Low Expectations as Week Begins
Author: Greg Valliere
June 16, 2025
THE WEEK BEGINS very tentatively — No imminent end to the Middle East war, low expectations for the G-7 Calgary summit, and a simmering immigration dispute dividing America.
THE STUNNING ISRAEL-IRAN CONFLICT shows little sign of resolution any time soon; in fact, there are signs that it could widen. Benjamin Netanyahu is talking about regime change in Tehran, and he is pleading to the U.S., in private, for bunker busting bombs.
THE GREAT RISK TO THE U.S., which has 40,000 troops stationed in the Persian Gulf region, is that some of those troops will get dragged into this conflict; President Trump has refused to rule out a more overt U.S. role.
FOR NETANYAHU, THIS IS A CLEAR OPPORTUNITY to oust the ayatollahs, and he now has fairly solid support among Israeli citizens. So why would he agree to negotiate with the Iranians, who have consistently miscalculated leading up to this new conflict?
THIS CRISIS COULD LAST A WHILE: As we wrote on Friday, the biggest risk for the markets is a blockade or terrorism near the Strait of Hormuz.
IT COULD TAKE WEEKS FOR ISRAEL TO DESTROY all of Iran’s enrichment facilities, some of which — like the one at Fordow — are buried deep into the mountains west of Tehran.
THERE CERTAINLY WILL BE CALLS FOR MIDEAST NEGOTIATIONS when G-7 leaders meet this week, but the summit is likely to be little more than a photo op, and expectations have been lowered — especially on trade. There won’t even be a final statement in Calgary.
TRUMP ALMOST CERTAINLY will have to stretch out his trade goals until fall or later. There have been vague “frameworks” with China and the U.K., but Trump’s goal of 90 trade deals in 90 days has stalled.
TRUMP HAS BACKED DOWN AGAIN ON TRADE, conceding over the weekend that he has instructed his administration to allow undocumented immigrants — working in restaurants, agriculture, hotels, etc. — to stay in the U.S. No details, of course.
FOR THE PAST YEAR, we have argued that the least appreciated factor for investors has been the remarkably resilient U.S. economy. With a Mideast war, trade confusion and political violence in the U.S., that argument is becoming more and more difficult to make.
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