Iran Walks? U.S. Manufacturing Up; Meet the $3.5 Trillion IPO Club!
Let’s check latest in Iran talks as deal appears to stall; manufacturing’s apparent comeback, and sort through the mega IPOs.
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A market pause? At least not at the headline level. It does feel like markets need a catalyst at this point to continue their massed ascent toward record highs on a weekly or almost daily basis. On Monday, Pres. Trump downplayed concerns after Iran appeared to walk away from what were believed to be ongoing peace talks. As Iran’s government-controlled news agency, Tasnim, reported that the “Axis of Resistance” would activate “all fronts” across the Middle East to include Iranian proxies in Lebanon, Yemen, Iraq and Syria, the U.S. president posted the following to his social media account, “Talks are continuing, at a rapid pace, with the Islamic Republic of Iran. Thank you for your attention to this matter! President DONALD J. TRUMP.”
That came after the president had discussed Lebanon with Israeli Prime Minister Bibi Netanyahu and apparently prevented a further excursion into that nation by Israeli Defense Forces. This was enough for the day to arrest what could have been a selloff across U.S. financial markets. Equities largely hung in there even as WTI crude oil futures rallied and Treasury debt securities traded lower (yields higher).
The Waiting
The waiting is the hardest part
Every day you get one more yard
You take it on faith, you take it to the heart
The waiting is the hardest part
Yeah, the waiting is the hardest part
-Tom Petty (Tom Petty and the Heartbreakers), 1981
Nuclear News
Early on Tuesday morning, the Financial Times reported that U.S. officials have signaled an openness to the deployment of nuclear weapons-capable bomber aircraft to additional European nations beyond the six that already host such craft. These talks, which the FT stresses, may not come to anything, come amid widespread concern that this administration would reduce troop levels and the deployment of critical weapons systems to Europe. Among NATO allies, Poland and several Baltic states have shown an interest in hosting U.S. bomber aircraft.
This came after on Monday night, when the Wall Street Journal reported that the Trump administration has been threatening to impose sanctions or maybe even take military action against Oman to get that nation to pick a side and abandon its neutrality in the conflict between the U.S. and Iran. The Omani Information Ministry has simply skirted the issue and stated, “Oman stands ready to work with the United States and all responsible partners to promote stability, deter disruption, and safeguard our shared strategic interests.”
The Rebirth of the U.S. Manufacturing Base?
On Monday, the Institute for Supply Management released its monthly survey of Purchasing Managers across the U.S. manufacturing sector for May. The headline number landed at 54.0, up from 52.7 in April. Anything above 50 reflects a state of expansion. New Orders, the most important component of any manufacturing-focused survey, printed at 56.8, up from 54.1 for the month. The acceleration both at the headline and for new orders were good for a fifth consecutive month of improved conditions for manufacturers across the U.S.
The survey showed accelerated expansion for production, order backlogs and export orders as well. In addition, while manufacturing-based employment continued to contract, that contraction decelerated. Prices remained red hot but do appear to have decelerated as well. Yes, despite, or in spite of a crippled Strait of Hormuz. Perhaps that was a net positive, if not for prices, at least for export orders that do not have to traverse that region of the planet.
What Could Stop This Market?
Investment banking. Seriously. As the IPO market produces new mega-cap names likely to draw huge investment from both institutional and retail players, the bankers will get paid as will the sellers. The investment, however, will have to come from somewhere. Cash? OK. How about existing investments?
On Monday, Anthropic confidentially filed paperwork with the Securities and Exchange Commission to kick off the process of going public within a few months. Anthropic closed a $65 billion round of funding last week and is now valued at more than $1 trillion. SpaceX published its prospectus last month and is now valued at $1.75 trillion. In addition, OpenAI, of Chat GPT fame, is planning to file imminently and was recently valued at $852 billion.
Bring three private companies public back-to-back to back, valued at more than $3.5 trillion? There are only 11 U.S. companies that trade publicly and also run with market caps of $1 trillion or more. These firms will draw huge investment dollars away from other stocks as investment bankers sell their wares.
Even better? Do any of these companies turn a profit? OpenAI lost $9 billion in 2025 and is projected to lose $14 billion in 2026. SpaceX lost $4.9 billion in 2025, but Starlink is a cash flow beast and growing. Anthropic may be the best business of the three. The firm expects to be cash flow positive by 2027 and truly profitable by 2028.
Raising Some Dough
News broke on Monday evening that Google parent Alphabet (GOOGL) (GOOG) plans to raise $80 billion in new equity offerings. The effort will include $30 billion in underwritten public offerings, $40 billion in an at-the market sale and a $10 billion private placement where Berkshire Hathaway (BRK.A) (BRK.B) will expand its investment in the company by taking on $5 billion in class A shares at $351.81 apiece and $5 billion in class C shares at $348.20 per share.
At the end of Q1, Berkshire held a close to $17 billion stake in Alphabet. Readers will recall that Alphabet, in the firm’s Q1 earnings call, projected 2026 capital spending of $180 billion to $190 billion and also projected that 2027 capex spending would increase significantly from there.
Marketplace
On Monday, the S&P 500 gained just 0.26% while the Nasdaq Composite added 0.42%. The latter was supported by the Philadelphia Semiconductor Index that gained 1.06%. That said, the KBW Banks and all of the small to mid-cap equity indexes closed in the red.
Just two of the 11 S&P sector SPDR exchange-traded funds closed in the green on Monday as technology (XLK) ran away from the pack followed by energy (XLE). The defensive sectors took four of the five bottom slots on the daily performance tables as the utilities (XLU) rode out the session in the caboose. It is generally seen as a positive for the broader economy when defensive sectors underperform cyclicals.
Breadth was not strong on Monday. Losers beat winners at both the NYSE and the Nasdaq by just a smidgen. But advancing volume easily bested declining volume for names listed at both exchanges. Trading volume contracted sharply from Friday’s “end of month” levels on a day over day basis, making the day’s activity, all together, less meaningful in my opinion.
Economics
(All Times Eastern)
08:55 – Redbook (Weekly): Last 9.0% y/y.
10:00 – JOLTs Job Openings (Nov): Last 6.866M.
10:00 – JOLTs Job Quits (Nov): Last 3.171M.
4:30 p.m. – API Oil Inventories (Weekly): Last -2.8M.
The Fed
(All Times Eastern)
01:50 – Speaker: Minneapolis Fed Pres. Neel Kashkari.
08:30 – Speaker: Cleveland Fed Pres. Beth Hammack.
Today’s Earnings Highlights (Consensus EPS Expectations)
Before the Open: DG (1.89), SIG (1.38), VSCO (.32)
After the Close: PANW (.80), ULTA (6.89)
At the time of publication, Guilfoyle had no position in any security mentioned.
