President Trump stated that talks with Iran on a provisional peace deal "will turn out well", even as forces from both countries clashed again near the Strait of Hormuz. Additionally, Trump posted that he is in "no rush" to close a deal to end the conflict and warned that military action could resume if talks fail. Iran accused Washington of sending contradictory signals and prolonging the negotiations. Meanwhile, Israel announced it will expand its offensive in Lebanon.

Our Take

Despite reaching a 60-day ceasefire agreement last Friday, the United States and Iran have exchanged strikes on military targets. Additionally, US media report that Washington's demands on Tehran regarding its nuclear program have cooled expectations of an imminent deal.

China's official manufacturing PMI stood at 50.0 points in May, exactly at the threshold separating expansion from contraction, 0.3 points below April's reading and in line with analyst consensus expectations. The internal details are less encouraging: new orders retreated to 49.9, returning to contraction territory from 50.6 in April; raw material inventories fell to 48.6; and only the production sub-index remained in expansion territory with 51.2 points.

Our Take

The data confirm that China's economy is losing traction in a gradual but sustained manner. The fact that new orders have returned to contraction territory is the most concerning signal in the report because it anticipates lower productive activity in the coming weeks and reveals that demand is not sufficient to sustain the pace of expansion seen in prior months.

The Eurozone's manufacturing sector showed some signs of difficulty in May due to rising prices and supply disruptions from the war in the Middle East. Specifically, the region's manufacturing PMI fell from the nearly four-year high registered in April (52.2) to 51.6 in May. However, this latest figure stood among the highest recorded since mid-2022. A key fact in May was the further rise in energy and commodity prices, which triggered the largest monthly increase in business costs in four years.

Our Take

European manufacturing has now strung together four consecutive months of expansion, but May delivers a less comfortable reading than April. The problem is not a sharp fall in activity, but rather the combination of weaker demand, higher costs, and renewed supply chain tensions.

German retail sales fell 0.3% monthly in April, a result slightly better than the -0.4% consensus had anticipated. On an annual basis, the retreat was also 0.3%, deepening the 0.2% decline recorded the prior month. Total retail trade has accumulated an annual contraction of 0.9% in the first four months of the year, with the fashion sector leading the deterioration with a 4% annual decline, evidencing the widespread caution in discretionary spending.

Our Take

The fact that German retail sales have now spent several consecutive months in negative territory is a signal of structural fragility in consumption in the Eurozone's largest economy. The combination of inflation that has not fully subsided, geopolitical uncertainty from the Middle East conflict, and a labor market beginning to show signs of cooling continues to inhibit household spending.

Former Federal Reserve Chair Jerome Powell warned that the Trump administration's attempts to increase political pressure on the US central bank could end up damaging public confidence in the institution's independence. For Powell, the Fed is undergoing a political stress test, much like other US institutions such as the courts or universities.

Our Take

In his first public appearance since concluding his Fed presidency on May 15, Powell used the event held at the John F. Kennedy Presidential Library to defend the role of democratic institutions. Powell has been succeeded at the Fed by Kevin Warsh, who officially assumed the role on May 22. However, he continues to be part of the institution as a Fed Governor.

Corporate News

Nvidia presented at Computex in Taipei a processor that will run Microsoft's Windows operating system. The chip will debut in Dell and Lenovo laptops and desktops this fall. Jensen Huang noted that Anthropic, OpenAI, and SpaceX are among the first major users of its upcoming data center microprocessor. Intel shares were falling around 7% in pre-market trading, while Arm shares were up more than 14% and MediaTek, which collaborated on the design, was advancing more than 5% in Taipei.

Our Take

Nvidia's entry into the PC market comes from a position of technological dominance: the company has the best AI chips, the most robust software ecosystem for model development, and the closest relationship with the hyperscalers that generate demand. For Intel, whose recovery in 2026 had been one of the year's most positive stories, the announcement is a direct threat to its last relevant stronghold: the CPU market for PCs. The most important signal is that Nvidia is determined to capture value at every touchpoint in the AI ecosystem.

Berkshire Hathaway announced the acquisition of Taylor Morrison Home for US$6.8 billion in cash (US$72.50 per share, a 24% premium over Friday's closing price), constituting the first acquisition under Greg Abel, who assumed his CEO role after Buffett's retirement last year. Abel indicated that over time he will seek to unify Berkshire's home construction operations, which include Clayton Homes, into an integrated platform, a departure from Berkshire's traditional model of allowing its subsidiaries to operate independently. Taylor Morrison is one of the largest residential community developers in the US, with more than 350 projects in 12 states. The transaction is expected to close in the second half of the year.

The to-do list

  • Monitor oil throughout the day: the US and Iran exchanged military strikes over the weekend despite the ceasefire agreement, and Brent is rising back toward $93.

  • Watch the May manufacturing ISM at 8am: consensus points to 53.0, but what matters to read are the prices paid, new orders, and employment sub-indices, which in April were already sending warning signals.

  • It's Monday, start the week with order: define the two or three priorities for the next five days before the day's news noise changes them.

  • This week brings the May employment report on Friday, organize your agenda with that data point in mind starting today.

  • Tonight, prepare something simple at home and do a short Pilates or meditation session before sleeping, starting the week with deliberate calm makes a difference.

Today's quote…

"Success is not final, failure is not fatal: it is the courage to continue that counts."

— Winston Churchill