My end-of-week morning train WFH reads:

• What’s the Sticker Price of Exorbitant Privilege? A clean Substack walk-through of the dollar’s “exorbitant privilege” — what reserve status earns the US, what it costs, and what would actually shake it. The de-dollarization chatter usually skips the math; this one shows it. That raises the obvious question: what would it take for the US to lose its privilege now? Where is the tipping point? Is it just about the US fiscal and macro fundamentals? Carolin Pflueger (U Chicago) and Pierre Yared (Columbia) don’t think so. (The Two Cents)

• The Dangerous Brew That’s Rattling Bond Markets: The WSJ on the cocktail of fiscal deficits, sticky inflation, and central-bank cross-pressure showing up in the long end. Read with the WaPo piece on what those yields do to households. A mix of debt, inflation and populism has changed the interest rate landscape since 2020. A mix of debt, inflation and populism has changed the interest rate landscape since 2020. (Wall Street Journal) see also Trump’s war is wrecking Trump’s economy: The U.S. war on Iran has upended energy markets and gut-punched the global economy, especially countries in Asia, the Middle East, Africa, and Europe. But the United States is not nearly as immune to the economic fallout from the war as U.S. President Donald Trump seems to think—and it is starting to show. There is a whole slew of economic indicators flashing “check engine” across the dashboard of the U.S. economy that show that the prolonged war in the Middle East is reigniting inflation, fouling supply chains, and dampening hopes of a tax-cut-fueled growth spurt this year. (Washington Post)

• SpaceX not the behemoth everyone thought: The prospectus shows just how much the IPO depends on expectations for future growth and investor servility to Musk — as opposed to the current underlying business. Axios on the leaked SpaceX financials that look a lot less Mag-7 than the secondary market implied. Read alongside the $15B Anthropic deal — both stories are about who is actually paying whom in this AI buildout. (Axios)

• Is Nvidia too big to fail? ‘You’re clearly at the centre of everything’ The global stock market has virtually become “One Big Trade”, according to Goldman Sachs. “AI Is Penetrating Every Corner of Financial Markets”, notes Apollo. Is it really just one big Nvidia trade though? (FT Alphaville free)

• Used EVs Are Now the Most Affordable Cars. Here’s How to Buy a Good One. With rising oil prices and more used EVs coming off leases, the total cost of ownership equation has flipped. The WSJ on the surprising flip: a three-year-old EV with most of its warranty intact is now often the cheapest car on the lot. Useful for anyone with a kid heading to college. Here’s How to Buy a Good One. With rising oil prices and more used EVs coming off leases, the total cost of ownership equation has flipped (Wall Street Journal)

• Why mortgages and car loans are getting more expensive: Yields for some Treasurys hit their highest level since 2007 — and consumers are starting to feel it. A clean WaPo explainer on the long-rate move and what it does to the household balance sheet. Useful for clients who only ever see the headline Fed Funds number. (Washington Post)

• FBI seeks US-wide access to license plate cameras, wants “data in near real time” FBI will pay vendors Flock and Motorola Solutions to help it track and search for vehicles nationwide. Ars on the Bureau quietly asking for a real-time feed from the country’s patchwork of private and municipal plate readers. The surveillance architecture has been built piecemeal for a decade; this is the centralization request. (Ars Technica)

• How the Bird Eye Was Pushed to an Evolutionary Extreme: The bird retina is one of the most energetically expensive tissues in the animal kingdom, yet it doesn’t use the energy advantage of oxygen. New research finally explains how this is possible. (Quanta Magazine)

• Japan is gripped by mass allergies. A 1950s project is to blame: BBC Future on the postwar Japanese reforestation program — millions of cedars planted for timber, no follow-up plan, and now nationwide hay fever as the karmic dividend. A small parable on policy half-lives. A decision made 70 years ago to reforest vast swathes of Japan with just two kinds of tree has come back to haunt the country. (BBC)

•  Retrospective — The Entire Series of MB&F Legacy Machine Watches: Monochrome runs through every Legacy Machine MB&F has built since 2011. A satisfying tour of one of the few independent watchmakers doing genuinely new things rather than re-issuing the 1960s catalogue. (Monochrome Watches)

Video of the day: The Album That Rewired Modern Pop: Believe (1998)

Be sure to check out our Masters in Business interview this weekend with Vimal Kapur, CEO and Chairman of DJIA component Honeywell International. The firm is in the midst of dividing into three companies: Honeywell Automation, Honeywell Aerospace, and Solstice Advanced Materials. The firm has fully integrated AI as the intelligence layer in all of its automation processes and products.

 

America’s Small-Business Boom Comes Without New Jobs

Source: Bloomberg

 

Sign up for our reads-only mailing list here.

 

The post 10 Friday AM Reads appeared first on The Big Picture.

US Deploys Aircraft Carrier To Caribbean As Trump Admin Pressures Cuba Authored by Jack Phillips via The Epoch Times (emphasis ours),

The U.S. military command operating in the Western Hemisphere said on May 20 that an aircraft carrier strike group entered the Caribbean Sea, as the Trump administration heaps pressure on the Cuban communist regime.

In a post on X, U.S. Southern Command said that the USS Nimitz is now in the Caribbean and released video footage of the carrier group. Southern Command did not provide more details about why the carrier group traveled to the region.

The Nimitz, it said, "has proven its combat prowess across the globe, ensuring stability and defending democracy from the Taiwan Strait to the Arabian Gulf."

The Nimitz, commissioned in 1975, carried out joint naval exercises with the Brazilian Navy off the coast of Rio de Janeiro last week, the U.S. Embassy in Brazil said in a May 14 statement.

On May 20, the Department of Justice (DOJ) unsealed a criminal indictment against former Cuban leader Raul Castro, and U.S. Secretary of State Marco Rubio released a video in Spanish urging Cubans to reject the country's communist leadership.

According to the DOJ indictment, Castro was indicted in connection with the 1996 downing of civilian planes operated by Miami-based exiles. Castro, now 94, was Cuba's defense minister when the planes were shot down, killing four people.

The charges against Castro, the brother of former Cuban leader Fidel Castro, drew pushback from the country's current leader, Miguel Diaz-Canel, in a post on X.

"This is a political maneuver, devoid of any legal foundation, aimed solely at padding the fabricated dossier they use to justify the folly of a military aggression against Cuba," Diaz-Canel wrote.

This year, U.S. President Donald Trump has been ratcheting up talk of regime change in Cuba and said he would potentially initiate a "friendly takeover" of the country if its leadership did not open up its economy to American investment and kick out U.S. adversaries.

When asked what will happen next for the U.S. embargo on Cuba on Wednesday, Trump said, "We're going to see." He added that the U.S. government is ready to provide humanitarian assistance to what he described as a failing country.

Trump said that "there won't be escalation" between the United States and Cuba, adding, "I don't think there needs to be."

"Look, the place is falling apart. It's a mess," Trump added. "They've really lost control of Cuba."

In Cuba, there is no food, electricity, or energy, Trump said, adding that the U.S. government will have to act to assist the country.

Earlier this month, CIA Director John Ratcliffe traveled to Cuba to meet with the country's top officials, a visit that came as the country's energy minister said the island has completely run out of fuel and that its power grid is in a critical state.

In January, the U.S. military launched an operation in Venezuela that captured its president, Nicolas Maduro, an ally of the Cuban regime, and took him to the United States to face drug-trafficking charges.

Since September 2025, the U.S. military has been launching strikes against suspected drug-smuggling boats in the Caribbean and eastern Pacific Ocean in what the military calls Operation Southern Spear.

Nimitz-class aircraft carrier USS George H.W. Bush (CVN 77) sails in the Arabian Sea, on May 3, 2026. Courtesy of the U.S. Navy Tyler Durden Thu, 05/21/2026 - 17:00

Exit Taxes Won't Save Failing States

Authored by Vance Ginn via TheDailyEconomy.org,

When a state starts floating an exit tax, it is telling you something more important than any campaign slogan: the people running the place know their model is not working. 

They may not say it that way. They will call it fairness, responsibility, or making the wealthy “pay what they owe.” But the meaning is the same. 

If families, entrepreneurs, and investors are leaving, the state can either ask why its policies are pushing them out, or it can try to tax them for escaping. An exit tax chooses punishment over reform. 

I understand why these proposals resonate with some people. If you are watching wealthy residents relocate while governments still face bills for schools, roads, pensions, and other commitments, it is easy to feel like the people with the most mobility are ducking the tab. 

That frustration is real. It deserves a serious answer. But an exit tax is not a serious answer. It is a confession that lawmakers would rather cling to a failing fiscal model than fix the spending, regulation, and tax policies that made people want to leave in the first place. 

That is why the current trend is so revealing.

In California, proposals have centered on taxing billionaire net worth, including wealth that often exists on paper rather than in cash. In New York, the push has extended to a new surcharge on high-value second homes in New York City.

In Washington, lawmakers have already enacted a “millionaires’ tax.” These policies differ in form, but not in spirit. They all send the same message: if government has made your state too expensive, too hostile, or too unpredictable, it may still try to claim part of your future anyway. 

The economics are worse than the politics. Supporters talk as if wealth is a pile of idle cash sitting in a vault, just waiting to be skimmed. It is not. Wealth is usually tied up in businesses, shares, property, and future earnings. 

Taxing net worth or unrealized gains means taxing value that often has not been sold, realized, or converted into cash. That can force asset sales, dilute business ownership, weaken investment, and change behavior long before the tax collector ever gets a check.

 A Hoover Institution analysis of California’s proposal found that once likely migration responses are considered, the measure could leave the state with a negative net present value of about $25 billion. That is the real lesson: politicians score the tax statically, but the economy does not sit still. 

And that is before you get to the broader evidence. The OECD has noted that recurring net wealth taxes have become much less common across advanced economies because they tend to raise less revenue than promised while creating large compliance costs, avoidance incentives, and economic distortions. Countries tried them. Many backed away. 

A recent NBER study on Scandinavian wealth taxation found that higher top wealth-tax rates reduced the number of wealthy taxpayers and that many of those taxpayers were business owners whose departure reduced investment, employment, and value-added. 

That is the part too often ignored in political talking points. When a state drives out a founder, investor, or employer, it is not just losing one tax return. It is losing future jobs, future capital formation, and future opportunity for everybody else too. 

Defenders of exit taxes still fall back on one argument that sounds morally satisfying: these taxpayers benefited from state infrastructure, legal protections, and markets while they lived there, so the state deserves one final cut

But that argument quietly rewrites the relationship between citizen and government. It turns moving into a taxable offense. It says the state retains a lingering claim on your success because you once lived under its jurisdiction. That is a dangerous principle in a federal system built on mobility and competition.

 Even in the international arena, exit taxes are controversial, complex, and tied to specific movements of assets or functions across borders. Importing that logic into state tax policy is not modernization. It is escalation. 

The problem is not just that these taxes are bad economics. It is that they usually do not stay narrow. Politicians sell them as a tool aimed only at billionaires or luxury homeowners — policy aimed at an applause line. But when the revenue falls short, the scope expands. 

One-time wealth taxes become annual property surcharges. “Billionaire” thresholds are expanded to target millionaires and eventually the middle class. “Temporary” taxes become permanent fiscal architecture. New York’s pied-à-terre proposal is a good example of how quickly the logic expands once the principle is accepted. 

Frédéric Bastiat warned us to look not just at what is seen, but at what is unseen. We see the tax revenues. That’s a small, visible victory compared to the investment that never happens, the entrepreneur who builds elsewhere, jobs that never arrive — the unseen costs compound. 

Exit taxes are built on ignoring all of that. 

Claiming an exit tax frames mobility as theft, when it is often a rational response to bad governance. They do not restore prosperity. They steal the opportunity to prosper by doubling down on the very policies that made growth harder in the first place. 

If lawmakers want to deter departures, the answer is not a fiscal trap door. It is better policy: lower taxes, lighter regulation, spending restraint, and a serious effort to make their states places where productive people want to stay.

Real economic renewal is more difficult than yet more taxation, but it is also the only approach that works. Exit taxes will not save failing states. They only confirm why people wanted to leave. 

Tyler Durden Thu, 05/21/2026 - 16:20

No Deal Reached, Amid 'Fabricated' Mideast Media Reports; Trump Presses Nuclear Issue & Iran President Says 'Won't Back Down' Summary

• Al Arabiya issues dramatic retraction on prior 'deal reached' reporting.
• Iranian president vows to not back down, as Trump still vows to get nuclear material.
• AI Arabiya TV obtains what it describes as final draft of US-lran agreement, 
• Reuters reported that Ayatollah ordered that stockpile of uranium enriched to 60% remain strictly inside Iranian territory. Some Iranian officials then denied report to Al Jazeera.
• WH says make a deal or else... "they can face a punishment from our military the likes of which has not been seen in modern history."
• US Intelligence says Iran has reconstitute drone program, defense industrial base, "faster than expected" (CNN).

//--> //--> //--> Will the Iran ceasefire continue through June 15?
Yes 51% · No 50%
View full market & trade on Polymarket

*  *  *

No Deal Reached: Prior Reports 'Fabricated'

After something like eight hours - which unleashed significant moves in oil and markets - complete retractions are being issued, with words like 'fabrication' used, after which oil swings higher...

Iranian President: Won't Back Down

Iranian President Masoud Pezeshkian has stated, "We will not bow our heads, our ministers and experts are working day and night, without a single day off." He added, per state sources: "We are willing to sacrifice as much as possible for the honor and pride of Iran, and we are not afraid of martyrdom."

And just like that...

Markets reversed earlier gains as Iran's President said on state TV that they won't back down in talks. The momentum then picked up when a "high-level source" told Al-Arabiya that the Pakistani Army Chief will not head to Tehran tonight.

The Pakistani were supposed to head to Iran only when the reach of an agreement was in sight, so this kind of denies the earlier reports of a US and Iran draft agreement.

US stock indices erased more than half of earlier gains. We've seen the same reaction in oil, FX and bond markets but now they are consolidating.

Still, Al Jazeera is reporting that "negotiators are very close to reaching a deal, and are currently working on a draft text. At the same time, another source told Al Jazeera that it is too early to judge whether a serious, final agreement is within reach."

IRNA has cited a Pakistani official who says the talks are "moving in the right direct" - though it's anyone's guess at this point. The prior reported draft did not take up the nuclear issue. Trump continues to press the nuclear issue:

US President Donald Trump has again pledged to seize Iran’s stockpile of highly enriched uranium as part of any agreement over Tehran’s nuclear program.

“Look, we’re going to make sure they don’t have a nuclear weapon or we’re going to have to do something very drastic. I believe when it’s put to the people of our country, they will all agree we cannot let Iran get a nuclear weapon,” Trump told reporters at the White House.

Asked whether Iran could retain its enriched uranium, Trump replied: “No, we will get it. We don’t need it, we don’t want it, we’ll probably destroy it after we get it. But we’re not going to let them have it.”

Oil Plunges on Final Draft of US-Iran Agreement Reached

Is this the one? While we've seen this rodeo before, oil is plunging on a Saudi media report which is positive for peace. Crude hits low of day...

Traders Circulate AI Arabiya TV obtaining what it describes as final draft of US-lran agreement: (CLICK TO SEE KEY PROVISIONS) - UNCONFIRMED

Key provisions include:

1) An immediate, comprehensive, and unconditional ceasefire on all fronts (land, sea, air)

2) Mutual commitment not to target military, civilian, or economic infrastructure

3) Cessation of military operations and instigating media warfare

4) Respect for sovereignty, territorial integrity, and non-interference in internal affairs

5) Guaranteed freedom of navigation in the Gulf, Strait of Hormuz, and Sea of Oman

6) Establishment of a joint monitoring and dispute resolution mechanism

7) Launch of negotiations on outstanding issues within seven days

8) Gradual lifting of U.S. sanctions in exchange for Iran's adherence to the terms

9) Affirmation of compliance with international law and the UN Charter

Importantly, there's no mention of the nuclear issue.

"The agreement is stated to enter into force immediately upon formal announcement by both parties," the Al Arabiya report says.

Saudi’s @AlArabiya TV has obtained what it describes as the final draft of a prospective Pakistani mediated U.S.-Iran agreement, reportedly set to be announced within hours [It does not align with what I am hearing].

Key provisions include:
1) An immediate, comprehensive, and… https://t.co/qxpEDSX04a pic.twitter.com/M0D1hMCD8b

— Basha باشا (@BashaReport) May 21, 2026

Drones, Military Industrial Base Being Rapidly Restored Amid Extended Ceasefire

The Iranians have reportedly rebuilt damaged and destroyed defense industrial sites much faster than expected. That's according to US intelligence assessments cited in CNN, and based on anonymous officials. The Pakistan-mediated talks have been stalled, and each of the last several weeks has seen Washington issue updated peace conditions, only for Tehran to in return counter-issue its own demands. And round and round the indirect negotiation has gone, yet with no breakthrough, or not so much as a step forward.

But perhaps this was all a tactic to simply prolong the ceasefire? It allowed for Iran to rearm and regroup, after the prior 38-days of US-Israeli bombing. "Iran has already restarted some of its drone production during the six-week ceasefire that began in early April, one sign it is rapidly rebuilding certain military capabilities degraded by US-Israeli strikes, according to two sources familiar with US intelligence assessments," CNN reports Thursday. "Four sources told CNN that US intelligence indicates Iran’s military is reconstituting much faster than initially estimated."

One US official cited in the report has gone so far as to say "The Iranians have exceeded all timelines the IC had for reconstitution." In the recent past, White House officials themselves have admitted that the Islamic Republic is probably reconstituting. Trump in the meantime keeps saying he's 'days' away from reordering strikes amid Tehran's intransigence. According to more on Iranian efforts to prepare for the next potential round of fighting:

The rebuilding of military capabilities, including replacing missile sites, launchers and production capacity for key weapons systems destroyed during the current conflict, means that Iran remains a significant threat to regional allies should President Donald Trump restart the bombing campaign, according to the four sources familiar with the intelligence. It also calls into question claims about the extent to which US-Israeli strikes have degraded Iran’s military in the long term.

While the time to restart production of different weapons components varies, some US intelligence estimates indicate Iran could fully reconstitute its drone attack capability in as soon as six months, one of the sources, a US official, told CNN.

They already tried that. It did not work. https://t.co/1OEZ50d5st

— Scott Horton (@scotthortonshow) May 21, 2026

Iranian Denials

Throughout the morning, and since the Reuters report was first issued, various unnamed Iranian officials are saying the Ayatollah gave no such order regarding taking enriched uranium removal off the table when it comes to potential negotiations. According to an Al Jazeera correspondent: 

A senior Iranian official denied to me reports that Supreme Leader Mujtaba Khamenei has issued a new order requiring enriched uranium to remain inside Iran, saying they are “propaganda by the enemies of the deal” The official added there are “no new order has been issued,” and that Tehran’s position has been consistent: Iran would downblend the material itself. “That is the subject of talks in the next stage,” the official said.

This will likely only fuel speculation of deep division within Iranian leadership ranks. Traditionally the IRGC reports directly to the Ayatollah, and is seen as the more hardline faction, ready to resist compromise and opt for a military response to US pressure.

Oil snaps lower on the denials... per Newsquawk:

In an immediate reaction, crude fell to the detriment of the USD and the benefit of equity and fixed benchmarks. Specifically:

• WTI Jul'26 fell from USD 102/bbl to USD 100.56/bbl.
• UST Jun'26 lifted from 109-00 to 109-04+.
• ES Jun'26 lifted from 7418 to 7433.

Ayatollah Orders Enriched Uranium To Say On Iranian Soil: RTRS

The illusion of a grand diplomatic breakthrough in the Middle East is once again colliding with reality. The White House has been busy trying to paint a picture of a total capitulation by Tehran, which hasn't been demonstrated given its consistent position defying Washington's demands on the nuclear issue.

According to two senior Iranian officials speaking to Reuters, Iranian Supreme Leader Mojtaba Khamenei has drawn a hard line in the sand, ordering that Iran's stockpile of uranium enriched to 60% remain strictly inside Iranian territory.

Office of the Supreme Leader, via Reuters

Reuters underscores that "Ayatollah Mojtaba Khamenei's order could further frustrate U.S. President Donald Trump and complicate talks on ending the U.S.-Israeli war on Iran."

"Israeli officials have told Reuters that ‌Trump has assured Israel that Iran's stockpile of highly enriched uranium, needed to make an atomic weapon, will be sent out of Iran and that any peace deal must include a clause on this," the report continues.

The officials noted that within Tehran, there is deep suspicion that the ceasefire is in fact "a tactical deception by the US," designed to lull Iran into a "false sense of security... before the fighting resumes."

The fresh directive from from the supreme leader flies directly in the face of the narrative being spun by Washington and Tel Aviv, given Israeli officials maintain that President Trump explicitly promised Israel that Iran's highly enriched stockpile would be completely removed from the country as part of any negotiated settlement.

Trump has also recently proclaimed this publicly, for example in a phone interview with CBS News last month, wherein he confidently proclaimed that Iran "agreed to everything" and would cooperate fully to ship its enriched uranium out of the country.

Extraction of nuclear material would of course rely heavily on the assumption of total Iranian compliance, given Trump has also lately appeared to rule out out a hostile invasion force, stating, "No. No troops."

There seems to be widespread agreement among national security officials at this point that some kind of special forces op to covertly go in and take it would be tantamount to a 'suicide mission'.

According to more of what Trump (prematurely) proclaimed in the prior CBS interview: "Our people, together with the Iranians, are going to work together to go get it. And then we'll take it to the United States."

The reality is all along the two sides' positions have been very far apart, and largely unbending:

And on a potential deal: "We'll be getting it together because by that time, we'll have an agreement and there's no need for fighting when there's an agreement. Nice right? That's better. We would have done it the other way if we had to" - he sought to explain.

At the moment, Iranian officials are reportedly reviewing the latest updated US proposals for peace, having reportedly asked Pakistan for time to assess and study the American points for negotiations."

However, Khamenei locking down the 60% enriched uranium inside Iranian borders, and amid suspicion that the US ceasefire offer is but a Trojan horse to get the Islamic Republic to simply given up its potential last line of defense, doesn't bode well for the chances of a breakthrough anytime soon.

//--> //--> //--> Iran agrees to surrender enriched uranium stockpile by June 30, 2026?
Yes 18% · No 83%
View full market & trade on Polymarket

For the latest warning from the White House, via Stephen Miller: "Iran has a choice to make: they can either agree to a piece of paper that is satisfactory to the United States, or they can face a punishment from our military the likes of which has not been seen in modern history. That's the choice they face" - he told Fox News.

Tyler Durden Thu, 05/21/2026 - 16:15

Trump Posts Article Laying Out: "Here's How To Crush Tehran In Three Moves"

President Trump on Thursday posted to Truth Social a New York Post article which was first published over two weeks ago, on May 1st, with the headline "Here's how to crush Tehran in three moves."

Trump's new social media post, issued without additional comment, comes just after news of Iranian Supreme Leader Mojtaba Khamenei having drawn a hard line in the sand, ordering that Iran's stockpile of uranium enriched to 60% remain strictly inside Iranian territory. So now the world awaits what's next at a moment the White House has renewed threats of massive military strikes if Iran doesn't quickly come to the table and conform.

The NY Post article had straight-faced and without a hint of intended irony proclaimed: "President Trump has the upper hand." That statement was issued on day 63 of Trump's Iran war. Today is day 83.

What did the interim look like as the world's most powerful military force has been unable to reopen the Strait of Hormuz, amid constant threats to take new, bigger military action - but which never actually materializes (at least not yet) no matter how many times the Iranians reject Washington's terms?

The below timeline and outline, stretching from last week into this one, basically illustrates the weekly Trump pattern that's been on display going back many weeks at this point: 

• Wed: Iran wants a deal. They called us 
• Thu: We are looking at proposals
• Fri: We might be close. Very close
• Sat: Iran knows what to do
• Sun: OBLITERATION. TOTAL. COMPLETE. They have 24 hrs. 
• Mon: The storm is coming 
• Tue: I'm giving it more time

This is what 'winning' looks like according to the NY Post, apparently. The publication also feels itself in a position to give 'advice' and guidance to the White House on executing a war. "His best path forward is to pursue three lines of effort in parallel," author Richard Goldberg (of Foundation for Defense of Democracies) wrote. It must be remembered that very recently a former senior official from FDD Action, the think tank's lobbying arm, joined Trump's Iran negotiating team - his name is Nick Stewart.

Here are the three:

1. Sustain the blockade and accompanying economic warfare to destabilize the regime’s hold on the state;
2. Remake the world in America's energy dominance image to mitigate long-term price impacts while undermining China's global ambition to defeat the United States;
3. Order the US military to forge a path through the Strait of Hormuz to restore freedom of navigation on our terms not Tehran’s.

...if only simply ordering a military "path through" was that easy!

NurPhoto via Getty Images

"You might call the latter Operation Epic Passage — a combined naval and air mission of self-defense that offers escort to tankers and restores freedom of navigation, all while making clear to Tehran the devastating consequences of breaking cease-fire," Goldberg, who openly boasts of his close ties to the Israeli government, also wrote. He further offered the mission name of "Blockade Plus".

After the opening days and weeks of Operation Epic Fury, when it became clear that the large-scale US and Israeli bombardment would not produced regime change in Iran, pundits widely questioned whether the Trump White House actually had a plan, or long-term strategic vision for the military mission. 

And now, after more than 80 days in, the public gets Trump posting a NY Post article by a hawkish FDD writer, which seems more focused merely on ways to mitigate the blowback and 'make the best' of a failed regime change operation, in the wake of the administration's constantly evolving stated goals.

Tyler Durden Thu, 05/21/2026 - 15:50

Rickards: Investing In A World In Turmoil

Authored by James Rickards via DailyReckoning.com,

To say that the world is in turmoil to an extent not seen since the 1960s is an understatement.

The war in Ukraine is now in its fifth year. The war in Iran continues with no end in sight, despite Trump’s optimistic talk. NATO may be nearing the break-up stage as Trump pulls U.S. troops out of Germany.

Energy prices are soaring, inflation has accelerated sharply again, consumer confidence has fallen sharply, debt is at an all-time high and supply chains are breaking down.

Yet the major U.S. stock indices are at or near all-time highs.

What accounts for record stock prices amid almost unprecedented turmoil?

There are a number of key factors supporting stocks. The most obvious is the AI frenzy. This has two aspects. The first is that AI applications can improve productivity. The second is that the build-out of data centers with the most advanced semiconductors has led to a $1 trillion capital investment tsunami as Microsoft, Amazon, Google, Meta, OpenAI, Anthropic and other AI providers build their server farms.

The next factor is related to the first and is often called the picks-and-shovels trade. The idea is that those who benefit in a gold rush are not the gold miners but the merchants who sell tools, clothes, supplies and other goods the miners need.

In the AI gold rush, the winners are electricity suppliers, builders, hardware manufacturers (semiconductors and servers) and small towns where the server farms are located. These suppliers will do well today whether AI lives up to its promise or not.

Passive Aggression

Another major factor is passive investing. An enormous amount of U.S. wealth is held in 401(k)s, IRAs and assets under management by wealth managers.

Relatively few of the account holders (or, for that matter, wealth managers) really understand active stock investing or risk management. Instead, they buy index funds, ETFs or other equity basket products that track the stock market itself or a specified segment.

When money is put into these index funds, the manager buys the stocks in the index. That buying pushes stock prices higher. That attracts more money, more buying and more gains in a positive feedback loop that drives stocks even higher. No Ph.D. is required. You just buy the index, sit back and enjoy the ride.

FOMO and TINA

Two other factors related to the passive investing feedback loop are fear of missing out (FOMO) and the idea that there is no alternative (TINA). It’s difficult to show up at a cocktail party or the country club when all of your friends are touting their stock gains and you’re not in the market.

It’s also difficult to put money in 4% cash equivalents or assets like gold when stocks seem set to deliver 10% returns as far as the eye can see.

FOMO and TINA have nothing to do with fundamental stock analysis. But they are real and powerful drivers of human behavior.

It’s not all fairy dust, however. There are actual fundamental drivers behind stock gains. Corporate profits are coming in strong (despite some high-profile missed estimates). U.S. energy self-sufficiency will keep the lights on in the U.S. and help prevent 1970s-style gas lines — even if we are not immune to the impact of higher prices.

That’s the argument for higher stock prices despite global problems. What could possibly go wrong?

Unrecognized Risks

The greatest threat to higher stock prices is that the market has not fully discounted the impact of the war in Iran and the unprecedented disruption in the supply of oil, liquid natural gas, nitrates for fertilizer, helium, sulphur, aluminum and other critical inputs.

The reality of these shortages has not hit home (with the exception of higher prices for gasoline and oil), but that does not mean the coast is clear.

An enormous amount of oil supply was already on vessels that left the Strait of Hormuz before the war began. That “floating supply chain” took weeks to be delivered to end users. That process has now been completed; the last deliveries have been made. There is nothing else on the way.

Major manufacturing nations like South Korea, Japan, Taiwan and China are now using up reserves. These may last another month or so. The critical point at which reserves are gone, no resupply is on the way and the Strait of Hormuz remains closed grows nearer by the day.

Even if the strait reopens tomorrow, the current shortages will raise prices, disrupt supply chains and possibly lead to a global recession. Markets seem to be ignoring this possibility in favor of a narrative that says the strait will reopen soon and all will be well.

Great Expectations (for AI)

Eventually, it may also occur to markets that AI is not producing any revenue. It’s consuming $1 trillion in capital and promising untold riches, but those riches have yet to materialize. AI is a powerful technology and it’s here to stay. But that does not mean it will be particularly profitable. It may even hurt growth if hundreds of thousands of skilled workers are laid off.

There are serious reasons to believe that AI will not be that productive at all. Output errors (called “slop”) not only cast doubt on the reliability of AI, but are also populating the internet, which AI itself uses as a training set for new applications.

More slop in the training set means even less reliable output than earlier versions. The dream of superintelligence (artificial general intelligence, AGI) is out of reach because of the inability of engineers to code abductive logic.

If the AI bubble bursts (which I expect), it will not only hurt the Mag 7 stocks but also the picks-and-shovels plays around it.

The Private Credit Canary

A separate trigger for a market meltdown is the crisis in private credit. Funds sponsored by top managers like Apollo, BlackRock, Blackstone, KKR, Morgan Stanley and others are severely limiting investor withdrawals.

Complicating matters further, if fund managers try to sell assets quickly, there may be very few buyers unless the seller agrees to slash the price dramatically — sometimes by half or more compared with the stated “book value.”

Supporters of private credit say that this private market is only worth about $4 trillion and that even 20% write-offs will not jeopardize the system. But this calculation ignores the impact of leverage and the effects of contagion. Losses in private credit can trigger runs on mid-tier banks, which then spread to funds that hold those mid-tier bank stocks and so on.

The Dark Side of Passive

But the greatest threat to the stock market may be the dominance of passive investing.

The same buying dynamic that drives stock prices higher can work in reverse. A market drawdown can cause investors to sell their index funds. This causes fund managers to sell the underlying stocks, which takes down the indices, causing more selling by investors and so on.

While passive investing can push markets higher gradually, it can also drive them lower with startling speed and violence.

What’s an investor to do? The positive story for stocks is real, but the downside potential is equally real. The solution is to hedge by diversifying your portfolio. Keep some stocks, but also maintain a slice of cash, a slice of gold and medium-term U.S. Treasury notes.

Gold is the everything hedge. Treasury notes are secure and will rally when the recession goes into high gear. Cash will give you the option to go shopping for bargains when everyone else is dumping stocks.

TINA and FOMO are not your friends. Diversification is.

Tyler Durden Thu, 05/21/2026 - 15:40

Rubio: Diplomacy Will Be Rendered 'Impossible' If Iran Enacts Hormuz Toll System

Iran has been seeking to significantly expand the area around the Strait of Hormuz over which it claims military control by this week advancing the newly-created government agency of the "Persian Gulf Strait Authority".

The agency quickly published a map proclaiming "Iranian armed forces oversight" across more than 22,000 sq km (8,800 sq miles) of the Hormuz waterway. Now, all transit through the strait "requires coordination with and authorization from the Persian Gulf Strait Authority" - the new entity announced.

Of course, Washington has made clear that international vessels must not comply with Iran's rules. Yet Tehran is Wednesday into Thursday claiming some 'victories' in this regard. 

The Iranians say they are in active discussions with Oman to establish a permanent toll system for maritime traffic passing through the strait, according to Iran’s ambassador to France, Mohammad Amin-Nejad.

"Iran and Oman must mobilize all their resources both to provide security services and to manage navigation in the most appropriate manner, prevent pollution, and simply strive to establish an order so that global trade is not subject to disruptions. This will entail costs, and it goes without saying that those who wish to benefit from this traffic must also pay their share," Amin-Nejad said, as cited in Bloomberg.

Amin-Nejad further asserted the potential costs would be "clear, transparent, reasonable, and logical" - though the system is not yet in place. An initial toll proposal, which some companies may have already paid in order to get their stranded vessels out, was reportedly up to $2 million per tanker.

Iran is also touting that China and and South Korea have been in direct communication to arrange passage of their ships:

Iran continues to control the flow of tankers through the Strait of Hormuz for political and propaganda gains as the war of words continues over the peace negotiations. The Islamic Revolutionary Guard Corps (IRGC) Navy is claiming to have increased the flow with Chinese tankers and the first South Korean tanker permitted to make the transit, while many other vessels continue to wait.

...The IRGC Navy released a statement claiming that in the past 24 hours, a total of 26 vessels safely transited the Strait of Hormuz. It said this included tankers as well as containerships and other vessels. It asserted, however, that they were all “under the coordination and security support” of the IRGC Navy. They said all the ships making the transit had obtained prior authorization and required close coordination with the IRGC. 

...South Korea’s Ministry of Foreign Affairs announced May 20 that its first tanker had been able to make the transit carrying about two million barrels of crude bound for Ulsan. It said there are 25 other South Korean-flagged vessels still caught in the Persian Gulf, but it was significant after Iran refused transit a month ago to another South Korean tanker that was reportedly bound for Pakistan.

If Tehran can attract each country to make separate deals for the passage of their ships, this will be hailed as a 'win' for Iran and its Hormuz protocols. 

But the US and its regional allies are not buying into Iran's narrative, with the UAE having described Iran's claims of control as "nothing but fragments of dreams."

And importantly, on Thursday US Secretary of State Marco Rubio stated that a tolling system in the Strait of Hormuz would render a diplomatic deal unfeasible and that the US remains "very upset with NATO" their response to the Iran crisis. He said: 

"A toll collection system in the Strait of Hormuz will make a diplomatic deal impossible."

"We are very disappointed with NATO allies, we will discuss the issue of troop deployment at the upcoming meeting."

Some vessels are paying Iranian authorities more than $150,000 for safe passage through the Strait of Hormuz, sources told Reuters. The US has warned that such payments might trigger American sanctions but some ship owners are paying anyway https://t.co/87HQZcBDcr pic.twitter.com/nuc7UXaFX9

— Reuters (@Reuters) May 21, 2026

But at this point, Tehran doesn't look to be in a rush to complete a deal. Trump could be ready to indefinitely withhold new military strikes, and Iran is busy rearming and regrouping. Also, as enough time passes with the stalemated situation in place, Tehran is likely to convince more countries that they have no choice but to deal with the Islamic Republic directly.

Tyler Durden Thu, 05/21/2026 - 15:20

Democrats Move To Block Trump's $1.776 Billion 'Anti-Weaponization' Fund

Via American Greatness,

Congressional Democrats are moving to shut down President Donald Trump’s proposed $1.776 billion Anti-Weaponization Fund, escalating a political fight over compensation for Americans who say they were targeted by politically motivated prosecutions and federal lawfare.

Rep. Jamie Raskin, the top Democrat on the House Judiciary Committee, is introducing legislation aimed at preventing any federal money from being used to create or distribute payments through the fund.

According to a copy of the bill shared with Axios, the legislation states that “no Federal funds may be used to create or make payments” tied to the Trump administration’s Anti-Weaponization Fund.

The fund emerged from a settlement between Trump and the Internal Revenue Service after the president sued the agency over the leaking of his confidential tax returns during his first term.

Under the settlement framework, individuals claiming they were victims of politically motivated prosecutions or government abuse would be able to seek compensation.

Potential applicants could include January 6 defendants and others who were unfairly targeted by federal authorities.

Raskin is reportedly considering using a discharge petition to force a House vote if Republican leadership blocks the measure from reaching the floor.

At the same time, some establishment Republicans are also voicing opposition to the fund. Rep. Brian Fitzpatrick told reporters Wednesday that he would “try to kill” the program.

“We’re going to write a letter to the [attorney general] to start, but we’re considering a legislative option,” Fitzpatrick said.

Supporters of the fund argue it represents a long-overdue effort to compensate Americans harmed by politically driven prosecutions and abuses of government power.

Critics, meanwhile, claim the program would improperly use taxpayer money to compensate individuals tied to controversial investigations, including those connected to the January 6 Capitol protest.

Two law enforcement officers who were present at the Capitol on Jan. 6 have already filed a lawsuit seeking to dissolve the fund entirely.

Tyler Durden Thu, 05/21/2026 - 15:00

Marcus Lemonis Fires Back On X Over Claims Camping World Spiraling Toward Bankruptcy

America's largest RV dealer and service chain, selling new and used motorhomes, travel trailers, and more for outdoor living, has been under pressure over the past several years as high interest rates have crushed RV demand.

An X user with the handle "Roger" laid out his thesis on why Camping World is next on the list to "file Chapter 11 bankruptcy with $3.5 billion of unpayable debt," adding, "West Marine (one of the largest boat suppliers in the US) just filed Chapter 11 bankruptcy today, holding over $1 billion in debt."

Camping World $CWH expected to file Chapter 11 bankruptcy with $3.5 billion of unpayable debt.

West Marine (one of largest boat suppliers in US) just filed Chapter 11 bankruptcy today holding over $1 billion in debt.

RV and Boat Bankruptcies. The signs are clear. pic.twitter.com/hBUvxQ5sWJ

— Roger (@rdd147) May 21, 2026

Camping World Revenues and Liabilities

Roger added, "RV and Boat Bankruptcies. The signs are clear."

Same boat as West Marine. Camping World is in Final stages of screwing the landlord to pay the debt holders. pic.twitter.com/25KTtPlZcq

— Roger (@rdd147) May 21, 2026

Shares of Camping World have been locked in a brutal bear market since peaking near $45 in late 2021, with the stock now down about 86% as of Thursday. The sell-off has pushed shares back toward Covid-era lows, as high interest rates continue to choke off RV demand and corporate America as a whole warns that consumers have significantly dialed back on big-ticket items (read here).

Responding on X to Roger's bear thesis on Camping World was none other than Marcus Lemonis, CEO of Bed Bath & Beyond, co-founder of Camping World, and TV personality.

Lemonis said Roger's view that Camping World was sliding toward bankruptcy was "totally false."

Totally false

— Marcus Lemonis (@marcuslemonis) May 21, 2026

Roger then responded to Lemonis: "Explain. Why are liabilities rising, in particular lease obligations? Paying debt holders and not rent is end-stage preparation. See West Marine. Couldn't pay its leases."

Explain. Why are liabilities rising, in particular lease obligations?

Paying debt holders and not rent is end stage preparation. See West Marine. Couldn’t pay its leases.

Honestly happy to hear an assessment pic.twitter.com/7uzCrIdtq2

— Roger (@rdd147) May 21, 2026

Roger ended with: "Honestly, happy to hear an assessment."

The CEO just entered the chat and bodied you. You shorting the company or?

— Brandox (@AngelsKill) May 21, 2026

Here is Wall Street's view on Camping World:

And the fact that Marcus Lemonis felt compelled to respond to a random X user raises its own set of questions.

False. Do your research

— Marcus Lemonis (@marcuslemonis) May 21, 2026

The stock is 21% short, equivalent to about 12.5 million shares, with 2.7 days to cover. 

Tyler Durden Thu, 05/21/2026 - 14:40

Getting An 'A' At Harvard Will Be Tougher Starting In 2027

Authored by Micaiah Bilger via The College Fix,

Two thirds of faculty vote to approve cap on A grades for undergrads...

Harvard University faculty gave an emphatic “yes” to capping A grades in a vote Wednesday amid concerns about grade inflation and academic rigor at the prestigious institution.

Approximately 70 percent voted to approve the 20-percent cap on As in undergraduate courses, The Crimson, Harvard’s student newspaper, reports. Nearly 700 professors participated in the vote. The measure will go into effect in the fall of 2027.

Harvard psychology Professor Steven Pinker praised the decision in an X post Wednesday, calling it “a big step in combatting the grade inflation that has been dumbing down our courses, conveying the wrong message to students, and making universities a national laughingstock.”

Another professor, political scientist Max Abrams at Northeastern University noted the impact of the decision on other higher education institutions. 

Harvard isn’t just some university. Many universities look to Harvard to inform their own decisions. I am strongly in favor of Harvard’s moves to reduce grade inflation. When everyone gets an A there is no signal. pic.twitter.com/Tpb4enuADA

— Max Abrahms (@MaxAbrahms) May 20, 2026

Other scholars called for their Ivy League institutions to follow Harvard’s lead.

Along with limiting As, the faculty also approved a measure by a large majority “to use average percentile rankings, rather than GPA, to determine internal awards and honors,” according to The Crimson.

A third measure within the proposal did not pass. It would have allowed professors “to petition to opt out of the A cap” if the grading for their course is on an “unsatisfactory, satisfactory, and satisfactory-plus basis,” the report states:

When the proposal was first introduced in February, its architects pitched the A cap and percentile-ranking system as paired reforms: the ranking system would prevent students from avoiding larger or more difficult courses in search of better grades under the cap.

After pushback, the subcommittee separated the measures into distinct votes, delayed implementation by a year to fall 2027, and added a “satisfactory-plus” designation for courses that chose to opt out of the system.

In the weeks before the vote, some faculty also pushed for a more complicated alternative to the“20 percent plus four” formula that would have tightened limits in smaller courses. But that amendment failed to make it onto the final ballot after faculty favored the original formula in a preliminary poll.

All three proposals came from a Harvard faculty committee in response to a report that found 60 percent of all undergraduate grades are now As – a 35 percent increase compared to 20 years ago.

In a statement after the vote Wednesday, the committee said the change will help restore integrity to the institution.

“This matters for our students above all,” they stated. “A Harvard A grade will now tell them, as well as employers and graduate schools, something real about what a student has achieved. An A will once again be what Harvard’s guidelines have long said it is: a mark of extraordinary distinction.”

Despite widespread concerns about grade inflation, Harvard students overwhelmingly opposed the cap, American Council of Trustees and Alumni fellow Steve McGuire pointed out on X. 

Now get rid of student course evaluations. pic.twitter.com/2xql1bW49U

— Steve McGuire (@sfmcguire79) May 20, 2026

One petition launched by a freshman claimed that the grading reforms would be “racially harmful,” The College Fix reported in April.

Concerns about grade inflation have arisen at other institutions as well, including Yale and Columbia universities and Swarthmore College in Pennsylvania. Additionally, some professors say they are under pressure not to fail students.

Tyler Durden Thu, 05/21/2026 - 13:40

The News-to-Death Ratio Strikes Again

Authored by Carl Henegan and Tom Jefferson via The Brownstone Institute,

There is a peculiar arithmetic that governs modern health reporting, one that has very little to do with actual risk. Hans Rosling captured it neatly during the 2009 swine flu episode, when he calculated a “news-to-death ratio” of 8,176-to-1. In other words, for every death attributed to swine flu, there were over eight thousand news stories. Tuberculosis, by contrast, received less than 0.1 news stories per death over the same period.

If that sounds absurd, it is, and yet very little has changed.

Take the current hantavirus scare. A cruise ship, the MV Hondius, sits off Cape Verde. There are 7 cases in total (2 confirmed, 5 suspected) and 3 deaths, including a Dutch couple and a German national. Passengers have been confined to their cabins while evacuations and disinfection efforts are organised. It is, undeniably, a dramatic story: a floating Petri dish, a whiff of quarantine, and a hint of the exotic.

In the past week alone, there have been at least 10 to 15 unique news stories, generating hundreds of articles. For a disease that, in normal times, struggles to attract even a single weekly mention, this represents a surge bordering on the hysterical.

And yet it is worth stepping back for a moment and asking, what are we actually looking at?

Hantavirus is a rare disease. In the United States, which diligently tracks such cases, there have been 890 laboratory-confirmed instances since 1993. In the UK, the situation is even less clear: from 2012 to early 2025, only 11 domestically acquired symptomatic cases have been recorded. Surprisingly, nine of these cases were not linked to cruise ships or exotic travel, but rather to a more mundane source—exposure to “pet fancy rats” or rodents bred as reptile feed.

This is not a pathogen ready to spread through the Home Counties. However, the rarity is not the issue; visibility is.

Diseases that afflict the poor, quietly and persistently, rarely command attention. Tuberculosis killed 1.23 million people globally in 2024. Over a million deaths every year, largely concentrated in less affluent parts of the world. It is one of the most lethal infectious diseases known to medicine, and yet it barely registers in the Western news cycle.

Why? Because TB is familiar, it is slow; It lacks narrative flair, and it does not trap well-heeled passengers in their cabins while helicopters circle overhead.

If you want coverage, you need something else entirely. You need novelty, uncertainty, and above all, proximity to affluence. A cruise ship outbreak ticks every box: a disease with a balcony suite.

This is the uncomfortable truth behind Rosling’s ratio: the media does not report risk, it reports drama. And drama requires context that audiences can imagine themselves in.

A rodent-borne virus in some remote rural setting barely registers. Put that very same virus aboard a cruise ship with buffet queues, balcony cabins, and a passenger list that looks uncomfortably like the readership, and suddenly it becomes headline news.

The result is a profound distortion of public perception. We are invited to worry about the improbable while ignoring the inevitable and reality. A handful of hantavirus cases generates dozens of headlines; a million tuberculosis deaths pass with barely a murmur.

If we were to apply Rosling’s lens to the present moment, the imbalance would be obvious. Three deaths linked to a suspected hantavirus cluster have produced hundreds of reports in a matter of days. Meanwhile, tuberculosis continues its relentless toll with scarcely a fraction of that attention.

The modern “news-to-death ratio” may not be precisely 8,176-to-1, but the underlying pattern remains intact.

The lesson here isn’t truly about hantavirus; instead, it’s about how we collectively determine what is significant.

Diseases associated with poverty—those that are endemic, predictable, and devastating—often fail to attract media attention because they don’t instill fear in the right audience or in the right way. No one is interested in the thousands of cholera deaths that are too remote, too ordinary, and lack the dramatic impact that draws interest. What commands attention are diseases that puncture our sense of safety, the kind that can slip past the gangway and make themselves at home on a cruise ship.

This post was written by two old geezers who live in a world where risk is misread, priorities are skewed, and the arithmetic of attention bears little resemblance to the arithmetic of death.

Republished from the authors’ Substack

Tyler Durden Thu, 05/21/2026 - 13:00

Trump EPA Targets Biden-Era Refrigerant Rules In Affordability Push

Watch Live 

President Trump Participates in an Announcement with the Administrator of the EPA https://t.co/lZJTv7m8HJ

— The White House (@WhiteHouse) May 21, 2026

* * * 

The Trump administration plans to delay compliance with Biden-era EPA regulations targeting hydrofluorocarbons later today. These regulations apply to refrigerants used in air conditioners, refrigerators, supermarket cooling systems, refrigerated trucks, cold storage, and some industrial applications.

Bloomberg reports that the EPA's 2023 Technology Transitions Rule, enacted under the American Innovation and Manufacturing Act, will be rolled back, with an estimated cost savings of more than $2.4 billion.

EPA Administrator Lee Zeldin said the Biden-era rules imposed costly and unrealistic requirements that exceeded the law.

Americans were right to be frustrated with the Biden-era refrigerant rules. They didn't protect human health or the environment and instead piled on costly, unattainable restrictions beyond what the law requires," Zeldin told the outlet in a statement.

Zeldin added, "Today, the Trump EPA is fulfilling President Trump's promise to lower costs and is fixing every problem we can under the authority Congress gave us."

President Trump and Zeldin are set to announce the rollback of Biden-era EPA regulations at a White House event later today. Zeldin's team is also preparing to propose additional rollbacks on hydrofluorocarbon regulations for refrigerated transport.

C-SPAN says Trump and Zeldin are set to announce the Oval Office at 11:00 ET.

The move here fits within Trump's broader deregulation agenda, which has focused on rolling back Biden-era environmental rules and lowering compliance costs for businesses to induce an economic boom.

Tyler Durden Thu, 05/21/2026 - 10:15

US PMIs Lead The World As Manufacturing Tops 4-Year Highs, Services Sink

Following Japan's ugly PMIs (Services lowest since March 2025) and Europe's disaster (weakest composite EU PMI since late 2023)...

...with prices surging...

All eyes are on the US 'soft' survey data for signs of divergence (or contagion).

With US 'hard' data improving notably, the preliminary soft survey data for May was mixed with improved performance in manufacturing was countered by a sluggish service sector.

• Flash US Services PMI Business Activity Index: 50.9 (April: 51.0). 2-month low.

• Flash US Manufacturing PMI: 55.3 (April: 54.5). 48-month high. 

Source: Bloomberg

“The damaging economic impact from the war in the Middle East is becoming increasingly evident in the business surveys," according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:

"The ‘flash’ PMI data for May recorded only modest growth of business activity as demand was again squeezed by a further spike in prices and jobs were cut as firms worried over rising costs and the economic outlook.

Coming on the heels of a subdued April reading, the May PMI indicates that the economy will struggle to manage annualized GDP growth of much more than 1% in the second quarter...

However, Williamson notes that even this subdued pace of growth may not last.

"On average, over the past three months order book growth has slowed to its weakest for two years, and a boost from precautionary stock building due to concerns over further price hikes and supply delays will not last forever.

Demand also looks set to cool further in response to rising prices.

"Firms’ costs have jumped higher at a pace not seen since the energy price shock of 2022 and are being passed on to customers in the form of sharply higher selling prices. The survey price gauges therefore indicate that inflation looks set to rise further just as the economy cools.”

Finally, while the composite numbers are not that encouraging, on a relative basis, US looks dominant...

Maybe trump was right about the impact of the war on everyone else? (Just don't tell anyone who drives!)

Tyler Durden Thu, 05/21/2026 - 09:54

Lilly's Next-Gen Weight-Loss Drug Clears Trial With Near-Bariatric Surgery Results

Eli Lilly reported positive Phase 3 results for its next-generation obesity drug, retatrutide, which delivered weight-loss results on par with those of bariatric surgery.

In the TRIUMPH-1 trial, overweight adults, but without diabetes, achieved meaningful weight loss across all tested doses after 80 weeks:

• 12 mg dose: average weight loss of 70.3 pounds, or 28.3% of body weight.

• 9 mg dose: average weight loss of 64.4 pounds, or 25.9%.

• 4 mg dose: average weight loss of 47.2 pounds, or 19%

Ahead of the results, RBC Capital Markets analyst Trung Huynh said the key success range would be 28% to 30% weight loss.

Lilly's 12 mg dose appears to have cleared the low end of Huynh's bar, with patients losing an average of 28.3% of their body weight over 80 weeks.

"We're in a zone that's historically been associated with bariatric surgery, and you're getting it with a medicine," Kenneth Custer, president of Lilly Cardiometabolic Health, told Bloomberg in an interview.

Custer added, "I think we can definitively check the box" based on the data that "retatrutide moves the goalpost on max efficacy."

Retatrutide is a first-in-class triple hormone receptor agonist targeting GIP, GLP-1, and glucagon, positioning it as potentially superior to current weight-loss drugs such as Lilly's Zepbound, Novo Nordisk's Wegovy, and copycat GLP-1s.

Lilly noted some downsides to taking the drug in the trial:

Events of dysesthesia and urinary tract infections were generally mild to moderate, the majority resolved during treatment, and most participants continued taking retatrutide

In markets, Lilly shares rose about 1% in premarket trading in New York, while shares of the Wegovy competitor, Novo Nordisk, traded in Copenhagen, fell slightly.

Latest in the GLP-1 space:

• HIMS Shares Plunge As Pivot To Branded GLP-1s Weighs On Outlook

The key question is whether bariatric surgery begins to lose favor among patients as next-generation obesity medications replicate, or come close to replicating, surgery-level weight loss without an invasive procedure.

Tyler Durden Thu, 05/21/2026 - 09:40

The post Forget Citizens United: Think Media appeared first on CEPR.

Quantum Stocks Erupt As U.S. Gov't Awards $2 Billion, Takes Equity Stakes

IBM and small-cap quantum names, including IonQ, D-Wave Quantum, Rigetti Computing, Infleqtion, and other peers, are surging in New York premarket trading after a Wall Street Journal report said the Trump administration is preparing to award $2 billion in CHIPS Act grants to nine quantum-computing companies.

IBM is set to receive half of the $2 billion tranche, or about $1 billion, as the large-cap leader in the race to build quantum computing systems that could revolutionize national security, accelerate scientific discovery, and deliver a range of other economic benefits.

WSJ, citing the Commerce Department, outlined the companies expected to receive funding from the 2022 Chips and Science Act:

The department has agreed to give $1 billion of the package to IBM, a leader in the race to build computers that use quantum mechanics to solve problems much faster than traditional supercomputers.

. . .

IBM and other companies are working to develop specialized chips for quantum computing, a focus for the government in its bid to spur domestic supply chains. Chip maker GlobalFoundries is receiving $375 million in funding.

The rest of the firms are expected to receive $100 million, except for startup Diraq, which is slated to get $38 million.

A slew of companies pursuing various approaches to quantum are slated to be awarded funds, including publicly traded firms D-Wave Quantum, Rigetti Computing and Infleqtion.

Commerce Secretary Howard Lutnick's strategy of using federal funding in exchange for equity stakes will also apply to the quantum computing companies listed above. This is similar to a series of other deals, especially in the rare earths space, including rare-earth magnet maker Vulcan Elements and mining company MP Materials.

US TO GRANT $2B TO 9 QUANTUM COMPUTING FIRMS, TAKE STAKES: WSJ

Among companies receiving funds:

IBM: $1BN
GFS: $375MM
QBTS: $100MM
RGTI: $100MM
INFQ: $100MM

— zerohedge (@zerohedge) May 21, 2026

Lutnick stated, "The Trump administration is leading the world into a new era of American innovation."

In premarket trading, IBM rose 6%, D-Wave Quantum soared 19%, Rigetti Computing jumped 15%, and IONQ up 9%.

Quantum computing benefits:

• National security: Quantum systems could eventually break parts of today's encryption, forcing governments, banks, defense firms, and cloud providers to move toward post-quantum cybersecurity. It also has potential uses in secure communications, advanced sensing, navigation, and intelligence systems.

• AI and scientific discovery: Quantum computing could accelerate complex simulations used in materials science, drug discovery, chemistry, energy systems, and advanced manufacturing. Combined with AI, it could shorten research cycles that currently take years.

• Semiconductors and supply chains: The race is not only about software. It requires specialized chips, cryogenics, photonics, control systems, and advanced manufacturing capacity, making it a strategic industrial-policy priority similar to AI chips.

• Finance and logistics: Quantum algorithms could improve optimization problems, including portfolio modeling, risk analysis, routing, supply-chain planning, and energy-grid management.

"Everybody is excited about quantum because it is the next big thing. A lot of the expectations and hopes have yet to be realized," said Dana Goward, president of the Resilient Navigation and Timing Foundation.

It is important to note that quantum computing remains in the early stages, is expensive, and is technically challenging.

Nvidia CEO Jensen Huang recently said that "very useful" standalone quantum computers are still roughly 15 to 20 years away.

Tyler Durden Thu, 05/21/2026 - 07:45

Futures Slump, Ignoring Korean Euphoria, After Iran Rejects Trump Enriched Uranium Demands

A steady rebound in US equities driven by peak insanity in Korea (where the two chip stocks that account for most of the market surged and sent the Kospi soaring more than 8% overnight) faded after a report that Iran’s Supreme Leader issued a directive that the country’s near-weapons-grade uranium must remain in the country, rejecting Trump's key ceasefire demand, while oil and bond yields jumped as traders waited in mounting futility to see whether hopes of a peace deal in the Middle East would translate into tangible progress. As of 7:15am ET, S&P 500 futures fell 0.4% and Nasdaq futures slid 0.3% after otherwise very strong Nvidia’s earnings failed to ignite further strong gains in the artificial intelligence trade. Treasuries fell as Brent reversed earlier losses to climb 2% above $107 after Tehran's response disappointed those hoping for de-escalation. JPMorgan CEO Jamie Dimon did not help, warning that interest rates may climb much further from current levels. Long-dated bonds around the world have tested multiyear highs in recent days on concern about an oil-driven spike in inflation and amid worries over government spending.

Yesterday's Nvidia earnings proved to be a dud: Nvidia shares were unchanged (crushing both put and call buyers as the implied vol collapse) in US premarket trading after the AI chipmaker reported Q1 results and gave a forecast amid increased investor skepticism. While analysts were broadly positive, some also questioned the sustainability of growth, especially amid higher competition. Intuit sank 13% after the software company said it plans to reduce its workforce by about 17%. The shares of space exploration and satellite internet companies were broadly steady after Elon Musk’s SpaceX filed publicly for an initial public offering. Tesla advanced 1.6%, while other Mag 7 stocks were mixed (Amazon +0.6%, Alphabet +0.3%, Meta -0.2%, Apple -0.3%, Microsoft -0.3%).

• Aevex Corp. (AVEX) is up 8.5% after the drone maker reported first-quarter earnings. The company also announced that it was awarded $15.6 million in contracts by the US Air Force.
• Applied Digital (APLD) jumps 11% after the company signed a 15-year lease valued at about $7.5 billion with a US investment-grade hyperscaler for its Polaris Forge 3 campus.
• Elf Beauty Inc. (ELF) is up 9.9% after the cosmetics company beat the average analyst estimate on major profit and revenue estimates. Meanwhile, the company forecast adjusted earnings per share for 2027 that fell short of expectations.
• Intuit (INTU) sinks 13% after the tax-preparation software company reported third-quarter results that were seen as disappointing for its TurboTax business. It also said it is cutting about 17% of its staff, confirming an earlier Reuters report.
• Nebius (NBIS) is up 8.4% after partnering with Bloom Energy to deploy fuel-cell technology to power its AI infrastructure build-out in the US. Bloom rises 2.6%.

In other corporate news, Samsung reached a tentative last-minute deal with its union, averting a potentially crippling strike scheduled to start on Thursday at the world’s biggest memory firm.

Virtually all overnight gains in the S&P faded just after 6am when Reuters blasted the following two headlines which poured cold water on expectations of a quick deescalation in the Iran war

• *IRAN SUPREME LEADER SAYS URANIUM MUST STAY IN IRAN: REUTERS
• *IRAN SUPREME LEADER ISSUES DIRECTIVE ON URANIUM: REUTERS

Almost overshadowed by headlines related to AI-disrupter Anthropic and SpaceX, Nvidia’s results produced the expected high growth.  Nvidia’s revenue growth shows that the momentum of the debt-fueled AI data-center buildout is accelerating. While analysts are broadly positive, some also questioned the sustainability of growth, especially amid higher competition. Some also pointed to the company's compute revenue miss as an early warning sign, especially with Nvidia changing the way it reports revenue so it masks this weakness going forward. Nvidia's price reaction was expected to be more muted compared to the last few years - call open interest has been drifting lower. While this suggests a cooling in the speculative chase that previously defined the popular AI trade, it isn’t dimming the price action of peripheral beneficiaries - a windfall for Asian chip makers. 

“Investors remain relentless in pursuit of supernormal returns offered by AI,” said Emmanuel Valavanis, an equity sales specialist at Forte Securities, noting how narrow the market has become given a “laser beam focus on AI, the biggest tech infrastructure build-out of 21st century.”

Shortly after the Nvidia results, SpaceX filed publicly for what stands to be the largest-ever IPO, revealing billions in losses and a super-voting share plan allowing Elon Musk to keep the company under his control. SpaceX had a net loss of $4.28 billion on revenue of $4.69 billion for the first quarter, compared with a net loss of $528 million on revenue of about $4 billion a year earlier, the filing shows. 

While this will surely change, for now SpaceX is now a cash incinerating machine, with nearly $25BN in cash burn in the last 12 months.

“We believe that our current space efforts will catalyze transformative breakthroughs that could reshape terrestrial industries and lead to the emergence of new trillion-dollar markets on the Moon, Mars, and beyond.” Space Exploration said in its Form S-1.

Elsewhere Jamie Dimon said interest rates may climb much higher from current levels, while his firm will likely hire more AI specialists and fewer traditional bankers as the adoption of the technology accelerate.

The muted tone in US markets contrasted with buoyant optimism in Asia, where a key tech gauge jumped the most in six weeks.

Overnight Asia saw stock market fireworks with Korea's LG Electronics and Hyundai Mobis both surging in Seoul after Nvidia CEO Jensen Huang touted new opportunities offered by robots and automated vehicles. SoftBank Group Corp. jumped 20% as two companies backed by the Japanese investor - OpenAI and SB Energy Corp. - were said to be preparing for initial public offerings. Regional chipmakers tracked Wednesday’s gains in US peers.

“The rally in Asia has been supported by very strong momentum in technology, particularly around the current reality of AI demand,” said Francisco Simón, European head of strategy at Santander Asset Management. “Looking ahead, investors also continue to see structural growth potential linked to the future evolution of AI, including companies that may emerge as leaders.”

European shares edged higher after early declines as investors digested earnings reports and purchasing managers’ index data from across the region. The Stoxx 600 rose 0.4%, British defense technology firm QinetiQ was among the top gainers after posting strong results and announcing a new share buyback programme, while Ubisoft slumped on weak bookings. Here are the biggest movers Thursday:

• QinetiQ shares jumped as much as 11%, the biggest daily rise in over a year, after earnings showed a profit beat and a buyback initiative.
• Investec rallied as much as 5.3% in London to its highest intraday level since April after the specialist lender reported net income for the full year that beat the average analyst estimate.
• Generali shares rose as much as 2.9%, the best performer on the Stoxx 600 Insurance Index, after the Italian insurer reported what analysts say are strong 1Q earnings.
• CSG shares rose as much as 5.9% after Oddo BHF upgraded the defense company to outperform from neutral, saying there is potential for significant re-rating after a short attack sent the stock plunging earlier this month.
• Naturgy Energy Group shares gained as much as 3.4%, trading at their highest level since 2022, after receiving upgrades from Morgan Stanley and BNP Paribas.
• Alfen rose as much as 25% after a Jefferies upgrade gives it a sole buy rating, with the energy-equipment company seen favorably positioned to capitalize on the energy transition theme, with double-digit growth in all end-markets.
• Greece’s Public Power rose as much as 6% to a record high after it concluded a share capital increase on Wednesday.
• Hexagon shares fell as much as 18% on Thursday, their first day of trading excluding rights to the company’s upcoming spin off of its subsidiary Octave.
• Ubisoft shares slumped as much as 19% on Thursday after the video game maker guided to a high single-digit percentage drop in net bookings for the coming fiscal year, well below expectations.
• Convatec shares dropped as much as 5.6%, worst performer in the Stoxx 600 Health Care Index on Thursday morning, after the medical products and equipment manufacturer provided an update for the first four months of 2026.
• MaaT Pharma shares plunge as much as 61%, the most on record, after the French biotech company said its experimental therapy Xervyteg for acute graft-versus-host disease is likely to be turned down by the European Medicines Agency.
• Autotrader falls as much as 4.8%, most since Feb. 3, after a soft earnings report which analysts said will weaken confidence in the online vehicle marketplace. The stock has lost about a fifth of its value this year.
• Elior slumped as much as 26%, the most since November 2024, after the French catering and food services company’s first-half results came in significantly below expectations and it lowered guidance for the full year.

Investors are also getting a reading into business activity in major economies against a backdrop of rising energy costs. The data compiled by S&P Global are closely watched as they arrive early in the month and are good at revealing trends and turning points. In the UK, businesses posted the first decline in output in over a year as the Iran shock and a mounting rebellion against Prime Minister Keir Starmer hit activity in the services sector. In the euro area, activity shrank at the quickest pace in 2 1/2 years.

Earlier in the session, Asian equities snapped a four-day losing streak, with a rally in tech shares and easing Middle East tensions helping lift sentiment. The MSCI Asia Pacific Index rose as much as 2.8%, the most over a month. South Korea’s Kospi surged more than 8% to lead gains in the region after Samsung Electronics reached a tentative deal with its labor union. Shares in Taiwan and Japan also jumped. Chip heavyweights contributed the most to the Asian benchmark’s gains. Meanwhile, SoftBank Group shares soared in Japan after reports said that two of the companies it backs are preparing to list in the US.

Walmart, Ralph Lauren and Deere are among companies expected to report results before the market opens. While confident in its ability to win market share, Walmart is unlikely to raise full-year guidance given persistent uncertainties from higher fuel and freight costs, Citi said. Numbers from Take-Two and Workday follow later in the day. 

In commodities, Brent crude futures are up 2% to near $107 a barrel, erasing an earlier fall, after a report that Iran’s Supreme Leader has issued a directive that the country’s near-weapons-grade uranium should not be sent abroad. European stocks surrendered gains and turned red on the news, while US equity futures dropped.  Precious metals extended declines. 

Bonds also sold off, with the decline in Treasuries pushing US 10-year yields up 3 bps to 4.61%. European government followed suit, led lower by shorter dated maturities.

In FX, the Bloomberg Dollar Spot Index is up 0.2% while the Swedish krona and Aussie dollar slipped to the bottom of the G-10 FX pile, losing 0.4% each. While a resolution could put the dollar under selling pressure, conviction of a lasting peace deal is lower, ING strategists say. “The dollar’s contained reaction to Trump’s comments leaves a relatively larger scope for further downside if a deal is indeed about to be agreed,” they write in a note; “But it also confirms thinner market patience, and a new period of a stall in negotiations could end up taking DXY above the 99.50 mark even without any new military re-escalation."" At the same time significant downside in the currency may be limited given hawkish FOMC minutes on Wednesday, strategists say

Looking at today's calendar, we get Housing starts for April, Philadelphia Fed business outlook, and initial jobless claims through May 16 are due at 8:30 a.m. ET, followed by provisional PMI data for May at 9.45 a.m. 

Market Snapshot

• S&P 500 mini -0.3%
• Nasdaq 100 mini -0.3%,
• Russell 2000 mini -0.3%
• Stoxx Europe 600 +0.4%,
• DAX +0.5%,
• CAC 40 +0.3%
• 10-year Treasury yield +2 basis point at 4.60%
• Bloomberg Dollar Index little changed at 1201.2,
• euro little changed at $1.163
• WTI crude -0.1% at $98.13/barrel

Top Overnight News

• Iran's Supreme Leader has issued a directive that the country's near-weapons-grade uranium should not be sent abroad, two senior Iranian sources said, hardening Tehran's stance on one of the main U.S. demands at peace talks. RTRS
• Pakistan stepped up diplomatic efforts on Thursday to hasten U.S. and Iran peace talks, as Tehran said it was reviewing Washington's latest responses and President Donald Trump suggested he could wait a few days for "the right answers" from Tehran but was also willing to resume attacks on the country. RTRS
• Tehran is studying the American text and has not yet submitted its response. Pakistan is working to bring closer the viewpoints between the US and Iran. Iran is in the process of responding to the text sent by the US and that "the sent text has reduced the gaps to some extent", but requires guarantees: Al Arabiya and ISNA
• The US will open a new consulate building in Greenland, renewing concerns over Washington’s designs for the island. Protests are planned. BBG
• Beijing is holding up a proposed visit by the Pentagon’s top policy official as China pressures Donald Trump over a $14bn weapons package for Taiwan. FT
• The Trump administration is awarding $2 billion in grants to nine quantum-computing companies in deals that include U.S. government equity stakes. WSJ
• Anthropic’s revenue is set to more than double to $10.9 billion in the second quarter, an explosive rate of growth that will help it turn an operating profit for the first time. WSJ
• The RBI is considering all available options to stabilize the rupee, including an interest-rate hike, more currency swaps and raising dollars from investors overseas, people familiar said. BBG
• Euro-area business activity shrank at the quickest pace in two and a half years, adding to fears that the Iran war and surge in energy costs are dealing a severe blow to the economy. BBG
• The Fed proposed a new type of limited payment account to give fintech firms greater access to the US payments system. BBG

Iran

• Tehran is studying the American text and has not yet submitted its response, Al Arabiya reported citing sources. Pakistan is working to bring closer the viewpoints between the US and Iran. ISNA further reported that Iran is in the process of responding to the text sent by the US and that "the sent text has reduced the gaps to some extent", but requires guarantees.
• "According to my sources in Tehran, Iran’s response hasn’t been handed to the Pakistani mediator. There’re ongoing deliberations, and serious efforts to reach a final draft," according to Al Jazeera's Hashem.
• "Pakistan’s mediation efforts between US and Iran are at a crucial stage where efforts are underway to secure an agreement or a framework for comprehensive talks which can eventually lead to a ‘deal’," according to journalist Mallick.
• Pakistani source tells Al Jazeera the Army Chief is still in Pakistan and his visit to Iran depends on the outcomes of the interior minister's visit, enriched uranium is the main sticking point in the US-Iranian negotiations.
• Pakistan's Army Chief is to travel to Tehran on Thursday for negotiations and as part of mediation efforts between the US and Iran, ISNA reported.
• Pakistani political and media circles point to accelerated mediation efforts after Pakistani Interior Minister's Tehran meetings, IRNA reported. The report adds that presenting a narrative that indicates that progress in negotiations between Tehran and Washington is likely.
• Iran's Foreign Ministry spokesperson said Iran is pursuing talks "in good faith" but views US with "deep suspicion", Press TV reported. Confirms multiple rounds of messages have been exchanged through Pakistani intermediaries based on the 14-point proposal.
• Iranian official said they are ready to use new weapons if the US makes an additional act of aggression again, while he said they have produced and advanced weapons inside the country that have not yet been used on the battlefield and have not yet been tested. Furthermore, the spokesman stated that in terms of equipment and defensive capabilities, they are not experiencing any shortages that would prevent the defence of the country, and this time, they do not intend to act with restraint.
• IRGC said forces are ready to respond to any enemy aggression and all armed forces are ready with fingers on the trigger, according to SNN and Tasnim.

A more detailed look at global markets courtesy of Newqsuawk

APAC stocks mostly rallied as the region took impetus from the gains on Wall Street, with global risk sentiment underpinned following a slide in oil prices due to increased optimism regarding a resolution to the Middle East conflict, after President Trump stated that they are in the final stages of talks with Iran. Furthermore, it was also reported that the Pakistani Army Chief may visit Iran today to announce the achievement of a final draft agreement, while the US side gave Iran a text through a Pakistani mediator after having received Iran's 14-point text a few days ago. ASX 200 climbed higher with the gains led by outperformance in the real estate, mining and materials industries, while the index also shrugged off the weak flash PMIs and disappointing jobs data. Nikkei 225 surged higher amid the decline in energy prices and heavy buying in tech stocks, with SoftBank shares up around 20% following the earnings beat from NVIDIA, while there was a slew of data from Japan which were ultimately mixed, but included stronger-than-expected trade figures. KOSPI outperformed amid tech strength with SK Hynix surging by a double-digit percentage, while Samsung Electronics was boosted by an eleventh-hour tentative wage agreement with the labour union to avert an 18-day mass walkout. Hang Seng and Shanghai Comp lagged despite the increased liquidity effort by the PBoC, with price action rangebound and Chinese markets constrained amid weakness in energy stocks and automakers.

Top Asian News

• Japanese Finance Minister Katayama said Japan's fiscal policy is proactive and not expansionary.
• Japan's draft extra budget is reportedly around JPY 3tln, while it was also reported that Japan plans to spend JPY 500bln in reserve funds on energy measures.
• India is said to weigh options to boost the rupee, including a rate hike, with the RBI also considering options such as currency swaps and raising dollars from overseas investors.
• South Korea's NPS may hike domestic stock holding target by 5 percentage points amid rises in domestic stock market, Maeil reported.

European bourses (STOXX 600 +0.3%) are entirely but modestly in the green, ex. FTSE 100 (-0.1%). Signs of an end to the Iran war seem to be emerging, with President Trump saying the US is in the final stages of negotiations with Iran, while Al Arabiya reported that Tehran is studying the American text. The source report added that Pakistan is working to bring closer the viewpoints between the US and Iran. Elsewhere, EZ flash PMIs disappointed, with commentary continuing to highlight stagflation worries despite ECB Lagarde’s persistence in moving away from the language. European sectors point to a positive bias. Autos (+1.2%) and Retail (+0.6%) top the sector pile while Energy (-0.2%) and Banks (-0.2%) underperform.

Top European News

• EU Commission downgrades 2026 GDP growth forecast to 0.9% (prev. 1.2%), 2026 inflation revised to 3.00% (prev. 1.9%).
• UK Chancellor Reeves is to announce cuts to food tariffs and children's bus fares on Thursday in a cost-of-living push to win back voters. It was separately reported that Reeves will not announce a proposed voluntary cap on supermarket prices for essential groceries following strong backlash from the sector, according to Financial Times. Furthermore, Politico reported that Reeves is to announce a cut to agrifood tariffs on some products and a rise in mileage rates.

FX

• The Dollar index is unchanged on the day and returns to Thursday’s lows around 99.00 after chopping on geopolitics and soft EZ/French data. Action ultimately dictated by geopolitics, with reports recently sounding constructive and has outweighed the Dollar positive factors which incl. poor EZ PMI metrics and hawkish FOMC Minutes.
• EUR saw decent weakness on dismal French data, which heightened the possibility of EZ-US differentials widening. French PMIs marked the steepest contraction since late 2020. Services and composite were expected to be broadly unchanged from priors, though both slipped significantly further into contraction territory. The Manufacturing picture was better, though the metric still fell into contraction. The EZ figure was also poor but provided some reprieve for the single currency. EZ Manufacturing was resilient, though still fell below expected and previous, while composite and services fell further into contraction. As the French series was released, EUR/USD saw a move c.24 pips lower to a 1.1594 trough, though pared some downside as German/EZ figures were not as bad as feared according to the indications from France.
• JPY remains reluctant to deviate from the 159.00 mark despite hawkish remarks from BoJ's Koeda. JPY fundamentals remain bearish amid reporting around the Supplementary Budget and terms of trade. Koeda’s remarks overnight, “BoJ needs to continue to raise the policy interest rate”, mark the second non-dissenting member to indicate willingness to tighten policy (Masu+Koeda). This shows that last meeting’s 6-3 vote split will be vulnerable in June’s meeting, with the aforementioned members’ remarks indicating a possible 5-4 vote split for a hike, where interest rate futures currently imply a 77% probability of such action.

Central Banks

• BoJ Board Member Koeda said the BoJ needs to continue to raise the policy interest rate in response to developments in economic activity and prices, as well as financial conditions, while she thinks the BoJ needs to continue examining the extent to which underlying inflation is anchored. Koeda said given the situation in the Middle East, she sees some possibility that underlying inflation may exceed 2% looking ahead, and noted it is reasonable for BoJ to raise the policy interest rate at an appropriate pace to address high inflation, whilst also considering the trade-offs for the economy. Furthermore, she warned that if real interest rates continue to deviate markedly in a negative direction from the natural rate of interest, unintended distortions could arise in future resource allocation, as well as stated that the BoJ should proceed steadily with normalising its balance sheet in a predictable manner, while ensuring flexibility.
• ECB's Rehn said economy is moving towards the adverse scenario of projections; may need to raise rates to maintain credibility.
• Norges Bank Expectations Survey (Q2): 12-month ahead CPI 3.3% (prev. 2.8%), 2026 real wages 1.1% (prev. 1.3%).

Fixed Income

• USTs are off by a few ticks, but have been clambering off worst levels throughout the European session; currently towards the upper end of a 109-05 to 109-12 range. Wednesday saw sentiment lift amidst positive geopolitical newsflow, and this has continued into today’s session. Most recently, reports have suggested that Iran is in the process of responding to the text sent by the US, adding that it has “reduced the gaps to some extent”. This led to some pressure in the energy complex, in turn, lifting US paper.
• Bunds trade firmer today and towards the upper end of a 124.71 to 125.12 range. Strength today has been facilitated by a) geopolitical optimism (see above), and b) a dire set of PMI metrics. In brief, the French figures were awful, with Manufacturing surprisingly slipping into contractionary territory and Composite/Services also deteriorating; the German metrics also indicated the downbeat Manufacturing environment, but were more or less in line with expectations. The EZ-wide figure concluded that activity in the region is softening across both the Manufacturing and Services; "The survey data indicate that the euro area economy looks set to contract by 0.2% in the second quarter”. The report concludes by suggesting that price gauges suggest inflation is running close to 4%, which, alongside slowing growth, “creates a deepening dilemma for policymakers”.
• Gilts move higher alongside the pressure in the crude complex. The region had its own PMI metrics to digest. Manufacturing remained solid whilst Services surprisingly fell into contractionary territory. UK paper was choppy in reaction to the data, but ultimately little moved – perhaps as attention turns to Chancellor Reeves, who is due to speak at 11:30 BST. Reports suggest that she will announce targeted cuts to agrifood tariffs expected to save consumers more than GBP 150mln annually. She is also expected to announce free summer bus travel for children, and a GBP 400mln package for motorists and hauliers, including a postponed 5p fuel duty rise. Political analysts view her speech as an attempt to secure herself as the Labour Party’s long-term chancellor in the midst of recent political turmoil

Commodities

• In geopolitics, US President Trump said Iran talks were in the “final stages” but warned the US could get “a little bit nasty” if no deal is reached, while stressing sanctions relief would only come after an agreement. Iran said dialogue was continuing around its 14-point proposal, but rejected surrender, ultimatums or deadlines. Tehran is studying the American text and has not yet submitted its response.
• WTI and Brent crude futures are moving lower following the aforementioned constructive geopolitical headlines. WTI Jul briefly topped USD 100/bbl before returning under the level, currently in a USD 97.29-100.11/bbl range. Brent Jul resides in a 103.68-106.80/bbl parameter. Dutch TTF is now softer by over 1%, with downticks also seen in light of the constructive US-Iran commentary.
• Spot gold is contained to a USD 4,512-4,570/oz range, on a modestly softer footing intraday but off extremes as the yellow metal moves in lockstep with the USD, which is influenced by energy prices. Spot silver found intraday resistance at USD 77/bbl before printing a USD 74.67/oz low.
• Base metals are lower despite the broader optimism from the US-Iran relatively flat DXY at the time of writing, whilst PMI data in Europe pointed to an overall bleak picture, with the data pointing to contractions in the EZ and the UK. 3M LME copper resides in a USD 13,477.65- 13,713.40/t range.
• ADNOC said that while it can ramp up its oil production in a matter of weeks, it will take 4 months for oil flows through Hormuz to return to 80% of pre-war levels.
• China raises gas and diesel prices by CNY 75 and CNY 70 per ton, respectively, from May 22nd.
• UAE's new pipeline that bypasses the Strait of Hormuz is reportedly around 50% complete.
• Goldman Sachs said global oil stockpiles fell at a record pace of 8.7mln bpd so far in May, while it added that physical markets continue to tighten with estimated oil exports through the Strait of Hormuz remaining at a very low 5% of normal.

Geopolitics

• Ukraine’s Drone Forces commander said Ukrainian drones attacked Russia’s Syzran oil refinery (147k-170k capacity) in the Samara region of Russia.
• US Defence Undersecretary Colby may visit China ahead of a possible trip by Pentagon chief Hegseth amid tension over Taiwan arms sales, SCMP reported.
• US deployed the USS Nimitz carrier strike group to the Caribbean in a show of force as President Trump pressures Cuba, according to NYT.
• US President Trump said on Wednesday he would speak with Taiwan's President Lai in an unprecedented move for a US leader that could roil US relations with China, according to The Guardian.
• Beijing is reportedly holding up a proposed visit by a Pentagon top policy official as China pressures US President Trump regarding a USD 14bln arms sale to Taiwan, according to FT.
• Chinese President Xi may visit North Korea by as early as next week, according to Yonhap.

US Event Calendar

• 8:30 am: United States May 16 Initial Jobless Claims, est. 210k, prior 211k
• 8:30 am: United States May 9 Continuing Claims, est. 1786k, prior 1782k
• 8:30 am: United States May Philadelphia Fed Business Outlook, est. 17.8, prior 26.7
• 8:30 am: United States Apr Housing Starts, est. 1410k, prior 1502k
• 8:30 am: United States Apr P Building Permits, est. 1384k, prior 1363k
• 9:45 am: United States May P S&P Global US Manufacturing PMI, est. 53.8, prior 54.5
• 9:45 am: United States May P S&P Global US Services PMI, est. 51.2, prior 51
• 9:45 am: United States May P S&P Global US Composite PMI, est. 51.8, prior 51.7

Central Banks

• 11:20 am: United States Fed’s Goolsbee Speaks in Chicago Radio Interview
• 12:20 pm: United States Fed’s Barkin Speaks on the Economy

DB's Jim Reid concludes the overnight wrap

Yesterday’s positive market mood has continued into Asian hours this morning, with the Kospi (+8.08%) and Nikkei (+3.58%) surging via a tech rally even as Nvidia’s eagerly awaited earnings drew a mixed response last night. This follows yesterday’s +1.08% gain for the S&P 500 on increased investor optimism that a US-Iran deal might materialise, leading to sharp declines for Brent crude (-5.63%) and a reversal in Treasury yields (-8.1bps on 10yr).

Starting with Nvidia, the chipmaker reported 85% yoy sales growth to $81.6bn last quarter and projected revenue of around $91bn in the current quarter (vs. $87.4bn est.). Despite the impressive growth and a 75% gross margin, that moderate sales guidance beat drew a lukewarm response from investors. Nvidia’s shares slipped by about 1% in post-market trading after a +1.30% gain yesterday that took it to a +19.8% gain YTD.

Futures on the Nasdaq and the S&P 500 are flat this morning following Nvidia’s results, but this comes after markets steamed ahead yesterday as the anticipation of good news on Iran brought oil prices and yields lower. The S&P 500 (+1.08%) rose for the first time in four sessions, with chipmakers and technology companies leading the way ahead of Nvidia’s results. The Philly Stock Exchange Index (+4.49%) rebounded strongly, with the Nasdaq (+1.54%) and the Magnificent-7 (+1.34%) also posting sizeable gains. European indices also rebounded, with the Stoxx 600 (+1.46%), CAC 40 (+1.70%), FTSE 100 (+0.99%) and DAX (+1.38%) all posting strong gains.

That positivity has carried over into Asian markets this morning. Japan’s Nikkei is up +3.58%, with Softbank surging +19.85% boosted by its roughly 13% stake in OpenAI as the WSJ reported that OpenAI is preparing to file an IPO in the coming days or weeks. Adrian Cox has written a quick note here on this overnight, putting the fundraising in some perspective. It would be double the previous largest IPO in history. Elsewhere, Korea’s KOSPI is soaring +8.08% with the likes of LG Electronics up +25.97% following Nvidia CEO Huang’s earnings call comments about the upside for physical AI and robotics. 8 stocks in the index are up by more than 15% as I type. Samsung (+5.35%) is also advancing strongly after reaching a tentative deal with its labour union to avoid a strike. The ASX is +1.63% higher but Chinese risk is broadly flat.

Before all that, it was rising optimism that the US and Iran might reach a deal that boosted markets yesterday. President Trump said that the US was in the “final stages” for a possible draft deal to end the conflict. Iran’s Tasnim news agency reported that Iran is reviewing the new draft US sent to Tehran in response to its 14-point proposal, while Axios reported that Trump and Israel’s Netanyahu had a tense call on Tuesday over the new peace proposal drafted by Qatar and Pakistan. That said, Trump did also threaten escalation, saying “We’ll either have a deal or we’re going to do some things that are a little bit nasty”. But overall investors jumped on potential, with Brent crude falling -5.63% to $105.02/bbl, whilst the 6-month ahead future fell -3.96% to $88.24/bbl. Brent is back up a modest +0.89% overnight.  
The decline in oil helped Treasury yields retreat from Tuesday’s highs. The 10yr yield fell -8.1bps to 4.59%, though that still leaves it +23bps above where it was on May 8. The bond rally was led by breakevens, especially at the front-end, with the 1yr US inflation swap falling -13.9bps to 3.24%. Long-dated real yields also declined after the sharp repricing over the past week, with 30yr nominal (-5.8bps) and real (-5.7bps) yields retreating from post-GFC highs.

While the rates rally dominated the day, the minutes of this month’s FOMC meeting showed officials growing more open to the potential need to raise rates. In particular, a “majority of participants highlighted… that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2 percent”, with “many” officials calling for the Fed to drop its easing bias as a result. As a reminder, three of the voting FOMC members had dissented in favour of dropping the bias.

European government bonds also saw significant relief, with yields on 10yr bunds down -9.6bps to 3.09%, while OATs (-11.2bps) and BTPs (-13.6bps) saw double digit declines amid the decline in oil prices. Those moves came as the final Euro Area April CPI was in-line with the flash reading at +3.0% y/y.

Here in the UK gilts outperformed after a big miss on April headline inflation (2.8% y/y vs 3.0% y/y expected). This was largely driven by weaker services inflation, which rose 3.2% y/y (vs 3.5% expected and down from 4.5% in March), though core CPI (2.5% y/y vs 2.6%) saw a more moderate downside miss. So combined with the global rally, that helped 10yr gilt yields to fall by -14.1bps to 4.99%, whilst the number of hikes priced in for the BoE in 2026 eased from 61bps to 47bps.

In overnight data, we’ve seen the first of the May flash PMI releases. The composite PMI declined in both Australia (from 50.4 to 47.8) and in Japan (from 52.2 to 51.1). Both manufacturing and services PMIs saw a deterioration, but it is services that led the decline, falling to 47.7 in Australia and a 14-month low of 50.0 in Japan. Meanwhile, Australia's unemployment rate unexpectedly rose from 4.3% to 4.5% in April, marking its highest level since November 2021. The amount of further RBA hikes priced by year-end has declined from 34bps to 25bps following the data. In contrast, Japan trade figures were unexpectedly resilient in April, with +14.8% year-on-year export growth (vs. +9.2% expected) driving the economy to a third consecutive monthly trade surplus at ¥302bn, significantly outperforming expectations for a marginal deficit.

Flash PMIs will remain in focus later today, with the Eurozone, Germany, France, UK and US releases due. Other US data today includes weekly initial jobless claims (our economists expect these to edge slightly lower to 209k from 211k), the May Philadelphia Fed manufacturing survey, as well as April housing starts and building permits. In the Eurozone, we’ll also have May consumer confidence and the March current account data. Central bank speakers today include the ECB’s Villeroy and BoE’s Taylor. Notable earnings include Walmart and Generali.

Tyler Durden Thu, 05/21/2026 - 07:38

Kremlin Blasts 'Borderline Crazy' Threat From Baltic NATO State

Russia has express outrage and condemnation of what it has on Wednesday denounced as a "borderline crazy threat" from NATO member Lithuania.

Lithuanian Foreign Minister Kestutis Budrys in an interview this week with Neue Zurcher Zeitung provocatively stated that NATO is capable of destroying all Russian bases located in Kaliningrad if necessary.

via MSC

"We have to show the Russians that we're capable of penetrating the small fortress they've built in Kaliningrad," he said of the Russian exclave. "NATO has the capability, if necessary, to raze Russian air defenses and missile bases there to the ground."

Russia's RT has published the Kremlin response as follows:

Recent threats directed at Russia’s Kaliningrad Region by Lithuanian Foreign Minister Kestutis Budrys are “borderline crazy” and reflect a “maniacal” hostility toward Russia among Lithuania’s leadership, Kremlin spokesman Dmitry Peskov has said.

“This anti-Russian sentiment makes them blind, prevents them from thinking about the future and from acting in the interests of their nations,” Peskov said, referring to political elites in all three Baltic states.

Later in the day, Russian Foreign Minister Sergey Lavrov echoed Peskov’s remarks, arguing that Western officials resort to such hostile rhetoric to assert their relevance. “But unlike the philosopher [Rene Descartes] who said ‘I think, therefore I am’ these people simply are,” the diplomat joked.

As for his other hawkish comments in the interview, the Lithuanian top diplomat strongly suggested the Ukraine war could spread deep into Europe, saying that should the frontline in Ukraine collapse, the consequences would be felt not only across NATO's eastern flank but throughout the entire European Union.

"The idea that a conflict with Moscow would only affect Russia's immediate neighbors is a dangerous misconception. It's part of Russian propaganda," Budrys said.

"If the frontline collapses, everything collapses - the EU, the economy, social order," he added. "There isn’t a single safe haven in Western Europe that would escape the consequences of war. We must finally quantify the cost of a lack of deterrence honestly."

Source: EuroNews

As a reminder, Kaliningrad is surrounded by Poland to the south and Lithuania to the north and east, which makes Moscow naturally alarmed whenever Polish or Lithuanian officials spew forth threats related to the exclave, which is Russian sovereign territory. However, Europe has also been fearful over the significant military assets and radar capability that Russia has stationed there.

Tyler Durden Thu, 05/21/2026 - 07:20

KOSPI, Samsung Soar After 11th-Hour Union Deal Averts Chip Strike; Workers Eye $340k Bonuses

South Korea's benchmark KOSPI jumped overnight after Samsung Electronics reached a tentative wage-and-bonus agreement with its main labor union, neutralizing the immediate risk of a paralyzing strike at the world's largest memory-chip producer.

The wage-and-bonus deal removes a major supply-chain threat in an already tight memory market, where AI data center buildouts have driven surging demand, soaring prices, and heightened procurement risk across global semiconductor supply chains.

Samsung Electronics' shares surged after it clinched an 11th-hour deal with its South Korean union to avert a strike, although the terms — which included bonuses of around $416,000 for some workers — gave rise to some concern https://t.co/azFdL0hten pic.twitter.com/1q5naanI5e

— Reuters (@Reuters) May 21, 2026

Here are the key points of the Samsung-union deal reached in the 11th hour of negotiations:

• Samsung will introduce a new 10-year performance bonus system for its semiconductor division.

• Plan links worker bonuses to profitability, with ambitious profit targets of 200 trillion won annually from 2026-28 and 100 trillion won annually from 2029-35.

• Bonus pool will be funded by 10.5% of performance and paid in stock after tax.

• Employees can sell 1/3 of the shares immediately, while the rest must be held for up to 2 years.

• Samsung also agreed to an average wage increase of 6.2%, improved child support payments, and expanded housing loans.

Based on Bloomberg calculations, Samsung's 78,000 semiconductor workers could receive an average bonus of about 513 million won, or $340,000, depending on final profit levels and individual allocation. That would be more than triple the company's average employee pay of 158 million won in 2025.

Local outlet Yonhap estimates suggest workers in the memory division could receive even larger payouts, potentially around 600 million won per person, though the company does not disclose exact staffing levels by chip segment.

Samsung's union told workers they will be able to vote on the proposed 2026 wage and bonus agreement on Saturday morning.

Putting the wage deal to a vote averted a massive general strike at Samsung today, leading to optimism in the markets.

"HK shares traded directionally lower today, with optimism resurging in memory-heavy markets. Samsung's deal with the labor union brought fresh optimism with Kospi jumping by +8%, and understandably fueling some rotation out of HK/China," Goldman analyst Shubham Ghosh told clients.

Korea's Kospi closes up 8.42%, fourth biggest one-day jump on record. The Index has had nine 5%+ moves just in 2026 pic.twitter.com/YeejMyyOEG

— zerohedge (@zerohedge) May 21, 2026

KOSPI

Samsung

Barclays analyst Bumki Son noted, "As Samsung Electronics and SK Hynix are now competing for global talents, competitive compensation packages are well warranted."

Earlier this month, the American Chamber of Commerce in Korea warned, "There are mounting concerns that any significant production disruptions or operational uncertainty at Samsung Electronics could place additional strain on the global memory semiconductor market, potentially worsening supply bottlenecks, price volatility, procurement uncertainty, and broader supply chain instability."

All eyes are on the union vote this weekend that extends into next week.

Tyler Durden Thu, 05/21/2026 - 06:55

My morning train WFH reads:

• Before you invest in crypto, watch this film: Mother Jones on a documentary diagnosing crypto as a wealth-transfer machine pointed at retail. The OC star turned skeptic remains an unlikely but effective explainer. Ben McKenzie scorches the cult of cryptocurrency. (Mother Jones)

• Nobody Knows Anything: A market-strategy riff on the Goldman line — humility about forecasting as the only durable edge. Always worth re-reading when the consensus gets loud. (TrendLabs) see also Nobody Knows Anything: Derek Thompson on why a piece of AI science fiction rocked the stock market — and what that tells us about how little anyone actually understands about where technology and the economy are heading. (Derek Thompson) see also Nobody Knows Anything: Barry Ritholtz’s Bloomberg classic on the fundamental unpredictability of markets — and why anyone who claims otherwise is selling something. (Bloomberg)

• The Great 2026 Reset… — Deutsche Bank Research Institute: DB’s macro team takes a swing at framing 2026. Read it for the framework, not the predictions. (Deutsche Bank Research Institute)

• Stories vs. Statistics: Ben Carlson on why narrative beats spreadsheet for most investors even when the spreadsheet is right. The behavioral piece behind half the bad decisions our industry sees. (A Wealth of Common Sense)

• Why Humans Are Obsessed With Numbers Too Big to Understand: Mathematician Richard Elwes discusses humanity’s long-time fascination with ginormous numbers—and what this obsession reveals about us. On our cognitive failure modes around trillions, billions, and parsecs. Relevant to investors, voters, and anyone trying to process the federal budget. (Gizmodo)

• The Iran War Is Crippling One of the World’s Wealthiest Nations: The NYT on Qatar — caught between US bases, Iranian missiles, and a gas-export business that depends on a quiet Strait of Hormuz. Even the rich neighbors are paying for this war. Iranian attacks and the stoppage of seaborne transit have paralyzed Qatar’s vital gas exports, stalling the economic pivots intended to anchor the country’s growth. (New York Times)

• The paradox at the heart of American meat: Vox Future Perfect on the gap between what Americans say about animal welfare and what they buy at the grocery store. The cognitive dissonance is the product. No one likes how animals are treated on factory farms. But no one wants to stop eating them. (Vox)

• The First Atomic Bomb Test in 1945 Created an Entirely New Material: Wired on trinitite — the strange green glass the Trinity test fused out of the desert floor — and what new analysis reveals about its mineral structure. A nice science palate cleanser. The discovery from the Trinity nuclear test site shows how extreme conditions can result in materials never before seen in nature or in the lab. (Wired)

• Everyone Thinks Trump Won Last Night. They’re Wrong: A contrarian read arguing the conventional wisdom missed the actual political signal from last night. Useful as a counterweight regardless of whether the call ages well. Trump’s revenge tour just made the GOP’s midterm problem a whole lot worse.” (The Message Box)

• Jackson Pollock painting sells for record $181 million at auction: Number 7A, 1948, which went under the hammer at the renowned Christie’s auction house on Monday, smashed the previous record for the most a work by the late American artist has taken at auction. The painting, which came from the private collection of media magnate SI Newhouse, is also now the fourth most expensive artwork ever sold at auction, according to ARTnews. (BBC)

Video of the day: Americans Crave Low-Cost Chinese EVs

Be sure to check out our Masters in Business interview this weekend with Vimal Kapur, CEO and Chairman of DJIA component Honeywell International. The firm is in the midst of dividing into three companies: Honeywell Automation, Honeywell Aerospace, and Solstice Advanced Materials. The firm has fully integrated AI as the intelligence layer in all of its automation processes and products.

 

AI Is Fueling a New American Startup Boom

Source: Apollo

 

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