Is A Pro-Wrestling Mentality Steering The US Economy?

U.S. equities have pulled back this week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the U.S. government's $36 trillion in debt. Long-dated U.S. Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5% and hitting its highest level since late 2023.Focus will shift to Wednesday's quarterly results from Nvidia, one of the world's largest companies by market value whose stock is a major influence on benchmark equity indexes.

"All eyes are going to be on Nvidia's report," said Chuck Carlson, CEO of Horizon Investment Services. "The whole AI theme has been a major driver of the market and Nvidia is at the epicenter of that theme."

Nvidia will be the last of the "Magnificent Seven" megacap tech and growth companies to report results for this period. Their stocks have been mixed in 2025 after leading the market higher as a group in the last two years.Nvidia shares are down 1% this year after soaring over 1,000% from late 2022 through the end of 2024 as its AI chip business spurred massive increases in revenue and profits.

Nvidia's first-quarter earnings likely jumped about 45% on revenue of $43.2 billion, analysts estimated in an LSEG poll.

After big tech companies earlier in the quarter signaled robust AI-related spending, Nvidia can deliver a strong message about AI and how companies' spending plans are faring, said Art Hogan, chief market strategist at B Riley Wealth."Nvidia can reinvigorate the enthusiasm for that theme."

Nvidia, popular among smaller retail shareholders, is an investor sentiment indicator, said Wasif Latif, chief investment officer at Sarmaya Partners.

"Given its sheer size and attention that it is commanding, there are going to be a lot of people looking for what happens with the stock," Latif said.

U.S.-China relations could also be in focus with Nvidia's report. The company said last month it would take $5.5 billion in charges after the U.S. government limited exports of its H20 artificial intelligence chip to China.

Trade developments have whipsawed the stock market this year, especially after U.S. President Donald Trump's April 2 announcement of sweeping tariffs on imports globally set off extreme asset price volatility.

Since then, Trump's easing of tariffs, especially a U.S.-China truce, has helped equities rebound. The benchmark S&P 500 index (.SPX), opens new tab ended on Thursday down less than 1% for 2025, and down about 5% from its February record high.

Investors shifted attention this week to the fallout from Trump's fiscal plans, especially after Moody's downgraded the U.S. sovereign credit rating due to concerns about the nation's growing debt pile.

The U.S. House of Representatives, controlled by Trump's Republican party, on Thursday narrowly passed a tax and spending bill that would enact much of his agenda while adding an estimated $3.8 trillion to the debt over the next decade. The bill is heading to the U.S. Senate for its review.

Long-dated government bond yields have been rising globally amid a selloff. In the U.S., benchmark 10-year Treasury yields this week hit their highest since February. Bond prices move opposite to yields.

Higher yields can diminish the appeal of stocks as they represent higher borrowing costs for companies and consumers, while making fixed income assets relatively more attractive.

"The biggest concern from an investment standpoint is that higher rates represent more competition for equities," said Horizon's Carlson. "If rates continue to move higher, that is going to put increasing amounts of pressure on where investors are putting their money."

Source: Kitco

Iranian and U.S. negotiators resumed talks on Friday in Rome to resolve a decades-long dispute over Iran's nuclear ambitions, Iranian media reported, despite Tehran warning that clinching a new deal might be insurmountable amid mutually exclusive demands.

The stakes are high for both sides. President Donald Trump wants to curtail Tehran's potential to produce a nuclear weapon that could trigger a regional nuclear arms race and perhaps threaten Israel. The Islamic Republic, for its part, wants to be rid of devastating sanctions on its oil-based economy.

Iranian Foreign Minister Abbas Araqchi and Trump's Middle East envoy Steve Witkoff were expected to lead a fifth round of talks, through Omani mediators.

Both Washington and Tehran have taken a tough stance in public over Iran's intensifying uranium enrichment programme, which could potentially give it scope to build a nuclear warhead, even though Tehran says it has no such ambitions and the purposes are purely civilian.

Iran insists the talks are indirect, but U.S. officials have said the discussions - including the latest round on May 11 in Oman - have been both "direct and indirect".

Ahead of the talks, Araqchi wrote on X: "...Zero nuclear weapons = we Do have a deal. Zero enrichment = we do NOT have a deal. Time to decide."

White House press secretary Karoline Leavitt told reporters on Thursday that Trump believes negotiations with Iran are "moving in the right direction".

Tehran and Washington have both said they prefer diplomacy to settle the impasse.

U.S. Secretary of State Marco Rubio said on Tuesday that Washington is working to reach an accord that would allow Iran to have a civil nuclear energy programme but not enrich uranium, while admitting that achieving such a deal "will not be easy".

Supreme Leader Ayatollah Ali Khamenei, who has the last say on Iran's state matters, rejected Washington's demands that Tehran stop refining uranium as "excessive and outrageous", warning that the talks are unlikely to yield results.

Among remaining stumbling blocks is Tehran's refusal to ship abroad its entire stockpile of highly enriched uranium - possible raw material for nuclear bombs - or engage in discussions over its ballistic missile programme.

Iran says it is ready to accept some limits on enrichment, but needs watertight guarantees that Washington would not renege on a future nuclear accord.

MOUNTING TENSIONS

Trump in his first term in 2018 ditched a 2015 nuclear pact between major powers and Iran. Since returning to office this year, he has restored a "maximum pressure" campaign on Tehran and reimposed sweeping U.S. sanctions that continue to hobble the Iranian economy.

Iran responded by escalating enrichment far beyond the 2015 pact's limits.

Wendy Sherman, a former U.S. undersecretary for political affairs who led the U.S. negotiating team that reached the 2015 agreement, said it was impossible to convince Iran to scrap enrichment - which Tehran touts as a matter of sovereignty.

"I don't think it is possible to get a deal with Iran where they literally dismantle their programme, give up their enrichment, even though that would be ideal," she told Reuters.

The cost of failure of the talks could be high. Iran's arch-foe Israel sees Iran's nuclear programme as an existential threat and says it would never allow Iran's clerical establishment to obtain nuclear weapons.

Israel's strategic affairs minister and the head of its foreign intelligence service Mossad will also be in Rome for talks with the U.S. team that is negotiating with Iran, a source aware of the matter told Reuters.

Araqchi said on Thursday that Washington would bear legal responsibility if Israel attacked Iranian nuclear installations, following a CNN report that Israel might be preparing strikes.

While rising U.S.-Iran tensions have put the nuclear talks in doubt, three Iranian sources said on Tuesday that the clerical leadership lacks a clear fallback plan if efforts to overcome the standoff collapse.

Source: Reuters

Per an AFP report, the deal will also involve the construction of a petrochemicals facility and a fertilizer plant. The refinery that Geo-Jade Petroleum will build will have a capacity of 200,000 barrels daily. One of the power plants will have a capacity of 650 MW and the other, a solar power facility, will have a capacity of 400 MW.

“These projects with Geo-Jade represent a big leap in the development of Iraq’s oil wealth and supporting of the national economy,” Iraq’s oil minister, Hayan Abdel Ghani, said, adding that the deal would create thousands of jobs.

Geo-Jade Petroleum already operates in Iraq – it is in charge of the Khana field, which is slated to begin expanded production in 2026.

Chinese companies as a whole have built a solid presence in OPC’s number-two, driven by Beijing’s strategy to expand supply availability through both domestic and international investments. To date, more than a third of Iraq’s proven oil and gas reserves and as much as 66% of production are under the management of Chinese firms, Simon Watkins reported earlier this year.

The Iraqi government’s ambition to boost production significantly, to as much as 7 million bpd, Chinese companies are among the best placed to take advantage of the opportunity. Currently, Iraq produces around 4 million barrels daily—above its OPEC+ production quota, which has created tensions with OPEC’s number-one, Saudi Arabia.

Chinese companies’ entry into Iraq’s oil and gas sector is a result of an agreement inked back in 2019 and dubbed “Oil for Reconstruction and Investment”, under which Chinese companies are granted entry into Iraq’s energy infrastructure sector as investors in return for oil supplies.

Source: Zero Hedge

China greeted global energy giants at the World Gas Conference in Beijing this week with a most welcome gift — tangible evidence that demand from the world’s largest importer is still strong.

Local utilities and industrial consumers signed long-term contracts for liquefied natural gas with BP Plc and ConocoPhillips. Meanwhile, top supplier PetroChina Co. said it was on the hunt for more upstream investment and flexible volumes of the super-chilled fuel to help increase its trading footprint.

The thirst for more gas comes in contrast to the picture on the ground. Imports fell during the first four months of this year on rising domestic production, competition from cheaper coal and renewables, and slowing economic growth.

The new deals are evidence the slowdown could be more about China adjusting to its new role in the gas business than any kind of endemic decline. The nation has become a swing market, redirecting cargoes elsewhere when demand — and spot prices — are high.

However, it’s also ready to soak up excess supply should there be a glut.

That role used to be played by Europe before its LNG needs became less flexible as Russian pipeline gas supply disappeared.

Crucial to this new status is a power system with massive amounts of generation from a variety of sources. China’s 125 gigawatts of gas capacity are only about a 10th of its massive coal fleet but still more than Germany, France and the UK combined.

Right now, it’s able to stay idle thanks largely to an abundance of wind and solar power. But when LNG prices get low enough, those sources may be able to fire up and offer a cleaner solution than coal.

That time may not be far off because new export plants are set to open in North America and Qatar during the coming years. This week offered a bit more assurance that China will be there for the molecules when needed.

UK energy bills will fall 7% after a dip in wholesale gas prices, providing some relief to households and businesses. The price cap — set every three months by regulator Ofgem — will decline to £1,720 ($2,322) starting July 1. That follows three straight increases. The cap sets the maximum amount suppliers can charge per unit of energy, and the figure released by Ofgem estimates what the average annual energy bill would be.

US President Donald Trump criticized the UK’s approach to taxing North Sea oil and gas, saying it discouraged drilling and raised energy prices.

Oil extended this week’s decline as OPEC+ weighs another bumper production increase that could add supplies to a market already expecting a glut.

The Big Take explores China’s “Lithium City,” where the nation is ramping up production of the metal to supply its booming battery business — at significant cost to the environment.

The Trump administration’s contradicting messages on a Venezuela oil-export license are leaving Chevron Corp. hanging and prompting a Caracas negotiator to call the situation a “Game of Thrones.”

Ukraine is rebuilding its battered energy grid using lessons from the front lines of the war with Russia. The network is becoming more resilient and greener.

Global funds to scale clean hydrogen have reached $277 billion, according to BloombergNEF’s Hydrogen Subsidies Tracker. However, funding to produce the molecule far outweighs that to boost demand. More than 63% of the incentives support production, while 34% is for midstream needs such as pipelines and storage. Just 3% is purely for demand.

Source: Bloomberg Europe

Bernstein analysts are forecasting the onset of a U.S. natural gas supercycle, driven by a combination of robust demand growth and constrained supply. In a detailed sector outlook, Bernstein projects that total U.S. gas demand will rise from approximately 120 billion cubic feet per day (bcfd) in 2024 to about 148 bcfd by 2030.

The key drivers of this growth are an expected surge in liquefied natural gas (LNG) exports and a sharp increase in power demand, particularly from data centers.

According to the Bernstein report, LNG exports are forecast to grow by 10 bcfd through the end of the decade, based on projects that are already sanctioned or under construction.

The analysts see this export-driven demand as “highly certain,” emphasizing that international markets will account for the vast majority, around 80%, of the demand growth over this period.

Power demand is expected to add another 8 bcfd, continuing a linear trend observed over the past two years.

This increase is attributed primarily to data center expansion, which the report characterizes as a structurally new source of demand.

Despite ongoing coal plant retirements, Bernstein assumes that renewables will largely offset the lost generation capacity, but acknowledges that natural gas could fill some of the gap depending on renewable deployment rates.

While demand is projected to climb steadily, supply growth appears more constrained.

Bernstein highlights that over 70% of U.S. gas supply does not interact with price due to either being associated with oil drilling or limited by infrastructure constraints.

In particular, production from Appalachia, the nation’s largest gas-producing region, is expected to remain flat due to pipeline limitations.

This leaves the Haynesville and Midcontinent regions as the primary sources of flexible, price-responsive supply.

Bernstein models suggest that to balance the market, these basins will need to contribute an additional 17 bcfd by 2030.

However, current activity levels, particularly in the Haynesville, are below the necessary pace, raising concerns about the industry’s ability to respond.

The supply-demand mismatch leads Bernstein to forecast a sustained rise in gas prices.

Their model indicates a long-term equilibrium price around $5 per million cubic feet (mcf), above recent spot and forward prices.

Under more bullish assumptions, such as a shortfall in Haynesville growth, prices could exceed $8 or even $10/mcf, triggering both demand destruction and increased incentive for supply expansion.

Bernstein’s assessment calls this environment a “supercycle,” driven not by speculative hype but by underlying structural trends.

They stress that global dynamics, including rising LNG demand for power and transport in Asia, will ensure that U.S. exports continue to run at or near capacity, further tightening the domestic market.

In this context, Bernstein recommends increased exposure to gas-weighted equities, naming EQT (ST:EQTAB) as their top investment idea to capture long-term value from this structural shift.

Source: Investing

In a call on Friday, Chinese President Xi Jinping and German Chancellor Friedrich Merz emphasized the significance of their countries’ relationship, as China and Europe navigate the uncertainties brought about by U.S. tariff policies.

China and Europe are among the largest trading partners of the U.S. and maintain substantial trading connections with each other. Last year, the trade volume between China and Germany alone was around 246 billion euros ($279 billion), based on official data.

Germany has been striving to maintain a delicate balance in its relationship with China, which Berlin views as both a strategic competitor and a crucial trading partner. The vast Chinese market has been a significant support for Germany’s export-oriented economy.

During the call, President Xi acknowledged the world is experiencing changes unseen in a century, marked by "intertwined turmoil and transformation," as reported by official broadcaster CCTV. "China is willing to work with Germany to open a new chapter in their all-round strategic partnership, to lead China-EU relations toward new development, and to contribute to the stable growth of the global economy," President Xi was cited as saying.

A spokesperson for Chancellor Merz stated that both leaders expressed their readiness to cooperate in addressing global challenges. The Chancellor underscored the importance of fair competition and reciprocity, the spokesperson added.

Source: Investing