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The US and PAX
Danny Riley
May 19, 2026
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Is rising debt, geopolitical fragmentation, energy insecurity, and de-dollarization efforts are gradually weakening the U.S.-led global order, potentially marking the beginning of the end of the post-WWII “Pax Americana” system?
Pax Americana (Latin for "American Peace") refers to the period of relative global stability and economic prosperity overseen by the United States following the end of World War II in 1945. Modeled after terms like Pax Romana and Pax Britannica, it defines an era where the United States emerged as the world's premier economic, cultural, and military superpower, establishing a unipolar or heavily US-centric global order.
The Three Pillars of Pax Americana
The maintenance of this international order historically relies on three interconnected foundations:
Military Supremacy: Anchored by a vast network of global security alliances, such as the North Atlantic Treaty Organization (NATO), and hundreds of international military bases to deter major great-power conflicts.
Economic Dominance: Built on the hegemony of the US dollar as the world's primary reserve currency, alongside international institutions like the World Bank, the IMF, and a commitment to global free trade through the WTO.
Normative Influence: The promotion of liberal-democratic values, open market economies, human rights, and the rules-based international order.
Historical Launch: The Marshall Plan
Many historians point to the enactment of the Marshall Plan in 1948—which transferred billions of dollars in economic aid to rebuild Western Europe—as the official launch of Pax Americana. This strategic framework successfully prevented another world war among major industrialized nations, a period often referred to by political scientists as the "Long Peace."
Criticisms and Contrasting Perspectives
While proponents argue that Pax Americana facilitated unprecedented global growth, technological advancement, and a reduction in large-scale interstate warfare, it has faced steep criticism:
Imperialism Claims: Critics, particularly in the Global South, argue that the "peace" was selective, noting that the era was marked by brutal proxy conflicts, military interventions (e.g., Vietnam, Iraq), and the subversion of unfriendly governments.
Selective Benevolence: Some scholars from the Georgetown Journal of International Affairs note that for many developing nations, Pax Americana felt less like peace and more like enforced geopolitical subordination and economic austerity.
Current Status and Decline
Geopolitical analysts increasingly view Pax Americana as an eroding or transforming system. Factors driving this shift include:
The Rise of a Multipolar World: The rapid economic and military ascent of China—seeking what some call a Pax Asia-Pacifica—along with an assertive Russia, has directly challenged unipolar US dominance.
Domestic Political Shifts: A growing fatigue within American domestic politics regarding the financial and human costs of global policing.
Erosion of Trust: Transactional foreign policy approaches, rising economic protectionism, and unilateral actions have strained traditional alliances, leading many strategists to project a transition into a fragmented "Pax Multipolaris," where no single nation dictates the global rules.
For a deeper exploration into how this international system was built and the challenges it faces today, view this analysis of the global liberal order:
Main Drivers
Massive U.S. debt + rising interest costs
Weakening confidence in fiat currencies
China/Russia pushing de-dollarization
BRICS trade outside the dollar
Energy/geopolitical risks, especially the Strait of Hormuz
Growing global instability and bloc politics
Core Thesis
The U.S. still dominates financially and militarily, but its ability to control:
global trade, reserve currency flows, and geopolitical stability is gradually eroding.
Here are two videos explaining PAX, one short (4 min.), one longer (26 min.).
Our View
Welcome to QE. I am not surprised, but this shows the Fed is under pressure to provide higher liquidity for the U.S., while also under pressure to open up the dollar window to U.S. partners in the Gulf States who are already on a borrowing binge.
As of April, Abu Dhabi, Qatar, and Kuwait have quietly raised nearly $10 billion through private U.S. dollar bond placements — their first international borrowing since the Iran war severely damaged Gulf economies. Abu Dhabi accounted for $4.5 billion, Qatar $3 billion, and Kuwait $2 billion.
Unlike previous years, when these sovereigns routinely issued debt in public markets, the shift toward private placements suggests borrowing conditions remain too volatile and expensive to test openly. More than any official statement, the move highlights the financial strain still facing the Gulf after the conflict.
The ceasefire may have ended the fighting, but the economic costs are only beginning to surface.
According to Bloomberg, and provided by Standard Chartered Bank, Abu Dhabi sold $4.5 billion in U.S. dollar bonds since the start of April, with Bloomberg reporting that Standard Chartered arranged at least $2.5 billion of those transactions across two bond reopenings within 48 hours. Qatar followed with $3 billion and Kuwait with $2 billion, structured as private placements to selected institutional buyers rather than broadly marketed public deals.
As I have said for the last few sessions, things have a very unstable feel to them.
Our Lean — Danny’s Trade (Premium only)
Tom Incorvia - Blue Tree Strategies
iShares U.S. Home Construction ETF (ITB) — Market Structure Update
Over the past ten months, ITB has carved out a well-defined balance area between $88 and $116. Price has now slipped below the $88 lower boundary, putting the ETF in an exploratory phase. This is the market probing for new information, not a confirmed breakdown — yet. The identical price structures in both D.R. Horton (DHI) and Pulte Group (PHM), each sitting at the lows of their own established ranges, reinforce the message: the entire sector is at a decision point simultaneously.
The macro backdrop is not helping the bull case. Interest rates are drifting back toward recent highs, applying direct affordability pressure on a rate-sensitive sector. The critical tell will be how price behaves around $88 over the coming sessions. A swift reclaim on expanding volume suggests the break was a probe and raises the odds of a return into the prior range. Sustained acceptance below $88 — particularly with rates continuing higher — opens the door to a measured move lower. Let the auction resolve it before taking a side.
ITB
DHI
PHM
You can purchase Tom’s Course on Volume Profile here
The ES had a 7453.25 high and a 7375.00 low on Globex, with 413k contracts traded, and opened Monday’s regular session at 7438.25, down 6 points or 0.08%.
After the open, the ES traded to 7438.50, sold off down to 7415.25 at 9:45, rallied 39.00 points up to 7454.25 at 9:55, made a few lower highs, and then sold off 50.00 points down to 7404.25 at 10:35. After the drop, the ES rallied 26.25 points up to 7430.50, and then dropped 38.75 points down to 7391.75 at 11:30, rallied 22.25 points up to 7414.00 at 11:40, and then sold off down to a higher low at 7396.75.
The ES rallied 22.25 points up to just above the VWAP at 7419.00 at 12:20 and then sold off 37.25 points down to a new low at 7381.75 at 12:30, rallied up to 7414.75 at 1:10, sold off 41.25 points down to new lows at 7373.50 at 2:55, and then rallied 47.00 points up to 7420.50 after Trump put this out on Truth Social:
I have been asked by the Emir of Qatar, Tamim bin Hamad Al Thani, the Crown Prince of Saudi Arabia, Mohammed bin Salman Al Saud, and the President of the United Arab Emirates, Mohamed bin Zayed Al Nahyan, to hold off on our planned Military attack of the Islamic Republic of Iran, which was scheduled for tomorrow, in that serious negotiations are now taking place, and that, in their opinion, as Great Leaders and Allies, a Deal will be made, which will be very acceptable to the United States of America, as well as all Countries in the Middle East, and beyond. This Deal will include, importantly, NO NUCLEAR WEAPONS FOR IRAN! Based on my respect for the above mentioned Leaders, I have instructed Secretary of War, Pete Hegseth, The Chairman of The Joint Chiefs of Staff, General Daniel Caine, and The United States Military, that we will NOT be doing the scheduled attack of Iran tomorrow, but have further instructed them to be prepared to go forward with a full, large scale assault of Iran, on a moment’s notice, in the event that an acceptable Deal is not reached. Thank you for your attention to this matter! President DONALD J. TRUMP
After the “pop,” the ES sold off down to 7386.50, rallied back up to 7425.25, and traded 7423.25 as the 3:50 cash imbalance showed $931 million to sell. The ES pulled back to 7418.75, and then rallied to 7427.75 as the MIM flipped to a buy and settled at 7425.75, down 6.50 points or -0.09%.
The NQ settled at 29,096.00, down 135.75 points or -0.46%; the YM settled at 49,468.00, up 151 points or +0.38%; and the RTY settled at 2,782.70, down 16.90 points or -0.60% on the day.
In the end, it was a big rip on Globex and a big dip in the day session. In terms of the ES and NQ’s overall tone, there are so many moving parts, and the high level of uncertainty definitely has the markets, both in the U.S. and around the world, spooked.
In terms of the ES’s overall trade, Globex was high at 430k contracts traded, and 1.508 million traded on the day session, for a total of 1.938 million contracts traded.
Market-on-Close Recap
The May 18 MOC opened with a sharp sell-side tone and never fully escaped that pressure. At 15:50, the all-market imbalance showed $404M to sell, with the dollar lean at -82.4%, a clear wholesale sell indication. The first full update at 15:51 expanded to $853.9M to sell, with $2.45B to buy against $3.30B to sell. The dollar lean stood at -57.4% and the symbol lean at -52.7%, showing broad but somewhat rotational selling rather than an extreme all-market liquidation.
The transition was choppy. From 15:52 through 15:53, the market stayed sell-heavy near $534M to $604M. Then the imbalance flipped positive at 15:54 and peaked at $567M to buy at 15:55, with buy dollars briefly outpacing sell dollars. That mid-window improvement did not hold. By 15:59, the imbalance slipped back slightly negative, and by 16:01, the final snapshot showed $229M to sell, with $504M to buy versus $733M to sell.
The strongest sell pressure came from Nasdaq, where the imbalance was -$1.088B and the dollar lean reached -72.6%. That is the most notable read of the session because it exceeded the -66% threshold, pointing to wholesale sell pressure rather than normal rotation. Nasdaq symbol lean was also extreme at -67.7%, with only 30 buy symbols against 63 sell symbols. The S&P 500 also leaned sell at -58.7% dollar and -52.6% symbol, while all markets leaned -57.4% and -52.7%.
On the sell side, pressure was concentrated in large-cap technology and communication services. GOOGL, AAPL, KLAC, MU, INTC, GOOG, QCOM, and TSLA were key sell-side names, joined by HON, DXCM, and XOM. On the buy side, JNJ, IBM, MSFT, SBUX, DHR, NU, NEE, TMUS, AMZN, and UNP led demand. Sector-wise, tech was split but heavily represented on both sides, while health care, utilities, restaurants, banks, telecom, and rails provided the main buy-side offset.
Fair Values for May 19, 2026:
SP: 19.67
NQ: 89.54
Dow: 78.49
Daily Market Recap 📊
For Monday, May 18, 2026
• NYSE Breadth: 61% Upside Volume
• Nasdaq Breadth: 51% Upside Volume
• Total Breadth: 54% Upside Volume
• NYSE Advance/Decline: 58% Advance
• Nasdaq Advance/Decline: 45% Advance
• Total Advance/Decline: 50% Advance
• NYSE New Highs/New Lows: 92 / 65
• Nasdaq New Highs/New Lows: 140 / 235
• NYSE TRIN: 0.89
• Nasdaq TRIN: 0.80
Weekly Breadth Data 📈
For Week Ending Friday, May 15, 2026
• NYSE Breadth: 43% Upside Volume
• Nasdaq Breadth: 51% Upside Volume
• Total Breadth: 48% Upside Volume
• NYSE Advance/Decline: 26% Advance
• Nasdaq Advance/Decline: 31% Advance
• Total Advance/Decline: 30% Advance
• NYSE New Highs/New Lows: 285 / 214
• Nasdaq New Highs/New Lows: 745 / 521
• NYSE TRIN: 0.47
• Nasdaq TRIN: 0.45
ES & NQ Levels (Premium only)
Economic Calendar
Today’s S&P500 Earnings: 31
Polaris Trading Group Summary - Monday, May 18, 2026
The session showed a well-structured trading day where the PTG framework helped traders identify early upside fulfillment, avoid lower-quality range trades, and later take advantage of defined D-Level and Money Box opportunities. The best results came from respecting location, waiting for price to reach mapped levels, and staying selective.
Opening context
ES held within the upper and lower target boundaries from the Daily Trade Strategy briefing.
Reclaiming the prior low gave bulls early control.
The 7445 upper target was officially fulfilled pre-RTH, confirming strong early rhythm.
Key morning level
David identified the Central Pivot at 7451.75.
The room focused on how price behaved around key structure rather than chasing movement.
Morning lesson
A potential short inside the range was discussed.
The takeaway was that it was not an A+ setup because the location was not ideal.
Lesson: avoid forcing trades in the “sandbox”; wait for better location and cleaner structure.
Midday trade
The D-Level came into play.
The D-Level long reached the prior low target, providing a positive example of trading from a defined level with a clear target.
Market tone
Price settled in around midday but maintained downside pressure.
Geopolitical headlines added uncertainty, reinforcing the need to trade structure rather than emotion.
Afternoon setup
Price drifted lower with a lack of aggressive buying.
David highlighted a retest of Money Box 1 and the CD2 Violation Level at 7370.50.
Lower references included MB2 at 7363.75 and the CD2 range target at 7353.86.
Positive afternoon trade
David called an MB1 long entry scaling into the D-Level / Money Box zone.
The next upside target was the prior low.
The trade aligned well with the Bond Closing Buy Program.
David later noted the second bite at the DLMB apple played out, marking another solid structured opportunity.
Main takeaways
Respect the Daily Trade Strategy levels.
Let price come to planned zones instead of chasing.
Prioritize A+ location over marginal signals.
Range trades require extra selectivity.
Defined D-Level and Money Box areas offered the best opportunities of the day.
Tone into the close
Despite the afternoon sell imbalance, David looked for upside follow-through into Cycle Day 3.
Discovery Trading Group Room Preview – Tuesday, May 19, 2026
Geopolitics: Oil remains the key market driver as U.S./Iran headlines continue to whipsaw markets.
Diplomacy: Trump delayed new strikes on Iran after Saudi Arabia, Qatar, and the UAE pushed for more time to seek a resolution.
Talks: Both the U.S. and Iran continue to reject recent proposals as insufficient.
Hormuz: Pressure remains on reopening/securing the Strait of Hormuz.
G7: Day 2 discussions include the Middle East, Ukraine support, and global imbalances.
AI Cloud: Alphabet and Blackstone are launching an AI cloud venture using Google TPUs, with Blackstone committing an initial $5B.
Meta AI: Meta is shifting 7,000 workers into AI-related roles as part of a flatter structure.
Earnings: Home Depot reports premarket, with ADI, LOW, TGT, TJX Wednesday morning and NVDA Wednesday after the close.
Volatility: ES 5-day average daily range rose to 87 points.
Whales: No clear bias as overnight large-trader volume was light and mixed.
Resistance: ES resistance remains near 7460/65s, then 7685/90s.
Support: ES support sits near 7311/16s, then 7175/80s.
Trend: The ES 50-day MA near 6980 remains above the 200-day MA near 6896, keeping the longer-term MA bias bullish.
