Wildfires Surge Across U.S. as Drought Raises Fears of Severe Summer
Iran war upends Asian agriculture, raising fears of global food shock | Trump/Xi summit: U.S. has 5 B’s and China has 3 T’s
| LINKS |
Link: Video: Wiesemeyer’s Perspectives, May 9
Link: Audio: Wiesemeyer’s Perspectives, May 9
Topics discussed:
- Weekly Markets
- Argentine soyoil discount to U.S. hits decade low
- 2026 Wheat Quality Council’s HRW Tour May 11-13
- Iran war ceasefire?
- Tuesday: Crop Report & WASDE
- Congress returns… Wed.: Year-round E15 Vote in House?
- Thur./Fri.: Trump/Xi summit in Beijing
- Another negative court ruling on Trump tariffs
- Tariff refunds begin
- More ag disaster and farmer aid?
- $1 bil. farmer bridge payments for specialty crops/sugar this week?
- Trump investigation of meat packers/ Agri Stats case
- Fertilizer hearing in Senate Ag Committee Tue., May 12
- Trump met with Brazil’s President Lula
- Politics: Va. Supreme Court rejects state redistricting effort
| Updates: Policy/News/Markets, May 9, 2026 |
| UP FRONT |
TOP STORIES
— Russia moves to rebuild Iran’s drone arsenal during ceasefire: Russia is reportedly shipping drone components to Iran across the Caspian Sea as Tehran works to restore military capabilities damaged during the recent U.S./Israeli conflict. U.S. officials also accuse both Russia and the PRC of supporting Iranian attacks on U.S. forces through drone and satellite assistance.
— Trump and Xi prepare for high-stakes Beijing summit: President Donald Trump and Chinese President Xi Jinping are expected to focus on trade, Taiwan, Iran, technology restrictions and agricultural purchases during the May 14-15 summit in Beijing, with both sides seeking limited stabilization rather than a broad reset in relations.
— Wildfires surge across U.S. as drought raises fears of severe summer: Wildfire activity has climbed to the highest level in a decade as drought, heat and expanding dry conditions spread fire risk into regions not traditionally viewed as vulnerable, increasing concerns over agricultural losses, infrastructure damage and insurance costs.
— Update: Agri Stats faces antitrust reckoning as DOJ targets meat industry data sharing: Federal regulators reached a settlement with Agri Stats over allegations that its benchmarking reports helped dominant meat processors coordinate pricing and production decisions, intensifying scrutiny of concentration and data-sharing practices across agriculture.
— Iran war upends Asian agriculture, raising fears of global food shock: Fertilizer shortages, soaring fuel costs and shipping disruptions tied to the Iran war are forcing farmers across Asia to reduce planting and fertilizer use, increasing concerns over lower crop yields, food inflation and rising rural debt burdens.
FINANCIAL MARKETS
— Equities Friday and weekly change: U.S. equities closed at fresh record highs Friday, with the S&P 500 and Nasdaq posting a sixth consecutive weekly gain as strong earnings, resilient labor data and continued momentum in semiconductor stocks supported markets.
AFFORDABILITY/INFLATION
— Airline industry faces post-spirit shakeup as higher fares reshape market: Barron’s reports the collapse of Spirit Airlines is accelerating consolidation across the airline industry, strengthening legacy carriers while higher jet fuel costs and operational pressures push airfares sharply higher.
— AI productivity boom could push rates higher — or trigger stagflation: Chicago Fed President Austan Goolsbee warned that AI-driven productivity gains could either fuel higher interest rates if successful or create stagflation risks if expectations fail to materialize, challenging arguments that AI will naturally lower inflation.
AG MARKETS
— Argentine soyoil discount to U.S. hits decade low as harvest surges and biofuel demand climbs: Bloomberg reports Argentine soybean oil is trading at its cheapest level relative to U.S. supplies in at least a decade as massive South American harvest supplies collide with stronger U.S. biofuel-driven demand.
— Agriculture markets Friday and weekly change: Grain and livestock futures ended the week mixed, with soybeans and wheat rebounding Friday while cattle and hog markets remained under pressure amid broader volatility tied to energy, weather and trade developments.
ENERGY MARKETS & POLICY
— Friday: oil ends higher as Iran conflict keeps energy markets on edge: Oil prices finished higher after another volatile session dominated by military escalation fears and diplomatic speculation surrounding the U.S.-Iran conflict and disruptions near the Strait of Hormuz.
— JPMorgan warns gasoline could hit $5 amid jet fuel crunch: JPMorgan analysts warned U.S. gasoline prices could soon reach $5 per gallon as refiners prioritize jet fuel production amid Middle East supply disruptions and elevated crude prices tied to the Iran war.
TRADE POLICY
— Mexico’s trade outlook faces new pressure ahead of USMCA review: Barron’s reports political tensions surrounding a major cartel-linked indictment in Mexico are adding uncertainty ahead of the July USMCA review, even as investors continue supporting Mexican equities, bonds and the peso.
POLITICS & ELECTIONS
— Virginia court strikes down democratic congressional map, reshaping midterm landscape: The Virginia Supreme Court invalidated a Democratic-backed congressional map, restoring previous district lines and handing Republicans a major advantage in the broader national redistricting battle ahead of the 2026 midterms.
— Massie faces Trump-backed primary test in Kentucky: Rep. Thomas Massie (R-Ky.) remains favored in Kentucky’s Republican primary despite escalating attacks from President Donald Trump and a growing MAGA-backed challenge from candidate Ed Gallrein.
WEATHER
— NWS Outlook: The National Weather Service warned of heavy rain and severe thunderstorms from the Gulf Coast into the Florida Panhandle, with additional severe weather threats developing across the Southern Plains while triple-digit heat expands across the Desert Southwest and interior California.
| TOP STORIES—Russia moves to rebuild Iran’s drone arsenal during ceasefireMoscow reportedly shipping drone components across Caspian Sea as Tehran works to restore strike capabilities after U.S./Israeli air campaign According to a report from the New York Times citing U.S. officials, Russia is supporting Iranian efforts to rebuild its military capabilities during the current ceasefire period by shipping drone components across the Caspian Sea. The reported transfers are intended to help Tehran restore offensive drone capacity damaged during the recent conflict with the United States and Israel.The Caspian Sea has long served as a key corridor for military and commercial trade between Moscow and Tehran. During the war, Israeli forces targeted Bandar Anzali Port on Iran’s Caspian coast in an effort to disrupt Russian shipments of military supplies, including Shahed drones, artillery shells, and ammunition destined for Iran. The latest report also follows separate claims that Russia proposed supplying Iran with 5,000 short-range fiber-optic drones along with several longer-range satellite-guided drones reportedly equipped with Starlink-enabled communications systems. However, there is currently no evidence that the drone components now being shipped are directly tied to those proposed systems. The reported Russian assistance comes as Iran attempts to rebuild portions of its missile and drone infrastructure damaged by U.S. and Israeli strikes. Iranian forces are reportedly working to recover launchers, drone systems, and other equipment hidden underground or buried beneath strike debris during the conflict. Russia and the People’s Republic of China (PRC) also backed Iranian attacks on U.S. bases during the conflict. On May 8, the U.S. State Department sanctioned four entities — including several Chinese firms — for providing satellite imagery that supported Iranian operations targeting U.S. forces in the region during the war. Among the sanctioned entities were PRC-based companies Earth Eye and Chang Guang Satellite Technology, which supplied Iran with imagery of U.S. and allied military installations across the Middle East. Western media previously reported that Iran used the Earth Eye TEE-01B reconnaissance satellite, acquired from the PRC in 2024, to help identify and target U.S. military assets and bases during the conflict. Russia likewise assisted Iran by providing satellite imagery of U.S. facilities, along with Shahed drones, to support Iranian attacks during the war. Meanwhile, Iran has not yet responded to the latest U.S. proposal and will likely use any delay in negotiations to continue to rebuild its military capabilities. Iranian Foreign Affairs Ministry Spokesperson Esmail Baghaei stated on May 9 that Iran is still reviewing the U.S. proposal and will “pay no attention to…deadlines.” Regional security analysts warn that restoring those capabilities could allow Iran to rapidly resume retaliatory operations against U.S. forces, Israel, or Gulf states if fighting reignites. The rebuilding effort also underscores growing military cooperation between Moscow and Tehran as both countries deepen strategic ties amid broader confrontation with the West.—Trump and Xi prepare for high-stakes Beijing summitTrade, Taiwan, Iran and technology disputes set to dominate talks between the leaders of the world’s two largest economies According to reporting from the New York Times (link), President Donald Trump and Chinese President Xi Jinping are set to meet in Beijing next week for a closely watched summit expected to focus on trade tensions, the war in Iran, Taiwan, artificial intelligence cooperation and broader strategic competition between Washington and Beijing. The talks come as both countries face mounting economic and geopolitical pressures, including the global energy shock tied to the Iran war and concerns over the durability of the current U.S./China trade truce. A major focus of the negotiations is expected to center on what U.S. officials are calling the “Five B’s” — Boeing airplanes, beef, soybeans, a board of investment and a board of trade. The framework is designed to expand commercial cooperation in areas viewed as lower risk for national security concerns while encouraging additional Chinese purchases of U.S. goods and investment. (Trump administration officials have stressed U.S. ag products will not be limited to soybeans and beef.) Meanwhile, Beijing is expected to emphasize its own priorities, known as the “Three T’s” — tariffs, technology and Taiwan. Chinese officials are likely to push for an extension of last year’s trade truce, seek relief from U.S. semiconductor export restrictions and pressure Washington to scale back support for Taiwan, which Beijing claims as part of its territory. The summit also comes amid heightened tensions surrounding Iran and the Strait of Hormuz. Trump is expected to press China to use its influence with Tehran to help reopen the strait and stabilize global energy markets. At the same time, the two sides are expected to discuss artificial intelligence safeguards, fentanyl trafficking, South China Sea security and China’s expanding nuclear arsenal. Despite the broad agenda, analysts cited by the New York Times cautioned against expecting sweeping breakthroughs. Instead, the meeting is more likely to produce modest agreements aimed at stabilizing relations and buying time for both countries as they continue efforts to reduce dependence on one another economically and strategically. The Iran war could nevertheless complicate the discussions. China has criticized U.S. actions in the conflict while also signaling support for reopening the Strait of Hormuz and maintaining regional stability. Meanwhile, Washington and Beijing continue to escalate economic pressure tactics, including sanctions, export controls and retaliatory regulatory measures.—Wildfires surge across U.S. as drought raises fears of severe summerExpanding fire risk beyond traditional hotspots Wildfires across the United States have surged to their highest level in a decade, as persistent drought, extreme heat, and shifting climate patterns fuel concerns that the country could face an especially destructive fire season this summer. Large portions of the U.S. are experiencing unusually dry conditions, leaving forests, grasslands, and agricultural areas highly vulnerable to ignition. Fire officials and climate experts warned that prolonged dryness combined with above-normal temperatures is creating conditions for rapid fire spread across multiple regions simultaneously. A major concern is that wildfire activity is increasingly expanding into areas that historically were not considered high-risk fire zones. States and regions outside the traditional western wildfire belt are now seeing more frequent and intense fires as drought conditions spread eastward and northward. Warmer winters, reduced snowpack, and earlier spring drying are extending the fire season and increasing the amount of combustible vegetation. Strong winds and low humidity have further amplified the threat, complicating firefighting efforts and straining emergency response resources. Officials are particularly concerned about impacts on rural communities, infrastructure, utilities, transportation corridors, and agriculture. Smoke pollution from the fires is also expected to pose growing health risks across broad sections of the country during peak summer months. Of note: Congress is going to attempt later this year a likely combined ag disaster and farmer aid package that is looking for a legislative vehicle. Meanwhile, insurers, utilities, and state governments are preparing for potentially elevated economic losses tied to property destruction, power disruptions, and emergency response costs. The growing geographic spread of wildfire risk is forcing policymakers and businesses to rethink long-standing assumptions about which regions are vulnerable to major fire disasters.—Agri Stats faces antitrust reckoning as DOJ targets meat industry data sharingFederal regulators say the company’s benchmarking reports helped dominant meat processors coordinate pricing and production, making Agri Stats a central focus in the government’s broader crackdown on food-sector concentration and inflation Agri Stats, an Indiana-based agricultural benchmarking and analytics company long embedded in the U.S. meat industry, has become the latest focal point in the federal government’s expanding antitrust crackdown on food and agricultural markets. The company is drawing national attention after the U.S. Department of Justice reached a settlement resolving allegations that Agri Stats’ data-sharing system enabled major meat processors to coordinate prices, manage production, and suppress competition across the chicken, pork, and turkey industries. Founded in 1985, Agri Stats built its business by collecting highly detailed operational and financial data from meat companies and compiling that information into weekly benchmarking reports distributed to subscribers. The reports became deeply influential throughout the protein sector because they allowed processors to compare plant performance, margins, labor costs, inventories, production levels, and pricing trends against competitors across the industry. Federal regulators, however, argued that the same benchmarking system evolved into a mechanism that allowed dominant meatpackers to monitor one another closely enough to influence production decisions and sustain elevated prices without directly communicating. According to the DOJ, Agri Stats distributed sensitive information quickly and in such granular detail that companies could allegedly track competitor behavior in near real time. The government said Agri Stats’ subscriber network represented the overwhelming majority of U.S. protein production, including more than 90% of broiler chicken sales, roughly 80% of pork sales, and about 90% of turkey sales. Regulators argued that this concentration gave the company extraordinary visibility into the inner workings of the meat sector and amplified concerns that the reports facilitated coordinated conduct across the industry. The settlement announced this week imposes sweeping restrictions on Agri Stats’ operations. Under the agreement, the company must significantly limit the pricing, wage, and plant-level information it distributes to processors. The settlement also requires broader transparency by making certain market information available to buyers such as grocery retailers and restaurants rather than restricting access primarily to meat companies themselves. Federal oversight provisions included in the agreement are expected to remain in place for years, with long-term compliance monitoring built into the settlement structure. Agri Stats has denied wrongdoing throughout the litigation and maintains that its reports were designed to improve efficiency and operational benchmarking rather than facilitate collusion. The company has argued that benchmarking services are common across industries and provide valuable information that helps businesses reduce costs and improve performance. Nevertheless, the DOJ case marks one of the most aggressive federal challenges to agricultural data-sharing practices in decades and reflects growing bipartisan scrutiny of concentration within the U.S. food system. The lawsuit also fits into a broader wave of antitrust enforcement aimed at information-sharing platforms and algorithmic pricing systems across multiple industries. The Agri Stats controversy extends beyond federal enforcement. The company has also been tied to a series of private antitrust lawsuits involving allegations of coordinated chicken, pork, and turkey pricing, as well as poultry worker wage suppression claims. Several meat companies and Agri Stats itself have previously entered settlements in related litigation without admitting liability. The case carries major implications for the agricultural sector because benchmarking services are widely used throughout commodity markets, livestock production, food processing, fertilizer distribution, and grain merchandising. Industry participants are now closely watching whether the DOJ’s action against Agri Stats signals a broader regulatory push against data-sharing systems in other concentrated agricultural industries. Meanwhile, the political backdrop surrounding the case has elevated its visibility even further. Trump administration officials have increasingly linked antitrust enforcement to concerns about grocery inflation and consumer food prices. Administration figures have argued that cracking down on concentration and alleged coordination in the meat industry could help lower costs for consumers while increasing competition for producers and workers. The Agri Stats settlement therefore represents more than a dispute over industry analytics. It has become a test case for how aggressively federal regulators are willing to police information-sharing systems in concentrated markets and whether longstanding benchmarking practices in agriculture could face substantial new legal and regulatory limits in the years ahead. — Iran war upends Asian agriculture, raising fears of global food shockFertilizer shortages, soaring fuel costs and disrupted shipping through the Strait of Hormuz are forcing farmers across Asia to cut planting, threatening lower crop yields, rising food inflation and deeper rural debt The war involving Iran is increasingly reverberating far beyond energy markets, with farmers across Asia warning that soaring fertilizer and fuel costs tied to the conflict are crippling planting decisions during critical sowing periods. According to a report by the Washington Post (link), growers in Thailand, Bangladesh, the Philippines and Australia are already scaling back acreage, reducing fertilizer use or abandoning planting altogether as supply disruptions tied to the conflict choke off access to key agricultural inputs. At the center of the crisis is the disruption of trade flows through the Strait of Hormuz and damage to Gulf energy infrastructure, which has sharply reduced exports of urea fertilizer and fuel products from the Middle East. Analysts cited in the report estimate roughly 30% of the world’s urea supply has effectively been removed from the market, sending spot prices up about 40% since February. China has restricted fertilizer exports to protect domestic supply, while demand for Russian product has surged, potentially strengthening Moscow’s economic position amid the war in Ukraine. The Food and Agriculture Organization warned the conflict represents a direct threat to the global food system. FAO Director-General Qu Dongyu said the war has become “a disruption at the core of the global agrifood system,” while FAO Chief Economist Maximo Torero cautioned that the economic impact could rival the agricultural dislocations seen during the Covid-19 pandemic if shipping disruptions persist into peak fertilizer demand months. The pressure is already reshaping farmer behavior. Thai rice producer Saithong Jamjai said planting another crop would guarantee heavy losses because production costs now far exceed expected crop revenues. Other farmers interviewed said they were leaving portions of their land idle for the first time in decades or sharply reducing fertilizer applications, decisions that are expected to reduce yields later this year. The crisis is particularly acute in Southeast Asia because many countries entered key planting windows shortly after the conflict intensified. Fertilizer retailers across Thailand reported being completely out of urea for weeks, while distributors have been forced to offer alternative Russian blends that some farmers distrust. Government officials acknowledged that even when replacement supplies can be secured, shipping delays mean cargoes may arrive too late for the current crop cycle. Meanwhile, the war is also damaging export markets. Thailand’s rice industry has been hit by halted shipments to Gulf buyers after maritime disruptions forced cargoes off vessels and back into warehouses. The Middle East accounted for roughly 17% of Thailand’s rice exports in 2025, with Iraq serving as the country’s largest single customer. The resulting oversupply at home has depressed rice prices further, compounding pressure from rising input costs. Agricultural groups warned the economic and social consequences could become severe if the disruption continues. Thai farmer organizations said many producers were already heavily indebted before the conflict and now face the prospect of taking on additional high-interest loans simply to finance planting. Industry representatives also warned of mounting mental health stress in rural communities as farmers confront debt, shrinking margins and uncertainty over future harvests. Experts say the crisis underscores the vulnerability of global agriculture to concentrated fertilizer and energy supply chains. Some analysts are urging governments to accelerate investments in local fertilizer alternatives, renewable energy systems and more resilient domestic food production. But farmer groups caution such transitions require time and financial support that many growers currently lack. |
| FINANCIAL MARKETS |
—Equities Friday and weekly change: Friday closed at fresh records. Both the S&P and Nasdaq logged a sixth straight weekly gain — the longest streak since 2024. The 10-year yield ended near 4.41%. A better-than-expected jobs report and a continuing chip-stock rally lifted stocks to new highs.
As of May 7, 82% of S&P 500 companies have beaten EPS estimates, the highest rate since 2021. 81% beat on revenue. These are historically exceptional numbers.
| Equity Index | Closing Price May 8 | Point Difference from May 7 | % Difference from May 7 | Weekly Change |
| Dow | 49,609.16 | +12.19 | +0.02% | +0.22% |
| Nasdaq | 26,247.08 | +440.88 | +1.71% | +4.51% |
| S&P 500 | 7,398.93 | +61.82 | +0.84% | +2.31% |
| AFFORDABILITY/INFLATION |
—Airline industry faces post-Spirit shakeup as higher fares reshape market
Legacy carriers emerge stronger while ultra-low-cost airlines struggle under fuel costs, labor pressures, and shifting consumer demand
According to Barron’s (link), the collapse of Spirit Airlines is accelerating a major restructuring of the U.S. airline industry, driving airfare increases higher while strengthening the competitive position of large legacy carriers such as Delta Air Lines, United Airlines, and American Airlines. Domestic airfares are already up 36% this year amid soaring jet fuel costs tied in part to Middle East tensions and disruptions around the Strait of Hormuz, forcing airlines to rethink business models that relied on ultra-cheap travel.
The Barron’s analysis argues that Spirit’s downfall was caused not only by fuel prices, but also by pilot shortages, rising airport costs, inflation-driven pressure on middle-income travelers, aircraft engine problems, and aggressive competition from “basic economy” fares offered by larger carriers. Spirit’s shutdown is expected to shift market share toward carriers like JetBlue Airways and Frontier Group Holdings, although both airlines are still projected to lose money over the next two years.
Meanwhile, major airlines are increasingly emphasizing premium seating, international routes, and high-margin loyalty programs instead of competing primarily on low fares. Barron’s described Delta and United as emerging “blue-chip airlines,” noting that both companies are expected to generate roughly $2 billion in free cash flow this year despite elevated fuel prices and broader industry volatility. Delta continues expanding domestic premium seating and international operations, while United maintains strength in global routes and loyalty revenue streams.
The article also highlighted how other carriers are abandoning traditional discount-airline models. Southwest Airlines has added baggage fees and assigned seating after decades of maintaining an all-inclusive structure, while Alaska Air Group is expanding long-haul and premium operations following its acquisition of Hawaiian Airlines.
Barron’s compared the struggles of U.S. ultra-low-cost carriers with the success of Ryanair Holdings in Europe, where lower airport fees, shorter routes, and cheaper labor markets have allowed airlines to sustain extremely low operating costs. Spirit, by contrast, was unable to reduce costs enough to remain competitive after the pandemic.
Analysts cited in the article believe the shrinking footprint of ultra-low-cost carriers could ultimately support stronger pricing power and profitability for larger airlines. However, the sector remains highly sensitive to oil prices and geopolitical developments. Barron’s noted that if Brent crude were to climb back toward $125 per barrel and remain there, Frontier could face severe financial distress or potentially another bankruptcy wave in the discount-airline segment.
—AI productivity boom could push rates higher — or trigger stagflation
Chicago Fed’s Goolsbee warns markets may be overestimating AI’s economic benefits
Austan Goolsbee warned Friday evening that the widely anticipated artificial intelligence productivity boom could ultimately create two very different economic outcomes: persistently higher interest rates if the boom succeeds, or stagflation if the expected gains fail to materialize.
Speaking at the Hoover Institution’s annual monetary policy conference at Stanford University, Goolsbee challenged growing arguments from Trump administration officials and likely future Fed leadership that AI-driven productivity gains will naturally lower inflation and justify lower borrowing costs.
The remarks directly pushed back against views advanced by Kevin Warsh, who is expected to be confirmed Monday as the 17th chair of the Federal Reserve. Warsh has repeatedly argued that AI could unleash the “most productivity-enhancing wave of our lifetimes” and produce structurally disinflationary effects similar to the technology boom of the 1990s.
Treasury Secretary Scott Bessent has also embraced the comparison, arguing the U.S. economy is entering the early stages of a productivity boom comparable to the late-1990s expansion.
Goolsbee, however, argued the historical analogy is more complicated than many investors and policymakers assume. He noted that when productivity gains are already heavily anticipated — as they are today with AI enthusiasm embedded across financial markets and corporate investment plans — businesses and consumers often accelerate spending and investment before the productivity improvements actually arrive. That front-loading of demand can overheat the economy and place upward pressure on inflation and interest rates.
He pointed to the experience under former Fed Chair Alan Greenspan, whose Federal Reserve raised interest rates six times between 1999 and 2000 even as the technology boom accelerated.
Quote of note: “The bigger the hype, the bigger the concern,” Goolsbee said.
Goolsbee cited Federal Reserve Bank of Chicago survey data showing economists, technology workers, and the general public all expect roughly one additional percentage point of annual productivity growth over the next decade because of AI adoption.
He said policymakers are watching several indicators to determine whether those expectations are already reshaping economic behavior, including rising housing wealth effects, surging costs tied to data-center construction, higher semiconductor demand spilling into unrelated industries, and lower labor-force participation among workers expecting future wealth gains from AI-related investments.
Meanwhile, Goolsbee warned that the risks become even more severe if the anticipated productivity boom ultimately disappoints. In that scenario, he said, consumers and businesses could continue borrowing and spending aggressively based on expectations that never materialize, leaving the economy overheated with stubborn inflation even as growth slows.
“You can easily get stagflation,” Goolsbee said, arguing the risk would stem not from speculative excess but from economic fundamentals tied to widespread expectations of future productivity gains.
Other panelists challenged aspects of Goolsbee’s argument. Christopher Waller said the wealth-effect mechanisms Goolsbee described have existed in economic models for decades without consistently appearing in real-world data. Waller argued that many households cannot easily borrow against future expected income, limiting the extent to which anticipated AI wealth gains would accelerate present-day consumption.
Steven Davis added that recent Atlanta Fed analysis showed AI-related investment spending remains highly concentrated among a relatively small group of companies, suggesting the boom may not yet be broad enough to reshape the wider economy.
Meanwhile, Luigi Zingales noted that surveys from the Federal Reserve Bank of New York increasingly show households fear losing jobs to AI, a dynamic that could encourage higher savings rates rather than stronger consumer spending.
The debate highlights a growing divide within economic and policy circles over how AI will ultimately affect inflation, labor markets, productivity, and monetary policy as the Federal Reserve navigates an economy already facing elevated geopolitical and inflation risks.
| AG MARKETS |
—Argentine soyoil discount to U.S. hits decade low as harvest surges and biofuel demand climbs
Bloomberg reports expanding Argentine supplies and stronger U.S. biofuel mandates are reshaping global vegetable oil markets
According to Bloomberg, Argentine soybean oil is trading at its cheapest level relative to U.S. supplies in at least a decade as a massive South American harvest collides with surging U.S. biofuel demand. The widening price gap highlights how global vegetable oil flows are increasingly being reshaped by both crop fundamentals and energy policy.
Data from Commodity3 showed Argentine soyoil discounts widened this week to roughly 24 cents per pound below Chicago Board of Trade benchmark futures — the deepest discount in records dating back to 2016. By Friday, the spread had narrowed only slightly to 23.6 cents per pound.
The pressure on Argentine prices comes as the country’s soybean harvest accelerates across the Pampas growing region. The Buenos Aires Grain Exchange projects Argentina’s soybean crop at 48.6 million metric tons, with yields in key producing areas running above historical averages. As fresh supplies flood the market, Argentine crushers are ramping up processing activity to convert soybeans into exportable soybean oil and meal.
Meanwhile, U.S. soybean oil prices have surged sharply higher following Trump administration moves earlier this year to increase biofuel blending mandates. The stronger renewable fuel requirements are expected to significantly boost domestic demand for soybean oil and corn ethanol, tightening U.S. vegetable oil supplies even as global production remains abundant elsewhere.
U.S. soybean oil futures have rallied more than 50% so far this year, helping create the unusually wide discount for Argentine product. The divergence underscores how biofuel policy is increasingly becoming a dominant pricing force in agricultural commodity markets, particularly for feedstocks tied to renewable diesel and biodiesel production.
The development also comes amid broader disruptions across global energy and shipping markets tied to tensions around the Strait of Hormuz. Elevated crude oil prices and uncertainty surrounding fuel supplies have helped reinforce demand expectations for alternative fuels, contributing to the ongoing strength in U.S. biofuel-linked agricultural commodities.
—Agriculture markets Friday and weekly change:
| Commodity | Contract Month | Closing Price May 8 | Difference from May 7 | Weekly Change |
| Corn | July | $4.71 1/4 | +3 3/4 cents | -9 cents |
| Soybeans | July | $12.08 | +15 3/4 cents | +4 3/4 cents |
| Soybean Meal | July | $319.70 | +$0.80 | +40 cents |
| Soybean Oil | July | 74.32 cents | +17 points | -84 points |
| SRW Wheat | July | $6.19 | +6 3/4 cents | -18 3/4 cents |
| HRW Wheat | July | $6.75 3/4 | +8 1/2 cents | -18 3/4 cents |
| Spring Wheat | July | $6.78 1/2 | +4 3/4 cents | -25 1/2 cents |
| Cotton | July | 84.73 cents | +1.73 cents | +54 points |
| Live Cattle | June | $248.90 | -$1.15 | -$4.10 |
| Feeder Cattle | May | $367.375 | +$1.05 | -$4.025 |
| Lean Hogs | June | $98.625 | -$0.75 | -$2.65 |
| ENERGY MARKETS & POLICY |
—Friday: Oil ends higher as Iran conflict keeps energy markets on edge
Volatile trading session reflects tug-of-war between escalation fears and diplomatic hopes
Brent crude oil futures settled higher Friday after another volatile trading session dominated by rapidly shifting headlines surrounding the ongoing conflict between the U.S. and Iran. Brent crude rose $1.23, or 1.2%, to close at $101.29 per barrel after surging as much as 3% earlier in the session.
U.S. West Texas Intermediate crude gained 61 cents, or 0.6%, to finish at $95.42 per barrel. Despite the daily rebound, both benchmarks still posted weekly losses of more than 6%.
Energy markets remained highly sensitive to geopolitical developments following direct exchanges of air strikes between American and Iranian forces on Thursday, along with renewed attacks targeting the United Arab Emirates. The continued fighting reinforced concerns about disruptions surrounding the Strait of Hormuz, one of the world’s most critical energy shipping corridors, where vessel traffic remains heavily constrained.
Meanwhile, traders increasingly shifted attention toward the possibility of a temporary diplomatic breakthrough. Expectations grew that current negotiations between Washington and Tehran could evolve into a broader 30-day framework designed to extend talks and reduce the immediate risk of further escalation. That optimism helped trim earlier oil price spikes later in the session, even as both governments continued to exchange threats and military pressure.
The session underscored how heavily crude markets are now trading on geopolitical headlines rather than traditional supply-and-demand fundamentals. Prices initially jumped sharply on fears the conflict could intensify and further disrupt Gulf energy flows before retreating as reports of potential diplomatic progress emerged.
Supply risks nevertheless remain elevated. Shipping volumes moving through the Strait of Hormuz continue to operate well below normal levels, restricting the flow of crude oil and refined products through the strategic chokepoint. Traders are also increasingly focused on how quickly Gulf producers could fully restore export capacity if conditions stabilize, whether global inventories are sufficient heading into peak summer fuel demand, and how future sanctions policy toward Iran could evolve under any eventual diplomatic settlement.
—JPMorgan warns gasoline could hit $5 amid jet fuel crunch
Iran war disruptions push refiners toward jet fuel production as energy markets tighten
Analysts at JPMorgan Chase are warning that U.S. gasoline prices could soon climb to $5 per gallon as the Iran war continues to disrupt global energy markets and trigger a growing jet fuel supply crisis.
The bank said Brent crude has averaged roughly $100 per barrel since the conflict began, driven by continued instability around the Strait of Hormuz and damage to key Middle Eastern energy infrastructure. Refiners have increasingly shifted production toward jet fuel to meet surging aviation demand and offset tightening global supplies, reducing output of gasoline and diesel in the process.
JPMorgan analysts warned that the combination of elevated crude prices, constrained refining capacity, and ongoing shipping disruptions through the Strait of Hormuz is likely to keep fuel markets under pressure in the coming weeks.
As of Friday, the national average gasoline price stood at $4.55 per gallon, up 52% from pre-war levels, underscoring the growing economic impact of the conflict on consumers and transportation markets.
| TRADE POLICY |
—Mexico’s trade outlook faces new pressure ahead of USMCA review
Drug cartel indictment adds political risk as investors bet on Mexican stability
According to Barron’s, Mexican financial markets have remained surprisingly resilient in 2026 despite mounting political and trade tensions with the Trump administration. The EWW — the iShares MSCI Mexico exchange-traded fund that tracks major Mexican companies — has climbed roughly 14% this year, outperforming the S&P 500, while the Mexican peso has strengthened about 4.5% against the dollar as investors respond positively to Mexican President Claudia Sheinbaum’s efforts to maintain cooperation with President Donald Trump while preserving strong domestic support.
That balancing act is now under greater strain after U.S. federal prosecutors indicted Sinaloa Governor Rubén Rocha Moya and nine associates on allegations tied to narcotics trafficking and cooperation with the Sinaloa cartel. The case places additional pressure on Sheinbaum only weeks before the July 1 review deadline for the United States-Mexico-Canada Agreement (USMCA), a pact tied to roughly 30% of Mexico’s gross domestic product. The indictment also arrives as Mexico’s economy contracted 0.8% in the first quarter of 2026.
Washington increasingly appears willing to link trade negotiations with security and narcotics enforcement, according to analysts cited in the report.Henry Ziemer of the Center for Strategic and International Studies said Mexico is attempting to separate trade issues from drug trafficking disputes, while the U.S. administration appears inclined to combine them. Rocha Moya is viewed as a major figure within Sheinbaum’s Morena Party and a close ally of former President Andrés Manuel López Obrador, raising political risks for the administration if extradition demands intensify.
The Republican-led House Foreign Affairs Committee signaled the indictment may represent only the beginning of broader pressure campaigns targeting Mexican officials. Analysts warned that the dispute could complicate already difficult USMCA negotiations and increase uncertainty surrounding future trade relations.
Trade discussions are expected to extend beyond the July 1 review deadline, with negotiators reportedly preparing to compromise on issues such as stricter North American content requirements for automobiles and tighter restrictions on Chinese investment routed through Mexico. However, some market participants fear the Trump administration could leave the agreement in a prolonged “zombie” status — technically active but subject to recurring annual reviews and political uncertainty.
Strategists interviewed by Barron’s warned that Mexican equities may now face downside risks after a strong rally pushed valuations closer to long-term averages. Meanwhile, Mexico’s bond market and currency continue attracting investor interest. Analysts at UBS Global Wealth Management said the peso has shown resilience partly because investors increasingly view it as a liquid alternative to a weakening U.S. dollar. With Mexican 10-year bond yields remaining above 9%, some investors still see attractive returns despite rising political risks.
Mexico also retains leverage heading into negotiations. The country surpassed China as the United States’ largest trading partner, with two-way trade reaching approximately $873 billion last year. Analysts noted that many U.S. industries strongly support preserving the USMCA framework, meaning any attempt to withdraw from or destabilize the agreement could trigger significant opposition from the American private sector.
Still, analysts cautioned that the Rocha Moya indictment has increased the likelihood of volatility in Mexican markets that until now had largely been pricing in continued political and economic stability.
| POLITICS & ELECTIONS |
—Virginia court strikes down Democratic congressional map, reshaping midterm landscape
Virginia Supreme Court ruling restores existing House districts and hands Republicans a major advantage in the escalating national redistricting fight ahead of the 2026 midterm elections
The Virginia Supreme Court on Friday struck down a newly approved Democratic-backed congressional map, dealing a significant setback to Democrats’ efforts to regain ground in the U.S. House and intensifying the nationwide redistricting battle already underway ahead of the midterms. The ruling restores Virginia’s previous congressional boundaries and eliminates four newly drawn Democratic-leaning districts that party leaders had hoped would help offset Republican gains in other states.
According to the court’s 4-3 decision, Democratic lawmakers violated Virginia’s constitution during the process used to place the redistricting amendment before voters. The justices focused heavily on the timing of the General Assembly’s initial vote on the amendment, which occurred only days before the 2025 legislative elections. The court argued that many Virginians who voted early were denied the opportunity to fully evaluate where candidates stood on the amendment before casting ballots.
The now-invalidated map had been narrowly approved by Virginia voters in a statewide referendum last month and was viewed by Democrats as one of their few successful countermeasures against aggressive Republican redistricting efforts in states such as Texas, Tennessee, Alabama and Louisiana. Democrats had invested nearly $70 million and devoted months of political effort to securing passage of the measure.
President Donald Trump celebrated the decision, calling it a “huge win for the Republican Party, and America, in Virginia.” Meanwhile, House Minority Leader Hakeem Jeffries (D-N.Y.) condemned the ruling as “unprecedented and undemocratic,” saying Democrats were exploring all legal options to overturn the decision.
Virginia Democratic leaders indicated they may seek emergency relief from the U.S. Supreme Court, though legal experts noted the case centers primarily on state constitutional procedure rather than federal constitutional law, potentially limiting federal court involvement.
The decision further shifts momentum toward Republicans in the broader redistricting war that intensified after the U.S. Supreme Court recently weakened portions of the Voting Rights Act. Since then, several Republican-led Southern states have moved aggressively to redraw congressional maps before November, seeking additional GOP-friendly districts. Democrats, meanwhile, face structural disadvantages in many states because prior reforms in places like Virginia created independent commissions or procedural hurdles that limit partisan mapmaking flexibility.
As it stands now, Democrats have drawn five seats in their favor in California and gotten improved lines for one seat through litigation in Utah. Republicans have redrawn five Democratic-held seats to lean right in Texas and increased their advantage in two Ohio seats, one North Carolina seat, one Missouri district, four Florida districts and one Tennessee seat. Louisiana Republicans are planning to add one or two more.
The ruling also underscores how legal and procedural disputes — rather than simply partisan demographics — are increasingly determining congressional boundaries nationwide. Republicans successfully challenged multiple aspects of Virginia’s amendment process, including ballot language, district compactness, legislative timing and procedural notification requirements. Ultimately, the court sided with arguments that early voters were deprived of a meaningful opportunity to evaluate lawmakers’ positions before casting ballots.
Of note: As of Friday, May 7, here is how Inside Elections sums up 2026 House ratings:
However, at the end of April, the Cook Political Report, which handicaps political races, listed 217 House seats as at least leaning Democratic — meaning the party would have needed to win just a single “tossup” race to seize the majority. As of Friday, Cook rated 208 seats as at least leaning Democratic — meaning the party would need to win 10 of the 18 races it sees as “tossups.”
While Democrats suffered a major immediate setback, the court’s ruling left open the possibility that Virginia lawmakers could attempt another redistricting effort in future election cycles if constitutional procedures are followed more carefully.
—Massie faces Trump-backed primary test in Kentucky
Libertarian-leaning congressman remains favored over challenger Ed Gallrein despite escalating feud with President Donald Trump and growing MAGA opposition ahead of the May 19 Republican primary
Rep. Thomas Massie (R-Ky.) appears positioned to withstand a high-profile challenge from Trump-backed Republican rival Ed Gallrein in Kentucky’s 4th Congressional District, according to recent polling and prediction market data. The race has become an early test of President Donald Trump’s influence over Republican voters when targeting a well-known incumbent who has repeatedly broken with the administration on issues ranging from Iran policy to the Epstein files controversy.
Two recent surveys show Massie maintaining a narrow but consistent lead. A Big Data Poll conducted in early April found Massie ahead 52.4% to 47.6%, while a Quantus Insights survey showed him leading 46.8% to 37.7%, with a sizable bloc of undecided voters still in play. Prediction markets have also favored Massie, with both Kalshi and Polymarket assigning him roughly a 72% chance of defeating Gallrein in the May 19 primary.
Political analysts say Massie’s independent brand may resonate in northern Kentucky’s heavily Republican but ideologically driven electorate. University of Kentucky political science professor D. Stephen Voss told Newsweek that the district’s voters are more receptive to libertarian-minded conservatives than other Republican strongholds where Trump-backed candidates have successfully defeated dissenting incumbents.
The deteriorating relationship between Massie and Trump has become central to the race. Their clashes date back to 2020, when Massie opposed a major Covid-19 relief package and drew public condemnation from Trump. Although Massie later endorsed Trump’s 2024 presidential campaign, tensions reignited after Massie opposed parts of the administration’s agenda, including the One Big Beautiful Bill Act and military actions involving Iran. Massie also joined Rep. Ro Khanna (D-Calif.) in pushing for the release of Justice Department files tied to disgraced financier Jeffrey Epstein, further straining ties with the White House.
Trump has repeatedly attacked Massie publicly, calling him one of the worst Republicans in congressional history while aggressively promoting Gallrein’s candidacy. Gallrein, a farmer and military veteran, has received backing from several prominent Kentucky Republicans, including Rep. Andy Barr.
Meanwhile, Sen. Rand Paul has endorsed Massie, underscoring the ideological divide within Kentucky’s Republican establishment.
Despite the heated primary battle, the district remains overwhelmingly Republican, meaning the eventual GOP nominee will be heavily favored in the general election after Trump carried the district by more than 35 points in the 2024 presidential race.
| WEATHER |
— NWS outlook: Heavy rain and strong thunderstorms from central Gulf Coast to the Florida Panhandle into this evening… …Strong to severe thunderstorms are expected to develop across the Southern Plains to the Arkl
