Deal or No Deal? And the U.S. Economy Is Dealing... – Top 3 Takeaways – May 7th, 2026
Takeaway #1: Deal or No Deal?
The question entering Wednesday was whether the pause of Project Freedom amid news of a potential Iranian peace deal was in effect ground hog day...or whether yesterday would truly be a monumental day of change in the middle east. According to Axios – which was the first to break detailed news of a potential deal in the making, a one-page memorandum was under serious consideration for ratification by Iran. Four sources were cited for the story which speaks to leaks within the president’s ranks but nevertheless the details of the proposed peace plan included these...A declared end to the war in the region – which btw, would also imply peace between Israel and Lebanon too. A minimum 12-year moratorium on uranium enrichment, with no underground nuclear development to take place. An Iranian pledge to never pursue a nuclear weapon, and the removal of enriched uranium from Iran. A 30-day window in which there would be a coordinated reopening of the Strait of Hormuz – including an end the U.S. blockade of Iran and the eventual relaxing of U.S. sanctions if Iran proceeded to plan. In breaking this down, it’s clear where there’s a compromise here. For President Trump – it's a delayed enrichment program for Iran, as opposed to an end to the potentially ability for them to ever enrich uranium as well, along with a face-saving feature with Iran pledging to never pursue nukes (this in theory would allow for the president to say he’d achieved the goal of Iran never having a nuclear weapon). For Iran, the upside is obvious as they could eventually fully engage the world economically. But then again is this what they’ve ever indicated that they’ve wanted? Optimism reigned supreme early in the day with oil trading down below $90 per barrel and stock market futures indicating record stock market highs. As the day went along, stocks continued to soar (in part because the economy, despite higher gas prices, continues to be performing – more on that in a minute)...but then the news perhaps predictably? began to sound more negative than before. President Trump Truthed this: Assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption, the already legendary Epic Fury will be at an end, and the highly effective Blockade will allow the Hormuz Strait to be OPEN TO ALL, including Iran. If they don’t agree, the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before. That message also sounded like other moments in recent weeks when many thought we were on the precipice of peace. What is different is that the U.S. blockade has taken 23% of Iran’s total GDP offline creating Great Depression like economic conditions for the country. Historically Iranian officials have only been interested in deals that have served their long-term goal of developing a nuclear weapon. These are Islamic terrorists who believe in the 12th Imam (aka the well Imam) after all. It’s a great deal for Iran if leaders there are interested in living in relative peace and prosperity. It’s not a great deal for them if they’re interested in bringing about a nuclear World War III rather quickly. These are not rational people, therefore it’s not possible to handicap whether what’s been proposed here actually sticks. Deal or no deal we’re still dealing with Islamic terrorists.
Takeaway #2: An economic boom after all?
Here’s a question for you to consider. Let’s say gas was $3 per gallon today. How would you feel about the economy generally? It was only two weeks before the Iran war that I picked up on a few different themes that to me seemed to be pointing towards a booming economy by next year. As I noted at the time... During the four years of the Biden administration real earnings (meaning average household incomes net of inflation) dropped by 1.6% . Through the first year of the Trump administration real earnings (inflation adjusted) were up 1%. And my argument for the economy going from one that’s improved for the average American to one that could boom by next year was predicated on the belief that that most who stood to benefit from the additional tax cuts in the Trump tax policy (Social Security recipients, those who earn tips, and those who earn overtime) would only start to realize those benefits as tax season was to unfold and they commonly will receive either big refunds or much lower tax liability than planned. Well, that happened but then the war and higher gas prices hit, seemingly muting economic benefits of Trump’s tax policies. But when you look at your retirement account(s) how do you feel? With new record highs by the day for the stock market driven by the AI boom, the answer is probably pretty good. The median 401k increase during year 1 of the Trump presidency was over $44k, and if you project that out as to where people likely are today, we’re looking at gains of over $70k! And that takes me back to the question about gas. If you look at your retirement account(s) and if the price of gas is $3 how would you feel about the economy today?
Takeaway #3: The answer would likely be more than just ok...
Consider this. Yesterday’s ADP Report showed the best overall job growth since January of last year when President Trump was just getting settled in for his second term. Not only did job growth come in ahead of expectations with 109,000 jobs added during the month, but the biggest gains came from the smallest companies too. A total of 65,000 jobs were added with companies with 50 or fewer employees, with 42,000 added with the largest companies. What’s important about this is that A) Small businesses are leading economic indicators. Small businesses are only hiring more employees when business conditions demand it. It’s also a good sign to see the largest companies adding employees – as the age of AI has arrived. It always makes the news when a high-profile tech company announces AI-related layoffs. What doesn’t make the news is when less sexy sounding companies are rapidly adding head count too. But that’s what’s happening. The smallest and largest companies are currently in growth mode, which is an especially encouraging economic indication. Additionally, ADP showed wage growth of 4.4% for those who stayed in place over the past year and 6.6% higher earnings for those switching jobs over the past year. Both are strong numbers that sit well ahead of inflation – even with $4 gas. So, if there is resolution in the middle east and if we do once again see $3 gas – with economy is well positioned to cook with it...