Yesterday markets exhaled. Iran sends a peace proposal, oil drops, equity indices punch new records. But underneath the shine sit four wars, two contested ceasefire offers and a central bank that can no longer pretend inflation is transitory. Below, what you actually need to know this morning.
Markets snapshot
– S&P 500 closed at 7,259.22 (+0.81%), a fresh record. Seventh consecutive green session. – Nasdaq Composite 25,326.13 (+1.03%), also a new all-time high. Small caps led, with Russell 2000 hitting an intraday record. – Dow Jones 49,298.34 (+356 points, +0.73%). AMD jumped on its earnings release. – WTI crude ugly day. Mid-session low at $88.71, intraday drop up to 13%. Later recovered, closing near $90, after Trump paused “Project Freedom” in the Strait of Hormuz for the sake of a peace deal. – Gold around $4,550 per ounce, down nearly 2% on the latest session. The Middle East war turned an inflation hedge into a political emotion; the yellow metal swings with the headlines. – DXY around 97.9, hovering near yearly lows. The dollar bounced off December’s low to the technical equilibrium line. – Bitcoin at the $80,000 resistance, stuck between breakout and reversal. Safe-haven assets are consolidating.
Lithuania and Baltics
– The Paluckas immunity case moved onto Seimas’s agenda yesterday. The Prosecutor General requested the lifting of the former Prime Minister’s legal immunity. The investigation, opened last year, concerns abuse of office and unlawful enrichment of up to EUR 345k over 2010–2024. Nausėda publicly stated that Paluckas should give up his mandate or at least leave the LSDP faction. Paluckas refused. Žemaitaitis will not back the immunity removal. The LSDP council session on the coalition is scheduled for late May. – “Iron Wolf 2026” exercises kicked off in Lithuania with 2,500 troops and 300 pieces of equipment, alongside UK and Polish NATO forces. Estonia is running its own exercises in parallel until June 1. – Baltic Health Pact. Lithuania’s and Latvia’s health ministers and Estonia’s social affairs minister signed a cooperation declaration for crisis or military conflict scenarios. A joint medicines reserve and regional medical staff training. – 2026 defense budget approved at EUR 4.79 billion (5.38% of GDP), the largest in history. A real estate tax slice and a “security contribution” from the insurance sector will add roughly EUR 0.5 billion per year to the defense fund.
Europe
– The ECB Bulletin now officially admits that “upside risks to inflation and downside risks to growth have intensified”. Eurozone energy inflation went from -3.1% in February to +10.9% in April. The central bank kept rates unchanged. – EU VAT (Value-Added Tax) reform. Finance ministers will try to agree this week on new rules against VAT fraud. The Brussels Economic Forum’s theme: the AI revolution. The EP committee is assessing accession progress for Albania and Montenegro.
Ukraine
– Two contested ceasefire offers. Zelenskyy declared a ceasefire from midnight on May 5. Russia replied with its own, for May 8–9 (the Victory Day parade). Foreign Minister Sybiha called Zelenskyy’s offer “a serious step toward diplomacy” yesterday. – Putin’s dilemma. Zelenskyy cynically added that “this summer Putin will decide whether to expand the war or move toward diplomacy.” He noted that Moscow’s refusal to display military equipment at the May 9 parade signals weakness, “they fear drones buzzing over Red Square.” – The frontline. Russia’s offensive continues toward Sumy, Kharkiv and Pokrovsk. Total Russian personnel losses since February 2022, by Kyiv’s tally, exceed 1.33 million. Long-range Ukrainian strikes inside Russia continue.
Geopolitics
– Iran attacked the UAE yesterday. Fifteen missiles on target, a fire at the Fujairah industrial complex, at least three workers injured. The first attacks on UAE territory since the April 8 ceasefire. In parallel, Iran struck commercial vessels with drones in the Strait of Hormuz. – US response. The Navy “sank” six small Iranian boats after they fired cruise missiles and drones at US and commercial ships. Hegseth: the ceasefire “is definitely holding.” – Trump announced a pause on “Project Freedom” (escorting ships through Hormuz) to give time for a peace deal to close. Iran is reviewing a 14-point peace proposal from the US. The blockade against Iranian ports remains. – Iran and oil. The oil market is currently a bargaining instrument for the peace deal. Every progress headline lets prices drop 5–10%; every missile launch puts 5% back on. – OPEC+ decision. Seven countries are running an additional 188k barrels per day production increase in May. Russia’s exports: 48% of crude moves on “shadow” tankers, 44% on the G7+ fleet. Russia is undershooting its OPEC+ quota by up to 400k barrels per day. – China and the US. The tariff pause was extended to November 10, but Section 301 tariffs (25–100%) remain. In March, the Trump administration launched new trade investigations against China, Vietnam, Taiwan, Mexico and others.
Central banks
– Fed. At the prior April 29 meeting, Powell confirmed he stays in office, despite Trump’s legal pressures. Next meeting June 17 (with SEP, dot plot mandatory). – ECB. Rates left unchanged. The energy inflation jump (10.9%) reinforces the on-hold stance.
IPO radar
– Anthropic has a new funding round underway, with a 48-hour deadline announced for investors to submit allocations. Target: roughly a $50 billion round at about a $900 billion valuation. If it lands, it more than doubles the valuation and overtakes OpenAI ($852 billion post-money). IPO planned for October. – OpenAI completed a historic $122 billion private round, $852 billion post-money. Listing in Q4. – SpaceX investor roadshow starts in June; the IPO targets a $75 billion round at up to a $1.75 trillion valuation (after the merger with xAI). – xAI separately raised $20 billion in Series E.
Read it three times: three companies are jointly chasing more than $240 billion through an IPO wave. That will drain Q4 retail capital from every other name. The secondary market is already discounting this drain.
Analyst voices
– Henrik Zeberg released a new weekly update for Founding Members yesterday (May 4). Content behind a paywall, but per his Macro Navigation Framework, leading indicators have been below the equilibrium line since end-2024; in his model the economy has officially shifted from Expansion to Slowdown. Source – Lyn Alden and Luke Gromen released a joint analysis a week ago, “System Collapse If Iran War Continues Any Longer”. Argument: if the Hormuz blockade lasts another month, the US Treasury market and the dollar shift from stress to break. Source
What to watch tomorrow
– WTI crude near the $90 line. If Iran signs a peace memorandum, opening Hormuz, the first target is $75. If US ships are shot at again, back to $110 within 24 hours. – Anthropic funding round. Investor deadline closes around today. A close should land within two weeks. Any headline about a $900 billion valuation is a signal for the entire AI market sector. – The Paluckas immunity vote. Seimas will need to decide this week on a fast-tracked immunity-removal procedure. Žemaitaitis’s stance will swing the coalition’s fate. – ECB speeches. Lagarde appears Thursday; eurozone energy inflation is already in double digits. The question: are we shifting from “hold” to “might hike.” – Ukraine ceasefire. Tonight will show whether Zelenskyy’s midnight ceasefire held its first 24 hours. Russia’s response is traditionally delayed.
Meška’s take
Yesterday was a “peace rally” day. New S&P record, oil dropping, dollar napping, bitcoin consolidating. Looks pretty. But let’s see what’s actually happening under the cover: four wars at once (Middle East, Ukraine, the trade war with China, the internal war between Powell and Trump), three IPOs targeting $240 billion in half a year, double-digit ECB inflation, a former Lithuanian PM with EUR 345k missing from his asset declaration.
Nothing new in the cycle. Liquidity is still on the edge, the AI names suck all oxygen out of the retail market, the periphery (small caps, world markets) recovered on the misunderstanding that Iran “won’t manage.” Manage or not, the dollar is irreparably rotten, because any “peace deal” only happens when the US agrees to release financial pressure. And it cannot release it, because the budget deficit demands the dollar remain mandatory. That is where the cycle loops back. When the central bank has to choose between inflation and war financing, it chooses both.
Look not at the records. Look at the ECB energy line: from -3.1 to +10.9 percent in two months. That level will have to be stopped with rate hikes or accepted as a self-spinning inflation. There is no choice. Only time.
May nothing blow up today. Tomorrow we continue.
— Meška