# Daily Brief 2026-05-17
Sunday morning, the week ended with opposing messages stacking on top of each other. Trump returned from Beijing with 200 Boeings and a vague Chinese favor on Iran. Warsh officially took the Fed chairman’s seat on Friday, with Powell stepping down but staying on the board until 2028. The bond market squeals that the Fed will raise rates, stocks shout almost the same thing only in the opposite direction. In Lithuania the LSDP council will have to decide this week what to do with Paluckas. That is what’s on the table.
Markets snapshot
– S&P 500 closed Friday at 7,408.50 (-1.24%), practically zero change on the week (+0.3%). A gap after Thursday’s record above the 7,500 mark. – Nasdaq Composite 26,225.14 (-1.54%), the week +0.3%. The tech sector pulled back with rising yields. – Dow Jones 49,526.17 (-537 points, -1.07%), the week -0.05%. The index back below the 50,000 mark. – WTI oil about 106 USD a barrel, +4.5% Friday, +11% on the week. The Strait of Hormuz is still closed, the second week of the month without significant commercial movement. – Brent above 109 USD. The spread with WTI due to Western Hemisphere supply. – Gold 4,547.89 USD an ounce (-2.22% Friday), the week -4%. Investors are reconsidering whether the Fed can keep rates high longer than they expected in April. – DXY 99.27, five-week highs. The index added 1.3% on the week, the strongest weekly reading since March. – 10-year US Treasury yield 4.59%, the highest since February 2025. Two-year 4.09%. – Bitcoin 80,120 USD Friday, dropped below 80,000 on Saturday to 79,049 USD. From 82,000 USD it lost 3 percent over two sessions. Liquidity was thin on Saturday morning, but the direction is clear.
Lithuania and the Baltics
– LSDP leader Sinkevičius does not urge Paluckas to resign. The former PM suspended his party membership, agreed to a simplified procedure for lifting immunity. “Paluckas is free to decide on his further work in the Seimas,” Sinkevičius stated. The LSDP council meeting is set for the week’s end, a decision on the coalition should be made by the end of May. – Nausėda repeated his position. Paluckas should give up his mandate or at least leave the LSDP faction. “That is his personal decision.” PM Ruginienė added that migrating to another faction “would give nothing.” – Veryga’s proposal. Aurelijus Veryga, leader of the “Lithuania List”, called on Paluckas to leave the Seimas altogether. A third party’s voice changes the political arithmetic if the LSDP itself does not act. – Žemaitaitis calm after searches. The “Nemuno aušra” leader says officials took phones and computers from his home, but for his political career “there will really be nothing.” In March the VRK found that the party cannot justify 49.5 thousand euros of spending. The investigation is now under Article 182 part 2 of the Criminal Code, fraud. – Two coalition partners in one week. One (Paluckas) with charges filed, the other (Žemaitaitis) after searches. This is not a coincidence, it is the system’s week.
Europe
– The ECB policy pause continues. After the March 19 meeting rates stayed unchanged. The war in the Middle East officially added “upside inflation risks”, but the ECB stayed silent on further steps. – European Parliament plenary session May 18-21. President Metsola will present the European orders of merit to the first laureates. The session agenda, as announced, includes defense readiness and relations with the Western Balkans. – Council agenda for the week’s end. Defense ministers worked on the Ukraine support package and the Middle East’s impact on EU security. Further steps on the May 18-31 agenda.
Ukraine
– A three-day ceasefire ended in blood. Trump’s announced Saturday-Monday ceasefire practically did not hold. Over 24 hours 263 combat clashes were recorded, 9,153 kamikaze drones launched, 270 guided aerial bombs dropped. Russia struck a Kyiv apartment block, at least 24 died, Ukraine responded against the Ryazan oil refinery. – Putin: I will meet Zelensky in a third country. The condition, that the main provisions of a peace treaty be negotiated first, not the other way around. “The meeting must be the final point, not the negotiations themselves.” US mediation continues, but territorial issues over Donbas remain unresolved. – Military aid. Media cite the Pentagon on the continued flow of ammunition, on May 5 the UK announced a new sanctions package against Russia’s drone supply chains.
Geopolitics
– The Trump-Xi Beijing summit ended without major breakthroughs. The concrete result: China’s promise to buy 200 Boeing planes. A “Trade Council” and “Investment Council” were established, a “mutual tariff reduction system” announced. Other issues (Taiwan, Iran) left in the fog. The “fantastic trade deals” rhetoric without numbers equals zero. – Xi directly about Taiwan. He named it as “the most important issue,” Trump replied: “Nothing has changed in the US position.” China paid nothing for the meeting, which is presented as a success. – Iran: vague Chinese support. Beijing agreed to press Iran on Hormuz, but no concrete mechanisms were provided. For nearly three months since February 28 the strait has been practically closed. IEA chief Birol called it “the largest oil supply disruption in history.” About 20% of global oil supply effectively disappeared from the market, 80% of it usually travels to Asia. – UAE’s exit from OPEC. After the decision announced on April 28, the UAE officially left OPEC on May 1. Abu Dhabi invested 150 billion USD in production capacity over 15 years, but the quotas cost “tens of billions” of lost revenue. When Hormuz opens, about 1 million barrels of UAE oil a day will return to the market, and that will first balance Russia’s budget, which is already in a triple-deficit state. – OPEC+ in May. Still raising production by 188 thousand barrels a day, but the real impact depends on Hormuz. Russian exports: about 48% of oil is carried by “shadow” tankers.
Central banks
– Warsh officially Fed chairman. The Senate confirmed on May 13 by 54-45, mostly along party lines. Powell’s term as chairman ended on May 15. Warsh stated that “I see room to cut rates,” but at the same time noted that “I will use my own judgment, not the White House’s orders.” – Powell stays on the board. The chairman stepped down from the top position but remained on the Fed board until 2028. This is a rare case, usually Fed chairmen leave entirely. Powell indicated he will stay at least until the investigations into the Fed renovation project are completed. – The market prices a Fed hike. The 10-year yield 4.59%, the highest since February 2025. The CPI and PPI shocks (3.8% and 6.0% annual readings) did their work. The dollar strengthens, stocks pull back, gold falls. A classic set of tightening expectations. Warsh’s first speech as chairman will be read with an X-ray.
IPO radar
– Anthropic 30 billion USD round at a 900 billion USD valuation. It is reported it may close at the end of this month. Annualized revenue since the start of the year jumped from 9 to 44 billion USD. The IPO is planned for October, it could be the first to exceed OpenAI’s 852 billion USD valuation from March. – Stripe. On the Forge platform the shares last Friday traded at 72.45 USD, which implies a company valuation of 175.62 billion USD. Above the February tender operation at 159 billion USD.
Analyst voices
– Luke Gromen and Lyn Alden on “MacroVoices”. Both spoke of Hormuz as “America’s 1956 Suez moment.” Gromen: “Every day the strait is closed brings us closer to a nonlinear break in supply chains.” Alden added that the market underestimates the persistence of structural inflation. ([MacroVoices](https://cryptobriefing.com/luke-gromen-closure-of-the-strait-of-hormuz-could-trigger-nonlinear-supply-chain-breaks-us-faces-a-critical-choice-between-economic-contraction-and-monetary-expansion-and-significant-food-inflation/)) – Mike Green on “MacroVoices” May 14. A counterintuitive position: Warsh is more likely an aggressive rate cutter, not a hiker, because the political incentives are clear to him. The S&P records next to the Hormuz crisis are explained not by fundamentals but by the automatic flows of passive investing. ([MacroVoices link](https://www.macrovoices.com/mobile-home)) – Doomberg. Admitted that his own forecasts on the oil price after Hormuz did not pan out. WTI at 100 USD with the strait closed for two months contradicts his entire analytical apparatus. His explanation: the SPR (strategic petroleum reserve) is structured as an “oil loan” under Energy Secretary Wright’s scheme, plus Trump’s open rhetoric against long oil positions. ([Doomberg](https://newsletter.doomberg.com/p/sovereign-arbitrage)) – Brent Johnson. The “Dollar milkshake” author argues that “America as a paper tiger” is a false narrative. Over the past 18 months the US bombed Iran without resistance, took over Argentina, repeatedly raised NATO partners’ defense budgets, signed swap line agreements with the UAE. Johnson is increasing food and energy positions due to fourth-quarter supply shocks. ([YouTube](https://www.youtube.com/watch?v=yi5WIdDpD4o))
What to watch tomorrow and this week
– LSDP council meeting at the week’s end. If the council decides Paluckas must leave the faction, the coalition will lose one mandate but regain political capital. If it holds, a signal to Nausėda and the public that the party chose loyalty over the institution. – Warsh’s first speech as Fed chairman. Most likely in the next 5-10 days. The tone on inflation persistence versus policy adjustment will be the main input to the week’s curve. – Hormuz after Trump-Xi. Watch whether China’s “vague support” turns into concrete pressure on Iran through Pakistani mediation. Any shift on the oil ceiling question will change the direction of BTC, gold and DXY. – Anthropic round closing. End-of-month deadline. A 900 billion USD valuation, if confirmed, rephrases all the AI sector benchmarks. – US Treasury auction. The supply of 20-year paper after two inflation shocks and Warsh’s start. A bid to cover ratio below 2.3 will mean there are no buyers left at the current price.
Meška’s note
Friday was interesting. S&P -1.24%, DXY +1.3% on the week, the 10-year yield 4.59%, gold -4% on the week. A classic set of tightening expectations. But the S&P week is still +0.3%, because on Thursday the index was above the 7,500 mark. This is the bond market shouting “the Fed will raise rates”, and the stock market still shouting “the Fed will cut rates,” at the same time. Warsh just took the seat. His first speech will say which market is wrong.
In Lithuania the LSDP has a decision that will say more about the party’s culture than ten election programs. Whether the former PM, with charges filed over 345 thousand euros of unexplained assets, stays in the faction, or resigns. The same with Žemaitaitis, only a different color. This is not a political cycle, it is an institutional cycle, and it works. As long as it works, the system has correction mechanisms within it. When it stops working, then we’ll talk differently.
Look not at the Beijing press conference and not at Trump’s Boeing number. Look at Hormuz and at Warsh’s first speech. The first will say whether the structural inflation shock continues. The second will say how the Fed responds to it. Capital now hesitates between two scenarios, but briefly. Within two weeks the direction will have to be clear.
Let nothing blow up in Hormuz today. Tomorrow we continue.
— Meška