Lead Story
Kalshi prices not unbiased probabilities, CEPR finds strong favourite-longshot bias
An examination of Kalshi’s contract prices finds that while near-term pricing tracks win probabilities loosely, a pronounced favourite-longshot bias persists; cheap bets underperform and the expensive bets yield marginal gains, suggesting prices are not unbiased probabilities.
Prediction markets have long promised a clearer read on where public information converges, yet a CEPR study of Kalshi data challenges that narrative. The analysis draws on more than 300,000 contracts across politics, economics, and entertainment, and shows that contract prices broadly reflect the odds of winning as expiry approaches, but with a persistent bias. The cheapest contracts tend to lose more often than their price would imply, while some of the more expensive bets return small positive margins. The result is a persistent pre-fee negative return profile that unsettles the orthodox view of prediction markets as pure probability aggregators.
The report underscores differences between makers and takers, with the bias amplified for takers who tend to overestimate small probabilities and gravitate toward the certainty of a positive return. A simple model within the paper attributes part of the phenomenon to risk preferences and the winner’s curse, alongside a modest probability distortion. The authors conclude that Kalshi’s broad market structure, including uncapped volumes, has not yet delivered the promised predictive accuracy. They caution policymakers and institutional users to treat Kalshi prices as informative but not as unbiased probabilities.
Near-term implications centre on how officials and firms use prediction-market insights in policy design and risk management. As expiry nears, prices may converge toward underlying fundamentals, but the bias persists across sub-samples and asset classes, suggesting limits to what these markets can reliably reveal. The study recommends tracking pricing accuracy as expiry approaches and following ongoing research on market bias and regulatory framing in the United States.
Observers are advised to watch for updates on Kalshi pricing accuracy, ongoing bias research, and policy discussions that could alter the operating environment for prediction markets. If the underlying drivers of the bias shift-through participant composition, market design, or regulatory change-the practical value of Kalshi as a forecasting tool could change accordingly.
In This Edition
- EU capital markets reform should focus on innovation investment: practical reforms to finance growth and scale-up firms in Europe
- South Korea is a massive bubble, says emerging market specialist: AI-driven flows and margins raise drawdown risk
- Defence is no longer a red line for many ESG investors: rising defence exposure reshapes allocations
- Can global real estate continue to build on outperformance in 2026: regional leadership and data centre trends
- Super Tanker Rates Soar Amid Sanctions, Supply Shifts, and Strategic Hoarding: fleet consolidation and rate volatility
- Turkey Begins Ultra-Deepwater Oil Drilling in Horn of Africa: strategic expansion and governance questions
- Atlas Salt, Sandvik expand collaboration for Great Atlantic salt project in Canada: execution certainty and electrification
- BHP and Wheaton sign $4.3bn silver streaming deal in Peru: monetising assets while preserving copper exposure
- Niger to return 95,000 tons of uranium powder to Orano: resource nationalism and supply chain implications
- Aramco signs 1 million tonnes LNG off-take for 20 years: LNG flows reshape US and global markets
Stories
EU capital markets reform should focus on innovation investment
Europe faces an innovation capital gap that holds back scale-ups and late-stage financing; a Bocconi report sets out six practical reforms to unlock more risk-taking capital within Europe.
EU venture capital activity remains markedly below US levels, particularly in the scale-up segment, where long-horizon funding and credible exit routes are scarce. The Bocconi Institute for European Policymaking argues that frictions across national regimes and regulatory fragmentation damp cross-border investment and raise transaction costs. The cost of failing to provide adequate late-stage financing is a drag on Europe’s productivity performance and strategic autonomy.
The report highlights a pronounced scale-up gap, with EU venture investment trailing US levels by a wide margin at each stage of firm development. Dealroom data show Germany and France hosting the bulk of unicorns within the EU, but the UK and the United States host far more, with exits increasingly denominated in US dollars rather than euros. The Paris-Berlin-Brussels axis thus underscores a risk that Europe’s most valuable firms relocate liquidity and growth to the US.
The six recommendations prioritise practical, near-term gains: EU-labelled savings accounts aimed at channelling household funds into risk capital, new private pension instruments to diversify institutional allocations, EURIPO to foster Eurosystem-friendly exits, cross-border custodian simplification, innovation-friendly securitisation to free bank balance sheets, and a strengthened European Investment Bank role to de-risk private investment and align national initiatives.
Executives and policymakers will watch how uptake unfolds, how EURIPO evolves, and whether scale-up finance and currency-based exits begin to move closer to parity with the US. The proposals are designed to be incremental yet complementary, offering a pragmatic path toward a more integrated yet realistically staged European capital market.
Stories
South Korea is a massive bubble, says emerging market specialist
An emerging market analyst warns that South Korea’s AI-driven dynamics may be inflating a bubble, with margins and earnings quality under strain and a warning for investors leaning on hype rather than fundamentals.
Rob Marshall-Lee of Cusana Capital has characterised South Korea as a “massive bubble” driven by AI-linked flows and episodic earnings upgrades that may not be sustained. He notes a stark contrast between a 92.8% three-year gain versus regional peers and margins that have surged in some cases from the mid-teens to around seventy percent. The concern is that a significant reversion in margins or a shift in the AI narrative could trigger sharp drawdowns for investors who have priced in others’ optimism.
The analysis cautions that a misalignment between price and underlying earnings quality could amplify market moves as the AI narrative evolves. If margins normalise or if AI exposure fails to translate into durable profitability, stocks could experience meaningful downdrafts even while headline AI themes remain attractive. Governance reforms and better disclosure of AI risks will be critical to underpin investor confidence.
Investors should monitor earnings quality and returns on equity across Korean names versus regional peers, plus governance and board oversight on AI exposure. The near-term signal would be whether earnings momentum is sustained beyond AI-driven sentiment and whether valuation multiples adjust in step with fundamental outcomes.
Stories
Defence is no longer a red line for many ESG investors
Defence exposure is rising in ESG-focused funds as geopolitics intensify, with UK defence spending and fund allocations drawing greater attention to potential performance shifts.
A Hargreaves Lansdown ESG survey shows increasing defence exposure within funds as geopolitical tensions intensify. UK defence spending, reported at 380 billion in 2025, features inside a typical tracker at around 5.9 percent. Attitudes toward firearms have softened among some investors, widening tolerance for sector inclusion in an otherwise risk-averse framework.
The shift has the potential to recalibrate sector weights across major indexes and fund ranges, altering portfolio construction, risk budgeting, and investor suitability. The change could affect the relative performance of defence-focused strategies versus exclusionary approaches, particularly if geopolitical hotspots persist and defence production ramps up.
Wealth managers and funds will be watching changes in Wealth Shortlist allocations, demographic differences in attitudes toward defence exposure, and any resulting reweightings at the fund level. The broader question is whether this realignment improves resilience or raises concentration risk in political supply chains.
Stories
Can global real estate continue to build on outperformance in 2026
Global REITs posted stronger 2025 returns across Asia Pacific and Europe, suggesting a regional rotation in the sector’s leadership that could extend into 2026 as data centres and senior living remain high intensity growth themes.
Global REITs outperformed US peers through 2025, aided by regional strength in Asia Pacific and Europe and by secular demand drivers for data centre capacity and senior living facilities. Investors are eyeing a potential catch-up in Europe and Asia as macro support and occupancy trends stabilise. The relative underperformance of US REITs in prior years has given way to renewed interest in regional assets that are exposed to growth in consumption and infrastructure cycles.
A sector rotation narrative is taking hold, with valuations and policy support shaping upside potential for regionally focused players. Data centres and tech-enabled real estate remain central to the thesis, while macro-policy support for domestic consumption across Europe and Asia adds a layer of credibility to stay invested.
However, the pace of policy normalisation and the trajectory for interest rates will be critical near-term determinants. If macro conditions tighten or if capex cycles slow, price performance could lag, even as long-run secular drivers stay intact. Investors will watch REIT performance by region, alongside data-centre exposure and the policy backdrop for property and urban logistics.
Stories
Super Tanker Rates Soar Amid Sanctions, Supply Shifts, and Strategic Hoarding
VLCC freight rates surged as Sinokor expanded control of a large fleet, driving volatility and reshaping global oil pricing and supply routes.
The tanker market is adjusting to a consolidation wave led by Sinokor, which has moved to control an estimated 120 VLCCs. This build-up coincides with tight supply conditions and high demand from East Asia, lifting daily earnings above 120,000 dollars in late 2025 and feeding into multi-year rate gains year on year. The market’s structure is shifting as a smaller group of large owners dominates capacity, encouraging rate volatility as time-charter decisions align with strategic pricing.
Analysts note that the concentration of tonnage gives the consolidators leverage to hold back ships when rates do not meet their target levels, a development that can amplify price swings in both short and longer horizons. The tightening of supply, alongside geopolitical frictions and sanctions, is altering freight flows from the Persian Gulf to the U.S. Gulf Coast and to Asia, with spot market dynamics proving more sensitive to owner-led pressure.
Observers stress the need to monitor fleet ownership shifts, charter-rate developments, and the pace at which sanctions-impacted routes adapt. The broader implication could be a re-pricing of global crude flows and a potential impact on crude pricing benchmarks as shipping costs become less predictable.
Stories
Turkey Begins Ultra-Deepwater Oil Drilling in Horn of Africa
Turkish state company TPAO is moving into offshore blocks in Somalia, a high-stakes expansion that could reshape Africa’s energy map and Turkey’s regional influence, subject to security and legal considerations.
Following a multi-year seismic programme and a formal drilling campaign, Turkey has begun operations with Cagri Bey in Somali waters, marking a major step in an expansive Africa strategy. Somalia is estimated to hold substantial oil and gas resources, and Turkey’s move aims to unlock these reserves while strengthening strategic ties in the Horn of Africa region. The venture is wrapped in questions about legal terms, sovereignty, and the security framework surrounding offshore exploration in a fragile context.
Turkish officials frame 2026 as a year of discoveries, while observers caution that the legal framework and revenue arrangements will determine whether the project translates into enduring gains for Somalia or becomes mired in disputes. The depth targets are significant, with exploration pushing toward several thousand metres below sea level, and the venture could influence regional power dynamics if discoveries prove large and governance arrangements are credible.
Security considerations loom large given Somalia’s long-running conflict and governance challenges. The commercial upside depends on stable access to resources and favourable fiscal terms, alongside robust revenue-sharing practices that support development at home while attracting foreign investment. Analysts will track progress on drilling campaigns, depth milestones, and the evolving terms of revenue distribution with Somalia’s authorities.
Stories
Atlas Salt, Sandvik expand collaboration for Great Atlantic salt project in Canada
Atlas Salt and Sandvik advance the Great Atlantic project with an expanded scope, emphasising electrification and a capital plan centred on equipment throughput and financing.
The expanded MOU envisions a higher production rate of 4 Mt per year, up from 2.5 Mt, with a total Sandvik scope valued around C$132 million. The collaboration integrates Sandvik equipment into the project, supporting a ramp-up strategy and the broader electrification narrative for a major Canadian salt resource. A non-binding financing plan accompanies the expansion, reflecting an integrated approach to capital deployment and project execution.
Execution certainty is at the core of the partnership, with the project benefiting from Sandvik’s technology and Atlas Salt’s resource access. The plan also points to a longer-duration outlook for critical mineral supply chains and grid-friendly materials, with the shift toward electrification underpinning demand for salt-based feedstocks and allied solutions.
Watch timelines for the underground and surface works, equipment orders, and any financing commitments tied to the ramp-up. Interconnection discussions and offtake arrangements will be important to monitor as the project moves from planning to the first operational phase.
Stories
BHP and Wheaton sign $4.3bn silver streaming deal in Peru
BHP will stream a substantial portion of silver from the Antamina mine, creating a new cash flow stream while maintaining copper exposure.
The streaming agreement covers 33.75 percent of silver from Antamina, with 90 percent payable until the first 100 million ounces are delivered, after which the stream persists at 22.5 percent. Wheaton pays 20 percent of the spot price for each ounce. The deal monetises one of BHP’s flagship assets while preserving exposure to copper, aligning with broader capital-allocation strategies and shareholder value.
Delivery milestones and the tenor of the stream will be watched for implications on cash flow profiles and debt management at both companies. The contract is expected to influence how investors value silver and other by-product streams in major mining portfolios, potentially affecting financing structures and capital markets reactions.
Analysts will assess how the Antamina stream interacts with copper price dynamics, mining costs, and the company’s broader commodity mix. The near-term focus will be on the timing of deliveries and any adjustments to offtake terms driven by market shifts or operational performance at Antamina.
Stories
Niger to return 95,000 tons of uranium powder to Orano
Geopolitical tensions over resource nationalism continue as Niger agrees to return yellowcake to Orano, affecting long-term mining project risk and international supply chains.
Niger’s government has announced the return of 95,000 tonnes of yellowcake to Orano, comprising 63.4 percent of the Somair mine’s 150,000 tonnes produced. The move follows ongoing nationalisation dynamics after 2024 and signals ongoing host-state leverage over critical minerals. The arrangement highlights the risk to host-country control and the implications for international energy supply chains.
The decision underscores the broader pattern of strategic minerals governance, where host states seek greater influence over resource revenues and future development trajectories. Niger’s policy posture and future negotiations with China and France will shape Somair’s operations and the asset’s value to its operators and investors.
Observers will track Niger’s broader stance on strategic minerals, potential shifts in Somair’s production strategy, and how revenue-sharing arrangements evolve under ongoing political conditions. The long-term implications for European and global energy security depend on whether resource nationalism stabilises or intensifies in the face of evolving geopolitical pressures.
Stories
Aramco signs 1 million tonnes LNG off-take for 20 years
Aramco’s 1 million tonnes per year LNG off-take with Commonwealth LNG marks a major extension of US LNG export capacity and reconfigures global gas-market flows.
The 20-year agreement projects substantial export revenue and strengthens the US LNG export position, with Commonwealth LNG describing potential total volumes up to 9.5 Mtpa. The deal is expected to influence project financing, infrastructure planning, and regional pricing dynamics as the Gulf region’s LNG capacity expands.
Market observers will watch for final offtake volumes, timing of any FID, and the availability of project financing and support from policy frameworks. The arrangement could affect pricing benchmarks and routes for LNG, particularly as Europe and Asia balance imports against competing energy investment opportunities.
Near-term signals to watch include confirmations on offtake volumes, project funding milestones, and any regulatory or infrastructure updates that could unlock further capacity and demand for LNG exports from situated hubs in the Gulf and southern United States.
Narratives and Fault Lines
- The governance of capital markets and the role of cross-border exemptions are increasingly entangled with Europe’s aim for strategic autonomy, while real-money investors watch for practical, near-term reforms that unlock scale-ups rather than broad structural harmonisation.
- In energy markets, a shift toward long-duration storage and diversified LNG supply chains is creating a more complex risk environment for traders, utilities, and policy makers, as sanctions, fleet concentration, and new routes alter traditional pricing dynamics.
- Sovereign risk and resource nationalism continue to shape mining project viability in Africa and beyond, with revenue-sharing arrangements and host-state leverage likely to influence long-term investment decisions and project execution.
Hidden Risks and Early Warnings
- Watch for re-pricing of EU scale-up finance if EURIPO delays or custodian frictions persist; the impact could slow exits and liquidity.
- Monitor energy-policy shifts that could rebalance LNG demand and pricing benchmarks, especially if new sanctions or infrastructure constraints emerge.
- Governance concerns around resource nationalism may trigger renegotiations with major miners and affect project timelines for offshore and upstream ventures.
- Freight-rate volatility remains sensitive to fleet consolidation and sanction routing, potentially amplifying price swings for crude and refined products.
- The accuracy and reliability of AI-enabled forecasting in high-risk sectors will determine where firms invest in automation and how risk controls evolve.
- Sovereign decision-making in mineral-rich states could alter the economics of long-life assets and force re-pricing of associated equities.
- Data centre demand and storage deployment remain a tail-risk factor for grid planning, where regulatory constraints or slower adoption could affect project economics.
- The intersecting influences of policy, currency dynamics, and cross-border investing might create a near-term environment of mixed signals for venture capital and commodity markets.
- In shipping, fleet ownership concentration could lead to higher barriers to entry and more pronounced price spikes during periods of geopolitical stress.
- The regulatory and legal frameworks governing offshore energy exploration in fragile states may constrain project timelines and capital flows.
Possible Escalation Paths
- Escalation: LNG capacity expansion accelerates; project financing lines firm up; observable improvements in FID timing and pipeline interconnections.
- Trigger: Finalisation of offtake volumes and project funding milestones; regulatory approvals and policy support announcements become more frequent.
- Escalation: Sanctions redefine routing; sanctions-affected corridors witness persistent congestion and rate volatility; market signs include charter-rate spikes and route-specific price shifts.
- Trigger: Reallocation of LNG flows from traditional routes toward new hubs; infrastructure upgrades and port capacity come online.
- Escalation: Resource-nationalist moves tighten revenue-sharing terms; Somair and other mines face renegotiations; observable indicators include revised contracts and royalty-rate discussions.
- Trigger: Government stance on strategic minerals conveys stronger leverage; negotiation timelines and settlement terms shape asset valuations.
- Escalation: AI adoption translates into measurable productivity gains; desk-level productivity boosts and risk-management improvements become apparent.
- Trigger: Implementation of advanced analytics in trading desks and risk systems; new governance frameworks accompany AI deployments.
- Escalation: European capital markets show measurable progress on the six reforms; early adoption and liquidity improvements appear in Dealroom and EIB data.
- Trigger: Uptake statistics indicate increased cross-border investment and a measurable rise in scale-up exits denominated in euros.
Unanswered Questions To Watch
- Will EU savings accounts deliver meaningful scale-up financing quickly?
- Can EURIPO deliver credible European exits at scale?
- How will EU custodian reforms affect cross-border settlement costs?
- Will EU private pensions shift institutional allocations toward higher risk?
- Are Korean earnings and margins sustainable if AI-driven gains recede?
- How quickly will defence exposure influence overall ESG fund performance?
- Do tanker fleet consolidations persist, and how will that affect rate volatility?
- Will Somalia’s governance framework permit stable drilling returns for Turkey?
- How will the Great Atlantic project’s financing stack up in the face of higher capital costs?
- Will Niger’s resource nationalism affect Orano’s operations long term?
- Will Aramco’s LNG deals alter global pricing benchmarks meaningfully?
- How quickly will 24/7 solar storage projects translate into grid reliability gains in California?
- Are AI-driven desks delivering verifiable productivity gains across commodities markets?
- What will be the medium-term impact of large silver streams on BHP and Wheaton’s cash flow?
This briefing is published live on the Newsdesk hub at /newsdesk_commodities on the lab host.