A New Hope for Iran Deal? My Advice for the Fed; Where’s the Nvidia Party?

An Essay on Man

Hope humbly then; with trembling pinions soar;
Wait the great teacher Death; and God adore!
What future bliss, He gives not thee to know,
But gives that hope to be thy blessing now.
Hope springs eternal in the human breast:
Man never is, but always to be blest.
– Alexander Pope, 1733

A New Hope?

The temptation would be to brush it off. Another chance at peace between the U.S. and Iran? We’ve seen this movie before. For weeks, Iran had been militarily beaten in a very one-sided battle, but still was unwilling to surrender. On Wednesday, financial markets caught a whiff of new peace negotiations between the two nations that would reopen the Strait of Hormuz and remove the threat that a nuclear Iran poses to civilization. Algorithmic-driven optimism permeated those markets. Crude oil sold off. Treasury debt securities rallied, as did equities. Hooray! We’ll see.

Bloomberg News is reporting very early on Thursday morning that Iran is assessing what it terms as the “latest peace proposal” from the U.S. and might be expected to respond shortly. This exchange between the U.S. and Iran is apparently based on Iran’s 14-point text that was sent weeks ago.

The plan, if understood by the media, would essentially be little more than a short-term deal that sets up future, more in-depth negotiations. The keys would be that Iran would commit to not shooting at vessels in the Strait and not shooting at its neighbors while the U.S. would lift its naval blockade of Iranian ports.

Lending substance to this newfound optimism, Pakistan’s Field Marshal Asim Munir, who has mediated between the U.S. and Iran is known to be in Tehran on Thursday. Additionally, on Wednesday, U.S. Pres. Donald Trump told reporters that the U.S. was in the “final stages” with Iran in terms of diplomacy. Bear in mind, “final stages” could wind up being a double-edged sword. The market took that comment in a positive light at the time.

The Party Stalled…

That Wednesday rally, at least as I traverse the zero-dark hours, appears to have been a one-day phenomenon. At least, that is, until we hear from Iran. Then markets will either roll on or roll over. What put a halt to Wednesday’s euphoric move was the release of Nvidia’s (NVDA) fiscal first-quarter financial results. The tech giant and bellwether for the AI trade posted top and bottom-line results that easily beat expectations. Nvidia announced an increased return of capital to shareholders, while also issuing impressive guidance.

So, what’s the problem? It’s not like those shares have fallen out of bed. NVDA has been trading close to unchanged as I work through the wee hours. Equity index futures are doing much the same. Call it the “law of large numbers.” It has become impossible for Nvidia to shock the marketplace in a positive way. The business is humming. More than humming. That said, there is still no business being done between Nvidia and its “former” clients in China.

On CNBC, after the release, Nvidia CEO Jensen Huang commented, “The demand (for AI-capable chips) in China is quite large. Huawei is very, very strong. They had a record year, they’ll likely, very likely, have an extraordinary year coming up, and their local ecosystem of chip companies are doing quite well, because we’ve evacuated that market.”

Then Huang dropped a bombshell: “We’ve really largely conceded that market to them.”

There are no expected Chinese sales worked into Nvidia’s forward-looking guidance.

Marketplace

Party on, Garth. On Wednesday for the regular session, the yield on the U.S. Ten-Year Note dropped 9 basis points to 4.57%, while WTI Crude traded below $99 per barrel. On the equity side, the Nasdaq Composite ran 1.54% while the S&P 500 gained 1.08%. Small caps outperformed the broader market as did the Dow Transports and Philly Semiconductors. The Russell 2000 and S&P 600 gained 2.56% and 2.05% respectively while those latter two indices tacked on 2.27% and a whopping 4.49% in that order. Arm Holdings (ARM) ran the table for the semis on Wednesday, gaining a stunning 15.1% on a positive initiation at Bernstein.

Eight of the 11 S&P sector SPDR exchange-traded funds closed out the day on Wednesday in the green, led by the discretionaries (XLY) and tech (XLK). Energy (XLE) paced the losers for the obvious reason. Cyclicals easily outperformed defensives. Winners beat losers by a rough three-to-one margin at both major U.S. equity exchanges. Advancing volume took a 73.1% share of composite Nasdaq-listed trade and a 71.5% share of composite NYSE-listed trade.

So, after days of this market being unable to technically confirm a bearish reversal of trend, was Wednesday a re-confirmation of the bullish trend? Absolutely not. Aggregate trading volume contracted by 6.3% on a day-over-day basis across Nasdaq-listings and contracted by just a smidgen across NYSE-listings. Trade slowed across the membership of the S&P 500 as well. In short, professional money was cautious ahead of those Nvidia earnings and slow to act on U.S. / Iran headlines as headlines like that have become commonplace.

An Out-of-This-World New Stock

SpaceX finally made the firm’s IPO filing public on Wednesday evening. The Elon Musk-led firm will list at the Nasdaq under the ticker symbol SPCX. SpaceX has become, over time, NASA’s largest launch partner, while operating its Starlink satellite internet service and a constellation of roughly 10,000 satellites. The company also operates an artificial intelligence unit after merging with Musk’s xAI. This unit includes the “X” social media network, which was formerly known as Twitter.

At least we now know that SpaceX must colonize Mars for Muck to get his largest possible payday. Back to reality. SpaceX suffered a net loss of $4.9 billion for Q1 2026 after suffering a net loss of $4.9 billion for all of 2025. Yikes. Goldman Sachs (GS) will be the lead banker, supported by Bank of America (BAC), Citigroup (C), JP Morgan Chase (JPM) and Morgan Stanley (MS). The full syndicate includes a total of 21 banks. Retail brokers participating in distribution will be Morgan Stanley’s E-Trade, Charles Schwab (SCHW), Robinhood (HOOD) and SoFi Technologies (SOFI).

The Minutes

The Minutes of the Federal Open Market Committee meeting that culminated on April 29 were released on Wednesday afternoon. What was revealed was that a majority of committee members at that time felt that increasing short-term interest rates would likely be appropriate going forward if inflation continues to run above target. It honestly always blows my mind that PhD. economists are consistently unable to discern between demand-driven inflation and inflation driven by a supply shock, which is what this is.

Increasing interest rates slows economic activity through demand destruction, which in turn slows inflation. This is not hard to figure out. Committee members need to get their pencil necks out of the textbooks and pay some attention. Tamping down demand will do nothing to slow inflation driven by a shock to supply. It will, however, still slow economic activity and almost definitely slow demand for labor. Yes, raising short-term rates would put the U.S. economy on the road to recession at a crucial moment.

I ask the membership of the FOMC to please call me before heading down that route. Past members have. I have always been frank. You would not be the first. I get it. You’re policy makers and you think you’re supposed to know. Leave the castle occasionally. Talk to the people who work in the real economy. It’s what you need to do.

Economics

(All Times Eastern)

08:30 – Initial Jobless Claims (Weekly): Expecting 210K, Last 211K.
08:30 – Continuing Claims (Weekly): Last 1.782M.

08:30 – Housing Starts (Apr): Expecting 1.41M, Last 1.502M SAAR.
08:30 – Building Permits (Apr):
Expecting 1.38M,
Last 1.363 SAAR.

08:30 – Philadelphia Fed Manufacturing Index (May): Expecting 16.7, Last 26.7.

09:45 – S&P Global Manufacturing PMI (May-Flash): Expecting 53.8, Last 54.5.
09:45 – S&P Global Services PMI (May-Flash):
Expecting 51.3, Last 51.0

10:30 – Natural Gas Inventories (Weekly): Last +85B cf.

11:00 – Kansas City Fed Manufacturing Index (Weekly): Expecting 9, Last 10.

The Fed

(All Times Eastern)

12:20 p.m. – Speaker: Richmond Fed Pres. Tom Barkin.

Today’s Earnings Highlights

(Consensus EPS Expectations)

Before the Open: AAP (.44), DE (5.71), RL (2.53), WMT (.66)
After the Close: ROST (1.71), WDAY (2.52), ZM (1.42)

At the time of publication, Guilfoyle was long NVDA, SOFI equity.