Good morning investors,
Yesterday the market took the Iran peace deal and ran with it, and the move deserves real respect. This was not merely a sentiment bounce. The agreement lifted the single largest overhang the bears have leaned on since February, and the response was emphatic. The Nasdaq surged more than 3%, the S&P jumped over 1% to add roughly $1.2 trillion in market value, and the Dow climbed nearly 1% to another record close, its 16th all-time high of the year.
The semiconductors led with a conviction that tells you this was continuation rather than rescue. Marvell ripped 10.4%, Micron 10.8%, AMD 7%, Taiwan Semiconductor 4.1%, and Nvidia 3.5%. Oil collapsed another 5% on the confirmed reopening of the Strait of Hormuz, and US crude has now dropped below $79 a barrel, its lowest since March 10th and squarely within the $80 range I have been targeting for weeks. Futures are quieter this morning, little changed across the board, as the market digests the move ahead of tomorrow's main event.
That main event is Kevin Warsh's first FOMC meeting and press conference as Fed chairman, and it will define the rest of this week.
Why This Was Continuation, Not Rescue
I want to reframe how to read yesterday's surge, because the popular narrative of a market saved by peace talks misses what actually happened. The truth is there was very little here that needed saving. Look at what the chips did over the past four months. They marched higher straight through a violent oil shock, a blockade that choked off a fifth of the world's energy, and the daily uncertainty of a shooting war. The semiconductor ETF and the South Korea ETF have each more than doubled this year, both up over 109%, while all of that played out in the background.
A theme that can absorb that much and keep climbing is telling you something profound about its durability. The deal does not determine whether the AI trade works. It already worked, through the worst the geopolitical environment could throw at it. What the deal changes is the speed at which the move can accelerate from here. Take the energy shock off the table and shelve the biggest tail risk, and the capital that cautious investors had been holding in reserve has a clear path back into the market. The natural home for that money is the trade that never stopped working. The bulls have now won on both Wall Street and the geopolitical front at once, and to my mind that durability matters far more than any single session's percentage gains.
A word on what I mean when I talk about not chasing, because I am a wealth manager / planner and my lens is long term. When I caution against chasing a move like this, I am not telling anyone to sit in cash or stay out of the market. Quite the opposite. I am saying do not pile additional exposure on top of holdings you already own simply because the tape is euphoric and oil just cracked. If you are already invested in this theme, and most disciplined portfolios are, you are participating fully in exactly this kind of advance. The discipline is in resisting the urge to stack fresh risk at the moment of maximum optimism, not in avoiding the market itself. Staying invested and chasing are two very different things, and the gap between them is where good long-term outcomes are made.
The Long Road Back for Oil
I do want to temper the oil enthusiasm with some realism, because the path back to normalized crude prices is longer than a signing ceremony suggests. Even with the strait reopening Friday, the market faces three distinct logistical hurdles. First, hundreds of ships are trapped on either side of the Persian Gulf, and threading them through the region is a waterborne version of air traffic control at a major airport. Second, oil-producing nations have had to shut in millions of barrels of production as their storage filled, and reversing that can take weeks or months. Third, the war damaged refineries and LNG terminals that now need rebuilding, with Rystad estimating the repair bill exceeds $50 billion.
As Rystad's chief economist put it, sentiment has clearly improved, but sentiment is not the same as supply. It will take time for production to ramp, for logistics to normalize, and for the risk premium to fully dissipate. So while I am thrilled to see crude below $79, I would not expect a straight line back to pre-war levels. The direction is unambiguously right, which is what matters for the inflation narrative and the Fed. The pace will be gradual.
The AI Trade Becomes a Funding Story
Here is the development I am watching most closely beneath the surface, because it is reshaping how to think about the entire AI complex. Nvidia announced it will raise at least $20 billion, likely closer to $25 billion, in its first corporate bond sale since 2021. Demand for the offering reportedly hit $85 billion, a staggering figure.
Nvidia is a cash machine, generating $49 billion in free cash flow last quarter alone, and the official use of proceeds is general corporate purposes and refinancing rather than direct AI capex, but the symbolism is impossible to ignore. Even the single biggest winner of this entire boom, a company returning roughly half its free cash flow to shareholders, is tapping the debt market to preserve flexibility. It joins Alphabet's planned $85 billion equity raise, Amazon's $54 billion in debt this year, and Super Micro's $7 billion in financing.
The message across all of it is the same. The AI trade is no longer just about who has the best chip or the best model. It is increasingly about who can keep paying for the machines behind it. Globally, companies have raised a record $4.7 trillion in equity, corporate debt, and bank loans this year, running roughly $500 billion above the 2021 financing boom, driven primarily by technology firms funding AI. This is the funding story I have been flagging, and it is becoming the defining feature of the cycle. It works beautifully as long as the returns materialize. It is precisely why investors punished Oracle last week for raising capex guidance while only reaffirming revenue. The market is starting to demand proof of return on all this spending, and that demand will only intensify.
Fox Buys the Screen
I wrote my full take on the Fox-Roku deal yesterday, and I will share the heart of it because I think it is one of the cleanest strategic acquisitions in media for years. Fox is acquiring Roku for $160 per share in cash and stock, valuing the platform at roughly $22 billion.
Fox already owns premium content that people watch regardless of the economic backdrop, with live sports, news, entertainment, and Tubi. What it lacked was the distribution layer, and Roku solves that immediately, bringing more than 100 million streaming households, leading connected-TV positioning, and, most valuably, first-party viewing data. Roku knows what people watch, when they watch it, what they ignore, and how advertising performs. As ad dollars keep shifting toward connected TV, that information is extraordinarily valuable. Combining Tubi with The Roku Channel creates a massive free-to-watch ecosystem at exactly the moment consumers are growing selective about how many subscriptions they will pay for.
The market did not love it, sending Fox down more than 15% in its worst day ever on concerns about the debt taken on to fund the deal, with Bloomberg Intelligence estimating Fox's debt could more than double. I understand the near-term caution, but I think the strategic logic is sound and the direction telling. A decade ago, telecom giants like AT&T and Verizon tried to buy content and those deals aged badly. Fox is doing the reverse, a content company buying distribution, not cable pipes but the TV home screen itself. The companies that win the next decade of media will control both the content and the customer relationship. Fox already owned the content. Yesterday it bought the screen.
Let Your Financial Plan Drive the Portfolio
I want to take a moment away from the market action for something that matters more to your long-term outcomes than any single trade. It has been genuinely wonderful hearing from so many of you over the past few weeks, and the conversations have reinforced a conviction I hold deeply. A portfolio should never be a random collection of exciting bets assembled in reaction to headlines. It should be the financial expression of an actual plan, anchored to your specific goals, your time horizon, and your real tolerance for risk.
This matters enormously right now, because the environment is engineered to pull you off course. The largest IPO in history just debuted, the AI trade is roaring, and every instinct the market triggers is designed to make you act on emotion rather than strategy. The data bears out the danger. The biggest fortunes in the stock market are built by holding, not trading, yet retail investors' share of trading volume has doubled since 2010 and sits near a record high. People are trading more and, predictably, achieving worse outcomes. A plan is what protects you from that. It tells you whether a position like SpaceX belongs in your portfolio at all, and if so, at what size, rather than letting a dazzling story dictate decisions that should be governed by your objectives.
If any of this resonates, I would genuinely love to talk. I am always happy to set up an intro call to discuss your financial plan, what your money is actually for, and how a disciplined, goals based approach could help you navigate exactly the kind of noisy, exuberant market we find ourselves in. Reach out anytime. These conversations are among the most rewarding parts of what I do.
Warsh Steps to the Podium
Tomorrow is the week's defining moment. The FOMC is virtually certain to hold rates, with futures pricing more than a 98% probability of no change, but this is Warsh's first meeting as chairman and his press conference will be the real read on the new regime.
The setup is delicate. Inflation keeps climbing, with May CPI at its fastest since 2023 and PPI at its fastest since 2022, even as the labor market stays firm and payrolls beat estimates month after month. President Trump is publicly demanding cuts. The bond market has priced one hike for later this year. Warsh has to navigate all of it while addressing the question of AI's impact on growth, jobs, and inflation. The peace deal helps him considerably, pulling the energy shock off the table right as he meets, but he still faces a genuinely contradictory dashboard.
My long held view is that Warsh ultimately resists the calls to hike, and this week tests that opinion directly. I will be listening most carefully for how he frames the near-term inflationary impulse of the AI buildout against his stated belief that AI is disinflationary over the long run. That tension is one of the most important policy questions of this entire cycle, and how the new chairman threads it will shape the back half of the year.
The Bank of Japan Moves
Worth noting that the Bank of Japan raised its policy rate to 1% overnight, the highest in over 30 years and its first hike since December. The move was widely expected and reflects rising inflation, partly driven by the same Iran energy shock, with Japanese producer prices climbing 6.3% in May. The reopening of the strait actually gave the BOJ more confidence to proceed by reducing the supply-shock uncertainty hanging over Japan. The Nikkei briefly touched 70,000 for the first time before easing, and the global bull market remains very much alive across every major region.
A Word of Caution on Micron
Let me flag one analytical point that aligns with my framework. One of the biggest mistakes investors make is assuming a low forward P/E means a stock is cheap. Micron traded at a low forward multiple in 2000 precisely because its earnings were nearing a cyclical peak, and when DRAM prices collapsed, those earnings evaporated and the stock lost more than 98%. Today Micron again looks inexpensive against expected earnings, and the entire question is whether those earnings are cyclical or structural. My conviction has been that this cycle is structural, driven by real and immediate AI demand for high-bandwidth memory rather than speculative oversupply. I hold that view with confidence but also with the humility to keep watching memory pricing closely, because the commodity bears are making the one argument that genuinely deserves respect.
Final Thought
The brakes are off, and I do not say that lightly given how cautious I have been through this pullback. The peace deal removed the largest overhang, oil has fallen below $79 toward my target, and the semiconductors are signaling that the generational bull run has plenty of room left. The Dow's 16th record of the year extends a 14-year streak of annual all-time highs, two years longer than the legendary 1989-to-2000 run. Records are made to be broken, and this market keeps breaking them.
My framework holds and the week has reinforced it. Earnings are set to grow roughly 25% this year on agentic AI, oil is easing as the US exits the war, and Warsh is likely to push back against the hawks, a thesis that gets its first real test tomorrow. The funding story is the development I am watching most carefully, because the market is rightly beginning to demand returns on the enormous capital being raised. But none of that breaks the case. The 10-year above 4.75% remains the level that would change my mind, and until it does, I view this as a healthy, broadening bull market with the biggest geopolitical risk now off the board.
Watch Warsh tomorrow above everything else. Stay invested, stay disciplined, and remember that a plan, not a headline, should drive every decision you make. I look forward to hearing from those of you who want to talk through yours.
Best regards
Dan Sheehan [email protected]
Subscribe: https://substack.com/@dansheehan3
Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader's objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.