Cover:
-Energy Roundtable experts discuss the ongoing global energy supply shock, exacerbated by the Iran war, impacting production rates and market stability. The panel convened on May 8, 2026, featured prominent figures including Lloyd Byrne, Helima Croft, Seth Kirkham, and Dan Pickering, who shared insights on the dire situation where Asian nations are rationing fuel, governments are depleting crude stockpiles, and airlines face massive flight cancellations. The discussions highlighted that even a swift conclusion to the conflict in Iran won't lead to an immediate rebound in oil and gas production. The panelists analyzed the intricate dynamics of the energy market, addressing the long-term implications for the global economy and investor strategies. As Middle Eastern alliances weaken, the panel identified specific stocks believed to be resilient amid these disruptions, notably naming Devon Energy and Baker Hughes as key players likely to weather the storm. The expert insights provided valuable perspectives on navigating the volatile landscape of energy investment during one of the industry's most significant crises, emphasizing the necessity for strategic foresight in uncertain times
Interview:
-No update
Tech Trader:
-Cerebras Systems' recent IPO is viewed as a significant success, driven by its artificial intelligence chip technology and favorable market conditions. Initially set at a price midpoint of $120, the IPO was eventually priced at $185 and began trading at $350, closing at $311—159% above initial expectations. CEO Andrew Feldman noted the company's unique advantages gaining newfound recognition, leading to a 25-fold oversubscription. With a market capitalization of around $100B, Cerebras's valuation is comparable to major companies despite projected 2025 sales of only $510M. Its Wafer-Scale Engine 3 addresses performance bottlenecks in high-performance computing by integrating computing and memory on a single chip, surpassing traditional architectures that separate these components.
The Trader:
-Market dynamics are increasingly influenced by artificial intelligence (AI) rather than oil, despite rising inflation affecting energy prices. The Dow, S&P 500, and Nasdaq showed mixed performance this week, with AI stocks driving growth amidst consumer sentiment lows. The K-shaped recovery favors high-income households, which account for significant spending and earnings, predominantly from top tech firms. This concentration in a few tech stocks has led to record S&P 500 levels, even as oil prices rise amid geopolitical tensions. Overall, while AI boosts investor confidence, concerns persist regarding inflation and oil markets.
Features:
-The Gates Foundation, founded by Bill Gates, has sold its remaining 7.7 M shares of Microsoft, valued at $3.2 B. This sale, disclosed in a SEC filing, reduces the trust's stake from 28.5M shares a year ago, which were worth $10.7 B. Gates, the fund's sole trustee, is winding down the foundation’s activities over 20 years, with plans to spend all assets. Despite this selloff, Gates retains 103M Microsoft shares valued at $43 B. Microsoft’s stock has decreased by 11% this year, attracting interest from other investors, including Bill Ackman and TCI Fund Management.
-President Trump and Chinese leader Xi Jinping's summit aimed at resetting their relationship, yielding minimal concrete outcomes but soothing investor concerns. Analysts suggest the cooling of tensions may encourage U.S. investments in Chinese stocks. Aniket Shah notes the U.S. acknowledges China as a strategic peer rather than a subordinate. Despite vague mentions of "fantastic trade deals," specifics remain lacking, with expectations that China will purchase significant agricultural goods. Scott Kennedy anticipates a continued tariff cease-fire and the establishment of a "Board of Trade" to facilitate commitments. However, he indicates that China benefits significantly without substantial concessions on key economic policies.
Europe:
-Europe's systemic risk overseer is contemplating an inquiry into private-credit investing due to potential risks to the EU's financial system. Despite individual investors withdrawing from funds that finance private equity buyouts, the European Systemic Risk Board is considering the implications of these developments. Some credit funds, such as Ares Management and Blackstone, are experiencing growth, but concerns exist regarding leverage and interconnections, although current debt levels do not appear extreme. The board anticipates a significant study on these issues as it examines the effects of private credit on market stability.
Emerging Markets:
-Latin American equities, including Colombia, are experiencing a notable surge, with the Global X MSCI Colombia ETF rising 23% over the past year, outperforming the S&P 500. This growth is attributed to investors reducing oil import exposure and a weakening U.S. dollar, alongside anticipation of a pro-market candidate in the upcoming elections. President Gustavo Petro, who took office in 2022, has faced criticism, yet his popularity has risen due to improved inflation control and strong tourism, despite sluggish investment growth. With elections on May 31 and potential runoffs in June, leftist candidate Ivan Cepeda is expected to continue Petro's policies, focusing on agriculture, tourism, and renewable energy, leading in polls against conservative candidates.
Commodities:
-USA Rare Earth reported a first-quarter operating loss of $37 M, with sales of $5.7 M, underperforming Wall Street's expectations. Despite a recent stock dip, shares have risen significantly this year, reflecting optimism about future growth. The company is developing a rare earth supply chain to reduce reliance on China and has made key acquisitions and secured financing for its Round Top mine. Analysts project substantial revenue growth, with $3.2 B in sales by 2030. The new CEO, Barbara Humpton, emphasized ongoing strategic developments, transitioning the company from a "story stock" to early-stage maturity.
Streetwise:
-The equity risk premium (ERP) is calculated as the expected market return minus the risk-free rate, often expressed as ERP = E(Rm) – Rf. While the ERP indicates the compensation for market risk over safer bonds, it relies on uncertain future market returns. Historical averages or surveys can inform expected returns, but they don't reflect current market valuations. The Federal Reserve publishes a Financial Stability Report biannually, providing an ERP estimate by subtracting the 10-year Treasury yield from the stock market's earnings yield. Recently, this calculation yielded an ERP of 2.7%. Although current ERP values are near a 20-year low, some posit that investor optimism may drive these figures down, prompting calls for portfolio rebalancing to mitigate risks tied to potential over-investment in sectors like artificial intelligence.