The Wrap: Bessent Kicks Ass, Bitcoin Collapses, AI Soars or Not
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- 5 min read
“Central bankers around the world…seem more comfortable with inflation closer to 3% than I wish were the case. That’s very dangerous stuff. We can have an economic boom in that scenario, but there’ll be a high price to pay.”
Kevin Warsh, 2024
This week in “The Wrap,” we feature the top events in Washington and on Wall Street over the past week. And please do watch “The Wrap with Chris Whalen” on The Julia LaRoche Show every Saturday on YouTube to catch our discussion of what’s hot and what’s not in the world of finance and investing.
June 5, 2026 | Another week goes by and there is still no peace agreement between the US and Iran. The Strait of Hormuz remains closed and much of the world’s capacity for producing key refined products remains offline.
The Iranians have made clear that they are not going to give up the nuclear program nor the Strait of Hormuz, their key playing cards. We spoke with our friend John Dizard this week and he wonders why the Trump Administration is refusing to begin planning for rationing of synthetic lubricants.
Adding to the sense of confusion in Washington, this week President Donald Trump unexpectedly appointed FHFA Director Bill Pulte as Acting Director of National Intelligence (DNI), a move that left many people inside and outside the intelligence community speechless.
In case you are wondering, Pulte will keep his FHFA job, notes mortgage market observer Rich Swerbinsky, where he serves as the regulator of half of the US market for housing finance. "I'm crushing it at FHFA," Pulte said in a statement. "Why stop now? Imagine what I'll do at both." An anonymous senior FHFA staffer responded: "Please. Please stop him."
As one Washington insider told The IRA: “Actually, this makes perfect sense if Trump wants Pulte to combat the deep state and to exorcise the spirit of John Brennan. Trump is still score-settling from Jan 6th.”
The appointment of Pulte as DNI resulted in a remarkable exchange during an appearance this week by Treasury Secretary Scott Bessent before the Senate:
Senator Thom Tillis (NC): "Did you actually tell Pulte you were going to punch him in the face?"
Bessent: "No, sir. I actually said I was going to kick his ass."
Tillis: "Good, I share the emotion…I'm not going to support Pulte for DNI…He lost me when he went after Powell."
This week Trump also announced he’ll formally nominate Acting Attorney General Todd Blanche for the post full-time. “This will be a difficult nomination for Senate Republicans,” notes Punchbowl News. “There’s no guarantee that Blanche — Trump’s former personal lawyer — can even get through the Judiciary Committee, much less get confirmed by the full Senate.”
The Treasury market rallied on hopes of a peace accord in the Middle East, but the 10-year Treasury note is still at 4.5%. The par 5.5% Ginnie Mae contract closed Thursday a 100-05, meaning that most lenders will be offering 6.5% fixed rate mortgages next week. We suspect that mortgage rates will move higher rather than lower, making us very grateful for the 5.875 30-year fixed rate mortgage we priced in April.
The financial markets continue to behave in a manic fashion, reacting to headlines about the prospect of peace in the Middle East, when the reality is far different. Even were peace agreed tomorrow, it would take literally years for the damage to productive assets in the Persian Gulf to be reversed.
Damage to Persian Gulf petroleum refining and energy infrastructure is projected to shave roughly 0.3% off forecasted global GDP in the coming year, largely through elevated energy prices and inflation. More severe local contractions (up to double-digit drops) may occur in heavily impacted Gulf economies. We think that the global impact could be greater once shortages of key industrial materials are fully factored into the analysis.
“Bitcoin posted its longest losing streak since August,” Bloomberg reports, “weighed down by liquidations of bullish bets and this week's rare sale of tokens by the dominant corporate buyer.” Gold and silver, by comparison, have held steady or declined modestly over the past five trading days. The action is AI-related stocks, however, remained brisk, but with some stocks falling in price.
Source: Yahoo Finance (06/04/2026)
NVIDIA (NVDA) was up roughly 2.08% over the last five trading sessions and gained approximately 2.44% on the 5-day window. Broadcom (AVGO) fell sharply by roughly 14.10% following a tech sector pullback after recent quarterly reports. Memory maker Micron Technology (MU) dropped about 7.74% over the five days amidst high cyclical volatility in the memory-chip market.
Alphabet (GOOGL) emerged as the top-performing megacap AI-related stock, surging nearly 10% over the trailing five trading days. The rally was driven by renewed investor enthusiasm over AI infrastructure spending following tech earnings reports. The AI investing crowd seems to go from one stock to the next, gunning even large cap stocks up hundreds of percent before moving on to the next target.
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