Academy’s Geopolitical Intelligence Group (“GIG”) weighed in on the American Strike over the weekend. The overall assessment was that this was a good move:

• It helped reestablish deterrence and sent a strong message to all adversaries.
• The assessment was that Iran had limited capacity/capability to strike back.
• Iran would be under pressure internally and externally to not mess with the Strait of Hormuz.

We recommended buying the dip in stocks and bonds, in large part due to the GIG’s assessment.

Academy had the privilege yesterday to be on Bloomberg TV, Bloomberg Radio, and the Wolf of All Streets (a more crypto-centric podcast).

We discussed and reiterated our view that the strike was likely a good decision and would lead to good things!

Academy’s section starts at the 56-minute mark in this Bloomberg TV Clip. Much of what we discussed has come to pass – and we sent out an optimistic SITREP shortly after Iran Attacked U.S. Bases.

At this stage, Peace Through Strength seems to be working out according to plan. Things can obviously change, but not only has a lot of progress been made in the region, but also all of our adversaries have to consider us in a different light after that bold (and successful) strike.

There has been some discussion about how much damage was inflicted and what Iran may or may not have moved away from the areas. It is still too early to tell, as it will take time to collect the full intelligence, but we have argued, and continue to argue:

• The damage was likely extensive. Sensitive equipment, even if not fully destroyed, may be inoperable for a long time.
• The damage was secondary to the message delivered. To a great extent, it doesn’t matter what was hit or not. Those facilities are likely to be inoperable and inaccessible. Anyone considering entering the facilities, for repair, further work, or extraction, has to realize that they will likely be attacked (for those attacks, the Israeli Air Force is more than capable). If things have been moved, it is likely that they will be found (intelligence has been very good) so they will ultimately get attacked.

This combination of so many factors, which the GIG has the experience, understanding, and insights to lay out, has been working well.

There is talk of Regime Change, and we discuss that in the clip above. Whether that can occur or not remains to be seen, and our current thoughts are:

• It has to be an organic groundswell from the people of Iran.
• It should not be something orchestrated (certainly not via the military) by Israel or the U.S.
• With the IRGC command structure hurt badly, and the Ayatollah in hiding, the opportunity may be there.

 There is reason to be optimistic that this strike has set the region on a better path.

The “Other” Moving Parts

As discussed in Sunday’s T-Report, there are A LOT of Moving Parts.

We will be watching for progress on the Big Beautiful Bill now.

More Tariff extensions seem to be the most likely and obvious path. One thing that we are hearing more about are various “tariff mitigation” strategies. We have already discussed the potential to change the component values to import the same goods into the U.S. at lower tariff rates by shifting the various input values to countries with lower tariffs (primarily not China at current levels). We are seeing a surge in USMCA Compliant approvals – a process that was largely ignored, until it had the ability to sidestep tariffs.

On the Fed, we have now had two members, Waller and Bowman, trying to put July on the table.

Neither the market nor the Fed are with our more aggressive view on the timing and the number of rate cuts (or even bond yields in general – we are more bullish than the consensus), but things are moving in that direction and Peace Through Strength should further help our view.

Things could still go wrong in the Middle East. The tenuous ceasefire could fail. Iran could dig in its heels on nuclear enrichment, etc., but for now, we can be optimistic. It is not unreasonable for this success to translate into renewed efforts with Russia/Ukraine, which would also be a positive (especially for global bond yields).

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