LinkedIn Post – 6/17/25 Cuban Missile Crisis Part Deux?

Are we approaching a new Cuban Missile Crisis but this time in Iran?

President Trump gave Iran 60 days to accept a deal around nukes, no deal made, and everyone blames everyone else. Iran expected the can to be kicked down the road but on day 61 Israel attacks. Israel inflicts material damage including the killing of much of the Iranian military leadership (12) and nuclear scientists (14). Iran strikes back with heavy force causing Israeli casualties, as well as firing hypersonic weapons on civilian areas. Israel continues its attacks wiping out most of Iran’s aerial defenses. The U.S. mobilizes an additional strike force to the Middle East, Trump leaves G7 early. Trump convenes an emergency session of his National Security team. Israel makes proclamations of more devastating attacks to come to Iran more advanced than the drones that were launched from inside Iran or the walkie talkie/pager bombs that hit a few years ago. Is the US about to partner with Israel and send Bunker Buster’s into Iran to destroy the nuclear facilities?

What would China do? We think nothing. What would Russia do? We think a deal is made. Trump said yesterday he doesn’t want to increase sanctions on Russia, and it should be the G8 including Russia, not the G7. Russia agreeing to cut Iran as a military ally would be positive for the West, with the US giving ground on Ukraine to make this happen. Some have said this will occur between Wednesday and Friday of this week.

The markets? Completely ignoring the risk of a Serious Nuclear attack. Volatility is in check, the S&P500 is steady at the 6000+ level, and credit spreads are firm. Rates are rangebound and the dollar has recovered from a low of 1.163 to currently 1.15 vs Euro. To us it seems the market is frothy and dismissing the small but real possibility of massive escalation and fallout. We have taken risk down. But if a real deal is made between Israel/Iran and Russia/Ukraine, stocks would rip, oil prices would drop, inflation would continue to moderate and that all would give the Fed room to cut… Let’s see how Powell addresses this at tomorrow’s press conference. Special thanks to our friend Peter Tchir and Academy Securities for hosting an outstanding call helping us formulate our views.