Project Freedom Day 1, Two Tankers Cleared Hormuz. PLTR Tonight, 10% Implied. EU Auto Tariffs +25%. OPEC+ Delivers 188K With UAE Empty Chair.

Monday pre-market, 7:00 AM ET. The weekend delivered exactly the kind of headline reversal that breaks single-direction positioning. Trump announced “Project Freedom” Sunday afternoon, an open-ended US Navy operation to guide civilian ships out of the Strait of Hormuz, and CENTCOM confirmed at 5:30 AM ET that two US-flagged merchant vessels had successfully transited. Brent gapped to $114 in early Asia trading on initial Iranian press claims of a missile strike on a US patrol boat, then unwound the move once the US flatly denied the report and the first transits cleared. As of writing, Brent sits at $108.40, WTI at $103.10, both down roughly 2.5% from Friday’s close and 5% off the overnight highs. S&P futures are 4 handles lower at 7,253.75. Nasdaq futures are 27 points higher. The tape is split, oil is the swing factor, and PLTR after the bell is the binary.

The geopolitical backdrop has shifted in a meaningful way over the weekend, even if the cracking ceasefire in Lebanon has not. Iran made its 14-point proposal public Saturday rather than negotiating in private through Pakistan, which forces the US into a counter-offer in a public forum. The terms are predictable on the headline (lift sanctions, end the blockade, withdraw forces, formal ceasefire within 30 days, nuclear track parked separately) but the act of publishing them is itself a de-escalation signal because Tehran wants to be seen offering rather than refusing. Trump told reporters on Air Force One Sunday that he “can’t imagine” the latest version is acceptable, but his deputies are framing the talks as “very positive.” That is the same pattern that preceded the Lebanon ceasefire framework last November. We read the tape as a 55/45 lean toward formal ceasefire by the May 14 to 15 Trump-Xi summit, which would force a $15 to $20 unwind in front-month Brent.

The other weekend story for the energy book is OPEC+. The Saudi-led seven held their first ministerial without the UAE on Sunday and agreed to add 188,000 barrels per day from June. The number itself is small, the choreography is the signal. With Brent at $108 and Hormuz finally seeing flow, an output add reads as a vote for normalization rather than a defense of price. The UAE’s empty chair is the bigger structural read. The cartel just lost 2.9 mbpd of swing capacity and the remaining members chose to add rather than hold. That tells you the Saudis prefer market share over price discipline once the war premium fades, which is consistent with our medium-term Brent target range of $85 to $95 once ceasefire is signed.

Three things into Monday:

1. PLTR is the marquee print of the week, after the close. Consensus sits at $0.28 EPS on $1.54B in revenue (revenue +74% y/y). Polymarket is implying a 96% probability of an EPS beat. Options are pricing a ~10.06% straddle on Monday, slightly tighter than the four-quarter realized average of 10.5%. The stock is down 20% YTD and sits 31% below its November all-time high of $207.18, which means positioning is materially cleaner than any quarter in the last 18 months. Two things matter: US commercial growth versus the +94% consensus, and whether the full-year guide gets a meaningful raise. We hold the underlying long into the print at 60% of target weight and overlay a long-dated June $200 call into any 5%+ post-print weakness.

2. EU auto tariffs at 25% just landed, and European autos are already down 1.6% in early dealings. Trump’s Friday announcement to lift the EU vehicle tariff from 15% to 25% takes effect this week. Mercedes, BMW, and Volkswagen import the largest share of US-sold inventory from European plants. The read-through to the US OEMs (F, GM) is mixed because Detroit also sources from Europe but has more domestic production on the ramp. The cleaner trade is short the EU-domiciled OEMs through ADRs (MBG.DE, BMW.DE, VOW3.DE) into any rally on Trump-Xi summit headlines.

3. The bond market has rallied a little, but the macro setup has not changed. 10Y back to 4.43% and 30Y to 4.96% over the weekend on the Hormuz transits and Iran proposal headlines, but auctions return this week with 10Y on Wednesday and 30Y on Thursday. CPI prints next Wednesday May 13 and the Cleveland Nowcast still has April at 3.6% headline. With Brent in the $105 to $110 range through April, the energy passthrough is real. We stay structurally short duration via TLT put spreads, sized smaller into the headline-driven rally.

The Macro Print

What Already Posted This Cycle

Today’s Calendar

Our take on ISM Services: A print above 52 reanchors the hawkish-hold narrative and re-tightens the front end. A print below 50 (services contraction) takes the soft-landing-with-stagflation thesis and turns it into hard-landing-with-stagflation, which is much worse for equities. We model 51.4. Watch the prices-paid sub-index. With Brent at $108 and the EU tariff hike landing, the services prices sub-component is very likely to print above 65 for the second straight month.

Project Freedom and the Hormuz Tape

This is the new market-moving variable for the next two weeks. Trump’s announcement Sunday (Truth Social, 4:12 PM ET) framed the operation as “humanitarian” and limited to escorting flagged civilian ships out of the Gulf. CENTCOM later clarified the force package: guided-missile destroyers, “over 100 land and sea-based aircraft,” drones, and roughly 15,000 service members in the regional package. The deployed Navy will not enter the strait itself. The escort happens at the edge of the contested waterway, with merchant vessels routed through with US air cover.

The math on stranded vessels: the IMO put the figure at roughly 2,000 ships and 20,000 seafarers as of last week, including LPG/LNG carriers, crude tankers, and bulk dry cargo. If Project Freedom successfully clears even 30% of that backlog over the next two weeks, the spot oil market normalizes very quickly and the front-month dated Brent flips from backwardation to contango.

Iran’s response so far has been verbal rather than kinetic. Ebrahim Azizi (head of the parliament’s National Security Commission) called the operation a violation of the April 8 ceasefire framework. The Khatam al-Anbiya commander threatened attacks on any foreign forces “attempting to approach or enter” the Strait. The IRGC released a statement that any “aggressive US army” presence “will be attacked.” This is rhetoric we have heard for sixty days. The kinetic threshold is whether Iran fires on a US-escorted civilian vessel. If they do, the ceasefire is functionally dead and Brent prints $130. If they do not (our base case at 65%), Hormuz volumes normalize over four to six weeks and Brent settles in the $90s.

Two false starts overnight that did not survive an hour:

• 2:14 AM ET: Iranian press wire claims a missile strike on a US patrol boat in the Gulf. US Navy denies within the hour. Brent rallies to $114 then unwinds.
• 4:08 AM ET: Iranian state TV reports a US warship “turned back” from the entrance to Hormuz. CENTCOM confirms transit ongoing. Brent sells off another 80 cents.

Both episodes are examples of the kind of two-way headline risk that will dominate price discovery this week. Position with that in mind. Tight stops on directional oil exposure, larger stops on optionality.

Earnings Recap and Setup

The week’s read-throughs:

PLTR (tonight). US commercial growth is the only number that matters. We ignore government because Q1 federal contracts were front-loaded into the print on the IRGC strike packages. Commercial below +85% breaks the AIP narrative. Commercial above +100% takes the stock to $200.

AMD (Tuesday). The OpenAI 6GW deal and the Meta 6GW deal are already in the price. The trapdoor is gross margin. AMD guided Q1 to ~55% versus 57% in Q4, and the 2.9 percentage points of MI308 China inventory reversal that boosted Q4 will not repeat. If GM prints below 54%, the stock backs off 7-8%. If GM prints 55%+ with a clean Q2 guide, the stock takes out the $200 level. Implied is 7%, which feels slightly tight given the GM uncertainty.

ON Semiconductor (Tuesday). Auto-exposure name into a freshly-tariffed European auto cycle. We are short into the print via June $50 puts. EU autos at -1.6% pre-market this morning is the read-through.

Berkshire Hathaway, the Weekend Sequel

Saturday’s annual meeting did what we expected. Greg Abel ran the show, ruled out a break-up, doubled Q1 operating profit (insurance underwriting up 28%, BNSF margins flat), and kept the $385B cash pile parked in T-bills. The line that matters for our coverage is unchanged from yesterday’s note: “We are not going to do AI for the sake of AI.” The consensus reaction across the sell-side reads has been “solid scorecard,” with three notes already out from CNBC, CBS, and Reuters echoing the steady-hand framing.

We are one trading day past the meeting and the market reaction so far has been muted. BRK/B premarket is flat at $510. The opportunity cost of $385B in T-bills earning ~4% versus an equity index up 12% YTD is real, and our view that BRK/SPY ratio has limited room to run remains intact. We are not adding to the short, but we are not covering it either.

Trade Ideas

▼ Long Brent / Short Brent Backwardation via Calendar Spread

Project Freedom plus the Iran 14-point proposal plus OPEC+ adding 188K bpd makes the front-end backwardation untenable on a two-week view. Buy the August Brent contract at $99.40 and sell the June Brent contract at $108.40, for a net debit of ~$9.00 (paid up for the front-month). If Hormuz normalizes by mid-May, June rolls down to $95 and August holds at $93, capturing a $4 to $5 spread compression. Defined risk if you cap the short June at front-month $116 (a hard re-escalation case).

This is the cleanest expression of “ceasefire by the Trump-Xi summit” without taking outright directional oil risk. We are building this position on any front-month Brent print above $110 today.

Risk: An Iranian kinetic action against a US-escorted vessel would blow out the front month $130 and crater the spread. Cap the short at the August contract level if June trades above $116.

▲ PLTR Stock + Short-Dated Put Spread Hedge

Hold the underlying through the print at 60% of target weight. Overlay a defensive put spread for the binary protection: buy the May 16 $130 / $120 put spread for ~$2.10 net debit. The stock is at $144 pre-market, options are pricing a 10% straddle, our PT is $185 on commercial accel. The put spread caps downside on a guide-down scenario at $130 while keeping the upside long open.

If the print is clean (commercial +100%+, full-year guide raised by $80M+), we exit the put spread Tuesday morning and add to the call overlay (June $200 calls).

Risk: A revenue miss below $1.50B, or commercial below +85%, takes the stock through $130 and breaks the AIP narrative thesis. Position size 1.0% of NAV gross, 0.6% net.

▼ Short EU Autos via OEM Triple via Mercedes / BMW / VW Put Spreads

Trump’s Friday announcement of 25% EU vehicle tariffs (up from 15%) takes effect this week. The three names with the largest US-sold-from-Europe mix are Mercedes (MBG.DE), BMW (BMW.DE), and Volkswagen (VOW3.DE). Buy June 19 25-delta put spreads on each name, equal-weighted at 30 bps of NAV per leg.

The base case is a 6-8% drawdown across the basket over the next two weeks as the tariff hits Q2 reported revenue and management cuts FY guides. The bear case is 12-15% if Mercedes preannounces a guide cut (their next investor update is May 7).

Risk: A Trump-EU late-week climb-down on the tariff (precedent: the Mexico steel pullback on March 14) would rally the basket 3-4%. Stop on a 5% rally in any leg.

▲ Long Defense via LMT and NOC Call Spreads

Project Freedom is a 15,000 service member deployment with persistent air cover, and the FY27 budget reauthorization debate begins in committee May 19. The Iran war has driven defense backlog up roughly 18% YTD across the prime contractors. Buy LMT June 19 $530/$560 call spread for ~$10 net debit (LMT spot $522). Pair with NOC June 19 $570/$610 call spread for ~$11 net debit (NOC spot $562). Equal weight each at 40 bps of NAV.

Both names break out on a soft ceasefire because the FY27 budget gets locked in at war-elevated levels regardless of headline diplomacy. This is a duration trade on the budget cycle, not the war cycle.

Risk: An unexpected 2027 budget cut targeting prime contractor cost-plus contracts (not currently signaled) would reverse 50% of the trade. Idiosyncratic.

— Long VIX June $20 Call Spread (Replace Outright Calls)

Reduce the outright VIX call exposure from yesterday’s note. With Hormuz starting to normalize and the Iran proposal in public, the tail of a VIX 30+ print has compressed. Roll into a defined-risk June 18 $20/$26 call spread for ~$1.45 net debit (max profit $4.55, ~3:1 payoff). VIX at 17.40 covers the binary risk into PLTR and ISM Services without the unbounded premium decay of outright calls.

Risk: A one-direction PLTR rally, followed by a clean ISM Services 52+ print, followed by a soft CPI on May 13 collapses VIX through 14 in three sessions. Position size 0.3% of NAV.

▲ STAY LONG BA — Top Conviction (Reiterate)

Lebanon escalation is a marginal positive for defense backlog without a corresponding negative for the commercial book. Travel demand is back to 2019 baseline. 737 MAX deliveries hit 38 in Q1, FCF turned positive a quarter early, defense backlog grew $4B q/q. Stock at $193 pre-market, PT $215. Position remains a core long. No options overlay.

Risk: 737 MAX production ramp issues. Idiosyncratic.

Signal Tracker

Assessment: 5 BULL / 4 BEAR / 4 NEUTRAL. The signal mix has shifted from defensive on Friday to constructive this morning, but the constructive signals are unconfirmed. Project Freedom needs to hold for 72 hours without an Iranian kinetic response before we lean materially long. Until then, we hold the book at neutral gross, increase cash to 12%, and concentrate longs in idiosyncratic catalysts (PLTR, BA) versus index beta.

What to Watch — Week of May 4

Monday May 4 (Today)

• PLTR Q1 earnings (after close, ~4:05 PM ET). Consensus $0.28 EPS / $1.54B revenue. Implied straddle 10%. Watch US commercial (+94% consensus) and full-year guide.
• ISM Services PMI April (10:00 AM, consensus 51.0). Watch prices-paid sub-index.
• Factory Orders March (10:00 AM, consensus -0.4% m/m).
• Project Freedom transits continue. Watch CENTCOM updates at 12:00 ET and 18:00 ET.

Tuesday May 5

• AMD Q1 earnings (after close). Whisper $1.27 EPS / $9.84B revenue. GM watch is 55% line. Implied move ~7%.
• ON Semi (after close), VRTX (after close), FANG (after close), Pinterest (after close), Norwegian Cruise (BMO).
• JOLTS March.
• Trade Balance March.
• Loan Officer Senior Survey (Q2).

Wednesday May 6

• DIS, UBER earnings. Disney parks demand and DTC profitability. Uber rides volume into Olympics-adjacent quarters and AV partnership commentary.
• ADP Employment (April).
• 10Y Treasury auction. Watch the tail.

Thursday May 7

• COIN, ABNB, AFRM, DDOG earnings. Crypto multiples, summer travel, BNPL credit, observability spend.
• Initial Jobless Claims.
• 30Y Treasury auction. Last week’s tail was 4.5 bps.
• Mercedes-Benz Q1 reporting (BMO European time). First read on EU auto tariff impact.

Friday May 8

• April NFP. Consensus +120K, UR 4.3%. First clean read after the labor market kept holding through April. Sub-100K with UR to 4.4% gets the Miran dissent into the regional Fed presidents’ camp by the June meeting.
• University of Michigan Consumer Sentiment (preliminary May).
• Consumer Credit.

Key Dates Ahead

• May 11 (week of): Senate full vote on Warsh Fed chair confirmation. We model 53 to 56 votes.
• May 13: CPI April. Consensus 3.0% headline / 2.9% core. Cleveland Nowcast 3.6%. Above 3.3% is the risk-off trigger.
• May 14 to 15: Trump-Xi summit, Beijing. First US presidential visit to China in nearly a decade. Tariff cap into Q3 set here.
• May 15: Powell steps back to governor; Warsh likely sworn in as chair.
• May 21: OPEC+ ministerial. First full ministerial without UAE. Production response to Project Freedom and any ceasefire.
• May 22: Geneva US-Iran technical talks (if they proceed). Binary tail risk for oil.
• May 28: NVDA Q1 earnings. Index-level event.

This note reflects information available as of May 4, 2026, 7:00 AM ET. Pre-market futures continue to trade. For internal use only. Not investment advice.