Equity melt-up versus building recession risk

Moved from 2.1.2 0.66 ± 0.08 to 0.70 ± 0.07 - mean step of +0.04, band tightens. The 2.1.2 confidence was overweighted toward the recession-risk leg on the Monday-morning Polymarket 6% Up-open pricing; the cash session ended near flat (SPY -0.07%, Nasdaq -0.07%, VIX DOWN to 18.43) once Trump's afternoon de-escalation flows landed. The named tell (muscle-through across three consecutive hot inflation prints) survived the Monday session cleanly - hot inflation context unchanged, equity tape resilient. Width tightens 0.08 -> 0.07 because the band now captures the Wed-Thu binary cluster as the operative move rather than tactical geopolitics. Beta(30, 13) encodes ~43 effective observations - up from ~36 reflecting the Monday cash session as a clean structural print of the melt-up's resilience to peak-escalation framing. Next material confidence move comes from the Wed-Thu binary cluster (FOMC minutes, NVDA, Walmart).

The Monday cash session held up FAR better than the Monday-morning bearish framing implied. SPY closed 738.65 (-0.07% from Friday's 739.17), QQQ 705.88, Dow -0.34%, Nasdaq Composite -0.07%, and VIX actually FELL to 18.43 (from ~19 Friday). The Monday-morning Polymarket 6% Up-open probability was meaningfully too bearish - the cash session integrated the Sunday Barakah escalation plus Trump's Monday afternoon de-escalation (called off Tuesday strikes at Gulf-allies' request, US negotiation text reportedly waives Iran oil sanctions during negotiation period) and ended near flat. The Friday tape (SPX 7,408.50 -1.24%, NVDA -4.4%, AMD -5.7%, INTC -8%) has not been re-tested. CME FedWatch hike-by-December holds the ~56% level. Q1 2026 earnings season closed at 84% beat rate, 27.7% blended EPS growth (latest FactSet refresh), blended net margin 13.4% (highest since FactSet began tracking in 2009). The invalidation grammar requires either a vol-expansion break (VIX > 25 with SPY breaking 50d MA for 5 trading days) or unimpeded melt-up confirmation (SPX > 7,300 with VIX < 15 for 5 trading days) - VIX at 18.43 sits squarely in the mid-zone, neither has fired. Three binary tells land in the next ~40 hours Wed May 20 - Thu May 21: FOMC minutes (2 PM ET Wed), NVDA Q1 FY2027 (5 PM ET Wed), Walmart Q1 FY2027 (pre-open Thu).