MAY 21 THINKMARKETS MARKET OVERVIEW: WTI by Market_Vision1 — TradingView

Good morning, friends. Let’s review the most important news in the market right now, as things start to pick up and there is indeed news that can benefit us in our trading.

The first eye-catching news is that Elon Musk’s SpaceX has officially begun the initial public offering (IPO) process. Papers have been submitted, so the issue of inclusion is more realistic than ever. Of course, you’re going to be seeing this news everywhere for the next little while, because we’re talking about a very large company and one of the largest potential IPOs in history, possibly even bigger than Saudi Aramco.

But here I want to clarify a very important point for those who are directly excited about any notable IPO.

If we look back at the history of large IPOs over the past few years, we see that most IPOs were not profitable for the investors who entered in the first place. Yes, there are exceptions like Visa or Alibaba Group, but even these companies subsequently experienced significant declines.

Take Coinbase, Robinhood or Rivian, for example. They all entered the market with great fanfare, but within a short period of time, their prices plummeted by dozens of percentage points.

The reason is simple: when a company is very popular, a large number of non-professional investors get in out of enthusiasm. Everyone wants to buy “before the price explodes,” which inflates valuations too much before actual trading even begins.

But after listing, institutions and large investors begin to evaluate the company’s real data, and this is often the beginning of corrections and declines.

Frankly, for me, participating in an IPO of this magnitude is not the best idea from an investment perspective, even if the media coverage is very attractive.

Yes, it will be interesting to see if SpaceX will actually reach its $1.8 trillion valuation, and if Elon Musk will officially join the list of richest people by a huge margin. But for us traders, the real opportunity here is not as great as some might think.

As for the situation in Iran, despite Trump’s fiery rhetoric and constant threats, what’s going on behind the scenes is somewhat different.

We are still seeing ongoing attempts at negotiation. Iran made new proposals, and the United States responded with comments and amendments. Best of all, responses are no longer rejected outright like before. Instead, there was talk of a “research proposal.”

This in itself suggests that the door to a deal remains open.

Because it would not be in the interest of either party to continue with the current situation. On the one hand, Iran is suffering economically from maritime restrictions and sanctions, and on the other hand, Trump is gradually losing support due to rising domestic fuel prices in the United States.

To that end, we note that the oil market has started to calm down a bit. After the recent upward surge, Brent crude oil is back around $104-105.

But on the other hand, U.S. inventory data remains concerning. The latest data showed a decrease of about 8 million barrels in a week, and the previous deficit was only about 4 or 5 million barrels.

This means that the market remains truly undersupplied.

If negotiations completely break down or the crisis escalates again, oil prices are likely to reach $115 a barrel or higher.

As for the Fed, the minutes of the last meeting have been released and it is clear that Fed members are still adopting strict policies.

There is no serious discussion about cutting interest rates yet. Instead, some members said simply talking about easing could make markets overly optimistic.

Some officials have even suggested that raising interest rates remains an option if inflation problems and high oil prices persist.

This means that U.S. monetary policy is likely to remain tight even with new leadership at the Fed.

Therefore, it is natural for the U.S. dollar to remain relatively strong in this scenario, as high interest rates typically support the currency.

Today we are also awaiting budget data from the Federal Reserve to see if they have begun injecting additional liquidity into the financial system or if they are continuing to tighten policy and cut budgets.

Overall, the current market situation is relatively clear, and much of the next move will depend on Iranian documents, oil prices and upcoming US inflation data.