Brazil votes October 4, with a near-certain runoff on October 25 between President Lula and Senator Flávio Bolsonaro, the son and anointed successor of a jailed Jair Bolsonaro. The latest polling shows a dead heat.

The VICO model puts Flávio's chance of winning the presidency at 45%, lower than his 58% on Polymarket. But the model's sharper call is what a Bolsonaro victory would do to markets.

The VICO model sees a close race that tilts marginally toward the incumbent, putting Flávio at 45%, notably below prediction markets at 58%. The model is more cautious on Flávio because of his past scandals and Lula's incumbency advantage.

What keeps it this close is the anti-incumbent mood: both men carry roughly 50% disapproval, voters are focused on corruption, security, and the economy, and Flávio has inherited a mobilized Bolsonaro base even with his father behind bars.

A Bolsonaro victory is what investors are positioned to cheer. VICO's Scenario Explorer sees a sharp relief rally in Brazilian assets, though the currency's move would force the central bank to tighten hard.

The runoff will have a large impact on Brazilian assets as the future of government intervention is decided. A Flávio win means a rally in stocks and the real paired with a hawkish rate shock, while a Lula win is the mirror image, continuity and no relief rally, which is why global investors will be trading the October 25 result as closely as Brazilians vote it.

At the UN, President Trump framed a choice between a deal and whether to "annihilate the Islamic Republic," while the same day US and Iranian officials quietly met for three hours in New York.

VICO reads the threats as theater: the likeliest path is neither annihilation nor a breakthrough, but a holding pattern that pays off mostly for Democrats at home.

Major US strikes on Iranian nuclear sites this year look slightly unlikely but plausible, at 43%. With the war already deeply unpopular, the US has shifted to economic pressure for a reason, but recent buildup around suspected nuclear site Pickaxe Mountain could provoke a US response.

Real diplomacy looks even less likely in the near term, at 16%, held down by the sequencing standoff (Iran wants the blockade lifted first, Trump wants goodwill first) and by Trump's own signal that any deal waits until after the midterms.

With no strikes and no deal, the status quo holds, including the regime itself. The model sees little chance of the kind of collapse Trump gestures at.

The real movement is political, and it is at home. An unpopular, unresolved war is the single biggest reason the model now leans toward Democrats taking the Senate, a number that has climbed fast.

Trump and Zelensky are scheduled to meet today on the sidelines of the UN, where Trump plans to push him toward a ceasefire halting strikes on Russian energy infrastructure.

The meeting comes as diesel hits the most expensive price tag in American history, over $6.50 on the national average.

But VICO reads a deal as unlikely and sees the more probable path as a grinding energy war that continues to squeeze Russia's exports and, in turn, US consumers.

A mutual energy ceasefire in the next 90 days sits at just 25%, because neither side is likely to agree to a deal. The VICO model argues that Moscow sees the destruction of Ukraine’s energy grid as one of their main goals, and Ukraine views its strikes as successfully harming the Russian economy.

Those strikes are the story the model believes in: a 76% chance Russian crude or refined-product exports fall 10% or more in Q4. Rather than force Moscow's hand, Washington is likelier to lean on Kyiv, with a 55% chance it conditions further aid or intelligence on Ukraine accepting a truce.

The cost of a war with no truce continues to keep diesel prices up: with Russian barrels off the market and refineries burning on both sides, the VICO model sees just a 10% chance US diesel falls below $6 a gallon in the next 90 days.

The US and Denmark reached a security agreement over Greenland on September 18, expanding the US military presence and locking China and Russia out of the island's bases and mining sector, while leaving Greenland under Danish sovereignty.

By formalizing US backing and shutting out Chinese competition, the deal lowers the political risk on Greenland projects and opens the door to US government financing, which is why VICO expects it to draw more American investment into the island's rare earths.

That investment is being framed as a fix for US rare-earth dependence, but VICO's forecasts say the mineral payoff is years away.

The deal must be ratified by the legislative bodies in Greenland and Denmark; the VICO model expects the deal to clear that hurdle at 70%. It also expects the deal to pull in capital, giving a major US-backed investment before 2028 a 75% chance, since a binding US commitment lowers political risk and unlocks financing.

But money committed is not metal produced. A new commercial-scale mine entering production by the end of 2028 sits at just 15%, because Greenland's ice, thin infrastructure, and the need to build ports, roads, and processing at once push timelines well past the political calendar.

The deal promotes real investment from the US, with political risk lowered, but the logistical hurdles of arctic mining operations means the US is unlikely to gain access to the crucial minerals in the next few years, meaning supply will have to come from elsewhere.

But one thing is looking up:

Trump and Xi are set to meet in Washington later this month, with the October 2025 trade truce expiring November 10 and rare earths, chips, and Taiwan all on the table.

The meeting will be framed as a chance to reset, but VICO's forecasts point the other way: the two economies are already decoupling, and the summit is unlikely to reverse it.

China has little reason to escalate with new controls when its firms have already cut rare-earth exports to the US, so the leverage is being applied without a new rulebook. That puts the odds of Beijing's suspended secondary export-control round at just 26%, while the US looks set to advance the Taiwan arms package Beijing most wants stopped, at 55%.

The deals that would mark a real reset look nearly off the table, with a rare-earth supply guarantee at 8% and any easing of US chip restrictions at 5%, because each side would rather hold its leverage than trade it away.

With a supply guarantee at 8% and any chip easing at 5%, the model reads the summit as almost certain to end without a substantive deal on the two issues that matter most. Expect atmospherics and maybe a truce extension, not a resolution.

That makes no deal the base case to plan around, and it is bullish for the ex-China supply chain: domestic and allied rare-earth miners, plus defense contractors tied to the Taiwan deal, are the likely beneficiaries.

Political leaders from Scotland, Wales and Northern Ireland have joined forces to demand new votes on the future of the UK.

The declaration creates political pressure but VICO's model says it's unlikely to create an actual referendum with the probability of a legally binding vote at just 11%. 

For a referendum to happen, someone first has to unlock the legal authority to hold it. The VICO model sees two ways of reaching a vote, and neither are likely.

The political option, a UK government granting a Section 30 order or a Northern Ireland border poll, sits at 20%, because PM Andy Burnham has already ruled it "off the table" and a Prime Minister can simply refuse.

The judicial option is even lower at 5%: the Supreme Court ruled in 2022 that the devolved parliaments cannot authorize a referendum on their own, so a favorable ruling now would mean reversing that precedent.

Bottom line, a referendum requires one of two unlikely moves.

The declaration is leverage, not a countdown, so markets are likely to treat the union as intact.

The VICO Causal Explorer shows that raising the percentage over 50% would require an extremely intense campaign of political pressure that results in a major political crisis and the collapse of effective governance from Westminster.

• Even in that case, the probability is only 58%, showing how reluctant UK leadership would be to allow disintegration.

US envoys Witkoff and Kushner shuttled between Moscow and Kyiv this month, meeting Putin and Zelensky within days.

No breakthrough followed, but the model now sees trilateral US-Ukraine-Russia talks as more likely than not by the end of the year.

The VICO Causal Explorer identifies two factors that increase the likelihood of negotiations: continued battlefield deadlock at 77%, and constraints on US Patriot interceptor deliveries to Ukraine at 73%. As either side sees more battlefield success, negotiation odds decrease. The model argues that territorial gains, or firepower supremacy would provide the ascendant party with an incentive to continue the fight.

Together these factors help tilt the year toward negotiations, at 62%. 

The main threat runs the other way, in Russia's price of entry, at 29%, a risk that climbs with every Russian advance.

Talks are now the base case, pushed by a stalling front and a Ukraine bracing for a hard winter with thinner defenses. 

But getting to the table is not getting a deal. The VICO model's expectations for a ceasefire in 2026 remain low. 

• 20%: The probability that Russia and Ukraine reach a ceasefire in 2026. Versus Polymarket at 23%. The model argues that both sides still remain far apart on core issues like security guarantees and territorial disputes, both of which are unlikely to be ironed out in the next four months.

Yesterday, VICO told you the Houthis would take the Bab el-Mandeb Strait, today they did. The Houthis took Yemen's Red Sea coastline and a passage that carries roughly a quarter of seaborne oil, resolving the model's 75% capture call.

Saudi Arabia is already striking Houthi positions, and the model reads the capture as the start of a scramble that will likely remove Houthi control eventually.

The VICO model expects the Houthis to monetize the strait with a toll, given they now have both the capability and strategic incentive to do so.

The model doubts the hold lasts: a thinly held coastline under Saudi air attack is hard to keep, so it gives better-than-even odds they are pushed out before year end.

But US involvement looks shakier today than yesterday. This morning President Trump reportedly denied Saudi requests for US strikes on the Houthis, dropping the odds of a US strike to 40% from 78%. US escort missions now also are unlikely, at 35%.

Expect tolls and intermittent disruption while the Houthis hold the coast. But under sustained Saudi attacks, the VICO model expects them to lose control within the year. 

That means higher shipping costs in the short term as tankers have to pay the toll, and face higher risk transit. But it also means eventual relief when the Houthis are pushed back.