Ceasefire will be indefinite, Trump says, as top economist puts risk of recession at 40% if Hormuz stays closed

Good morning. On Fortune’s radar today:

- Gates Foundation investigates ties to Epstein.

- Ceasefire will be indefinite, Trump says.

- Hormuz closure pushes chance of recession in the U.S. to 40%.

- Markets: S&P futures decline after record high.

- Iran could face the USA in the World Cup 😬

- Kevin Warsh may not arrive at the Fed until after the war.

THE MARKETS

Record high yesterday, profit-taking today

- S&P 500 futures were down 0.5% this morning, a sign of profit-taking after the index rose 1.05% yesterday to a new record high of 7,137.9.

- In Europe, the Stoxx 600 declined 0.39% in early trading and the U.K.’s FTSE 100 was down 0.83% before lunch.

- Asia: South Korea’s KOSPI closed up 0.9%, a new all-time high. But elsewhere, traders sold off. Japan’s Nikkei 225 was off 0.75%. India’s Nifty 50 was down 0.8%. China’s CSI 300 was down 0.28%.

- Brent crude was above $103 this morning. That’s up from its recent low of $85 on April 17, per TradingEconomics.com:

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ONE BIG THING

Gates Foundation investigates its ties to Epstein—weeks before Bill Gates faces Congress

The Gates Foundation has commissioned an external investigation of its past engagement with Jeffrey Epstein, CEO Mark Suzman told staff in a memo this week. At the same time, billionaire co-founder Bill Gates prepares to testify before Congress in June about his relationship with the late sex offender. The probe follows Fortune’s March investigation into how Epstein embedded himself in Gates’ inner circle. Epstein spent a decade building a network of intermediaries to get closer to Gates. The network included Gates’ “right hand” and chief science advisor Boris Nikolic; a former Gates Foundation senior adviser named Melanie Walker; and Mila Antonova, who was reportedly Gates’ former mistress. Epstein went so far as to help Antonova, a Russian citizen, secure a visa, put her up in his New York apartments, fund her coding classes, and send her wire transfers. Epstein then used these favors to try to pressure Gates, Fortune found—writing to Gates’ deputy Larry Cohen in April 2018 that he had put Antonova up in his New York apartment and that Gates was “playing with fire.”

- Must-read: How Jeffrey Epstein pulled Bill Gates and Microsoft into a web of sex, money, and secrets - Eva Roytburg

IRAN

Ceasefire will be indefinite, Trump says, but experts say it could be months before Hormuz reopens

President Trump confirmed there was no deadline for ending the current ceasefire with Iran. The White House is waiting for a response from Iran before the next round of peace talks can start, Bloomberg says.

- The Strait of Hormuz remains closed: Iran struck three ships yesterday and seized two of them, according to the BBC. The U.S. said it had forced 31 ships back into the Gulf since its blockade began.

- Normalcy will not return soon. It will take six months to clear the strait of Iranian mines, the Washington Post says, and that operation can only start after the end of the conflict.

- Defense Secretary Pete Hegseth fired Navy Secretary John Phelan yesterday, the latest in a series of exits by high-ranking Pentagon officials. Here is the key sentence from Axios’s report: “Hegseth felt Phelan had bypassed the chain of command too much with a direct line to Trump, whose Mar-a-Lago Club in Palm Beach is near Phelan's mansion, [a] source familiar with the situation said.”

There’s a 40% chance of recession in the U.S., Daco says

In a pessimistic email this morning, EY-Parthenon chief economist Gregory Daco put the odds of recession in the U.S. over the next 12 months at 40%. His logic: “The Middle East conflict is proving longer lasting and more destructive to energy production capacity,” he said in the note. “Concerns center on a slowing labor market, rising stress in private credit, and uncertainty around the pace and scale of AI-driven labor displacement. Taken together, we continue to assess U.S. recession odds over the next 12 months at around 40%.” Assuming that doesn’t happen, Daco estimates 1.8% growth in U.S. GDP for the year.

THE SPORTS PAGE

How Iran could face the USA in the World Cup

White House special envoy Paolo Zampolli caused global headlines after he confirmed that he asked Fifa to replace Iran with Italy in the upcoming World Cup, a move that is surely against the rules of the tournament and will likely never happen.

However, a greater potential drama awaits the U.S. men’s national team on July 3, the eve of Independence Day. That is when the second-place team from Group D plays the second-place team from Group G in the knockout stage of the cup.

You guessed it, USA is in Group D and Iran is in Group G. It is possible that both teams could survive the group stage and thus be drawn against each other for Match 95 of the contest. In Iran’s group, they face New Zealand, Belgium, and Egypt. The latter two would be expected to graduate first and second place, into the knockout stage. But all Iran (seed