Okay, let’s start with the first thing: the U.S.-Iran deal. The hottest news this weekend was this one. On May 23, Trump announced on social media that the U.S. and Iran had basically reached a deal, and the Strait of Hormuz would reopen. As soon as the news came out, oil prices fell and the market erupted in joy.
But hold on—don’t get excited too soon. Iran’s official news agency almost immediately pushed back. The Iranian Foreign Ministry spokesperson said the core issue in the talks was not nuclear weapons at all, but lifting the maritime blockade. The U.S. side claimed Iran would give up highly enriched uranium, but Iran flatly denied it, saying the reports were completely false. Iran’s Supreme Leader Khamenei even directly ordered that uranium close to weapons grade must stay inside Iran, and cannot be taken out for even a moment.
Think about that scene. The U.S. says the nuclear issue has been settled; Iran says the nuclear issue was never even discussed. So who is lying?
Then look at Israel—things got even more dramatic. Netanyahu urgently convened a security cabinet meeting, and officials directly said this deal was very unfavorable to Israel. The U.S. completely excluded Israel from the negotiations. Israeli media said Israel’s role had gone from driver to passenger, completely losing decision-making power over Middle East affairs.
Three parties, three stories. The U.S. says it won, Iran says it made no concession, and Israel says you didn’t even bring me into the game. That’s not a deal; that’s a whodunit.
But setting aside the word games, what does the market actually see? A ceasefire. The Strait of Hormuz is open for at least 60 days, Iran agrees to clear mines, the U.S. lifts the maritime blockade, and crude can be transported normally. It’s that simple.
Why the market sees it as bullish: oil prices and inflation
Many people will say, this deal didn’t solve any core issues—the nuclear problem wasn’t settled, armed groups in the Middle East weren’t addressed, so why is the market still treating it as a positive?
I’ll tell you: the market never wants true peace; it wants immediate stability. Especially now, when the global oil supply chain is already stretched to the limit, even 60 days of open passage through the Strait of Hormuz is enough to calm the market.
Think about it: why would Iran even sit down to talk? Because it can’t hold on much longer. A prolonged maritime blockade has almost completely shut down Iranian crude exports, storage tanks are nearly full, and there’s nowhere left to store oil. If the blockade continues, the oil industry collapses outright, and the economy goes down with it. So for Iran, this deal is a retreat-for-advance survival move—sell the oil first, stabilize the economy, and deal with the nuclear issue later.
As for Trump, inflation is a time bomb for the midterms. Energy prices contribute more than one percentage point to CPI. If oil doesn’t come down, inflation prints will only look worse, and the pressure on the Fed to keep hiking rates will keep rising. That is absolutely unacceptable for Trump. So even if the deal doesn’t resolve the core conflict, as long as it pulls oil prices down, it counts as a win.
But I need to remind you: this deal is essentially a 60-day gamble. A bet that oil prices can fall, that elections can stay stable, and that Iran can endure. If talks break down after 60 days, all the consensus today goes back to zero overnight. And Iran has not really given up nuclear capability; it has only temporarily pulled back. The Strait of Hormuz is still under Iran’s control, and so-called free passage was never truly free.
The first time I saw this deal, my reaction was the same as yours: what is this thing? The U.S. version and Iran’s version don’t line up at all—how can that even be called a deal? Then I thought it through, and I realized the point of the deal is not what it says, but what it doesn’t say. It doesn’t say permanent ceasefire, it doesn’t say how the nuclear issue is solved, and it doesn’t say how to handle armed groups in the Middle East. It only says two things: the strait opens for 60 days, and the U.S. lifts part of the sanctions. In plain English, both sides step back a bit, catch their breath, and save the core conflict for later.
Everyone, the Middle East has never had true peace—only temporary ceasefires. Behind every deal is an exchange of interests, and interest exchanges are never stable. If you go all-in on oil stocks because of this, I advise you to calm down. Sixty days later, if the deal falls apart, oil could be back to square one overnight.
SpaceX’s Starship V3 test flight succeeded—the timing is just too perfect
Alright, after the Middle East, let’s talk about the second big event: SpaceX. This weekend, SpaceX’s upgraded Starship V3 launched successfully in Texas. There were a few minor issues, but it entered orbit and deployed 20 simulated satellites, completing all core objectives.
Sounds impressive, right? But look at the timing. SpaceX plans to go public on June 12, with a valuation of $2 trillion and a target raise of $75 billion. And just two weeks before the IPO, the rocket test flight happened to succeed. Do you think that’s a coincidence?
I’m telling you, Musk is extremely good at managing market expectations. He knows exactly what a successful test flight means for IPO pricing. This flight success was less a technical breakthrough and more a carefully staged IPO roadshow. The technology itself is valuable, sure, but the timing choice was definitely deliberate.
Of course, whatever the reason, a successful test flight is bullish for the market. It supports the SpaceX IPO story. Reusable heavy-lift rockets will be core infrastructure for future space exploration and AI satellite internet. The market expects the successful test flight to push the IPO pricing higher and possibly increase the fundraising size.
For the broader market, SpaceX’s success further boosts risk appetite, especially confidence in tech growth stocks. In a backdrop where inflation and rate-hike expectations still exist, AI and aerospace have become safe havens for capital as high-growth sectors. SpaceX’s success injected fresh momentum into those themes.
But here’s my warning: a $2 trillion IPO valuation is controversial on its own. This company only has Starlink making money right now; the other businesses are all burning cash. What does a $2 trillion valuation mean? It means you’re buying a story, not an income statement. Musk’s story is indeed valuable, but you still need to know what exactly you’re buying.
Four key variables next week, each capable of shaking the market
Alright, after the two big weekend events, let’s turn our eyes to next week. The coming week brings four key variables, and each one could directly determine the direction of U.S. stocks.
First, the PCE price index. This is the last piece of the inflation puzzle. Earlier CPI and PPI data showed inflation is still hot, and the market expects April PCE data to continue that trend. HSBC’s report put it very bluntly: even if a U.S.-Iran deal is reached, supply shocks will still be hard to reverse for global inflation, and more central banks may be forced to hike rates.
If PCE comes in above expectations, rate-hike expectations will rise again, Treasury yields will keep climbing, and the market will be under pressure. If PCE is below expectations, inflation cools, rate-hike expectations ease, and U.S. stocks may start another leg up.
There’s an important backdrop you should know. Market expectations for the Fed have fundamentally changed. At the start of the year everyone was talking about cuts; now people are talking about hikes within the year. The market expects the federal funds rate may rise 25 basis points by the end of 2026. Next week’s PCE data will directly determine whether that expectation strengthens further or turns around.
Think about it: from rate-cut hopes at the start of the year to rate-hike expectations now, sentiment has made a 180-degree turn. If PCE continues to beat expectations, that turn could become a sharp U-turn. Treasury yields would spike, and high-valuation tech stocks would be hit first. That’s why next week’s PCE is so important—it’s not just a number; it’s the switch for the whole market mood.
Second, GDP revisions. On the same day, the revised annualized QoQ real GDP for Q1 will be released. The initial estimate showed growth remained strong, and if the revision is marked up again, it will further prove economic resilience.
But don’t assume strong growth is automatically good. Strong economic growth means inflation pressure is harder to ease, and the case for Fed hikes becomes stronger. The U.S. economy really does have resilience right now—employment and business inventories look solid—which puts the Fed in a bind: inflation is high, so it needs to tighten, but if it tightens too much, recession risk rises. Next week’s GDP data will make that dilemma even more obvious.
Third, a wave of Fed speeches. Several Fed officials will speak next week, including multiple regional Fed presidents. Earlier, the new Chair Waller said in his inaugural speech that controlling inflation is the top priority, which lifted rate-hike expectations. Next week’s remarks will either reinforce or cool that view. Anyone trading U.S. stocks should pay close attention—any hawkish or dovish signal could trigger sharp moves.
Fourth, retail and mega-cap tech earnings. Earnings season is entering the final stretch, with more than 90% of S&P 500 constituents already reported, and the remaining names concentrated in retail and tech.
In retail, Costco, Home Depot, and Best Buy will report, testing whether high oil prices and high inflation are starting to erode consumer spending. If results beat expectations, that suggests U.S. consumers are still strong. If they miss, the market may reprice consumer stocks and intensify recession worries.
On the tech side, Salesforce and Dell will report, testing whether the AI growth story still holds. Nvidia’s beat-and-raise had already lifted the whole sector; whether these companies can replicate Nvidia’s growth will decide the AI sector’s direction. Meanwhile, Meta will hold its annual shareholder meeting on May 27, with AI strategy as the main focus. Management may unveil more AI plans, affecting confidence in Meta and the AI sector.
Honestly, while earnings season is nearing its end, the remaining names are all heavyweights. Costco’s report tells you how strong the American middle class really is, Home Depot reflects the health of the housing market, and Best Buy shows whether electronics demand is cooling. Put together, these data points give you a full picture of U.S. consumption. If that picture looks good, confidence continues; if it looks bad, recession expectations rise and the market may turn lower.
Three traps and one right answer
Before I wrap up, I want to talk about three traps. I estimate 90% of people fall into these every day.
Trap one: rushing in as soon as good news appears. When the U.S.-Iran deal came out, many people’s first instinct was to buy oil stocks and energy stocks. But have you thought about this? The deal only lasts 60 days, and none of the core conflicts have been solved. By the time you jump in, prices have already moved up. If the deal collapses 60 days later and you try to run then, it’ll be too late. Chasing news like this is basically helping someone else carry the chair.
Trap two: treating short-term tailwinds as long-term trends. If the Strait of Hormuz opens for 60 days, oil prices will indeed fall and inflation will indeed ease. But what about after 60 days? If Iran reintroduces fees or the nuclear talks break down, oil can rebound at any time. Betting on short-term fluctuations as if they were long-term direction is gambling, not investing. I’ve seen too many people lose everything through this kind of trade.
Trap three, and the most dangerous one: ignoring the time lag. When you see the news in Beijing time, U.S. stocks have already closed. By the time you chase at the next open, institutions have already positioned. You’re just taking their leftovers. Especially with something like a SpaceX IPO, institutions have known for months; the successful test flight is just the exclamation point on their positioning. If you rush in after the fact, what else are you but retail fodder?
So what’s the right answer? Simple: don’t chase headlines; position ahead of time. Watch next week’s PCE and Fed speeches—those are the core variables that determine market direction. If you’re not sure, hold cash and wait for the data before deciding. Better to miss an opportunity than step into a trap.
Remember this: news is for harvesting gains, not for following blindly. The money institutions make is the money you lose chasing headlines.
How next week may go, and where the opportunities and risks are
Alright, let’s summarize. This weekend brought two major events: the U.S.-Iran deal gave the market a short-term inflation-relief tailwind, and the successful SpaceX test flight boosted confidence in tech growth. But both positives have expiration dates—the U.S.-Iran deal only lasts 60 days, and the IPO effect for SpaceX will fade once pricing is done.
The real decisive variables next week are PCE data and Fed speeches. If PCE is below expectations, inflation cools and rate-hike expectations ease, U.S. stocks will probably keep rising; if PCE beats expectations, hike expectations strengthen and the market may pull back. GDP revisions and retail/tech earnings are supporting data points for judging consumer resilience and the AI growth story.
Overall, I’m neutral-to-bullish on next week, but you have to watch for the risk of good news already being priced in. Once all the good news has been priced by the market, the stock may have basically run out of room. U.S. markets will be closed on Monday for Memorial Day, trading hours will be shorter, liquidity will be lower, and volatility could intensify. Be ready—next week should be exciting.
On the opportunity side, AI and aerospace may see sentiment improve after the SpaceX test flight; if tech earnings beat next week, those sectors could keep strengthening. On the risk side, if PCE surprises to the upside and Fed officials sound hawkish, Treasury yields could spike and high-valuation tech may be hit first.
