Morning Report | Hormuz risk lifts oil, Fed stays hawkish
$META AI subscriptions test, compute sales hints · $NBIS rallies on 5.6% stake disclosure · $TLT slips, speakers signal restrictive bias · $LLY Zepbound coverage restored, Foundayo added · $GLD slides
Market Pulse
AI
3 events
Meta opens consumer AI monetization with subscription testing and hints at selling excess compute, as Nebius rallies on a new 5.6% stake disclosure.
Last 24 hours
Meta will test paid Meta AI subscriptions next month with $7.99 “Plus” and $19.99 “Premium” tiers alongside a free version, initially in Singapore, Guatemala and Bolivia, with higher-capacity usage and advanced features gated.
At its shareholder meeting, Zuckerberg said a cloud-computing business is “definitely on the table” if Meta overbuilds data centers, citing frequent inbound requests to sell API/compute; 2026 AI capex guidance is $125B–$145B.
Situational Awareness disclosed a 12.4m-share position in Nebius, a 5.6% stake, after which the stock was indicated about 11% higher premarket; the fund highlighted AI “physical infrastructure” as its focus.
Market reaction
Meta shares fell ~7% (per the report’s reference) amid the capex debate, while Nebius was indicated up ~11% premarket on the 5.6% stake filing, extending a ~149% year-to-date run cited.
Our view
Investors keep treating Meta’s AI subscription test and any “rent out compute” option as longer-dated monetization, with valuation anchored on whether capex converts to revenue rather than near-term contribution. Key monitor is early signal on conversion/ARPU versus incremental compute costs and any concrete move toward external API/compute sales.
What could change our view
Subscription uptake disappoints or compute costs overwhelm, reinforcing prolonged margin compression.
Meta formalizes cloud/API offering, resetting competitive assumptions for public cloud leaders.
Tickers: $META, $NBIS
Macro & Policy Digest
U.S.-Iran strikes revive Strait of Hormuz disruption fears, pushing crude higher while broader risk assets show only selective softness.
Last 24 hours
A U.S. official said forces downed four Iranian attack drones and hit a Bandar Abbas ground control station; Iran’s IRGC claimed a retaliatory strike on a U.S. airbase as Kuwait activated air defenses.
Early May 28, Brent rose about 2% to ~$96 and WTI gained about 2% to ~$90-$91 as traders repriced Hormuz shipping risk; Asia-Pacific equities were lower in parts while U.S. futures were little changed to slightly higher.
Market reaction
Crude led the reaction: Brent climbed roughly 2% to about $96.31 (after being up more than 3% earlier) and WTI rose about 2% to around $90.63-$90.94. Parts of Asia-Pacific equities softened, while U.S. index futures were little changed to slightly higher.
Our view
Oil remains headline-driven with an elevated geopolitical risk premium, but absent confirmed shipping disruption the move should stay contained to energy rather than broad risk-off. Monitor for verified constraints on commercial shipping through the Strait of Hormuz and further U.S. or Iranian strikes, plus any expansion of U.S. Treasury sanctions.
What could change our view
Confirmed disruption to Hormuz commercial shipping triggers larger, persistent crude spike.
Rapid de-escalation or reopening timeline gains credibility, fading the risk premium.
Tickers: $CL=F
Fed speakers highlight persistent Iran-war energy inflation and sticky core prints, keeping policy bias restrictive even as long-run rate cuts stay conditional.
Last 24 hours
Chicago Fed’s Goolsbee said Iran-war energy inflation has lasted longer than futures implied, calling it stagflationary for Asian importers; he cited Brent near $96 and WTI about $90, still well above pre-strike levels.
Minneapolis Fed’s Kashkari said inflation is “much too high,” citing April headline 3.8% and core CPI +0.4% m/m (2.8% y/y); he warned unanchored expectations could force more aggressive policy and flagged energy/fertilizer pass-through.
Market reaction
Oil was higher in the cited moves, with Brent up about 1.81% near $96 and WTI up about 1.71% around $90.21.
Our view
Persistent energy-led inflation keeps the Fed biased to hold rates and guard against expectations drift, capping upside in long-duration Treasuries even with conditional talk of lower long-run rates. Next key monitor is whether energy/fertilizer costs broaden into core inflation via pass-through.
What could change our view
Rapid oil price easing and softer core prints revive near-term easing expectations.
Inflation expectations unanchor, prompting more aggressive Fed tightening than priced.
Tickers: $TLT, $CL=F
CVS Caremark restores Zepbound coverage and adds Lilly’s Foundayo, shifting U.S. commercial GLP-1 access toward co-preferred Lilly and Novo options.
Last 24 hours
CVS Caremark said Zepbound returns to its standard commercial formulary on Oct. 1, 2026, and Lilly’s newly approved oral obesity pill Foundayo will be covered from June 1 across a ~25–30M-life template.
Our view
The CVS move improves Lilly’s access versus last year’s exclusion, but near-term volume impact is gradual given co-preferred positioning and sponsor opt-out flexibility. Monitor employer and insurer adoption of the standard template and any updated preferred-status language from CVS or Novo.
What could change our view
Large plan sponsors opt out of weight-loss GLP-1 coverage despite the template.
CVS reverts to single-preferred positioning or implements restrictions that limit utilization.
Tickers: $LLY
Gold and silver hit multi-week lows as firmer USD, elevated oil, and higher global yields push real-rate expectations ahead of April PCE.
Last 24 hours
Spot gold fell about 1.6% to ~$4,385/oz (lowest since Mar 26) with COMEX futures down ~1.3%, while silver slid ~2.4% as USD firmed, yields rose, oil stayed elevated, and attention turned to April PCE.
Market reaction
Spot gold traded near $4,385/oz (-1.6%) with front-month COMEX gold futures around $4,390 (-1.3%); silver also sold off about 2.4% in spot and futures pricing.
Our view
Near-term bias stays cautious on gold as a firmer USD and higher global yields keep the real-rate channel as the dominant driver. Next catalyst is April PCE versus the +0.5% m/m and 3.8% y/y consensus, which can quickly reset rate expectations.
What could change our view
Softer-than-expected April PCE drives yields lower and reverses gold’s slide.
Oil-price surge revives inflation-hedge flows into gold despite higher yields.
Tickers: $GLD
CFTC prediction-market rule enters White House OMB review, raising stakes for federal preemption as states pursue bans and lawsuits.
Last 24 hours
• A CFTC proposal to regulate prediction markets is in OMB interagency review with rule text not yet public, as Minnesota enacted a ban and Massachusetts/New York pursue litigation tied to platform offerings.
Our view
The OMB review progresses toward a federal framework, but near-term operating conditions stay uncertain amid unresolved state-federal jurisdiction. Watch for publication of the proposed rule and any court or enforcement outcomes that clarify whether states can restrict federally regulated contracts.
What could change our view
Final rule narrows permissible contracts or imposes burdensome compliance for platforms/intermediaries.
Courts or state actions erode CFTC preemption, fragmenting market access by jurisdiction.
Tickers: $COIN
Company Events
Snowflake’s $6B five-year AWS commitment and upside Q2 guide reframe cloud AI spend, with after-hours shares ripping and AWS coupling deepening.
Last 24 hours
AWS said Snowflake will spend $6B over five years on AWS services, expanding Graviton CPU and cloud GPU usage; Snowflake beat FQ1 and guided Q2 product revenue $1.415–$1.420B with 12.5% adj op margin.
Market reaction
SNOW shares surged as much as ~36% in extended trading following the results, guidance, and disclosed AWS spending commitment.
Our view
SNOW’s print and guide support near-term rerating and keep cloud AI demand narrative intact, while the AWS spend commitment signals durable platform dependence rather than near-term margin relief. Monitor whether product-revenue momentum and operating-margin trajectory stay ahead of consensus into the next quarter.
What could change our view
Follow-through guidance or margin misses unwind the after-hours rerating.
Any change in the $6B AWS commitment terms or execution pace.
Tickers: $SNOW
Zscaler resets FY2027 growth and capex expectations as sales-leadership turnover pressures confidence despite a Q3 beat.
Last 24 hours
Zscaler guided FY2027 ARR growth to ~16%–17% YoY and Q4 revenue to $875M–$878M versus $878.6M consensus, flagged two sales-leader departures, and expects FY2027 capex intensity +~200 bps amid higher costs.
Market reaction
ZS fell more than 30% on the day after the FY2027 ARR growth outlook came in below expectations despite a fiscal Q3 beat; Evercore ISI downgraded the stock to In Line from Outperform and cut its price target.
Our view
Treat the drawdown as a re-rating driven by execution and cash-flow uncertainty, with follow-through pressure likely until management stabilizes the go-to-market and capex trajectory. Monitor whether updated sales leadership and FY2027 ARR growth framing translate into steadier forward guidance and capex discipline.
What could change our view
Further ARR growth deceleration or additional sales-leadership turnover extends execution overhang.
Capex intensity rises beyond the guided ~200 bps, compressing free cash flow conversion.
Tickers: $ZS
Salesforce earnings beat met with mixed guidance as FY revenue midpoint undershoots while Agentforce annualized revenue tops $1B and RPO slightly misses.
Last 24 hours
CRM reported FQ1 revenue up 13% YoY and GAAP net income $2.11B; Q2 adjusted EPS $3.25–$3.27 on $11.27B–$11.35B revenue, with FY revenue midpoint $46.05B.
Our view
CRM trades as a steady grower with AI momentum but capped near term by modest revenue guide conservatism. Monitor whether Agentforce’s $1.2B annualized revenue converts into stronger bookings/RPO and offsets continued marketing/commerce softness and weaker Tableau renewals.
What could change our view
RPO and bookings weaken further, signaling demand deceleration beyond conservative guidance.
Agentforce growth slows, undermining AI-led reacceleration narrative into 2026.
Tickers: $CRM
Best Buy beats fiscal Q1 with comps up 2% while keeping full-year guidance unchanged amid tariff pressure and softer big-ticket demand.
Last 24 hours
• BBY posted fiscal Q1 revenue $8.94B and adj. EPS $1.28 with comparable sales +2%, reaffirmed FY revenue $41.2B–$42.1B and adj. EPS $6.30–$6.60, and named Jason Bonfig CEO effective Nov. 1.
Our view
We expect BBY’s results to support a steadier near-term setup for the retail complex, with unchanged guidance anchoring expectations and incremental margin levers (Ads, Marketplace) helping offset mixed category demand. Key monitor is whether FY comparable-sales outlook (-1% to +1%) tightens on tariff pressure or consumer confidence, which would shift focus from execution to demand risk.
What could change our view
FY guidance cut or comps trend below the -1% to +1% range.
CEO transition disrupts operating momentum or delays higher-margin Ads and Marketplace initiatives.
Tickers: $BBY
Go deeper -
For intraday developments, follow our Midday posts.
For the close, the wrap, and next-day trade ideas, read Evening Insights.
For deeper work, Forward Valuation covers multi-week single-name setups (paid subscribers only).
Deep Dive is where we publish our full thematic research for paid subscribers.
Informational only; not investment advice. Sources deemed reliable.