Bombing the Deal

Access VICO forecasts or make your own at www.vico.io as well as on the Bloomberg Terminal at WSL PREDICT<GO>, WSL ELECTION<GO> and WSL VICO<GO>.

What we are following this week:

• Global Politics: US x Oman, US x South Korea, Israel

• Domestic Politics: 2028 Primary Preview, Tuesday Primaries, ABC Suing FCC

• Economics: Treasuries, Canada Tariffs, Moderna

Global Politics: US x Oman, US x South Korea, Israel

We Will Not Bomb Oman

• The president’s threat to bomb Oman is a response to negotiations between Oman and Iran to split control of the Strait of Hormuz.

• VICO doesn’t believe the threats.

  • 12%: The probability that the US strikes Oman in the next 90 days. (VICO ticker: VICODXVB)

• In any case, on the possibility of a deal, the VICO model is less bullish than prediction markets.

  • 36%: The probability that Oman and Iran announce a Strait of Hormuz management agreement by September 30th. Versus Polymarket at 40%

    • The VICO model notes that Oman has a history of trying not to antagonize Washington which a deal would certainly do.

• Regardless, the model shows that an agreement alone would be unlikely to normalize shipping in the Strait.

  • 8%: The probability that shipping normalizes in the Strait of Hormuz in the next 120 days. (“Normalizes” is defined as 60 or more ships per day.)

• Meanwhile, the model believes that the probability that the US lifts the Iranian blockade by September 30th is only 6%. Versus Polymarket at 33%

• Taken together, this amounts to a continued stalemate.

US x South Korea - Opening the Door to North Korea?

• The US scaled back joint military exercises with South Korea earlier this week following the president’s order.

• The VICO model thinks the order will stick.

  • 32%: The probability that the US reinstates full joint military drills during President Trump’s term.

• Why the change now? The model sees an opening for personal diplomacy between the president and Kim Jong Un in response to the move.

  • 58%: The probability that President Trump meets with Kim Jong Un in the next 365 days.

    • The model points to the reduction in exercises as a substantive show of goodwill to justify a forecast of more than 50%.

• But even if Trump meets with Kim Jong Un, the question of meaningful diplomacy is different. The model maintains that North Korea and the US do not have aligning strategic objectives, making any resulting deal unlikely.

  • 20%: The probability that the US reaches a deal with North Korea concerning nuclear weapons during President Trump’s term.

• On the other hand, the model doesn’t see a war on the Korean peninsula.

  • 18%: The probability that North Korea strikes South Korea or American forces in South Korea in the next 3 years.

Israel

• In his meeting with Prime Minister Netanyahu, Jared Kushner reportedly urged Israel to push forward with a deal that would see Israel withdraw from the Gaza Strip in exchange for Hamas disarmament.

• The model doesn’t see a follow through in the near-term.

  • 12%: The probability that Israeli forces begin a withdrawal from the Gaza Strip in the next 90 days.

    • The model is clear that the Israeli elections make a withdrawal politically painful for Netanyahu. He faces a steep challenge from opposition parties who have hit the Israeli government on concessions to Hamas.

      • 36%: The probability that Netanyahu wins the Israeli parliamentary elections.

• As a result, the model is low on the odds for a Hamas disarmament.

  • 18%: The probability that Hamas begins the transfer of heavy weapons to a third party as part of disarmament in the next 90 days.

• Without a commitment from Israel, the VICO model sees a continuation of the status quo.

Domestic Politics: 2028 Primary Preview, Tuesday Primaries, ABC Suing FCC

2028 Primary Preview

• In recent newsletters (including last week’s) we have been heavily covering the midterm elections and primaries. But before we dive completely into the general elections in later editions, we want to give a sense of what the model thinks about the very early 2028 primary picture.

• The odds for each frontrunner to win the Republican nomination for president.

  • 31%: VICO ticker: VICOGXNZ Versus Polymarket at 47%

    • The VICO model is bearish on Vance compared to the market, citing his position as the number two in a broadly unpopular administration.

  • 30%: Marco Rubio VICO ticker: VICOCCJR Versus Polymarket at 23%

    • By contrast, the model is slightly bullish on Rubio owing to his positive status with donors and his visibility within the cabinet.

  • 9%: Ron DeSantis Versus Polymarket at 3%

  • 8%: Nikki Haley Versus Polymarket at 1%

  • 6%: Tucker Carlson Versus Polymarket at 3%

  • 6%: Pete Hegseth Versus Polymarket at 1%

• The odds for each frontrunner to win the Democratic nomination for president.

  • 17%: Josh Shapiro Versus Polymarket at 5%

  • 16%: Pete Buttigieg Versus Polymarket at 5%

  • 12%: Alexandria Ocasio-Cortez Versus Polymarket at 21%

  • 12%: Mark Kelly Versus Polymarket at 3%

  • 10%: Gavin Newsom Versus Polymarket at 15%

  • 10%: Jon Ossoff Versus Polymarket at 14%

• In both parties, the VICO model is higher on moderates (Rubio, Haley, Shapiro, Buttigieg) than prediction markets. The model puts large emphasis on the electability argument that moderates can use in the primaries.

Tuesday Primaries

• In a shocking upset, DSA member Angie Nixon defeated Alexander Vindman for the Democratic nomination for US Senate in Florida.

  • 5%: The probability that Angie Nixon (D) wins the Florida Senate election. Versus Polymarket at 6%

    • The VICO model explains that Nixon’s ideological profile makes an already uphill battle for Democrats even more difficult. In particular, the model highlights that socialism is uniquely unpopular with Florida’s large immigrant community.

• Alaska’s Senate primaries sent incumbent Dan Sullivan (R) and challenger Mary Peltola (D) to a general election faceoff in November.

  • 25%: The probability that Dan Sullivan (R) wins reelection to the Senate in Alaska. Versus Kalshi at 44%

    • The VICO model emphasizes that Peltola is uniquely electable as a Democratic candidate, having won a statewide race for Alaska’s only House seat in 2022. Combined with Trump’s unfavorability, Peltola’s electability makes her the favorite according to VICO.

ABC Suing FCC

• ABC is suing the FCC over demands for early broadcast license reviews. The news organization alleges that the FCC’s conduct represents retaliation for speech protected by the First Amendment.

  • 28%: The probability that ABC wins its First Amendment lawsuit against the FCC.

    • The VICO model explains that while the evidence in this case is uniquely direct to argue political retaliation, the FCC has broad statutory authority to review licenses, with courts typically deferring to the agency’s expertise.

Economics: Treasuries, Canada Tariffs, Moderna

Treasuries

• The Treasury doubled its long-bond buyback operations this week from $2 billion to $4 billion in an effort to decrease yields.

• The VICO model anticipates continued intervention in the bond market from the Treasury Department on a larger scale than we’ve seen previously:

  • 70%: The probability that the Treasury performs buybacks on long-term bonds again next quarter.

    • The VICO model highlights that new buyback programs are typically maintained to avoid destabilizing the markets.

• The VICO model also expects inflation and debt-to-GDP to continue rising. Both factors make bond interventions more likely.

  • 77%: The probability that the US federal debt-to-GDP ratio reaches at least 140% in the next 5 years.

  • 52%: The probability that inflation exceeds 4% again in 2026.

Canada Tariffs

• The US was set to levy new 50% tariffs on Canadian goods until a last minute deal was reached to delay their implementation by three days.

  • 85%: The probability that the United States and Canada reach a finalized agreement to permanently reduce or avoid the 50% Section 338 tariffs before August 23, 2026.

    • The VICO model treats the 72-hour grace period as a sign that an agreement is near.

Moderna

• Moderna’s stock more than tripled on Wednesday to $174 after the company released positive results in a phase 3 trial for a cancer vaccine targeting melanoma.

  • 82%: The probability that the FDA grants approval for Moderna’s intismeran autogene (mRNA-4157) in combination with Keytruda for the treatment of melanoma before December 31, 2027.

    • The VICO model explains that oncology drugs that meet phase 3 checkpoints have very high FDA approval ratings, making approval highly likely.

• Moderna has another cancer vaccine undergoing phase 3 trials targeted at non-small cell lung cancer.

  • 52%: The probability that Moderna announces successful phase 3 clinical trials for an mRNA-based cancer vaccine targeting non-small cell lung cancer in the next two years.

About Us

• VICO empowers decision makers to quantify and navigate event risk. Forecast, simulate and monitor political, geopolitical and economic events.

• Learn more and obtain a beta account at www.vico.io or email us at inquire@vico.io

Methodology and Copyright Notes:

All percentage changes are over the last week except where noted.

Our proprietary AI models are rigorously backtested and do not rely on any betting market information.

All data and content are owned by and copyrighted by VICO Technologies Inc.