Iran’s ceasefire is just an appetizer; three major risks still hang over the market.

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With the US and Iran set to sign a peace agreement on June 19, and the Strait of Hormuz expected to fully reopen to navigation, the market has finally received a long-awaited respite. Brent crude has already given back about 80% of its gains since the start of the current conflict, with geopolitical risk premiums quickly fading.

But according to Bloomberg strategist Jan-Patrick Barnert, the pullback in oil prices does not mean risk is gone. On the contrary, as geopolitical factors temporarily recede, three more persistent pressures are gradually coming to the fore: new Fed Chair Kevin Warsh hosting his first FOMC meeting, Washington beginning to directly intervene in AI industry development, and the liquidity test brought by the largest IPO wave in history.

What’s more concerning is that these risks are piling on top of a market rebound with shaky foundations. The recent US stock rally has been driven more by short covering, rather than new money actively entering the market. Once the power of short covering diminishes, whether the market can continue to rise will depend on whether real buyers pick up the baton.

Short Covering Drives the Rally; Real Bulls Have Yet to Return

The technical fragility of the market is raising concerns on Wall Street.

Brian Garrett, a derivatives expert at Goldman Sachs’ trading desk, points out that this round of macro short covering looks more like a repricing of summer trading than a true trend reversal. Previously crowded defensive and bearish positions have been forced to close in a market lacking clear direction, thus driving the index rebound.

At the same time, there are clear signs of sector rotation within the market. Recently, the strongest performers have not been the previously leading AI sector, but defensive industries and broader “broadening out trades.” Investors are actively searching for new trading themes rather than continuing to bet solely on the AI narrative.

Capital flows also reveal hidden concerns. Garrett notes that hedge funds have been net buyers of US equity risk assets for four consecutive weeks, but last week’s buying mainly came from cutting beta shorts, not actively adding alpha long positions. Global prime broker data show that the ratio of short covering to new long positions is as high as 4.7 to 1.

In other words, the main force driving the market up is the retreat of shorts, not the advance of longs.

Warsh Hosts FOMC for the First Time, Hawkish Risks in Focus

From June 16 to 17, Kevin Warsh will host his first FOMC meeting as Federal Reserve Chair.

The market is highly focused on this not only because it is his official debut, but also because Warsh has repeatedly criticized the Fed’s communication framework and publicly called for a “policy mechanism shift.”

He is taking over at a difficult time. Inflation remains sticky, energy price volatility has yet to fully abate, and bets on rate hikes resuming before year-end are heating up.

For Warsh, the challenge is to simultaneously prove the Fed’s independence to the market while avoiding direct conflict with the White House, which supported his appointment. Against this backdrop, any changes in wording in his first press conference may be sharply scrutinized by the market.

Washington Directly Intervenes in AI; Industry Pricing Logic to Be Reassessed

Compared to rate risk, policy risk is becoming the new variable for AI trades.

Last Friday, the US Department of Commerce required Anthropic to restrict foreign users’ access to its latest models, Claude Fable 5 and Mythos 5. To comply, Anthropic shut down the related services. This is the first time the US government has directly imposed restrictions on AI models themselves.

This change means that competition for “who leads cutting-edge AI” is no longer just about technology and capital, but is now deeply affected by national strategy and geopolitical factors.

For investors, this also makes valuation frameworks for the AI sector more complicated. Previously, the market mainly evaluated computing power, model capability, and commercialization progress. Now, policy intervention risk must also be included.

SpaceX “Fires the First Shot”, IPO Supply Wave Has Only Begun

Supply-side pressure is also approaching.

On June 12, SpaceX officially went public at a valuation of about $1.77 trillion with an issue price of $135, making it the largest IPO in US capital market history. Its fundraising volume is about three times the previous record; this single deal exceeds the total IPO fundraising for all of 2024 and 2025 combined in the US.

And this is just the beginning. Heavyweights like Anthropic and OpenAI are still waiting for the IPO window. Peter Tchir, head of macro strategy at Academy Securities, believes that in the coming months, the key to the market’s direction may no longer be macro data itself, but whether the capital market can continue to absorb such a huge supply of new shares.

With geopolitical risks temporarily easing, the market’s focus is shifting from war back to liquidity, policy, and valuations themselves. These three tests may determine the course of US stocks in the second half of the year even more than oil price fluctuations.

Risk Warning and DisclaimerThe market carries risk. Investments require caution. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their specific circumstances. Investing accordingly is at your own risk. ```