Market Report.
⚔️ The war in Iran continues to be a constant tug-of-war, causing sideways movement and zigzagging trends in the markets. The overall picture is one of a multifaceted conflict that shows no sign of resolution. However, the stock markets have risen again, led by the technology sector. The reasons? I’ll explain them in the corporate section. Now, let’s move on to our war report.
🗞️ Iranian state media, citing Al Arabiya, report that serious efforts are underway to finalize a draft U.S.–Iran agreement that would include an immediate, comprehensive ceasefire across all fronts, mutual commitments to avoid attacking critical infrastructure, guarantees of free navigation in the Persian Gulf, Strait of Hormuz and Gulf of Oman with joint monitoring, and a phased U.S. sanctions relief tied to Iranian compliance;
✈️ Pakistan’s army chief Asim Munir is reported to travel to Tehran on May 21–22 to announce completion of the draft, with remaining issues (nuclear program, regional forces, missiles) slated for negotiation within seven days and further talks planned in Islamabad after the Hajj.
🧾 However, an Iranian source close to the negotiating team told The Hormuz Letter that optimistic reports of a final draft US-Iran deal are outright false. The source described the talks as being in a permanent deadlock, with Iran having no desire to even continue negotiations under current terms and warning that the conflict could restart at any moment.
🎙️ Iranian Foreign Ministry spokesperson Esmail Baghaei publicly stated that claims about nuclear discussions, including enriched uranium levels or enrichment limits, are merely media speculation and lack credibility. He emphasized that current talks focus solely on ending the war on all fronts, not on nuclear issues.
⏳ Trump said yesterday that he’s willing to wait “a few days” for a response from Tehran.
🗣️ Speaking at a government event called “Iranian Narrators,” where various agencies present their work, President Pezeshkian struck a defiant tone. “I will under no circumstances bow my head before any power. We will not sacrifice the honor and dignity of our country,” he said.
🔬 The United States wants nuclear concessions, including handling of highly enriched uranium and enrichment limits, integrated into or immediately following any ceasefire. Iran had proposed a phased approach separating immediate conflict-ending measures from later nuclear talks. The United States has reportedly rejected that framework, insisting nuclear issues be addressed concurrently.
📞 The deadlock follows a difficult call between Trump and Netanyahu on May 19 and 20, in which the Israeli prime minister opposed further negotiations with Iran. This adds another layer of complexity to Washington’s diplomatic efforts.
✈️ Iran Adapted to US Flight Patterns with Russian Help.
📰 A New York Times report revealed that Iranian commanders, possibly with Russian assistance, studied American flight patterns and made them predictable enough to shoot down an F-15E and hit an F-35 with ground fire. The US military official warned that American air tactics had become too easy to counter.
🛰️ CNN reported that US intelligence now estimates two thirds of Iran’s missile launchers survived, up from earlier estimates of half. Damage to Iran’s defense industrial base set reconstitution back by only a few months, and the ceasefire gave Tehran enough time to fully recover, vindicating earlier claims of 120 percent reconstitution.
🛡️ The Washington Post revealed that the United States carried the heaviest burden of defensive munitions during the Iran war, expending the majority of its high-end interceptors to protect Israel while Israeli forces conserved their own stocks. the US fired more than 200 THAAD interceptors and 100 SM-3 and SM-6 missiles to defend Israel, far exceeding what Israel itself used. This drained critical US air defense stocks and demonstrated that even the most advanced American systems could not stop Iranian missile barrages.
🔥 Reports indicate that if the US restarts military action, Iran is prepared to fire hundreds of missiles per day at Gulf energy infrastructure, refineries, ports, and desalination plants. The IRGC has threatened to return the Emirates to the era of riding camels and occupy Abu Dhabi, while the Houthis would close the Bab el-Mandeb Strait.
🧭 What role does Turkey – one of NATO’s largest armies in the region – play in the conflict between the US and Israel against Iran? Trump’s announcement that the Kurds would be rearmed did not go down well in Ankara. Turkey has been fighting Kurdish groups for years.
💸 In March, Turkey liquidated around 14 billion dollars in US Treasuries, reducing its holdings from roughly 16 billion dollars to just 1.6 to 1.8 billion dollars. The sale represented about 89 percent of its portfolio.
🏦 The central bank sold the Treasuries, along with gold and other reserves, to defend the Turkish lira and stabilize the currency. The trigger was the economic fallout from the Iran war, with the Hormuz disruption causing a massive spike in energy prices that ballooned Turkey’s import bill.
🌐 Turkey’s move was part of a wider pattern where countries like India and Thailand also sold reserve assets, including US Treasuries, to cover soaring oil costs and prevent excessive currency depreciation during the conflict.
📉 Turkish Markets Plunged on yesterday: The BIST 100 stock index dropped 6.05 percent, triggering a trading halt. Government bonds sold off sharply, and the US-traded Turkish ETF fell nearly 10 percent.
⛔ The closure of the Strait of Hormuz through the summer heightens the risk of a recession that could rival the global financial crisis.
📈 Despite growing concerns over rising inflation, investors continue to pour money into stock markets. This strategy may backfire, since equities do not offer the reliable trustable protection against price increases.
🛢️ Reuters reported that the global oil market has roughly three months before the supply shock from the Iran war pushes inventories to critically low levels. Once buffers are exhausted, the world faces sharper price spikes, demand destruction, and broader economic damage.
🧯 Strategic and Commercial Buffers Are Running Out: In the first two to three months, markets coped by releasing a record 400 million barrels from strategic reserves, rerouting through pipelines, drawing down commercial inventories, and increasing non-Middle East output. Those buffers are now depleting rapidly.
📉 The International Energy Agency estimates that 246 million barrels were drawn from global stocks in March and April alone, with some analysts putting the cumulative loss near 1 billion barrels. Draws are accelerating and commercial stocks could hit minimum operating levels as early as July or August 2026.
☀️ Peak summer demand arriving in July and August will collide with severely depleted stocks. Without a sustained reopening of Hormuz, the market could face a deficit of 6 million barrels per day or more, triggering extreme price moves.
⚠️ While the situation in Iran remains unresolved, Trump is planning to open another front: war with Cuba.
📣 Same narrative: Rubio Calls Cuba a National Security Threat. Secretary of State Marco Rubio framed Cuba as a national security threat and a leading state sponsor of terrorism. Rubio cited Cuba’s acquisition of weapons from Russia and China over the years and explicitly pointed to Russian and Chinese intelligence presence in the country.
🧱 Rubio’s framing mirrors the language the Trump administration has used against Iran. The structure of weapons from adversaries plus intelligence presence plus terrorism sponsor plus existential threat is nearly identical.
📜 The remarks came one day after the U.S. Department of Justice unsealed an indictment charging former Cuban leader Raul Castro and others in the 1996 Brothers to the Rescue shootdown incident. This is the first time senior Cuban leadership has faced such charges in decades.
⚡ The rhetoric is amplified by Cuba’s economic crisis, power outages, and migration pressures, which Washington is leveraging to push for regime change or a negotiated transition. Russia states that the US is hindering the Cuban economy.
🛡️ Rubio indicated that diplomacy is the preferred path but stressed that the president always has the option to do whatever it takes.
🌍 Europe is falling.
📉 Foreign investment in Germany fell 10 percent, dropping to its lowest level since 2009 according to data from Ernst and Young. The decline signals a sharp loss of confidence in Europe’s traditional economic engine.
🏚️ Corporate Bankruptcies Hit Highest Level in Two Decades: The Halle Institute for Economic Research reported that corporate bankruptcies in Germany have reached their highest level since 2005. The surge in insolvencies adds to the picture of deepening economic distress.
🗣️ AfD Leader Blames Coalition for Investment Collapse: AfD’s Alice Weidel seized on the data, saying the world is losing trust and foreign companies are investing less and less. She argued Germany can no longer afford the reform refusal of the Black-Red coalition government amid rising layoffs and economic decline.
🔁 As a reminder, during the last elections, the AfD suggested that Germany should leave the eurozone and establish a new European union based on trade but which respects the sovereign policies of member states. This party is currently leading the polls in Germany.
🏢 Corporate news.
🔬 Shares of quantum computing companies soared on Thursday after the U.S. government said it would award 2 billion dollars in grants to nine firms operating in the space. The National Institute of Standards and Technology announced the signing of letters of intent and said it would take a minority, non-controlling stake in each recipient company.
💰 IBM Is the Biggest Beneficiary with 1 Billion Dollars: The Commerce Department agreed to give IBM 1 billion dollars, making it the largest recipient. IBM shares jumped 12 percent on the news.
🏭 Chipmaker GlobalFoundries will receive 375 million dollars. D-Wave Quantum, Rigetti Computing, and Infleqtion will each get 100 million dollars. Diraq will receive 38 million dollars and PsiQuantum will also get 100 million dollars.
📈 D-Wave surged 33 percent, Rigetti soared 30 percent, and Infleqtion skyrocketed 31 percent. Even unlisted companies benefited, with Arqit up 25 percent, IonQ gaining 12 percent, and Quantum Computing adding 19 percent.
🏗️ IBM confirmed it will work with the U.S. government to develop America’s first purpose-built quantum foundry. The company will contribute a 1 billion dollar matching investment to a new standalone company called Anderon, headquartered in Albany, New York.
🌐 U.S. leadership in a quantum industry estimated to generate up to 850 billion dollars in economic value by 2040 while also bolstering national security. The awards are funded through the 2022 Chips and Science Act. Formal completion of the deals is still pending.
🖋️ Trump Postpones AI Executive Order Signing:
⏸️ President Donald Trump delayed the signing ceremony for his administration’s much-anticipated executive order on artificial intelligence. He told reporters in the Oval Office that he did not like certain aspects of it.
🏁 Trump said the United States is ahead of China and the rest of the world on AI and he does not want to do anything that could get in the way of that lead. The New York Times reported that the proposed executive order would have empowered the government to pre-evaluate AI models to identify security vulnerabilities before they are publicly available. Postponement Comes Amid Tech-Driven Market Gains.
🤝 The Trump administration has been broadly AI-friendly, backing industry calls to preempt state-level rules. It has also taken some steps toward oversight, with the federal Center for AI Standards and Innovation recently signing agreements with Google DeepMind, Microsoft, and Elon Musk’s xAI to evaluate models before public release.
Market View:
🔼 Back up again. US futures are rising, trying to move away from the bearish pattern we detected this week. The catalysts, I personally believe, are not the Iran negotiations — which are once again being denied — but rather the measures announced by Trump: freeing up the AI sector from new regulation, and the announcement of financial support for quantum development companies.
📊 Be that as it may, the outcome is as follows: S&P 500 futures are approaching 7,500 points, trading at 7,488; Nasdaq 100 futures are knocking on the door of 29,600 points, trading at 29,555.
💱 The US Dollar Index (DXY) is posting higher lows and forming a possible bullish wedge, currently trading at 99 points. This could knock pairs such as EUR/USD below support at 1.1585, or send USD/JPY soaring back towards 161. Let’s remain alert in the forex market.
🇪🇺 In Europe, equities continue to edge tentatively higher: DAX 40 futures are trading at 24,900 points, Euro Stoxx 50 futures at 6,025 points, with resistance at 6,050 points.
🛢️ The crude oil market remains choppy. Yesterday, spot Brent crude rose above $109.30 before falling back to $102.25; it is currently trading at $105 per barrel.
🥇 Gold futures are trying to hold above support at $4,500 per ounce and are currently trading at $4,525 per ounce.
🪙 Bitcoin is building a base around the $77,000 area and is attempting to stay above these levels, trading at $77,515.
