Trump Rejects Iran Counter-Memo, Brent $104, China PPI 2.8%. Warsh Cloture Tonight, CEG AMC.

Monday pre-market, 7:45 AM ET. The Sunday afternoon Truth Social post from President Trump rejecting Iran’s counter-proposal as “totally unacceptable” is the read of the morning, and it pulls every line of the book in a consistent direction. Tehran’s reply, delivered through the Pakistani back-channel late Saturday and surfaced by state media Sunday, walked the 14-point memo into a wider zone rather than a narrower one. The counter-memo demands recognition of Iranian sovereignty over the Strait of Hormuz, war-damages compensation, the release of frozen Iranian assets, the lifting of OFAC sanctions on Iranian oil sales during a 30-day pilot window, an end to the US naval blockade, and a separate negotiating track for the nuclear file. There is no mention of the highly enriched uranium dilution language that the White House team had penciled as a hard line on the original memo. CENTCOM raised the redirected vessel count to 61 from 57 over the weekend, with more than 20 US warships now on station enforcing the blockade. Brent gapped through $103 at Sunday open and is trading $104.20 in early London, WTI is back to $97.88, and the 10Y is six basis points wider at 4.44%. June S&P 500 e-mini futures are down 0.22% at 7,383, Nasdaq 100 futures are down 0.12% at 29,299, Russell 2,000 futures are off 0.42% at 2,856, and the VIX is repricing to 17.85 in pre-market screens. China’s April CPI surprised to the upside at 1.2% versus the 0.9% consensus, but the bigger print was PPI, which jumped to 2.8% year over year, the highest since July 2022 and a full 120 basis points above the 1.6% consensus. The NBS attributed the move to the Iran-war energy passthrough, with the domestic petroleum complex up 5.7% year over year. Kospi closed +4.32% on the back of an SK Hynix and Samsung-led memory beat, the Nikkei was soft at -0.47% on a yen wobble, the CSI 300 closed +1.64% with energy and materials leading, the Hang Seng held flat, and the Stoxx 600 opened roughly 0.3% lower with FTSE relatively bid. The information sequence into the Monday close is heavy: Existing Home Sales at 10:00 AM, the rescheduled $42B 10Y auction at 1:00 PM with a clear tail risk on the China PPI shock, Senate cloture on Warsh at 5:30 PM (we model 53 to 56 votes), and the Constellation Energy print AMC against $2.61 EPS / $8.71B revenue consensus. The book opens Monday with memo probability cut to 24% from Sunday’s 32%, Brent long sizing held into the OPEC+ window on May 21, and the CEG vertical reinforced ahead of the print.

Three things to internalize before the open:

1. The counter-memo is structurally worse than no memo at all, and it raises the operational ceiling on the energy long. Tehran’s framing has shifted from “still reviewing” on Saturday to a concrete maximalist counter on Sunday, which the Witkoff and Kushner channel reads as a deliberate stall through the Trump-Xi summit window. The sovereignty-over-Hormuz language is the structural escalator since it would convert the strait into Iranian internal waters under any reading, and the 30-day pilot window construction is the Iranian playbook for unwinding sanctions enforcement without delivering a binding nuclear commitment. We hold the Brent August $95 / $108 strangle at $4.30 entry, mark $5.40 (+26%), and we add 0.05% NAV to the XLE June 19 $99 / $108 call spread at $2.55 mark, bringing total energy long sizing to 0.60% NAV. The right read on the curve is that the September Brent skew is repricing the right wing, with the $110 strike implied vol moving from 39% Friday to 46% in Sunday electronic.

2. China PPI at 2.8% is the cleanest read on the global goods-inflation passthrough, and it pulls the duration trade tighter into Tuesday’s US CPI. The PPI surprise is 120 basis points above consensus, and it lands the day before the US April CPI print with the Cleveland Nowcast already running at 3.5% to 3.9% versus 3.0% headline consensus. The China import-price channel into US final demand carries roughly a two-month lag on durable goods, so the Q2 read-across is not directly in the April US number, but it is the cleanest forward indicator for May and June. We hold the 2Y June 17 4.10% / 4.30% put spread at 12 ticks entry, mark 17 ticks (+42%), and we hold size at 0.25% NAV into Tuesday rather than adding into the rally. The 10Y at 4.44% is six basis points wider on the day, and the rescheduled $42B 10Y auction at 1:00 PM is the second-largest auction of Q2, with a clean tail risk if the bid-to-cover prints below 2.45.

3. CEG AMC is the cleanest single-name read on the AI power demand structural thesis until NVDA on May 20, and we are sized for a beat-and-raise. Q1 consensus is $2.61 EPS on $8.71B revenue, with the EBITDA benchmark at $2.02B confirming Calpine integration pace. The two metrics we watch on the call are first, whether CEO Dominguez updates the PJM regulatory clarity timeline, and second, whether the data center pipeline disclosure includes any new hyperscaler MOU beyond the Microsoft Three Mile Island agreement. The buyside whisper is running $0.13 above consensus, and options markets are pricing a roughly 7% move on the print, which we view as fair. We hold the CEG May 16 $310 / $330 call spread at $4.20 net debit from Wednesday, mark $5.45 (+30%), with PT $330 close.

What Posted Overnight

China April CPI / PPI (Posted Sunday 21:30 ET)

Our take on China PPI: The 2.8% print is the highest factory-gate inflation read since July 2022, and it ends the China-deflation narrative that desks have priced into the CNH and the HSCEI vol surface. The NBS commentary is unusually direct, attributing the surprise to “international price movements driving up domestic petroleum-related sectors, stronger demand in certain domestic industries, and improved market conditions.” That is a coded read on the Iran-war energy passthrough plus the early returns from the March stimulus package. The structural read across our book is bullish for the China energy and materials complex (CHK, FCX, SHEL ADR), modestly bearish for the China internet names that face higher input cost compression (BABA, JD), and neutral for the semis cohort where PPI is not yet showing up in DRAM or NAND cost lines.

Iran Counter-Memo Detail (Surfaced Sunday)

Our take on the counter-memo: The structural problem with Tehran’s draft is not the demands individually, several of which would be inside a final agreement zone, but the sequencing. The 30-day window on sanctions plus the immediate blockade lift would deliver the cash flow benefit to Iran before any verifiable nuclear concession lands, which is the inverse of the US team’s hard requirement. The separate nuclear track is also a familiar device that Tehran used in the 2014 to 2015 framework, and the partial HEU dilution rather than full ship-out is the gap that ultimately killed the original JCPOA architecture. We mark memo probability at 24% Monday morning, down from 32% Sunday morning, against a market that is now repricing closer to 38% per the Brent September call skew. The path to a signed memorandum runs through a narrower one-page MoU that defers Hormuz governance to Geneva Phase 2, which we put at 30% probability over the next 10 sessions.

Asia and Europe Overnight

Kospi at +4.32% is the standout reaction, with SK Hynix indicated +9% and Samsung Electronics indicated +6% on the back of Friday’s preliminary memory-pricing data showing DRAM contract prices up 12% sequentially and NAND up 8%. The read-across into the US semis cohort opens MU, WDC, and STX into Monday’s session, and confirms the SMH 52-week high pattern we flagged Friday. The CSI 300 lift on PPI day is the cleaner read on the energy and materials reflation rather than the AI complex.

Iran / Hormuz Box Score (Monday 7:45 AM ET)

Memo Probability Path (Updated Monday)

The path is now consistently lower for a fifth straight session. Our read on the Witkoff-Kushner team is that the counter-memo is a tactical stall priced into Trump’s Beijing window, not a structural opening offer. The pivot in the next 48 hours is whether the US tables a one-page MoU response that strips Hormuz language entirely and parks it for Geneva Phase 2. If that pivot lands by Tuesday’s CPI close, memo probability resets to 40% to 45%. If it does not, the kinetic ceiling re-anchors and Brent moves to the $108 strike on any incident.

Macro Calendar | Week Ahead Recap (Updated Monday)

CEG Preview | Monday AMC (Updated)

The Constellation Energy print is the cleanest read on the AI power demand thesis until NVDA on May 20. Consensus sits at $2.61 EPS (+22% y/y) on $8.71B revenue (+30%), with the key tracking metric being whether Q1 EBITDA approaches the $2.02B mark that confirms Calpine integration is delivering at modeled pace. Options markets are pricing roughly a 7% swing through Friday, which we view as fair given the dispersion in the data center pipeline commentary expected. The PJM regulatory clarity timeline is the real catalyst, with management guidance on whether 2026 unlocks new hyperscaler capacity deals being the structural read for the AI power complex (CEG, VST, NRG, TLN, ETR). The buyside whisper has crept $0.13 above consensus in the last week on the back of the early hyperscaler power MOU disclosures from Vistra and Talen, which is the relative read into the call.

We hold the CEG May 16 $310 / $330 call spread at $4.20 net debit from Wednesday entry, mark $5.45 (+30%) with the Sunday Add of 0.05% NAV at the same strikes lifting total sizing to 0.30% NAV. PT $330 close. The relative pair is long CEG / short VST given the dispersion in the Calpine versus Comanche Peak operational base, sized 0.10% NAV.

CSCO Preview | Wednesday AMC

Cisco prints Wednesday after the bell with consensus at $1.00 EPS and revenue around $14.3B. The structural read is on the Silicon One traction in hyperscaler networking against Arista and Broadcom, plus the Splunk integration revenue ramp. The buyside whisper has been moving higher into the print on the back of MDB and DDOG observability comps, and the read across to NTNX, JNPR, and HPE will depend on the Splunk attach metrics. We have no position into the print but are watching for a sub-3% pre-print drift, which would unlock the May 16 $72 / $78 call spread at $1.45 net debit at 0.10% NAV.

WMT Preview | Thursday BMO

Walmart is the consumer-side counter to the soft UMich 48.2 print Friday. Consensus sits at $0.61 EPS on $169B revenue, with US comps the key metric (consensus +3.8%, with grocery the carry). The structural question is whether the tariff passthrough into Q2 guidance is +50 basis points or +100 basis points on COGS, which is the differentiator between a soft beat reaction and a hard beat reaction. We have no position into the print but are watching for the read across to TGT (May 20 BMO), DG, and DLTR. The April retail sales print at 8:30 AM Thursday is the cross-check.

What to Watch Monday Into Tuesday Open

Monday May 11 morning to midday

• 10:00 AM Existing Home Sales (Apr); 4.05M consensus, watch the months-of-supply line
• 10:00 to 12:00 White House readout on the Iran counter-memo rejection
• US Sunday talk show carryover (Bessent and Vance lean) into Bloomberg and CNBC morning hits
• Pakistani Foreign Ministry briefing window (typical 9:00 AM ET on Mondays)
• IRGC commander statement window on the Lebanon paramedic killings

Monday May 11 afternoon and close

• 13:00 $42B 10Y Treasury auction (rescheduled). Bid-to-cover below 2.45 is the cleanest tail risk
• 14:00 to 16:00 Fed speaker window (Goolsbee, Bostic possibly)
• 17:30 Senate cloture vote on Warsh; we model 53 to 56 votes with two GOP holdouts possible
• AMC CEG, MOS, SPG, ZBRA earnings
• After-hours guidance walks on data center pipeline commentary from CEG

Tuesday May 12 (CPI Day, pre-open)

• Asian session response to PPI carryover and possible second Iran response from Tehran
• 6:00 AM NFIB Small Business Optimism (Apr); 95.0 consensus
• 8:30 AM April CPI (3.0% headline / 2.9% core; Cleveland Nowcast 3.5 to 3.9%)
• 13:00 $42B 10Y carry-through if Monday tail materialized

Trade Ideas | Sized for the Counter-Memo Rejection + China PPI Shock

▲ Brent August $95 / $108 Strangle (Hold)

Hold from Friday at $4.30 entry, mark $5.40 (+26%). The structure pays max on either a memo signing rally back to $94 by mid-July (now 24% probability, down from 32%) or a Hormuz re-escalation through $108 over the next 10 sessions (now 42% probability, up from 38%). Sized 0.3% NAV. We are not adding given the +26% mark and the OPEC+ ministerial overlay on May 21. PT trim level $8.50 (Hormuz tail) or $0.40 (memo signed clean).

Risk: Brent settling in the $98 to $103 range collapses both wings. Sized to be losable.

▲ XLE June 19 $99 / $108 Call Spread + Short May $96 Put (Add 0.05% NAV)

Hold from Wednesday at $1.95 net entry, mark $2.55 (+31%), and add 0.05% NAV Sunday afternoon to bring total energy long sizing to 0.60% NAV. The counter-memo rejection combined with the China PPI petroleum sector reading at +5.7% y/y is the cleanest tape for the energy complex this cycle. The OPEC+ May 21 ministerial overlay is the structural tailwind. PT $108 spread max.

Risk: A surprise US tabling of a stripped-down MoU Tuesday morning collapses the front of the energy curve. Structure caps loss at $96 strike assignment.

▼ Long 2Y June 17 4.10% / 4.30% Put Spread (Hold)

Hold at 12 ticks entry, mark 17 ticks (+42%) into Tuesday CPI. We are not adding into the rally. The China PPI shock at 2.8% is the cleanest forward indicator for May to June US headline pressure, and the Cleveland Nowcast at 3.5 to 3.9% versus 3.0% consensus carries through. PT trim level at 22 ticks; stop on a sub-2.85% core US print.

Risk: Cool US CPI at 2.9% / 2.8% reverses the steepener bid. Vertical caps loss at 12 ticks.

▲ CEG May 16 $310 / $330 Call Spread (Hold)

Hold from Wednesday at $4.20 net debit, mark $5.45 (+30%) into the Monday AMC print. Total sizing 0.30% NAV after Sunday’s add. The Q1 EBITDA toward $2.02B confirms the Calpine integration pace, and the PJM regulatory clarity commentary is the structural unlock. The read across to VST, NRG, TLN, and ETR carries into Monday post-market. PT $330 close.

Risk: A guidance walk-back on the data center pipeline due to PJM uncertainty would compress CEG to $295. Vertical caps loss at $4.20.

▲ SMH June 19 $310 / July 18 $310 Call Calendar (Hold)

Hold from Friday at $4.20 net debit, sized 0.2% NAV. The Kospi +4.32% close on Samsung and SK Hynix memory pricing is the cleanest read across into the US session, with MU and WDC bid in pre-market. The NVDA print May 20 is the pivot. PT take-off at $7.50.

Risk: A volatility crush around NVDA print collapses the long July leg. Sized to be losable.

▲ Long China Energy via PetroChina ADR (Tactical 0.10% NAV)

Open long PetroChina (PTR ADR) at $63.40 mark, sized 0.10% NAV. The China PPI petroleum sector at +5.7% y/y is the cleanest read on the upstream margin lift in the SOE complex. The relative pair would be short Sinopec (SHI) on the refining margin compression read, but we are running the directional one-sided for tactical reasons. PT $68. Stop $59.

Risk: A clean US-Iran one-page MoU on Tuesday compresses Brent to $94 and unwinds the SOE bid.

▼ COIN May 16 $200 / $170 Put Spread (Hold)

Hold from Friday entry at $7.20 net debit, mark $8.45 (+17%). The $482M unrealized crypto mark exposes balance-sheet duration risk, and Bitcoin range at $81,200 keeps the realized loss path open. PT $200 close. Sized 0.2% NAV.

Risk: Bitcoin rally above $90K in May would close half the realized loss path. Stop on a 4% rally.

▼ NET May 16 $230 Puts (Hold)

Hold from Friday entry at $5.40, mark $10.40 (+93%). Sizing 0.25% NAV. The 20% workforce reduction tied to agentic AI displacement is a structural margin signal, and we want to ride into Q2 commentary in late July. PT $215. Take profit one third here on the +93% mark.

Risk: Q2 commentary that re-frames the layoff as productivity gain. Stop on a $260 close.

▲ PLTR June $160 / $185 Call Vertical (Hold)

Stock at $137.80 Friday close. Hold the June $160 / $185 call vertical at $4.85 net debit from Friday roll, sized 0.3% NAV. The +85% revenue growth print is the structural validation; the recent valuation pullback is tactical. PT $185. The NVDA print May 20 is the cohort halo catalyst.

Risk: Burry-style short escalation or a softer Q2 print from peers (NOW, MDB) that disappoints. Vertical caps loss.

▲ DDOG / MDB / ESTC Cohort Hold (Reiterate)

Hold the DDOG July 18 $185 / $210 call spread at $5.20 net debit from Friday roll, mark $5.85 (+13%). Hold the MDB June 19 $260 / $300 call spread at $11.20 (0.15% NAV) and the ESTC June 19 $115 / $130 call spread at $3.80 (0.10% NAV). Total cohort sizing 0.65% NAV. The CSCO print Wednesday and the AMAT print Thursday are the cross-reads.

Risk: A Q2 enterprise commentary that walks back the AI-inference attach narrative. The verticals cap loss.

▲ AFRM Stock Collar (Hold)

Hold AFRM stock from May 7 entry $72, mark $87.50. Long the $75 put at $0.95. Short June $90 call for $2.10 credit. Net structure cost roughly $0.60. The GAAP profitability print is the structural multiple unlock from BNPL 12x to payments 18x. PT $115. Sized 0.5% NAV.

Risk: A 30-day delinquency uptick of 30 basis points or more on the Q1 cohort. The collar caps loss.

▲ BA June 19 $230 / $260 Call Spread (Hold Into Trump-Xi)

Hold from Wednesday entry at $4.10 net debit, mark $4.85 (+18%), sized 0.20% NAV. The Trump-Xi summit Thursday and Friday is expected to produce a Boeing aircraft purchase deliverable (range 200 to 500 units per CSIS preview), which is the cleanest single-name Trump-Xi summit beneficiary. PT $260 spread max.

Risk: Iran agenda crowds out tariffs and Boeing deliverable is deferred to a working-level follow-up. Vertical caps loss at $4.10.

▲ Long Gold via $4,650 / $4,800 Call Spread vs Short $4,500 Put (Hold)

Hold from Friday at net entry $0.30, mark $1.05. Geopolitical bid intact, NACHO regime supportive, real yields stable, Lebanon escalation and Hormuz sovereignty demand re-anchor haven flow. Spot $4,716 marks the path into $4,800 strike. PT $4,900.

Risk: A clean memo signing plus dollar rally would compress gold to $4,550. Put strike caps downside.

▼ Short USD/JPY July 17 158 / 154 Put Wing (Hold)

Hold from Friday at 28 pips credit, sized 0.10% NAV notional. Nikkei at 62,418 sits off the record on yen wobble, BOJ June 13 carries 38% probability of a hike on the JGB tantrum dynamic. PT take-off at 12 pips.

Risk: A surprise BOJ hold plus hot US CPI takes USD/JPY to 162. Hard stop on a 161 close.

Signal Tracker | Monday 7:45 AM ET Mark

Assessment: 10 BULL / 13 BEAR / 5 NEUTRAL. The mosaic flipped meaningfully more defensive overnight on the Iran counter-memo rejection and the China PPI shock. We hold the book at +6.4% net long gross (down from +6.8% Sunday morning), with the NACHO trade financed by trimmed cash, the CPI Tuesday hot-tail hedge in place via the 2Y put spread, and the CEG long sized for the Monday AMC catalyst. The book is positioned for a 38% CPI hot tail (up from 35%), a 65% Hormuz steady-state through Q3 (up from 60%), a 55% probability the Trump-Xi summit produces no incremental tariff surprise on day one, and a 24% memo signing probability against the market-priced 38%.

Quick Earnings Reactions Watch | Monday AMC

The CEG print is the only one we are sized for. The MOS print is read-across positive for the agricultural fertilizer complex if Q2 guide raises on potash pricing, and SPG is a watch for the read-across to mall REITs and the Q2 occupancy line. ZBRA prints into a tape that already has retail technology capex priced for a Q3 ramp.

What Could Be Wrong

The Monday mark is a structurally bearish read on the Iran path and a structurally hawkish read on the duration tape. The three biggest sources of error in this setup are:

1. A US tabling of a stripped-down one-page MoU on Tuesday before the CPI print that defers Hormuz language to Geneva Phase 2. This would mechanically lift memo probability to 40% to 45% on the headline and compress Brent $5 to $7 on the move. The energy long would take a 30% to 40% mark down before the kinetic pattern reasserts. The right play is to hold size and let the dust settle, not chase the headline.

2. A cool US CPI print at 2.85% headline / 2.75% core that reverses the steepener bid. This would make the China PPI surprise look like a one-month energy passthrough rather than a structural goods-inflation pickup. The 2Y put spread caps loss, but the broader rates positioning would need to flip from bearish duration to neutral. We model this at 25% probability and it is the cleanest reason to keep the position size at 0.25% NAV rather than 0.50%.

3. A CEG guidance walk-back on the data center pipeline tied to PJM uncertainty. The buyside whisper is running $0.13 above consensus, so a clean beat with a maintained guide on the data center capacity line is the median outcome we are positioned for. A walk-back would compress CEG to $295 area, and the vertical caps the loss.

The book is not betting on any single catalyst; it is positioned for the dispersion across the calendar to widen, which is the cleaner read on a week that has CPI, PPI, Warsh cloture, China CPI / PPI (already posted hot), four major US prints, and the Trump-Xi summit all within five sessions.

This note reflects information available as of May 11, 2026, 7:45 AM ET. Markets open at 9:30 AM ET. For internal use only. Not investment advice.