Market Report.
📞 President Trump and Israeli Prime Minister Benjamin Netanyahu held a “lengthy and difficult” phone call on Tuesday evening. One U.S. source briefed on the call said Netanyahu’s “hair was on fire” afterward, widely interpreted as him being furious or extremely upset.
🤝 The discussion focused on renewed mediation efforts to reach a deal with Iran. Trump initiated the conversation to update Netanyahu on progress by regional mediators. He told Netanyahu that Qatar and Pakistan, with support from Saudi Arabia, Turkey, and Egypt, were finalizing a revised “letter of intent.”
📝 This document would formally end the current war and trigger a 30-day negotiation window. The window would cover Iran’s nuclear program, reopening the Strait of Hormuz, and related issues.
🤨 The Israeli leader was highly skeptical and opposed the framework. He believes the U.S. should instead maintain military pressure to further degrade Iran’s regime by destroying critical infrastructure.
😟 Israeli sources described him as consistently worried about any negotiations with Iran
🇺🇸 Trump later told reporters Netanyahu “will do whatever I want him to do” on Iran while describing their relationship as strong.
✈️ Reports indicate Netanyahu may visit Washington soon for in-person talks with Trump. The White House also declined comment.
🗳️ Meanwhile, yesterday, president Trump claimed that his approval rating in Israel stands at 99 percent, adding that he may travel to the country and run for prime minister, when his job in the US will be over.
💬 Trump also told reporters: “I hope we don’t have to do the war, but we may have to give them another big hit.” When asked how long he would wait, he said: “Two or three days, maybe Friday, Saturday, Sunday. Something maybe early next week.”
🔎 U.S. Vice President JD Vance offered an assessment of Iran, acknowledging its complexity. “Iran is a very complicated country. It’s a country that I wouldn’t pretend that I understand…It’s a great and proud civilization,” he said.
⚠️ On the other hand, Iran warned it would retaliate beyond the Middle East if the US or Israel attacks it again, following renewed threats from President Donald Trump. Iran’s speaker of parliament, Mohammad Bagher Ghalibaf, said the country made the “best use of the ceasefire opportunity” to rebuild its capabilities.
💣 The Islamic Revolutionary Guard Corps said if aggression against Iran is repeated, the regional war will this time extend beyond the region. The IRGC vowed “crushing blows in places you do not expect.”
❓ Is NATO pulling out?
🪖 Pentagon canceled a planned rotational deployment of about 4,000 soldiers from the 2nd Armored Brigade Combat Team, 1st Cavalry Division, which was set to move from Texas to Poland for a nine-month rotation.
📉 In early May 2026, the Pentagon announced the withdrawal of roughly 5,000 U.S. troops from Germany over the next six to twelve months. This move was tied to a review of force posture in Europe and tensions between Trump and European allies.
🔁 The combined effect of halting the Poland rotation and drawing down in Germany reduces the number of U.S. Brigade Combat Teams in Europe from four to three. This returns rotational levels in some areas to what they were before 2022.
🌍 The decisions stem from a widening gap between the Trump administration and European NATO allies over the U.S.-Israeli conflict with Iran. Trump and top officials expressed frustration that Europe, especially Germany under Chancellor Merz, was not providing sufficient support.
🛢️ Oil market:
📊 The EIA’s weekly report on May 20, 2026, reveals that the US Strategic Petroleum Reserve (SPR) experienced a record drop of 9.9 million barrels in one week, reducing total inventories to about 374.2 million barrels.
📉 This marks the lowest level since July 2024 and continues a trend of increasing withdrawals, as the previous week had a decline of 8.6 million barrels. The SPR is the largest emergency oil reserve globally, located in underground caverns in Texas and Louisiana.
⚖️ Majority Warned Rate Hikes May Be Needed.
🏦 April Meeting Kept Rates Unchanged with Dissents. A majority of Federal Reserve officials at the April meeting indicated the central bank would likely need to consider raising interest rates if inflation continued to run persistently above the 2 percent target. This marks a sharp turn from earlier in the year when rate cuts were seen as the most likely next move.
📈 The vast majority of participants noted an increased risk that inflation would take longer to return to the 2 percent objective than previously expected. The Iran war, the blocked Strait of Hormuz, and surging bond yields have all worsened the outlook since the meeting.
💹 Markets Now Price a Rate Hike in 2026. Investors are pricing in about 21 basis points of tightening by year end, implying a strong chance of at least one 25 basis point rate hike this year.
🔄 Warsh: A different approach at the Fed?
🗂️ Newly confirmed Federal Reserve Chair Kevin Warsh is promising a fundamental shift in how the central bank fights inflation. At his confirmation hearing, he criticized the legacy of policies under former Chair Jerome Powell that allowed inflation to exceed 8 percent and remain above target since 2021.
⚠️ Warsh described the failure to control inflation starting four to five years ago as a fatal policy error that is still hurting Americans. With April inflation at 3.8 percent and price increases outpacing wages, he argues that letting inflation take hold makes it much harder and more expensive to bring down.
📉 Warsh intends to reduce the Fed’s massive 6.8 trillion dollar bond portfolio, reversing years of quantitative easing. He views the balance sheet tool as disproportionately helping wealthy asset holders, while the interest rate tool affects the entire economy more evenly.
💵 Warsh and allied economists emphasize that the primary driver of inflation is the expansion of the money supply. Between 2020 and 2022, the Fed injected about 6.4 trillion dollars in new money, and roughly 29 percent of today’s entire M2 money supply was created since January 2020. During the low-inflation period from 2008 to 2020, M2 grew at 6.11 percent annually while CPI averaged 1.77 percent.
🧭 Warsh told senators he is most interested in the underlying inflation rate, not temporary changes from geopolitics or specific items like beef. This signals a potential shift in communication, aiming to avoid overreacting to supply shocks like the Iran war energy spike.
💻 Nvidia Earning Report:
📈 Nvidia reported adjusted earnings per share of 1.87, exceeding the 1.76 estimate. Revenue hit $81.62 billion, above the $78.86 billion forecast. Despite the beat-and-raise quarter, the stock sank in after-hours trading, heading for a fourth straight post-earnings decline. The company added $80 billion to its share repurchase plan and raised its dividend.
🖥️ Data center revenue soared as hyperscalers accounted for $38 billion, more than half of the segment total. AI cloud revenue more than tripled year over year. Nvidia is enabling rapid AI compute capacity in over 80 data centers exceeding 10 megawatts.
🤖 CEO Jensen Huang declared that agentic artificial intelligence has arrived and that the AI factory buildout is accelerating at extraordinary speed. He emphasized that Nvidia is the only platform running every frontier AI model, including those from Anthropic, OpenAI, Meta, and Google.
🚀 Huang predicted the next-generation Vera Rubin rack-scale system will be even more successful than Grace Blackwell, driven by rapidly growing inference market share. He expects Nvidia will be supply-constrained throughout the entire life of the new system.
⚠️ Nvidia acknowledged in its 10-Q filing that some large customers are developing their own custom ASICs, potentially becoming rivals. It also warned that these same firms could compete with Nvidia’s AI cloud services and impinge on its access to foundry capacity and scarce materials.
🌐 The company warned that if the Iran war escalates or extends, it could affect product development, supply chain, and revenue, creating business uncertainty.
🔌 U.S.-China tech decoupling:
📰 According with Financial Times, China added Nvidia’s RTX 5090D V2 to its customs “banned goods” list. The move occurred while Nvidia CEO Jensen Huang was in Beijing as part of President Trump’s delegation for the Trump-Xi summit.
🚫 Chinese customs authorities notified motherboard manufacturers and logistics companies that the RTX 5090D V2 would receive no import permits or clearance. This was China’s decision, not a new U.S. restriction.
🏭 Beijing is aggressively pushing self-reliance in semiconductors. Chinese officials reportedly view the RTX 5090D V2 as an “insulting” downgraded product. The government wants companies to buy homegrown alternatives from Huawei, Cambricon, and others.
📊 Huawei is now projected to take the largest share of China’s AI chip market this year. China already accounts for only about 9% of Nvidia’s revenue, down sharply due to prior U.S. curbs.
🏢 Corporate world:
🚀 SpaceX has filed for its IPO and plans to trade under the ticker SPCX on the Nasdaq. While the company has not disclosed the amount it wants to raise, reports suggest it may aim for around 75 billion dollars, which would be more than triple the largest U.S. IPO to date.
📜 The current record for the largest U.S. IPO is held by Alibaba, which raised 21.8 billion dollars in 2014. Other significant IPOs include Visa, which raised nearly 18 billion dollars during the 2008 financial crisis, and Enel SpA, which raised nearly 16.5 billion dollars in 1999. Facebook (now Meta) raised about 16 billion dollars in its 2012 debut, while General Motors returned to the markets with 15.8 billion dollars after a government bailout in 2010. Deutsche Telekom raised over 13 billion dollars in 1996, and Rivian’s IPO raised 11.9 billion dollars but saw shares drop significantly since then. Additionally, AT&T’s wireless spinoff raised over 10 billion dollars in 2000.
🤖 Reports indicate that OpenAI is expected to file for an IPO soon, giving it an 83 percent chance of going public before rival Anthropic. Investors hope SpaceX’s offering will energize an IPO market that has been quiet since late 2021.
Market View.
📈 The market saw fresh gains yesterday following Trump’s remarks that they were in the final stage of negotiations with Iran; however, this is yet another promise with no guarantees. US futures formed a perfectly symmetrical bearish pattern that we identified, creating a new shoulder. Mini S&P 500 futures are currently trading at 7,445 points and Nasdaq 100 futures at 29,370 points.
💱 The US Dollar Index (DXY), which practically reached 99.50, has pulled back sharply and now stands at 99.20. EUR/USD managed to reclaim the 1.16 level and is currently trading at 1.1615. USD/JPY, however, continues to move sideways with strong bullish potential should the dollar strengthen, currently trading at 159.
🇪🇺 In Europe, DAX 40 futures rose to resistance at 25,000 points, from where they have retreated to the current 24,755 points. Euro Stoxx 50 futures managed to strengthen and finally broke above the 6,000-point level, but have lost it again over the last few hours and are now at 5,970 points.
🛢️ The crude oil market pushed spot Brent down from the $111 area to the current $106.40.
🥇 Gold futures have recovered the $4,500 per ounce level, which served as strong resistance; despite the pullback in recent hours, they are holding above this level, trading at $4,530 per ounce.
🪙 Bitcoin continued to recover during yesterday’s session and is approaching the $78,000 mark, currently trading at $77,580.
