Pre-market movements: On Thursday, May 21, futures for the three major U.S. stock indices fell. As of writing, Dow futures were down 0.11%, S&P 500 futures were down 0.24%, and Nasdaq futures were down 0.38%. In Europe, Germany's DAX index was down 0.45%, Britain's FTSE 100 was down 0.36%, France's CAC 40 was down 0.49%, and the Euro Stoxx 50 was down 0.45%. WTI crude oil rose 2.22% to $100.44 per barrel, while Brent crude rose 1.68% to $106.78 per barrel.
Market News: A combination of uncontrolled debt, persistent inflation, and rising populism is creating pressure on long-term interest rates, a formula for bond market turmoil. An analysis suggests the recent surge in bond yields was overdue, as U.S. government borrowing is out of control and inflation has remained above the Federal Reserve's 2% target since 2022. Heavy corporate borrowing for AI infrastructure further supports the case for higher long-term rates. Investors are demanding greater compensation for lending over years, reflecting a view that debt, inflation, and populism are here to stay, likely exerting upward pressure on rates for years to come.
Following its exit from OPEC, the UAE is rapidly building a new "energy lifeline." The Abu Dhabi National Oil Company (ADNOC) CEO stated that nearly 50% of a second oil pipeline bypassing the Strait of Hormuz is complete. This pipeline from inland oil fields to the Fujairah port on the Gulf of Oman, unaffected by the Strait's traffic, is being accelerated due to Middle East conflicts. Expected to be operational by 2027, it will double ADNOC's export capacity via Fujairah, bringing the UAE's total bypass capacity to 3 million barrels per day.
U.S.-Iran negotiations are at an impasse. Israeli Prime Minister Netanyahu is reportedly deeply skeptical of talks with Iran and favors resuming military action. A recent "difficult call" with U.S. President Trump revealed a divergence on the next steps regarding a potential new agreement. Mediators have prepared a revised peace memorandum. Separately, a source indicated Iran's Supreme Leader has ordered that uranium enriched to near-weapons-grade levels must remain inside the country.
The Iran conflict is fueling broad market anxiety over energy shocks, inflation fears, and diminished rate cut expectations, unsettling bond investors and central bankers. However, U.S. Treasury Secretary Scott Bessent stated he views the elevated bond yields and overall inflation as temporary, expecting them to subside once conflicts ease.
A prominent investment bank warns the U.S. economy has become a "leveraged bet on AI." As AI transitions from a Wall Street narrative to a real economic driver, a deeper question emerges: has the world's largest economy become overly dependent on a rapidly evolving technology? Lazard CEO Peter Orszag offered a sobering assessment, stating growth is highly concentrated on two intertwined pillars—AI itself and high-income consumers benefiting from AI-driven stock gains. This chain is vulnerable; if the AI narrative falters, both engines could stall.
Anthropic is on track for Q2 revenue of $109 billion, exceeding its full-year 2023 sales and marking its first quarterly profit, according to sources. This would represent a more than doubling from Q1's $48 billion. The AI startup recently announced its annualized revenue run rate exceeds $300 billion, a significant jump from $90 billion at the end of 2023, with third-party estimates placing it around $440 billion, far outpacing OpenAI's growth.
Company News: SpaceX has officially filed its IPO registration statement with the SEC, setting the stage for a potentially record-breaking listing on the Nasdaq under the ticker "SPCX." This could give Elon Musk control of two trillion-dollar-plus public companies. The filing shows Q1 2025 revenue grew 15% year-over-year to $46.9 billion, with full-year 2024 revenue up 33% to $186.7 billion. However, the company reported a net loss of $42.8 billion in Q1 and $49.4 billion for 2024. Musk controls 85% of the voting power.
Following the IPO filing, Wedbush analyst Dan Ives predicted a merger between SpaceX and Tesla Motors in 2027, noting Tesla's existing stake in SpaceX and their joint Terafab factory operations.
OpenAI could secretly file its IPO draft registration as early as this Friday, preparing for what may become one of the largest IPOs in history. The company, valued over $8.5 trillion in private markets, is working with banks including Goldman Sachs and Morgan Stanley.
Despite consistently beating earnings, NVIDIA faces investor skepticism. CEO Jensen Huang emphasized the company is diversifying its business to reduce reliance on large data center operators. He stated NVIDIA is fully engaged in the "physical AI" space, a massive long-term opportunity encompassing robotics and autonomous vehicles.
Shortly after announcing a $670 billion merger with Dominion Energy, NextEra has agreed to acquire Caliber Resource Partners for $13 billion and form a joint venture to manage its U.S. shale assets, further securing its natural gas supply. This move positions it as a leading global power utility and data center power supplier.
Strategy is becoming the core force supporting Bitcoin's price. Despite a nearly 30% drop from a year ago to around $77,500 and weak overall market demand, the Michael Saylor-led company continues large-scale Bitcoin purchases. Its disclosed purchases of 171,238 Bitcoin year-to-date exceed the approximately 62,000 new coins mined globally in the same period.
Deere & Company reported Q2 sales growth, driven by its construction equipment business offsetting weakness in agricultural machinery. Net income was $17.7 billion, or $6.55 per share, compared to $18 billion, or $6.64 per share, a year ago, beating the $5.70 EPS estimate. Net sales and revenue rose 5% to $133.7 billion, above the $127.3 billion consensus.
Wal-Mart's Q1 revenue exceeded expectations, driven by consumer focus on value and increased online shopping. U.S. comparable sales grew 4.1% for the quarter ending May 1. Total revenue rose 7.3% to $1.778 trillion, slightly above forecasts. Adjusted EPS of $0.66 met expectations. The company noted growth across major segments and channels, with particular strength from higher-income households. E-commerce was a key driver, with U.S. online sales up 26%, fueled by advertising and third-party marketplace growth.
Key Economic Data and Events: 20:30 Beijing Time: U.S. Initial Jobless Claims for the week ending May 16. 21:45 Beijing Time: U.S. S&P Global Manufacturing PMI Flash for May. 00:20 Beijing Time (Next Day): Speech by 2027 FOMC voter, Richmond Fed President Tom Barkin. 01:00 Beijing Time (Next Day): U.S. 10-Year TIPS Auction results for May 21.
Earnings Preview (Friday Morning): WorkDay, Ross Stores, Take-Two Interactive Software, Zoom Video Communications.
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