May 18th Market Overview

Happy Monday

Pretty tame day today. Trump called off tomorrow's planned strike on Iran after Gulf leaders stepped in, saying a deal is close. We all know talk is cheap at this point from these headlines and I think that feeling is reflecting more and more in the charts. For now the market is barely moving on these peace deal headlines.

Let’s dig in...

Today's Big Picture

1. Trump Calls Off Tuesday Strike on Iran 

Trump posted that he's canceling a planned military attack on Iran scheduled for tomorrow. Qatar, Saudi Arabia, and the UAE asked him to hold off, claiming serious negotiations are underway. He told the military to stay ready for a "full, large scale assault" if talks fail. Oil pulled back from session highs but Brent still settled above $109.

2. Global Bond Selloff as Oil-Driven Inflation Takes Rate Cuts Off the Table

Brent crude has gone from roughly $70 before the Iran war to above $109 today, and that's now flowing into inflation expectations worldwide. Bond investors are selling because the Fed looks more likely to hike than cut. The 10-year Treasury yield pushed past 4.6, the 30-year hit 5.13, and Japan's 30-year reached an all-time high. Morgan Stanley's Michael Wilson flagged 4.5 on the 10-year as the threshold where yields start pressuring stock valuations.

3. NextEra Buys Dominion in $67 Billion Deal NextEra Energy 

$NEE is acquiring Dominion Energy $D in an all-stock deal worth roughly $67 billion. The combined company will be the world's largest regulated electric utility. AI-driven electricity demand is the catalyst here.

Market Overview

Index Performance

Stock Spotlight

Seagate $STX ( ▼ 6.87% )  
led chip stocks lower after CEO Dave Mosley said at a JPMorgan conference that building new factories "would just take too long." The comment rattled the entire memory chip space.

Micron $MU ( ▼ 8.12% )  
fell alongside Seagate on fears the industry can't ramp production fast enough to meet AI demand.

Regeneron $REGN ( ▼ 9.89% )  
dropped after its experimental melanoma drug fianlimab failed a pivotal trial. The drug didn't outperform Merck's $MRK Keytruda. BMO called it "a big miss" with "a tough road ahead."

Tesla $TSLA ( ▼ 2.71% )  
fell after Elon Musk lost his lawsuit against OpenAI. A jury rejected his claims in under two hours. The judge said she was ready to dismiss an appeal "on the spot."

Big Name Updates

Nvidia $NVDA ( ▼ 1.97% )  
dipped ahead of Wednesday's earnings. UBS noted investors are cautious and likely need an exceptional quarter to keep momentum going. This is the event of the week.

Berkshire Hathaway $BRK.B ( ▲ 1.0% )  
dumped its entire UnitedHealth $UNH stake last quarter. The first 13F filing under Greg Abel also showed new small positions in Delta and Macy's, and a full exit from Amazon.

TSMC $TSM ( ▼ 2.04% )  
got a bump from Bernstein, which said the stock is trading at a steep discount to the broader semiconductor index. They called it "the most trustworthy compounder in AI."

Other Notable Company News

Bio Rad Laboratories $BIO ( ▲ 14.11% )  
rallied after the Wall Street Journal reported Elliott Investment Management has built a sizable stake.

Lululemon $LULU ( ▲ 0.66% )  
is urging shareholders to reject founder Chip Wilson's slate of three director nominees in an escalating proxy fight.

Ford $F ( ▼ 2.46% )  
subsidiary Ford Energy announced a deal with EDF to develop up to 20 gigawatt hours of battery storage systems. Deliveries start in 2028.

Ryanair $RYAAY ( ▲ 5.14% )  
rose in Dublin even after warning that the Iran war is driving up fuel costs and pushing customers to delay bookings.

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Sector Watch

Bond Market

Yields kept climbing today after Friday's sharp move. The Committee for a Responsible Federal Budget estimated that if borrowing costs stay here for a year, they'll add nearly $200 billion to U.S. debt by 2036. A decade at these levels means $1.5 trillion in added debt. Fitch also reported private credit defaults hit their highest rate since the firm started tracking in August 2024, with 10 defaults recorded in April alone.

Policy Watch

Fed 
Kevin Warsh will be sworn in as Fed chair at the White House on Friday. That's notable because the last White House swearing-in for a Fed chair was Alan Greenspan in 1987. Warsh inherits an economy where inflation is running hotter than anyone at the Fed wanted, and markets are now pricing in rate hikes rather than cuts.

Trade 
China committed to buying $17 billion in U.S. agricultural goods annually through 2028, on top of an existing soybean deal.

• Combined total comes to roughly $28 billion a year, above last year but below the 2022 record of $38 billion

• Beijing also confirmed 200 Boeing aircraft purchases, well below the 500+ expected before the Xi-Trump meetings

• Corn, wheat, and soybean futures all moved higher on the announcement

International 
Chinese retail sales barely grew in April compared to last year, the weakest reading since late 2022. Industrial output and real estate also came in below expectations. China's recovery is still uneven despite strong exports.

What to Watch

The AI company quietly automating every Walmart distribution center already has 23 billion in orders on the book

It's just one of seven names in this free MarketBeat report.

Nvidia Earnings, Wednesday 
The most important report of the week. UBS says investors are cautious and only a standout quarter keeps the momentum going. The stock is now above $5.7 trillion in market cap.

Retail Earnings: Target Wednesday, Walmart Thursday 
These reports will show how consumers are handling the oil price shock. Americans are spending $800 million more per day on gas and diesel compared to a year ago. That money comes from somewhere.

Iran Negotiations 
Trump postponed tomorrow's strike. If talks collapse, he said the military is ready for a "full, large scale assault." Brent is above $109 and the Strait of Hormuz remains effectively closed. Everything in markets right now runs through this.

Thanks for reading - you are now the more informed 🙂

- John

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