Records Hit, Iran Response Day, ARM Beats, Brent Sub-$100.

Thursday pre-market, 7:00 AM ET. The S&P 500 closed at a fresh all-time high of 7,365 on Wednesday (+1.46%) and the Nasdaq Composite at 25,839 (+2.02%), with the cap-weighted move powered by AMD’s +18.6% session and a peace bid running through the entire risk complex. Overnight, Brent crashed through the $100 handle for the first time since March, briefly touching $96.73 before stabilizing at $99.79, a 6.3% session move, while WTI is at $96.18. The catalyst is the Iran response, expected to land at US negotiators today through the Pakistan back-channel, with both sides telegraphing convergence on the 14-point one-page memorandum that Witkoff and Kushner have spent the last 96 hours rewriting. Trump paused Project Freedom escort operations on Wednesday, citing “great progress,” and that pause is what oil is pricing. ARM beat on royalty mix after the close ($1.49B revenue, +20% y/y, royalties +11%), AppLovin beat on AXON monetization ($3.56 EPS vs $3.44), and DoorDash crushed on order growth (GOV $31.6B, +37% y/y). Futures are positive but mid-cycle: S&P +0.21%, Nasdaq +0.13%, with the 10Y at 4.34% (down nine basis points on the week) and the VIX flat at 17.39. We are tactically constructive with a cap on the next 24 hours, because a clean memo signing this afternoon collapses the energy long book another 4% to 6% and re-rates the EU auto and defense baskets, while a stalled response sets up a violent reversal into Friday’s NFP. Our base case probability for a signed memo by tomorrow’s NY close is 62%, up from 55% yesterday morning, on the back of Trump’s tone shift and the Project Freedom pause. The market is at roughly 75%.

The information sequence today is binary and time-stamped. The Iran response is expected mid-morning ET via Pakistan, and Trump has telegraphed a public statement window between 11:00 AM and 1:00 PM. The ARM and APP beats from Wednesday close confirm the AI infrastructure thesis is broadening from training compute (NVDA, AMD) to inference and ad-tech monetization, which is the fee layer the multiples need. ARM’s data center royalties more than doubled year over year, AGI CPU orders doubled since launch, and the FY guide points to roughly $5.5 billion full-year FY27 revenue. AppLovin’s EPS beat is the AXON 2.0 take-rate validation that desks have been waiting for since February. DoorDash on the read-across is the structural offset to UBER’s mobility share gain Wednesday, and the +12% after-hours move closes the relative-value gap we flagged in yesterday’s note. Tonight’s slate stacks four binary names: COIN (post-layoff dynamics), ABNB (summer travel), AFRM (BNPL credit, into a +109k ADP and a soft Brent), and DDOG (observability spend, the cleanest read on hyperscaler optimization). With Brent at $99.79 and ISM Mfg Prices Paid still at 84.6, the May 13 CPI setup gets meaningfully easier on the energy passthrough side, and the rates-friendly backdrop is doing the multiple work today.

Three things into Thursday:

1. The Iran memo is now the single largest binary the tape carries. Spot Brent prints below $100 for the first time in two months, the WTI/Brent spread compressed about 90 cents in a session, and the front of the curve flipped to backwardation overnight. A signed memo today or Friday means Brent prints $92 to $95 by Monday close and the energy-long book unwinds another 4% to 6%. A failed response keeps spot in the $100 to $108 range and brings back tail-hedge demand. We are halving the Brent September $95/$115 strangle from yesterday at +$1.40 mark, replacing with a put-fly at September $90/$96/$100 for $0.85 net debit, sized 0.3% of NAV. That structure pays max if Brent settles near $96 in the next eight weeks, which captures a credible signed-memo glide path without the upside-tail premium.

2. ARM’s royalty inflection lifts the entire IP layer of the AI stack. Q4 FY26 revenue $1.49B (+20%), royalties $671M (+11%), licensing $819M (+29%), and a non-GAAP EPS of $0.60 (vs $0.58). FY guide implies roughly $5.5B FY27 revenue, which retraces the post-Cambridge-IPO compression story. Data center royalties more than doubled, AGI CPU orders doubled, and the v9 ramp into smartphone is durable. The pre-market is +6% to +8%. We exit the May 16 $185/$200 call spread from Tuesday at +148% mark and roll to the June 19 $200/$220 call spread for $4.10 net debit. The relative pair is long ARM / short TXN through the EU auto wave, sized 0.4% of NAV.

3. Tonight’s slate is the cleanest read of the week on consumer credit and AI inference fees. COIN reports after the bell into a confessed 14% workforce reduction announced Monday, with $50 to $60M of restructuring charges hitting Q2. The pre-print whisper is roughly $0.40 EPS / $1.55B revenue against the $0.36 / $1.51B Street, but the buy-side is now positioned long the layoff-as-AI-pivot narrative. ABNB consensus is $0.30 EPS / $2.62B revenue, and the booking-window commentary into peak-summer is the swing. AFRM into a +109k ADP and a soft jobless-claims set is the BNPL credit confessor: a clean delinquency print is the structural unlock and the equity has run 14% in three weeks. DDOG at $960M consensus and the +32% growth a quarter ago is the observability barometer for hyperscaler optimization. Position sized: long DDOG calls 0.2%, AFRM stock collar 0.3%, COIN flat into print, ABNB short put spread 0.2%.

The Macro Print

What Posted Wednesday and Overnight

Today’s Calendar

Our take on jobless claims: 200K against 206K consensus is a clean labor read, but the four-week average has crept up about 7K since the Iran kinetic phase began in late February. The composition matters: continuing claims at 1.77M (down 10K) tells you that despite the headline goods-producing softness, services rehiring is still absorbing layoffs at a high frequency. With ADP at +109K Wednesday (well above +99K consensus), the Friday NFP whisper is creeping toward +130K versus the +120K Street, and a clean +120K with UR holding at 4.3% is the path that keeps Warsh’s confirmation calculus on track without forcing the Miran dissent into June.

Our take on the BoE: The 8-1 hold at 3.75% in April was the cleanest signal yet that the MPC is willing to look through energy passthrough on the assumption it does not feed services inflation. With Brent now at $99.79 versus $113 on April 29, the case for a hold is stronger today than it was three weeks ago, and the dovish minority should grow by one or two votes. Sterling crosses are pricing roughly 9 basis points of cumulative cuts by year-end.

Our take on productivity and ULC: A 0.8% productivity print versus 1.1% consensus is a flag, but the +2.3% unit labor cost print is the hotter signal. Wage growth is still running ahead of productivity gains by 150 basis points, which is the structural problem the Fed is watching for. This data does not change Fed pricing meaningfully but caps the Treasury rally at the long end.

Iran Memo Day, the Hormuz Tape, and Brent Below $100

The Pakistan-mediated channel is now the operative diplomatic line between Tehran and Washington, with the response expected mid-morning today. Trump’s pause of Project Freedom escort operations on Wednesday is the second clearest tell yet that both sides expect this to converge, with the first being the September Witkoff-Aragchi handshake at Geneva. The 14-point memorandum, in its current form, would: (a) declare an end to the war in the region, (b) open a 30-day negotiation window for a final agreement, (c) impose an Iranian moratorium on nuclear enrichment, (d) commit the US to lifting sanctions and releasing roughly $6 billion in frozen Iranian funds, and (e) bilaterally lift restrictions on Strait of Hormuz transit. The new five points from yesterday’s draft, per Axios, include a structured Geneva diplomatic track starting May 22 and a US commitment to a 30-day non-strike posture absent kinetic provocation.

We are at 62% probability of a signed memo by tomorrow’s NY close, up from 55% yesterday. The market is closer to 75%. Three reasons we hold the lower number. First, the Sunday 14-point proposal that became Tuesday’s UAE/Fujairah strike shares roughly nine of fourteen points with today’s draft, so the kinetic precedent for the Iranian rejection of the framework is fresh. Second, the GCC has not yet been brought in formally, and the UAE airspace closure earlier this week leaves an operationally awkward seam. Third, the IRGC’s signaling has been ambiguous on the nuclear moratorium clause, which is the binding lock for both sides.

The base case is the memo is signed in some form, but contingent rather than binding. The market has flipped from pricing-the-tail to pricing-the-base-case in 24 hours, which is what Brent at $99.79 and the WTI/Brent spread compression are telling you. We are using the structural break below $100 to rotate the energy short into a defined-risk put fly, and we are funding a long-duration add via a partial trim of the LMT/NOC pair that we have been short since April 8.

Three market-moving catalysts we expect today:

• White House readout on Iranian response, expected 11:00 AM to 1:00 PM ET
• Trump statement on the memo, tone matters more than substance. A “very good talks” framing keeps the bid; a “one week” framing or any deadline language is the rejection signal
• Pakistani Foreign Ministry briefing, expected late-afternoon ET

ARM Print Recap and Read-Across

The Numbers

Our Take: The royalty inflection is the print of the cycle for ARM. Data center royalties more than doubled year over year, validating the Neoverse v2 design wins flowing through the AMD, AWS Graviton, and NVIDIA Grace generations. AGI CPU orders doubled since launch. The licensing line at +29% reflects the smartphone v9 ramp finally hitting the take-rate inflection that Cambridge management telegraphed at the September investor day. Royalties at $671M annualizing at $2.7B against a $40B+ market cap implies a roughly 15x sales multiple on royalty alone, which is rich, but the 11% growth on a base that was already 20% a quarter ago is the structural anchor. PT moves from $185 to $215. Long via the rolled call spread structure outlined in the trade ideas.

Lisa Su’s Wednesday Reading on ARM

The AMD call mentioned ARM Neoverse v2 as the underlying architecture for the next-generation MI400 platform, due 2H 2026. That single line is the durability test for ARM’s data-center thesis through FY28, and it is one of the cleanest cross-corporate confirmations we have seen this earnings season.

AppLovin and DoorDash Earnings Recap

APP Q1 Print

Our Take: AXON 2.0 monetization is the thesis. With the EPS beat at +3.5% and adjusted EBITDA crossing $1.18B, the algorithm’s mobile ad take-rate has stabilized at the level the long thesis requires. The pre-market is +6%. We are flat into the print but adding long via the May 16 $640/$680 call spread at $9.20 net debit, sized 0.2% of NAV. The risk is a Q2 commentary that flags advertiser pullback into the EU auto / Chinese consumer drag, which is non-trivial.

DASH Q1 Print

Our Take: Revenue light is FX and the grocery vertical, but the GOV print is the structural underline. Gross margin at 51.9% (vs 51.6% modeled) is the first inflection on the grocery delivery cost-curve since Q3 2024. Pre-market +12%. We are closing the May 16 $108/$98 put spread from Wednesday at -65% mark for a $1.05 loss, which is sized inside the original 0.3% NAV book. Re-positioning long via stock at the open, sized 0.3% of NAV. PT $135 from $115.

Tonight’s AMC Slate

COIN detail: The Monday layoff (700 jobs, 14% of workforce) flagged $50 to $60M of restructuring charges in Q2, which makes the print itself less informative on operating leverage. The trading-volume backdrop is the variable: BTC averaged $80k in Q1 versus $65k a year ago, and ETH/SOL fees have stabilized after the December crash. Pre-positioning on the Street is roughly 60% long the layoff narrative, 40% short the trading volume drag, and the binary is the AI-pivot framing in the call. We are flat into print.

ABNB detail: Q1 is the seasonal weak quarter, with $0.30 EPS versus $0.56 in Q4. The booking-window commentary into peak summer is the swing. With Brent collapsing and the Iran peace bid running, summer travel pricing should be supportive. We are long the May 16 $145/$155 call spread and short the $130 put for a small net credit.

DDOG detail: Last quarter’s +32% growth is the bar. Hyperscaler optimization (the AWS-/Azure-native instrumentation push) has been the bear case, but the AI inference spend layer is the bull case. We are long via the May 16 $145/$160 call spread at $4.20 net debit, sized 0.2% of NAV.

AFRM detail: The +109k ADP and the soft 200K jobless claims plus 4.4% wage growth give credit-quality a clean print. BNPL delinquency rates in the 30-day bucket have been trending lower, and the Walmart/Apple Pay integrations have layered durable transaction volume. Stock collar (long stock + short $80 call + long $65 put) sized 0.3% of NAV, locking the upside while keeping the credit confessor exposure.

NET detail: Workers AI is the swing. Cloudflare’s edge inference offering has been priced cheap relative to AWS Bedrock, and the Q1 customer-add commentary will set the multiple. Buy NET into print via $145/$160 call spread, 0.15% of NAV.

Trade Ideas

▲ Long ARM via Call Spread Roll

Close the May 16 $185/$200 call spread from Tuesday at +148% mark for $5.30 net credit. Roll to the June 19 $200/$220 call spread at $4.10 net debit, sized 0.4% of NAV. The royalty inflection narrative is structural, the AGI CPU order doubling commentary keeps the FY27 build intact, and the AMD MI400 confirmation closes the durability question through 2H 2026.

Risk: A licensing slowdown in Q1 FY27 (smartphone v9 saturation) compresses the multiple 6% to 8%. The vertical caps loss at $4.10.

▼ Brent Put-Fly Replacing Strangle

Close half the September $95/$115 strangle from Wednesday at +$1.40 mark. Replace with a Brent September $90/$96/$100 put-fly at $0.85 net debit, sized 0.3% of NAV. The structure pays max if Brent settles near $96 in the next eight weeks, which is the credible signed-memo glide path.

Risk: A failed memo response with Brent re-testing $108 collapses the fly to zero. Sized to be losable.

▲ Long DDOG via Call Spread Into Print

Buy DDOG May 16 $145/$160 call spread at $4.20 net debit, sized 0.2% of NAV. The AI inference spend layer is the bull case, and Q1 cloud-margin commentary from MSFT, GOOGL, and AMZN this quarter all confirmed observability tooling as a “must-fund” line. Implied move 10% covers the binary.

Risk: A flat enterprise commentary on hyperscaler optimization compresses the multiple 8%. Stop on a 4% move lower post-print.

▲ Long AFRM via Stock Collar

Buy AFRM stock at roughly $72, short the May 16 $80 call for $1.95, long the $65 put for $1.40. Net structure cost roughly $0.55 against a $72 entry. Position 0.3% of NAV. The ADP print and soft claims read make the credit-quality confession path easier. PT $92.

Risk: A 30-day delinquency uptick of 30 bps or more on the Q1 cohort breaks the credit-quality confidence. The collar caps loss at $7 on a $72 stock.

▲ Long ABNB via Risk Reversal

Long ABNB May 16 $145/$155 call spread at $2.85 debit, short the $130 put for $1.10 credit. Net cost roughly $1.75. Position size 0.2% of NAV. Booking-window into peak summer is the swing variable, and the Brent collapse plus dollar weakness support international travel.

Risk: A weak Q2 booking-window commentary (international or domestic) breaks the structural thesis. Stop on $135 break post-print.

▲ Long NET (Cloudflare) via Call Spread Into Print

Buy NET May 16 $145/$160 call spread at $3.40 net debit, sized 0.15% of NAV. Workers AI inference customer-add is the swing variable. Q1 enterprise pipeline commentary will be the framing.

Risk: A revenue light versus $475M consensus signals enterprise pipeline slowdown. Stop on a 5% move lower post-print.

▼ Trim Half the Defense Pair (LMT / NOC)

We are 0.8% NAV short LMT/NOC pair from April 8. Mark is +6% on the pair. Trim half on the structural Iran memo bid running through the tape. Use the proceeds to fund: (a) the ARM call spread roll, (b) the ABNB risk reversal, and (c) a 0.1% NAV add to long PLTR.

Risk: A failed memo response with kinetic Iran continuation reverses the trim. NOC’s $95.7B backlog is the durability anchor.

▲ STAY LONG PLTR (Reiterate, Add 0.1%)

Stock at $151 pre-mkt, +1.8%. PT $215. The Tuesday print and the +120% US commercial guide are structural. We add 0.1% NAV via stock. Hold the June $200/$220 call vertical overlay funded by the $145 short put.

Risk: Burry-style short escalation on positioning, or a softer Q2 from peers (CRWD May 28). The call vertical caps loss.

— VIX Call Spread (Closed)

VIX June 18 $20/$26 call spread closed Wednesday at $0.92 mark, against $1.45 entry. Net realized loss $0.53. Position sized 0.15% of NAV at entry, total loss <$0.10 of NAV. We are flat on vol into the Iran response window.

Outcome: Memo bid collapsed VIX to 17.39 against our $20 long-call entry strike. Trim took us out at acceptable cost.

Signal Tracker

Assessment: 8 BULL / 4 BEAR / 4 NEUTRAL. The signal mix is constructive, with the structural anchor in the AI infrastructure print confirmation (ARM, APP, AMD all beating) and the cyclical catalyst in the Iran memo response. We hold the book at +6% net long gross, lift the energy short into a fly, raise position size on ARM, DDOG, AFRM, ABNB, NET, PLTR, and trim defense further. We are watching the 11:00 AM to 1:00 PM Iran readout window and the Trump statement that follows.

What to Watch the Rest of the Week

Thursday May 7 (Today)

• Iran response window opens 11:00 AM to 1:00 PM ET via Pakistan back-channel.
• Initial Jobless Claims (8:30 AM, posted 200K).
• BoE Rate Decision (7:00 AM, hold expected).
• Productivity Q1 prelim and Unit Labor Costs (8:30 AM, posted +0.8% / +2.3%).
• Wholesale Inventories (10:00 AM).
• Trump statement window (closing-tape 7:00 PM).
• Tonight: COIN, ABNB, AFRM, DDOG, NET, MELI, SQ earnings.

Friday May 8

• April NFP. Consensus +120K, UR 4.3%. With ADP at +109K (vs +99K consensus) and ISM Mfg Prices Paid at 84.6, the AHE print is the cleaner inflation read. With Brent now at $99.79 (vs $113 last week), the energy passthrough into headline CPI for May is meaningfully easier. A clean +120K with UR holding 4.3% is the path that keeps Warsh confirmation calculus on track.
• Univ. of Michigan Consumer Sentiment (preliminary May).
• Consumer Credit (March).
• Iran memo signing window if response is favorable.

Key Dates Ahead

• May 11 (week of): Senate full vote on Warsh Fed chair confirmation. We model 53 to 56 votes.
• May 12: $42B 10Y Treasury auction (rescheduled from May 6).
• May 13: $25B 30Y Treasury auction. Tail watch given Iran headline risk.
• May 13: CPI April. Consensus 3.0% headline / 2.9% core. Cleveland Nowcast 3.6%. With Brent crash from $113 to $99.79, this number gets easier on the energy side.
• May 14 to 15: Trump-Xi summit, Beijing. First US presidential visit to China in nearly a decade. Three-topic agenda: Taiwan, trade, Iran.
• May 15: Powell steps back to governor; Warsh likely sworn in as chair.
• May 21: OPEC+ ministerial. Production response to Fujairah strike is the structural read.
• May 22: Geneva US-Iran technical talks (Phase 2 of the memo, if signed).
• May 28: NVDA Q1 earnings. Index-level event. AMD’s print just reset the bar.

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