Downing and Out

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What we are following this week:

• Global Politics: Starmer Out, Iran, Colombia Election

• Domestic Politics: Housing Bill, Trump Senate Meeting, House Primaries, Political Lawsuits

• Economics: June Jobs Report, Fed Decisions, China Rare Earth Minerals, SpaceX Stock

• Special Section: World Cup Odds

Global Politics: Starmer Out, Iran, Colombia Election

Keir Starmer announced his resignation as Prime Minister of the UK on Monday, paving the way for Andy Burnham to take over as Labour’s new leader. Meanwhile, Vice President JD Vance reported progress during negotiations with Iran in Switzerland. And Colombian President Gustavo Petro alleged that Israel meddled in Colombian elections to help get Trump-endorsed Abelardo De Espriella elected. This week:

Starmer Out: We Called It

• In our May 21 newsletter, the VICO model put the probability of Starmer leaving office before August 1st at 92%, compared to Kalshi at just 55% for him to announce his departure.

• 75%: The probability that Andy Burnham becomes the next UK Prime Minister. (Polymarket: 98%)

  • If Burnham becomes the PM:

    • 85% probability that Burnham’s wealth tax proposals trigger capital flight on the London stock exchange, boosting yields on 10-year UK gilts by .75%.

• 76%: The probability that Burnham serves for a continuous period of at least two years if he is elected as Prime Minister.

  • 88% probability that Burnham lasts at least one year.

• 12%: The probability that the UK has a Reform UK Prime Minister in the next 4 years.

  • While the VICO model notes Reform’s polling plurality (30% vs 18% for the Conservatives), it argues that Reform voters are geographically spread out, which hurts their chances of a majority in a first-past-the-post system.

    • The model highlights the recent Makerfield election, in which a Reform candidate received 35% of the vote, but still lost to Labour’s Andy Burnham.

• 83%: The probability that all UK Prime Ministers in the next four years are either Labour or Conservative.

Iran

• In our June 11 newsletter, the VICO model put the probability of a deal with Iran concerning nuclear capabilities in the next 60 days at just 4%. Today, the forecast remains highly unlikely, at just 6%.

• • In our last week’s newsletter, the VICO model put the probability that Iran agrees to surrender enriched uranium in the next 60 days at 3%.

• Polymarket’s forecast on Iran agreeing to end the enrichment by July 31 rose sharply after the announcement of the MOU, but collapsed after Iranian negotiators insisted they would not end enrichment during talks in Switzerland.

• • While prediction markets continually jump at the sign of flashy news headlines, the VICO model has remained committed to structural fundamentals, which say Iran is unlikely to give up nuclear enrichment in the near-term.

MOU Scenarios

Below are each MOU scenario with the probability of different events that would push the deal in that direction.

• 52%: The MOU collapses, and strikes resume in the next 60 days.

  • 89%: Israel strikes Iran

  • 72%: Escalation of strikes between Israel and Lebanon

  • 24%: Iran formally rejects nuclear stockpile export deal

  • 14%: Iranian Navy continues or escalates mine-laying

• 46%: The MOU results in neither a permanent ceasefire nor strikes, and a peaceful stalemate ensues in the next 60 days.

  • 82%: Strait of Hormuz remains partially open.

  • 42%: China pressures Iran to continue diplomatic talks to protect mineral imports.

  • 26%: Israel-Lebanon conflict remains contained without major escalation.

• 2%: The MOU results in a permanent ceasefire in the next 60 days.

  • 6%: Iran and the US reach a nuclear agreement.

  • 6%: Strait of Hormuz reopens unrestricted to all commercial vessels.

  • 3%: Israel and Hezbollah reach a formal ceasefire agreement

Colombia Election: We Called It

• In our June 4th newsletter, the VICO model gave De Espriella a 78% chance to win the Colombian Presidential election.

• 78%: The probability that the Colombian government launches a formal investigation into the presidential election.

  • 12%: The probability that voter fraud is confirmed in 2026.

• 88%: The probability that Abelardo De Espriella is inaugurated on time (August 7).

  • The VICO model argues that the Colombian government is likely to launch an investigation, and possibly legal challenges, but that these will likely ultimately be fruitless, and De Espriella will take office on time.

    • Despite news attention being given to the voter fraud allegations, we are calling this story largely noise.

Domestic Politics: Housing Bill, Trump Senate Meeting, House Primaries, Political Lawsuits

In a surprise move, President Trump announced on Wednesday that he would refuse to sign the bipartisan ROAD to Housing Act. The move comes on the same day the President met with Senate Republicans to express his dissatisfaction with their inability to pass the SAVE Act, and the passing of the Iran War Powers Act. Meanwhile, Tuesday’s primary elections saw three Mamdani-endorsed candidates win in competitive primaries against more moderate candidates. And finally, President Trump threatened to sue ABC over their coverage of the reflecting pool. This week:

Housing Bill

• 78%: The probability that the ROAD to Housing Act becomes law before the midterms.

  • What if President Trump vetoes the ROAD to Housing Act?

    • 90%: The House fails to overturn the veto, with a majority of Republicans aligning with the President

    • 65%: Democrats weaponize the veto in the midterms, boosting voter turnout.

  • What if the ROAD to Housing Act becomes law?

    • 85%: In the first 18 months, the bill increases housing supply, stabilizing national annualized housing cost growth at 3-5%.

    • 70%: Publicly traded Real Estate Investment firms experience a short-term dip of roughly 5-10% in response to new acquisition restrictions.

    • 60%: The bill amplifies calls to relax local zoning laws in cities across the country, resulting in mixed levels of success, with progressive states seeing the most movement.

Trump Senate Meeting

• 16%: The probability that the SAVE Act becomes law before the midterms.

• 24%: The probability that the Save College Sports Act becomes law in 2026.

• 28%: The probability that President Trump will withhold fundraising support from a Senate Republican for the midterms.

House Primaries

• 24%: The probability that at least 5 progressive Democrats attempt to block Hakeem Jeffries’ bid for speaker if Democrats take the House.

  • While two of the candidates elected in New York City explicitly refuse to back Jeffries publicly, the VICO model points to the historic trend of unity on leadership votes among Democrats to argue that not many others are likely to join.

• 48%: The probability that Melat Kiros wins Colorado’s 1st district Democratic primary.

  • Kiros is another DSA candidate, currently polling well in Colorado. The VICO model is slightly higher on her opponent, Diana DeGette, largely because of her status as a 30-year incumbent.

Political Lawsuits

• 42%: The probability that President Trump sues ABC in the next year.

• 18%: The probability that Elon Musk sues Ro Khanna in the next year.

  • Musk threatened to sue Rep. Khanna over his claims that USAID’s dismantling sentenced 4.5 million children to death.

Economics: June Jobs Report, Fed Decisions, China Rare Earth Minerals, SpaceX Stock

After a strong May jobs report, investors are optimistic for another strong BLS report next week. But with job gains amidst rising inflation comes the risk of future rate hikes, a possibility Kevin Warsh alluded to at the last Fed meeting. At the same time, China launched more export restrictions on rare earth minerals, threatening more trade clashes. And SpaceX stock tumbled more than 25% from its high on Wednesday of last week. This week:

June Jobs Report

• 78%: The probability that the US adds at least 50,000 jobs in June (Kalshi: 80%)

• 68%: The US adds at least 100,000 jobs in June (Kalshi: 53%)

• 45%: The US adds at least 150,000 jobs in June (Kalshi: 24%)

  • This month, the VICO model is more bullish than prediction markets on the possibility of better-than-expected job growth.

Fed Decisions

• 38%: The probability that the Fed raises rates at their July meeting. (Polymarket: 23%)

• 88%: The probability that the Fed raises rates at least once in 2026. (Polymarket: 55%)

  • The VICO model remains higher on Fed interest rate raises than prediction markets, arguing that inflation presents a more immediate problem for the Fed than job growth.

China Rare Earth Minerals

• 32%: The probability that China implements its rare earth mineral export controls scheduled for November.

  • The forecast remains unlikely, as the VICO model is high on the possibility of the US and China reaching an agreement to delay the additional controls. However, the forecast is up from a low of 15% in early May.

• 88%: The probability that the US retaliates with sanctions or export controls in the next 180 days.

SpaceX Stock

• 82%: The probability that SpaceX stock ends the year above the closing price on IPO day.

Special Section: World Cup Odds

The VICO model is designed for political and economic analysis rather than sports or entertainment, but we still thought it would be an interesting experiment to forecast World Cup odds. Here are the odds for the ten teams with the highest odds to win the entire tournament:

1. 17%: Spain (Kalshi: 14%)

2. 16%: France (Kalshi: 19%)

3. 15%: Germany (Kalshi: 5%)

4. 12%: Argentina (Kalshi:15%)

5. 12%: England (Kalshi: 11%)

6. 6%: Portugal (Kalshi:8%)

7. 5%: Brazil (Kalshi: 5%)

8. 5%: Netherlands (Kalshi: 5%)

9. 4%: USA (Kalshi: 3%)

10. 2%: Norway (Kalshi: 4%)

• The VICO model’s largest discrepancy with prediction markets comes in Germany, where the model gives a much higher chance of winning the whole tournament. The model argues the Germans have an exceptionally deep roster, with high-quality players across positions, even on the bench.

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.