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Authored by Kimberley Hayek via The Epoch Times,

The U.S. Centers for Disease Control and Prevention has activated its highest-level emergency response to the growing Ebola outbreak in central Africa caused by the rare Bundibugyo strain, as the agency says that the risk of spread within the United States remains low.

The move to Level 1 activation, signifying the most severe health crises, comes as the outbreak, which is now in its second month, has infected more than 1,200 people in Congo, with 321 deaths reported there, plus additional cases in neighboring Uganda, according to the World Health Organization. This marks the highest first-month total of any Ebola episode on record.

Dr. Satish Pillai, the CDC’s incident manager for the Ebola response, detailed the agency’s efforts during a briefing on June 26.

Pillai said the CDC has stationed 19 staff members overseas to aid country teams and local health ministries with data analysis, exit screenings at airports, laboratory support, and training. Those personnel join approximately 100 CDC staff already on the ground in Congo and Uganda.

There are no approved vaccines or specific treatments for the Bundibugyo strain, distinguishing it from more common Zaire ebolavirus outbreaks. Mortality rates for Bundibugyo have historically spanned from 25 percent to 50 percent, according to the CDC.

The United States is currently developing a vaccine to combat the Bundibugyo strain through the U.S. Department of Health and Human Services’ Administration for Strategic Preparedness and Response and the Biomedical Advanced Research and Development Authority (BARDA).

That agency is also sending doses of the experimental monoclonal antibody therapy MBP134, which was developed with Mapp Biopharmaceutical for compassionate use and a randomized clinical trial spearheaded by the University of Oxford. BARDA has also pre-positioned 2,500 rapid diagnostic tests for deployment to Africa.

BARDA is also seeking proposals for vaccine candidates using the same platform as Merck’s Ervebo vaccine, which targets the Zaire strain.

The effort strives to support both the current outbreak response and longer-term preparedness in coordination with global partners, including the Coalition for Epidemic Preparedness Innovations.

The outbreak, first confirmed in mid-May in Congo, has spread to additional health zones, with recent jumps in cases and deaths. Congo’s Ministry of Communications reported 72 new cases and 32 new deaths in one update, raising the regional toll. Death totals in the outbreak have surpassed 200, with confirmed fatalities climbing steadily.

The outbreak has encompassed the displacement camps where the first Ebola deaths were reported, and challenges like laboratories running low on testing supplies early on in the response. Uganda has closed its border with Congo, and has confirmed cases and deaths of its own.

U.S. officials have issued travel advisories for the impacted regions. The State Department and CDC have issued guidance for travelers, with certain restrictions expanded in response to the outbreak.

Health authorities underscore that while the situation in Africa is serious, transmission requires direct contact with bodily fluids of infected individuals or contaminated surfaces, lowering the threat of widespread spread in the United States.

No cases have been reported in the United States connected to this outbreak.

Prior Ebola outbreaks, including the 2014–2016 West Africa epidemic, have also prompted a previous Level 1 CDC activation. International partners, including UNICEF and Gavi, have also urged accelerated vaccine development for the Bundibugyo strain.

While Anthropic has been forced to shut down its latest general-use models for over two weeks after it emerged that the company's de-tuned public-facing Fable 5 model could be 'jailbroken' into its unrestricted form (Mythos 5) to perform tasks that pose security risks, a Chinese AI company backed by Alibaba and Tencent has released a model that matches the performance of Mythos in some cybersecurity scenarios. 

The company, Zhipu AI - also known as Z.ai, can match the latest US models when it comes to finding security bugs - though it still lags at other tasks, according to the Wall Street Journal. 

Overall, the capability gap between top U.S. models and those built by Chinese companies has narrowed significantly, and use of Chinese AI systems has surged as businesses seek to rein in runaway costs. A host of companies, including Microsoft, are weighing how they can offer Chinese models on their platforms, a development that is set to alter the balance of power among tech companies.

What's more, Zhipu's GLM-5.2 is an open-weight model, meaning it can be downloaded and run on hardware by anyone and can be modified and used without supervision - which hackers are undoubtedly loving. 

GLM-5.2 has ranked as one of the 10 most-used AI models, according to data from OpenRouter, a company that provides access to more than 400 AI models. In some benchmarking tests, according to the cybersecurity company Semgrep, GLM-5.2 bested Anthropic’s Claude Opus 4.8 model, which was released in May. When given further instructions, Opus 4.8 and GLM-5.2 can match Mythos in bug-finding ability, according to researchers.

As we noted last week for our premium subscribers, this is how Goldman's Delta One head, Rich Privorotsky framed the latest Chinese shock to the system from open-weight models: 

The big development over the last couple of days has been GLM-5.2, another Chinese open source model that appears highly competitive on SWE benchmarks relative to some of the latest private models. It is not quite cutting edge, but the gap between open and closed models continues to narrow. The weights are open (MIT license), models can be distilled, quantized and reproduced...its a big leap in capability and a clear sign the field is narrowing.

It's not just some of Wall Street's top thinkers who were immediately drawn to the stats of the latest Chinese offering: various industry insiders were in shock.

Artificial Analysis’ new knowledge work benchmark rated it higher than GPT 5.5

"This kind of powerful weapon that can alter the landscape of cyberwarfare can’t remain solely in American hands," Zhou Hongyi - CEO of Chinese cybersecurity company 360 Security Technology, speaking at a cybersecurity conference in Beijing. His company has released a new bug-finding tool called Tulongfeng - which it claims is comparable to Mythos when it comes to finding bugs. 

So while the Trump administration restored some access to Mythos 5, IT departments across America are now at a disadvantage when it comes to using something this powerful to find and patch their own vulnerabilities. 

"Banning Fable while selling chips China needs to develop its own version is a gift to China," said Saif Khan - a distinguished technology fellow at the Institute for Progress think tank who focused on export restrictions under the Biden administration. Kahn says that the US needs to maximize the use of Mythos and similar models to harden cyber defenses while it can. 

Among the Mythos 5 and Fable 5 users that had lost access before Friday’s decision to restore Mythos 5 access for some trusted entities: the National Security Agency, which had been testing the tools and found them impressive in trials, according to people familiar with the matter.

Critics of the White House approach have said it has been lax in restricting use of Chinese open-weight models from companies such as DeepSeek and Zhipu, which are popular among U.S. businesses. -WSJ

Meanwhile - OpenAI on Friday said it will now limit access to its latest model - GPT 5.6, after Trump administration officials raised security concerns. The company warned that the government's current case-by-case evaluation process isn't a good long-term solution, but they're adhering to it following a recent executive order focused on security and model oversight. 

In short, the Trump administration is driving people to use open-weight Chinese models, while hobbling the US AI industry. 

By Peter Tchir of Academy Securities

The Path to a September Rate Cut (despite AI inflation)

A lot has changed in the past 24 hours. After Thursday’s CNBC interview, it seemed obvious (to me) that I needed to write about how there is a real path to a Fed Rate Cut in September. Not only has the market priced in a 75% chance of a hike in September, and 1.25 hikes by the December meeting, most have also taken any chance of a cut off the table. I think that is missing the path that I believe Warsh is trying to create. We argued last weekend, The Fed and Rates, that Warsh had curtailed the tail risk on the long end of the curve. We switched from bearish to neutral on the long end of the curve (10s went from 4.46% to 4.37% this week). The more we think about it, the more we believe that he has started us on a path, that despite his hawkish rhetoric, sets up for a cut in September to be followed by another cut in October, just ahead of the midterms.

Two things occurred, making me rethink today’s topic: Iran and doubts about the AI trade.

Those two topics are important enough that we need to at least address them, but in the end, we decided to focus on the path to rate cuts, as the other two stories will take time to play out.

Iran, Attacks Resume, But Ceasefire is Not Officially Broken

Iran and the U.S. exchanged fire on Friday and Saturday, and fighting continues to be a risk this weekend. Academy published a SITREP on The U.S. Strikes Iranian Targets over Ceasefire Violation.

For now, the working assumption is that this round of back-and-forth attacks will not derail the discussions. That both sides were “flexing” to remind the other side of why they are at the table. If the ceasefire breaks down, the hostilities escalate, and the oil trade is once again disrupted, then the odds of a September rate cut look bleak, but for now, that is not our base case on Iran.

There are two things that have not gotten the attention they deserve with respect to oil prices:

• The U.S. drained the SPR (strategic petroleum reserve) rapidly and to its limit, which kept oil prices capped, but that ability is largely gone, so something needs to be done.
• Providing sanction relief to Iranian oil may be as important as re-opening the Strait. Providing sanction relief not only brings more Iranian oil to the market than before, but it also lets them move the oil they were already sending (above sanctioned limits) with a higher degree of flexibility and transparency.
  • The fact that the concept of OPEC seems to be in tatters doesn’t hurt either.

Admirals Joyner and Whitworth, along with Bret Lowry, Maria Donnelly and I (Peter Tchir), touched on the f ragility of the peace between Iran and the U.S. in this month’s Around the World Podcast (iTunes and Spotify). The podcast also provides an update on our take on the Russia/Ukraine war, Cuba (which doesn’t get the attention it deserves), and of course, China and macro.

We need to keep a close eye on Iran, but for now, we see us limping along the path to discussing the details of the rather vague MOU that both sides seem to interpret very differently.

Questioning the AI Growth Story

We continue to see two economies. The AI and Data center economy and the rest of the economy. The former has been generating the jobs, the growth, and the earnings. The SOX Index (Philadelphia Semiconductor Index as if anyone, anywhere doesn’t know what the SOX is at this time) hit a high on Monday before dropping almost 10% from there.

Micron’s earnings call helped generate a rebound on Thursday, but that proved to be short-lived.

Questions are swirling around the spending. The cost of the buildout (more on that later). The utility of AI versus the cost of using AI. At some level, is the cost of using AI rising even faster than the benefits?

The growing angst about AI and Robotics (in our AI Revolution pieces) continues to grow and is something the AI companies need to aggressively address before it becomes a problem (via legislation or taxes, for example).

This isn’t a debate that will be answered today, but it does seem like the market is starting to rethink valuations. Stories were circulating that OpenAI may delay their highly anticipated IPO from this year to 2027. Since there is no official timetable, it is difficult to evaluate the veracity of such news, but it did little to help market sentiment.

It is always risky (and not wise) to publish a chart that one does not really understand. But rarely has the T-Report been accused of being risk averse and wise, so here it goes.

According to Bloomberg the Silicon Data LLM Token Expenditure Index (is a daily statistical benchmark to measure the effective expenditure level of the actively traded broad LLM Market, measuring price per million tokens). Say that ten times quickly!

I really don’t know how good this index is at measuring what it tries to measure (and it is in its infancy in any case), but it seems like something worth paying attention to as we all try to figure out where we are headed on AI spend (not just the spending to build out AI and data centers, but the actual spending on the compute they provide).

For what it’s worth, credit spreads in the sector started to widen recently. Not that problematic and certainly not enough to derail the borrowing to spend, but it is always worth paying attention to credit.

Expect more questions about valuations, even with good news, let alone with bad news.

The Path to a September Rate Cut

Let’s get to the “ fun ” part of today’s Report. We will lay out a case for September Rate Cuts that is entirely consistent with Warsh’s messaging.

We will do this, step by step. Some of the “steps” may seem to be disjointed, but I think they all tie well together.

Miran and The Neutral Rate

Let’s just go back in time, before the U.S. attacked Iran.

Miran was the administration’s inside person on the Fed. I didn’t like that he voted to cut every single time, but I think he did a lot of good work on the Neutral Rate.

The Neutral Rate, like R* and many other things in the field of economics, sounds precise, but is incredibly difficult to measure. There is a range of what the Neutral Rate is at any given time. That range moves along with the economy and technology.

• I felt attacking the neutral rate, and arguing that it was lower than the previous Fed had thought, was a solid argument towards getting cuts. You could probably justify 50 to 100 bps of cuts, just based on arguing that the prior Fed had been wrong on where the neutral rate was.
  • It is not an accident that I try to frame this as the “new” Fed blaming the “old” Fed for mistakes. It is consistent with this admin (and every other administration), to blame prior administrations for mistakes. It is often reserved for Presidents, but the tactic can be applied more broadly.

While no one is talking about the neutral rate today, I think this work will become relevant again.

STOP WITH THE PCE CHATTER!

Surprisingly, few things make my head explode (though high on the list is The Big Short’s portrayal of just a few people seeing cracks in the housing market, when lots of people saw the issue, but got stopped out because they timed it wrong).

But on Thursday my head nearly exploded, as I heard over and over that “ PCE, The Fed’s preferred inflation gauge ” did whatever it did.

I don’t know what it did because the PCE is NOT this Fed’s preferred measure. I’m not even sure if it was Powell’s favorite measure. I’m pretty positive Bernanke said it was the best measure. Maybe Yellen did too? Maybe Powell, though that doesn’t stand out. But I can pretty much guarantee you that Warsh doesn’t stay awake at night looking at PCE data.

The Data Source Task Force

I keep raising my hand (though I’m not sure that is a thing), but I’d love to be on the data source task force. Garbage In, Garbage Out.

This is where we square the circle on Warsh’s tough stance on inflation, with achieving a September Rate Cut.

Which data set do you believe?

The blue line is Owners ’ Equivalent Rent of Residences. It feeds into CPI. You can read the BLS Description. I challenge anyone to read that and argue it reflects anything in the world of renting shelter today.

In our “beloved” CPI, OER didn’t peak until the middle of 2023. Even then it “peaked” at 8%. Zillow peaked at almost 16% back in early 2022! For anyone who remembers the rental market post-Covid, which metric seems right?

Remember Team Transitory, who was still going ahead with QE while “contemplating” a rate cut, basing their assessment on inflation in shelter on OER versus something actually seen in the real world?

What is the BLS & Cleveland Fed New Tenant Repeat Rent NTRR YoY index? If you guessed, worst name ever for an index, you are probably correct! It is an index that the Cleveland Fed introduced (with little fanfare) to try to track rents. Guess what? It tracks the Zillow index pretty darn well!

So, Warsh doesn’t even need to go to outside sources! The Task Force can ask the somewhat obvious question – Why don’t we use the index that the smart people in Cleveland created? They did this work for a reason! They know OER is flawed. Maybe OER needs to be in CPI because it takes an act of Congress to change the CPI calculation (because it is used for Social Security benefits). But maybe, just maybe, someone at the Fed can say we should base monetary policy on something that resembles the real world, instead of some archaic, obsolete metric?

Two things come out of this work:

• The Team Transitory mistake was waiting too long to tighten monetary policy, because they were looking at the wrong data.
• Affordability, not inflation, is the bigger problem people face, and the affordability problem was a 2021/2022 problem, that was NEVER picked up accurately by the inflation data.

Now let’s go back to PCE and bring back Truflation.

I put the “green” line for inflation target at 2.9% rather than 2%. Yes, we have been “conditioned” to treat 2% as the target, but Warsh did “hint” that the left side (i.e., “big figure”) is more important than the total or “rounded” number. Sure, 2.9% isn’t 2%, but expect to be “conditioned” over the coming months to see that 2 point something is close enough to 2.

Truflation core is currently at 1.45% and has been below 1.8% since February.

Truflation produces real-time, daily inflation indices and other economic data to provide a more transparent and current view of the market than traditional government-reported metrics. Unlike monthly, survey- based methods, Truflation’s indices are compiled using extensive datasets (you had me at real time. You also had me at datasets).

It is also quite obvious, that had Team Transitory even glanced at Truflation we might have moved to tighter monetary policy sooner?

The same two mistakes that show up in housing show up in this as well:

• The Team Transitory mistake was waiting too long to tighten monetary policy, because they were looking at the wrong data.
• Affordability, not inflation, is the bigger problem people face, and the affordability problem was a 2021/2022 problem, that was NEVER picked up accurately by the inflation data.

The Data Source Task Force will come back with data that provides cover to cut and that data is likely better for basing decisions on, than the data the Fed has been wedded to!

Affordability NOT Inflation

I’m not even sure how to “fix” this chart, but I will figure it out (maybe with the help of AI).

We don’t look at the CPI data series very often. We tend to focus on monthly or annual changes. But affordability is the cumulative effect and that is what is hitting people.

• Given what we saw with Truflation and with rent, I suspect that CPI understates the real-world problem – by a LOT. And the problem is primarily a 2021 and 2022 problem!

I think there are cases to be made around past mistakes being made because the wrong data was used.

Avoiding future mistakes by looking at the correct data makes sense!

The Impact of the War Being “Over”

We can quibble about whether the war is over or not, but going back to Academy’s SITREP, we expect peace talks to continue, and the flow of oil to also continue.

Yes, there are problems in the energy ecosystem. We are “higher for longer” in prices, from oil out to January, to diesel, etc., but by all accounts the worst is behind us.

Why would we possibly be pricing in war impacts on inflation, when we seem to be in some new status quo? Maybe I spend too much time with geopolitical experts, but we don’t see a return to full hostilities, or significantly higher oil prices. Again, the removal of sanctions is a big deal.

The Administration’s Goals Have NOT Changed

The President didn’t wake up one day a few weeks ago, and tell Warsh, go ahead and hike. The President, as I believe he reiterated again this week, says he knows a lot about real estate and lower rates help real estate.

So, you can believe that Warsh is truly hawkish, that Bessent no longer cares about 3, 3, 3, and the President is oblivious to his hand-picked Fed Chair being hawkish (a chair who will likely spend Thanksgiving dinner at the home of his father-in-law, a large Trump donor), or you can think about what “master plan” is behind all of this.

Imagine (it is easy if you try) that Warsh convinced Trump that sounding dovish right now would be a disaster. Imagine (again, it is easy if you try) that he convinced the President to let me sound hawkish on inflation. That my hawkish message will control the long end of the yield curve (which it did). That we will convince every reporter and Wall Street analyst to believe we are going to hike and fight inflation. That we are retaining our independence (which they will to a degree).

And then Mr. President, this is the “good” part, data will start rolling our way. Inflation is already overpriced and with the war ending, it will come down more. Then, we will argue (persuasively, because it is true) that we should use other sources of data that show lower inflation.

Then, Mr. President, we will dazzle them with “neutral rate” mumbo jumbo. It has always been mumbo jumbo, but we will use it to our advantage.

Then, when the hawks and “dumocrats” (or is it spelled with a b?) say we are not protecting the people against inflation, we will point out it is all about affordability and the prior administration and “their” Fed (despite Powell being appointed by Trump) being “too late” resulting in “the mess” we are in.

You can agree or disagree with anything I just wrote on “political” grounds or otherwise, but can you really argue that it cannot play out that way?

AI and Data Center Inflation

Do you know what sort of spending is not affected by 50 bps of hikes?

• Spending by companies trading at 100x some multiple! (Ok, probably some hyperbole here, again, but seriously, 50 bps of hikes is meaningless to the data center/AI build). Just look at the price of electricity. Hiking to slow down AI/Data center spending (which is inflationary for now), will be incredibly ineffective/useless. The people hurt by 50 bps of hikes aren’t the ones driving inflation, they are the ones trying to stay one step ahead of the Repo Man (still a bizarre movie).

AAPL dropped after announcing some price hikes. The price hikes on relatively expensive things to begin with (the upper part of the k rather than the lower part). But the market, I believe, perceived that those price hikes would not be absorbed easily. If one of the largest consumer product companies raises prices and the market questions their ability to pass on costs, what does that mean for the

average company selling to consumers? I don’t read that as inflationary.

Someone in my stream, who I cannot seem to find at the moment, pointed out that some of the survey data pointed to increases in prices paid, and declines in prices received. Bad for margins, but hardly inflationary.

Anecdotally, and this was somewhat confirmed by a chip company we met with recently. Remember when they were “giving away” memory? I looked at updating my 5-year-old desktop. I have 64 gig of RAM. I do remember paying “up” for the upgrade. While today’s RAM is better, faster, etc., I was shocked, that most desktops came with 32 gig as standard and 64 gig was a relatively costly upgrade.

This feeds back into the “ are AI/Data Centers getting too expensive” question? And yes, it is inflationary, but has nothing to do with the true affordability or the inflation problems many are dealing with.

Bottom Line

Look for the market to start pricing in rate cuts. If there is one “pound the table message” I’d give, it is lower yields at the front end of the curve. The “hike” community is applying the wrong data to this Fed.

I’m less clear on the long end, but I’m neutral, to even slightly bullish on 10s. Bessent wants a 3 handle. Warsh took out the tail risk. There are all sorts of headwinds facing the longer end of the yield curve, but I think with some “appropriate” timing, the admin can launch Operation Twist with some other tools and force the long end lower.

I’m far from certain on AI/Data Center valuations.

I think with recent weakness, go heavily overweight energy, especially nuclear across the globe. As the President focuses on domestic issues, energy and electricity production remains front and center. Even Europe is nearing that point.

Lean heavily on ProSec and overweight the biotech/pharma component, while underweight the chip component (still a critical part of ProSec but not where the best value is).

Look for credit spreads to come under some pressure, as the big tech/data center/AI/space issuers have more to do and are less price sensitive than we are used to, because their multiples allow them to be less price sensitive. Just like their potential to issue more equity (after years of buybacks) is weighing on their equity.

While Bitcoin and crypto in general aren’t moving markets like they once did (thanks to prediction markets and leveraged ETFs, etc.), the losses in crypto may slow down the “gambling” crowd, which won’t help equities in general, especially the high-flyer, momentum stocks that have benefited most from this crowd.

Good luck and get ready for another short week, that will probably feel much longer than 4 days!

(Update1500ET): An expected next round of US-Iran talks in Switzerland has been 'stalled' by the latest fighting flare up in the Strait of Hormuz, after US forces bombed Iran's coast a couple times - and following more Iranian 'retaliation' on Gulf states, as well as against at least two international vessels in the Strait. WSJ is reporting Sunday:

The fighting has rattled shipowners and has thrown a budding reopening of the waterway into doubt, threatening the key achievement of Trump’s preliminary deal, which pushes discussions of more contentious issues, including Iran’s nuclear program, into a second phase.

Those talks were expected to resume this weekend in Switzerland but have been stalled by the fighting, people familiar with the matter said.

This should come as no surprise, however, neither side has yet announced they are fully walking away, amid this testing of each's red lines.

Increased chatter that the Iranians may not dispatch a delegation for technical talks with the U.S. due to start in Switzerland tomorrow.

Foolish decision if it proves accurate. https://t.co/aTvDucLDqq

— Ali Vaez (@AliVaez) June 28, 2026

*  *  *

“The Strait of Hormuz will return to its pre-war operating conditions within 30 days under a management framework implemented by Iran," Iranian Foreign Minister Abbas Araghchi has warned during a joint press conference with his Iraqi counterpart Fuad Hussein. 

The timing behind his visit to Baghdad is interesting, right at the moment a widening corruption sweep conducted by elements of the Iraqi government, which has unleashed mass protests and unrest outside Baghdad's Green Zone. The symbolism of defiance and readiness to fight was on display too, given Araghchi's corresponding visit to the site of former IRGC Quds Force commander Qasem Soleimani's assassination outside Baghdad Airport.

Iraq's state-run Iraqi News Agency reported that several political figures were arrested in a corruption probe tied to testimony from former Deputy Oil Minister Adnan al-Jumaili, who was detained last month.

As we reported earlier, security forces locked down Baghdad's heavily fortified Green Zone and carried out raids inside the government and embassy district that sits on the west bank of the Tigris River. It contains key Iraqi state institutions, including parliament and government offices, as well as foreign embassies, most notably the US Embassy.

As for Aragchi, he also also called on "all parties to refrain from interfering in Iran's management of the strait and to allow the memorandum to proceed as agreed."

This also as a separate statement out of the Iranian government condemned what it called severe violations of the ceasefire and agreed-to Memorandum of Understanding by the US.

Islamic Revolutionary Guard Corps (IRGC) spokesman Brig. Gen. Hossein Mohebbi vowed harsher retaliation in the scenario of any new US attacks.

"We have responded, and will continue to respond, to every action the enemy takes in this regard. We reiterate: if the enemy breaks its commitments and violates the ceasefire, we will respond more forcefully than before," said Mohebbi.

Crucially while in Iraq Sunday the top Iranian diplomat FM Araghchi visited the site where Qasem Soleimani, the former IRGC Quds Force commander, was killed in a US strike during the first Trump term:

Iranian Foreign Minister Abbas Araghchi is in Iraq today and visited the site where Qasem Soleimani, the former IRGC Quds Force commander, was killed in a U.S. strike during the first Trump administration. pic.twitter.com/p1jRdroKtD

— OSINTdefender (@sentdefender) June 28, 2026

The aforementioned major Baghdad protests triggered by the ongoing anti-corruption sweep appears aimed at Iraq's political class aligned with Iran. The US has long sought to peel away this influence, which ironically became solidified only in wake of the 2003 US invasion of Iraq and overthrow of Baathist secular Sunni strongman Saddam Hussein. 

The timing is also critical, coming just after Iran targeted Bahrain and Kuwait with drones and missiles in response to US strikes. That suggests Baghdad, with US influence, may be moving to eliminate Iran-linked networks inside Iraq before they can become a more worrisome pressure point.

The top executive of Japan's largest shipping company told the Financial Times in an exclusive weekend interview that the path toward normalization in the Strait of Hormuz remains far more complicated than anticipated. He warned that shipping volumes may stay well below prewar levels for months, as IRGC-laid mines are forcing vessels into narrow, safer corridors near Iran and Oman.

"The routes available for navigation are extremely limited — they're very narrow corridors," Takaya Soga, chief executive of Japan's NYK Line, told the outlet. "We're still nowhere near returning to conditions before the closure of the Strait of Hormuz."

The warning comes days after International Maritime Organization Secretary-General Arsenio Dominguez stated that IRGC forces had laid 80 naval mines across the main shipping channels in Hormuz.

Tanker transits through Hormuz have gradually resumed in recent weeks following the interim peace deal between the U.S. and Iran, with tracked vessel traffic peaking at 57 transits last Wednesday. That figure, however, likely understates the true level of activity, as the Bloomberg data captures only vessels with transponders.

Related:

• Tanker Rates Nearly Halve As Hormuz Shipping Normalizes

Last week, IRGC forces warned that commercial vessels must coordinate with Iran's naval command before transiting Hormuz and cautioned against using unauthorized routes. That warning was followed by an attack on an Evergreen-operated container ship, U.S. retaliatory strikes against Iran, and a subsequent Iranian response targeting Bahrain and Kuwait this weekend.

UK maritime authorities also reported that a tanker's bridge was damaged by an unidentified projectile. Meanwhile, Iraqi forces locked down Baghdad's Green Zone and arrested pro-Iranian political officials under the guise of a corruption probe, suggesting the regional pressure campaign is now spilling into Iraq.

Europe's heat wave is now quickly morphing from a public health crisis into an infrastructure nightmare, with power prices surging, more than 1,000 excess deaths reported across France, and extreme temperatures bringing parts of Germany's rail infrastructure to a halt.

The local German outlet Leipziger Zeitung reports that after a week of sweltering temperatures above 30°C, with readings climbing toward 40°C on Saturday, critical transport infrastructure in Leipzig failed under the heat.

The city, located in the eastern German state of Saxony, about 120 miles southwest of Berlin, was forced to suspend tram service after the asphalt–rubber joint sealant around embedded tracks softened and liquefied.

Here's more color from the local outlet:

Shortly afterwards, it was the turn of the Leipzig Transport Authority (LVB). At several points across the network, trams simply came to a standstill; nothing was working at all. Finally, on Saturday afternoon, the LVB  announced the  suspension of all scheduled tram services: "The joint sealant between the tracks and the tarmac has become liquid and, in some places, has clumped together," confirmed a representative for the Leipzig Group, to which the LVB belongs, in response to an inquiry from the LZ in the early evening.

One road-sealant spec lists a softening point of 100°C, or about 210°F, while another asphalt–rubber joint sealer has a softening point of 185°F and says the material is heated to 300°F to 350°F for application. That means that on a 40°C day, dark asphalt and rail beds accumulated enough heat to fall within the range noted above for liquefaction.

Bloomberg data shows relief coming for Germany after a week and a half of sweltering temperatures...

The effects of the weather phenomenon El Niño are likely to push average global temperatures to elevated levels in both 2026 and 2027.

Latest El Niño coverage:

• Super El Nino: Famine Follows War?
• Trader's Guide To Navigating The "Super El Niño"
• UBS Warns El Nino May Intensify Food Inflation Across Asia

Welcome to near the peak of Northern Hemisphere summer.

Beyond Sunday's Iranian drone and missile attacks targeting Bahrain and Kuwait, launched in response to earlier U.S. airstrikes, Hormuz shipping traffic remains stable but well below last week's peak, when 57 vessels transited the strait on Wednesday. With maritime flows stable through the critical waterway, attention now shifts to Iraq, where a widening corruption sweep inside Baghdad's Green Zone could become the next area of focus.

Iraq's state-run Iraqi News Agency reported that several political figures were arrested in a corruption probe tied to testimony from former Deputy Oil Minister Adnan al-Jumaili, who was detained last month.

Update: The arrest of former Iraqi Deputy Oil Minister for Refining Affairs, Adnan Mohammed Hamoud al-Jumaili, has so far led not only to a wave of high-profile arrests, but also to the seizure of what may become one of the largest corruption stockpiles uncovered in post-2003… https://t.co/zkvFZSgAuX pic.twitter.com/BK9YWPZmhl

— Basha ???? (@BashaReport) June 28, 2026

Security forces locked down Baghdad's heavily fortified Green Zone and carried out raids inside the government and embassy district that sits on the west bank of the Tigris River. It contains key Iraqi state institutions, including parliament and government offices, as well as foreign embassies, most notably the U.S. Embassy.

Video footage on X showed security forces in tanks and other heavily armed vehicles locking down the Green Zone.

Iraq's Green Zone in Baghdad has been placed under lockdown as military forces deploy, with reports of raids targeting the residences of government officials, according to The New Region. pic.twitter.com/1i3eKPsTEZ

— Open Source Intel (@Osint613) June 28, 2026

Special forces helicopters shake US embassy Green Zone https://t.co/E1MZhvISxG pic.twitter.com/3jQfT2gY5L

— RT (@RT_com) June 28, 2026

Video: The Green Zone right now—continued security deployment and inspections of vehicles with government license plates. pic.twitter.com/VlMCP317DA

— Wladimir van Wilgenburg (@vvanwilgenburg) June 28, 2026

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— Raymond Hakim (@RaymondFHakim) June 28, 2026

According to a security report obtained by AP News, seven people were arrested, including five members of Parliament whose immunity was revoked. Some were reportedly linked to the political bloc of former Prime Minister Mohammed Shia al-Sudani.

??A photo of a number of officials and bodyguards who were arrested in the Green Zone. pic.twitter.com/EzCfIfk7ag

— S p r i n t e r (@SprinterPress) June 28, 2026

"Al-Sudani's bloc won the largest share of seats in November's parliamentary elections, but he ultimately stepped aside amid a deadlock in the Coordination Framework — a coalition of Shiite parties allied with Iran that brought al-Sudani to power — over their preferred candidate for premier," AP News noted.

JUST IN: ???? Gunfire heard across Baghdad Green Zone as Iraqi forces raid and arrest high profile officials for corruption. pic.twitter.com/orTUPdyKNI

— BRICS News (@BRICSinfo) June 28, 2026

The outlet added, "He was replaced by Ali al-Zaidi, a businessman and political newcomer, who emerged as a consensus candidate and received the blessing of the United States."

Iraqi police have released picture of some of the money (dollars) they found in the home of the pro-Iranian Shiite MP Aliya Nassif last night.

She has long been one of the more famous MP’s in the Iraqi Parliament’s anti-corruption committee.

???? pic.twitter.com/1gwqP0tfew

— Visegrád 24 (@visegrad24) June 28, 2026

The immediate read is that this anti-corruption sweep appears aimed at Iraq's political class aligned with Iran. The timing is also critical, coming just after Iran targeted Bahrain and Kuwait with drones and missiles in response to U.S. strikes. That suggests Baghdad, with US influence, may be moving to eliminate Iran-linked networks inside Iraq before they can become a more worrisome pressure point.

Authored by Charles Hugh Smith via OfTwoMinds blog,

These dynamics and the incentives they generate lead to systemic crisis and collapse.

As I noted in What Once Explained Everything Now Explains Nothing, the simplicity of either-or ideologies appeal to us. Identifying with an ideology is like having a favorite sports team: yea for our team! Our team good, other team bad.

The roots of this simplistic either-or are obvious: our tribe good, other tribe bad. The problems with this simplistic loyalty arise when we attempt to explain complex real-world dynamics with the comic-book simplicities of ideology, which extend from politics to culture to finance.

Rather than explain everything, they add a layer of mud rather than illuminate. The emotions of tribal / ideological identity and loyalty bypass our rational processes in favor of fight-or-flight limbic responses. Needless to say, these hormonal floods of emotions are the equivalent of smashing a rock on a machine to "problem-solve" what's broken in the device.

Fortunately, we have conceptual tools that bypass this smash-it-with-a-rock approach to making sense of a complex, increasingly chaotic world. These tools show up in all my work, stretching back 20 years.

1. The problem-solving power of self-organization. Humans are social animals because the ability to cooperate with others opens vast vistas of problem-solving power via self-organization: we self-organize to pursue mutual / shared interests in ways that benefit us all. This is the core function of tribes, i.e. self-organizing social structures in which our self-interest is advanced by advancing our mutual interests.

Both markets and society are self-organizing structures that arise to benefit individual self-interests by benefiting shared interests. In other words, both capitalist and socialist structures arise to serve shared interests. They are not either-or, they're both manifestations of the same dynamic. This is why the ideological either-or is such a misleading false choice.

Markets only function to everyone's benefit within a high-trust society. If there is no social structure that serves everyone's shared interests by limiting predation and exploitation, then you end up with the extractive "market forces" of totalitarianism, i.e. rackets, in which the few impoverish and immiserate the many to the exclusive benefit of the small cadre of insiders.

As I have taken pains to explain, private-sector totalitarianism is the "market" manifestation of totalitarianism, a privately owned version of political totalitarianism. The core dynamic is the same: the system exploits and immiserates the many to benefit the few.

When private equity snaps up the only manufacturers of fire engines and then jacks up prices without adding any value, this impoverishes and immiserates the many who must collectively pay more money for no added value to enrich the few who own / control the racket. There is no functional difference between a totalitarian state structure that enriches party insiders at the expense of the many and "markets" in which private equity enriches insiders at the expense of the many.

This leads to the second dynamic:

2. Diffusion and Concentration. Control--i.e. power--self-organizes around the dynamics of Diffusion and Concentration. Consider the power of a monopoly that can raise prices for all customers, customers who have no alternative because the monopoly controls the "market" / political structure. The gains of the price increases (value is unchanged but the cost rises) are concentrated in the hands of the monopoly's managers and owners while the impoverishment and immiseration is diffused across a vast spectrum of customers / taxpayers.

The incentives to raise prices is extremely high for insiders, as they will reap enormous personal gains. The incentives to resist a relatively small increase in price among the millions of customers / taxpayers is low, because life is already demanding, and what's the potential gain of fighting a losing battle against a powerful opponent over a small sum of money? The cost in time and effort is far more significant than the relatively modest financial benefit of winning the battle.

Diffusion and Concentration establish incentives which then organize the system. Consider a local government which sells bonds for a project that benefits only a small sector of the populace. The costs of this borrowing from future income to pay for benefits the few will enjoy today is spread not just over the entire current populace but over future taxpayers who weren't old enough to vote on the decisions they will pay for.

3. Benefits, Risks, Costs and Incentives. Those seeking to reduce their private risks and increase their private gains seek to concentrate the gains generated by control structures and distribute the risks and costs to others. Pull the strings that diffuse the costs and risks over a large populace and gather the gains into the hands of the insiders that manage the control structure, typically some form of monopoly, either public or private, or a fusion of public-private rackets.

So corporations that engage in blatantly illegal skimming and scamming face low risks--managers or owners are never imprisoned, and the fines paid when caught are modest compared to the profits skimmed--while the gains are extremely enticing. This diffusion of risk and concentration of potential gains establishes perverse incentives to increase extractive, exploitive, well-hidden rackets that impoverish and immiserate the many, but in doses small enough to avoid triggering push-back.

In a system that concentrates gains and diffuses risk, the "rational actor" seeks to maximize rackets that distribute impoverishment and immiseration to the many in small doses over time that attract little attention and are not significant enough to trigger an emotionally potent resistance. This leads to:

4. The Ratchet Effect. Costs ratchet up, value ratchets down, but in increments too small to change the risk-reward equation and over time so the pain of this impoverishment and immiseration is normalized as the populace herded into the corral habituates to the decay of value and the rise in costs.

So the parking ticket that once cost $15 is now $60, but exactly how does the individual citizen push back against the monopoly powers of the city government? Yes, the citizen can file a complaint with their representative, but the odds that this will lead to reduced parking fines is zero. The same is true should the citizen attend a public meeting and get 30 seconds to speak at the end of a long meeting when everyone just wants to go home.

Bureaucracies optimize The Ratchet Effect by their very nature. Regulators and administrators must "do something" to justify the high costs of their employment and benefits, and so they "serve the public" by incrementally adding to regulatory thickets that over time strip out self-organizing functionality and replace it with control structures that are impervious to reform.

Reformers seeking to reduce bureaucratic regulations and costs run into Diffusion and Concentration. Those whose jobs are threatened by cost-cutting are extremely motivated to spend every waking second resisting any cost-cutting, while those who stand to benefit--the citizens paying fines or business license fees--will only see a modest reduction in costs, too small to motivate them to self-organize in support of the reforms / cost cutting.

So these control structures, public and private, run on automatic, concentrating benefits in the hands of insiders and owners and distributing the risks and costs to the diffused many. The result is institutional sclerosis, and self-reinforcing resistance to any adaptation that benefits the many at the expense of the few insiders / managers / owners.

5. Semi-chaotic tests of the system's stability. Benoit Mandelbrot's book The (Mis)Behaviour of Markets: A Fractal View of Risk, Ruin and Reward explains how self-organizing structures such as markets--and by extension, all of life, which is also self-organizing--are prone to unpredictable cascades that operate outside the "normal, predictable" rules we've identified as "the way things work."

In terms of selective pressures and adaptation, these unpredictable crises test the system's adaptability and stability. In this way, they are essential to maintaining the adaptive "muscles" and coherence of the system which boil down to the dynamics of self-organization--precisely what all the control structures running on automatic have stripped out in the "rational actor" incentives to optimize concentrating gains and diffusing costs and risks.

These dynamics led to a rising wedge of asymmetric distributions of power, control, wealth and income that strip out self-organizing adaptation and the system's ability to survive unpredictable but inevitable crises. These dynamics and the incentives they generate lead to systemic crisis and collapse.

The only structures capable of re-organizing the post-collapse world are islands of coherence that managed to retain self-organizing capacities that escaped the control and predation of "rational actors" maximizing self-interest at the expense of the system's adaptive capacity and stability.

As noted above, these dynamics inform all my work. You can review all my books here.

My book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free). Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free