dot plot projections for interest-rate trajectories. (c) Hawkish Shift: Despite the pause, updated projections from other committee members indicated an increased belief that rate hikes could be on the horizon for 2026 to combat inflation, and (d) Market Reaction: The hawkish tone and emphasis on price stability caused a spike in Treasury yields, with the 2-year note experiencing its biggest jump on a Fed meeting day since March 2008.

Despite the rhetoric, after Warsh appointment, the Fed continued to expand its balance sheet and money supply. (Fig. 5).

My prognosis is US has a more pressing need to stabilize the dollar first; the bond market becomes secondary. US probably hopes that when oil prices come down as the ME ceasefire sets in, a lowering of interest rates may be opportune.

We have persistently presented our thesis that US Treasuries issuance has already passed a market saturation point and that a precipitation is a certainty. (Fig. 6).

Immediately after the FOMC meeting, gold and silver were heavily hammered in the derivatives market (Fig. 7).

This is despite foreign Central Banks contiued their buying spree to diversify away from dollar risks. (Fig. 8).

The Bullion Banks are in a panic as a fresh call by Trump to once again audit US Gold Reserves at Fort Knox. (Fig. 9).

It is understood that for every physical ounce of gold held by banks, there were customer claims of 147 ounces, and for every ounce of silver, 392 ounces of customer claims. (Fig. 10).

No doubt, there would not be many more opportunities for Bullion Banks to square off their naked short positions when some Gulf Council State Members are forced to liquidate their bullion holdings to pay for state admin expenses when their revenue are halted.

Philippians 4:4  Rejoice in the Lord always. Again I will say, rejoice! 5  Let your gentleness be known to all men. The Lord is at hand. 6  Be anxious for nothing, but in everything by prayer and supplication, with thanksgiving, let your requests be made known to God; 7  and the peace of God, which surpasses all understanding, will guard your hearts and minds through Christ Jesus. 8  Finally, brethren, whatever things are true, whatever things are noble, whatever things are just, whatever things are pure, whatever things are lovely, whatever things are of good report, if there is any virtue and if there is anything praiseworthy—meditate on these things9  The things which you learned and received and heard and saw in me, these do, and the God of peace will be with you. 

Patience or Inertia

The week ended on June 5, 2026, interesting news items to look at for the past fortnight are:

Patience or Inertia: For the past two weeks, the main political and conflict theaters have seemed to be in a state of suspended animation, with “skirmishes” but stabilized front lines.  My humble assessment is that there now appears a clear delineation between Patience on the Global South and Inertia on the Western Hegemon. (Fig. 1).  

One telltale sign was that immediately after Taiwan KMT leader Cheng Li-wun returned from her visit to Beijing, an inner circle of the Trump administration secretly flew to Taiwan to try to extract details of the conversation between Li and Xi. This was leaked yesterday by Dr Julian Kuo, a respected political commentator who served for 3 terms in the Taiwan Legislative Yuan. Another indicator is the constant illusion by Trump of a deal when all that existed was a monologue to the Pakistani intermediary, without the principals talking to one another. (Fig. 2)  

Now “Patience” is the deliberate, conscious choice to endure waiting while remaining engaged, whereas “Inertia” is a passive, unconscious resistance to change. While both states can involve a pause in forward motion, patience is anchored in purpose and emotional control, whereas inertia is defined by stagnation and the path of least resistance. The “Core Difference” between the leaders’ psyche would almost certainly determine the eventual outcome. (Fig. 3).

Let’s gather a few data points below to see why ?

(i) Depletion of Munitions - A recent report by the Centre for Strategic and International Studies and echoed across the New York Times and the Wall Street Journal, is US faces significant depletion of high-end precision munitions, and it will take one to six years to replenish. (Fig. 4).

Additionally, over 1,000 Tomahawk Cruise Missiles (25% of the total US inventory) have been expended in 39 days against Iran with a Pentagon procurement program of just 57 in the 2025 defense budget.  What is missing from the narrative is the replenishment of these munitions; this is predicated on obtaining critical minerals and rare earth from China, which is a hurdle the US cannot overcome within the next 10 years.

(ii) Depletion of Domestic Political Support -  On Wednesday, the US House of Representatives moved to limit PONTUS powers to war in Iran (Fig. 5).

Trump’s approval rating also fell from an initial 52% TO A LOW 38%. On similar grounds, the Israeli Knesset also passed a bill to dissolve the parliament for an early election. (Fig. 6).

 (iii) Depletion of Ally Support - The worsening economic conditions from the Ukraine and Iranian wars have alienated US ally support from Europe, Asia, and the Middle East. It was said that Bessent was furious as Japan aggressively sold Treasuries to defend the exchange value of a weak Yen. (Fig. 7).

(iv) Depletion of Funds - ECB reported this week that gold accounted for 27% of global central bank reserve assets at the end of 2025. That was up from 20% a year earlier. By contrast, the share of US Treasuries fell to 22% from 25% over the same period. (Fig. 8).

For students who followed global de-dollarization closely, the news is 9 months behind the first report of this phenomenon, which initially appeared on August 27 2025. (Fig. 9).  

Nonetheless, it is still significant for the establishment to formally acknowledge that the established order has lost its grip.

 

Luke 14:31  Or what king, going to make war against another king, does not sit down first and consider whether he is able with ten thousand to meet him who comes against him with twenty thousand? 32  Or else, while the other is still a great way off, he sends a delegation and asks conditions of peace. 33  So likewise, whoever of you does not forsake all that he has cannot be My disciple. 

Truce

The week ended on May22, 2026, interesting news items to look at for the past fortnight are:

Truce: For the past fortnight, our focus has been on the Trump-Xi meeting, the Putin Xi meeting, and the impending confirmation of a new Fed chair, Kevin Warsh.

(i) Trump-Xi Meeting - There was no formal joint communique issued after the meeting, but the event set the tone for Constructive Strategic Stability for the next 3 years while the two countries remained fierce competitors. Except for a hot kinetic war between US and China, the two nations will likely invoke every trick in the book and off the books to prevail. If readers recall that I interpreted the subtleties of flower arrangements across the conference table in the past, and below are my latest interpretations. (Fig. 1)

The flowers at the center is Pink Azaleas. Pink symbolizes gentleness, affection, and friendship. It softens the formal atmosphere and brings people closer. In traditional Chinese culture, the azalea represents "prosperity and good luck." In a business context, it is seen as an omen of "great fortune, smooth business, and thriving success."  Azaleas also carry meanings of "joy in love," "resilience and optimism," as well as seamless integration and the joint creation of a bright future. China has been trying continuously to convey to US that the Pacific Ocean is big enough to accommodate US and China, and that there is much to gain through co-operation rather than rivalry. Now contrast this with the Crotons displayed in the May 2024 meeting between Blinken and Xi. (Fig. 2).

Subsequent to the meeting, Trump did take action to de-escalate two contentious issues with China:

(a) A warning to Taiwan against declaring independence (Fig. 3)

and (b) Trump reportedly urged Japan’s PM to avoid further escalations in dispute with China (Fig. 4)

(ii) Putin-Xi Meeting - Whilst the Trump-Xi meeting was spontaneous, the Putin-Xi meeting was the formalization of a deepening relationship. The mere fact of two military superpowers visited Xi in tight sequence meant that China has played a pivotal role in international conflict resolution. (Fig. 5).

The joint declarations issued by Xi Jinping and Vladimir Putin in 2025–2026 can be summarized as a strategic blueprint for a closer China–Russia partnership aimed at reshaping the global order away from U.S. dominance toward what they call a “multipolar world.”

(a) Strategic Alignment Against U.S. Influence: The core theme was opposition to what both leaders described as U.S. “hegemonism”- unilateral sanctions, military alliances, missile defense expansion, and “interference” in sovereign states. The declarations repeatedly criticized U.S.-led security structures and economic coercion. They portrayed China and Russia as defenders of global stability and international law.  

(b)  “Multipolar World” Vision. A major objective was to promote a new international system in which power is distributed among several major civilizations/states, Western liberal dominance is reduced. Global South countries gain more influence. Both governments framed this as creating:“a more just and democratic international order.”  

(c) Expansion of China–Russia Cooperation - The declarations deepened cooperation across multiple sectors: Economic, energy trade, local-currency settlement, infrastructure, Arctic shipping routes, and banking/payment systems bypassing the U.S. Dollar, technology, artificial intelligence, semiconductors, space cooperation, cyber coordination, nuclear energy, Military/Security, strategic military coordination, joint exercises, missile defense concerns, intelligence/security cooperation. And about 20 cooperation documents were reportedly signed.

As regards floral arrangement, the centerpiece was Pink and White Phalaenopsis Orchids. (Fig, 6).

In Chinese culture, the pink and white Phalaenopsis orchids are an expression of affection, purity, nobility, and lasting friendship.

(iii) Kevin Warsh - In the past fortnight, Wall Street has been apprehensive of what a hawkish Kevin Warsh would do in his reign on the Fed Chair. Warsh has been vocal on US spending and borrowing way too much to greese the US economy. On account of Iranian control of the Strait of Hormuz and Warsh, interes rates has been creeping up since mid-April. ( Fig. 7).

As far as my arithmetic goes, Fed’s control of the Fed Funds rate lever can no longer dictate the Treasury yield curve and must choose the lesser of two evils. Protect the US dollar and let the bond market collapse under the weight of inflation, or let US dollar run its natural course: print and buy US Treasuries to bail out the Treasury market as a buyer of last resort.  Last October, I predicted that the Fed would start QE by December 2025 when Treasury issuance exhausted M1 money supply. This same logic tells us that, if Warsh begins to shrink the Fed’s balance sheet by $40 billion per month instead of increasing it by $40 billion a month, as Powell initiated last December, everything would collapse by September 2026. Tthe pressure of Treasuries being stuffed into the Primary Dealers would exhaust even M2 by Q4 2026.  (Fig. 8).

So let us be on guard that, after Warsh’s confirmation, he will print money like a drunken sailor and hyperinflation will be rampant by the final quarter of 2026. Watch and pray that you can escape all this.

Act 3:6  Then Peter said, "Silver and gold I do not have, but what I do have I give you: In the name of Jesus Christ of Nazareth, rise up and walk." 7  And he took him by the right hand and lifted him up, and immediately his feet and ankle bones received strength. 8  So he, leaping up, stood and walked and entered the temple with them—walking, leaping, and praising God. 9  And all the people saw him walking and praising God. 10  Then they knew that it was he who sat begging alms at the Beautiful Gate of the temple; and they were filled with wonder and amazement at what had happened to him.