Good morning. It is Tuesday, May 26th, 2026, and this is your Morning Brief.

COHOST: Today feels like the first real workday after a long weekend, and the main question is which stories were merely paused and which ones actually changed while people were off the clock.

HOST: The clearest overnight change is in the Middle East, where the White House is still talking about negotiations with Iran while the U.S. military is also back in action. The Associated Press reports U.S. forces carried out what they called self-defense strikes in southern Iran on Monday, targeting missile launch sites and boats that were placing mines.

HOST: That matters because it cuts directly against the cleaner peace narrative the market had been trying to build into the holiday break. President Trump is still saying talks are moving in the right direction, but the new fact pattern is that Washington is now asking investors and lawmakers to believe in diplomacy while also explaining fresh military action.

COHOST: Which usually means the real story is not resolution. It is how narrow the path is between a deal and another escalation.

HOST: Exactly. And the market response this morning reflects that tension more than panic. AP reports stock futures were modestly higher early Tuesday, with S and P 500 and Dow futures both up about half a percent, while Brent crude was higher but still below one hundred dollars a barrel. So traders are not pricing in a complete collapse of the peace track, but they are also not treating the new strikes like background noise.

HOST: The domestic political angle is still active too. The House never actually held the war powers vote that leaders looked likely to lose last week, so Congress begins this shortened week with the same unresolved argument it had before Memorial Day: whether Republican leadership is willing to put members on the record about the legal and strategic limits of the Iran conflict.

COHOST: So for Tuesday morning, the watch item is simple. If the administration can point to concrete progress in talks over the next day or two, markets may keep giving it the benefit of the doubt. If not, every fresh military action gets more politically expensive.

HOST: The second Washington story is another case where the weekend did not solve anything. Senate Republicans come back with their immigration and deportation funding bill still stalled after last week's backlash to the Trump administration's new one point seven seven six billion dollar so-called anti-weaponization fund.

HOST: AP reports Republicans left town without voting on the roughly seventy billion dollar package for ICE and Border Patrol after frustration built over that settlement fund and after the separate one billion dollar White House security add-on for Trump's ballroom ran into resistance and procedural trouble.

COHOST: And that is still unusual because immigration is supposed to be one of the easiest unity issues for this White House.

HOST: Right. That is why it still belongs near the top today. This is no longer just a policy disagreement over one spending line. It is a test of how much extra political baggage Senate Republicans are willing to carry even on an issue where they generally agree with the administration's core goals.

HOST: The practical read for this week is that leadership probably needs a much narrower bill if it wants a clean win. If senators come back with a stripped-down enforcement package, that means the revolt worked. If they still cannot move it, the larger takeaway is that Republican control in Washington remains more fragile in practice than it looks in message politics.

HOST: On the AI and technology side, the freshest development is not a product launch or earnings report. It is a values fight. AP reports Pope Leo the Fourteenth issued a major manifesto on Monday calling for robust regulation of artificial intelligence and urging developers to serve the common good rather than profit alone.

COHOST: That is not just a Vatican story. It is another sign that AI is moving out of the narrow tech-business lane and into a broader moral, labor, and political argument.

HOST: Exactly. And the timing matters. In the United States, Washington is already treating AI as industrial strategy, export competition, national security infrastructure and power demand. So when a major global moral authority says the technology needs firmer outside guidance, it lands in a debate that is already getting bigger than Silicon Valley.

HOST: The useful morning takeaway is not that regulation is suddenly around the corner. It is that the pressure on AI companies is broadening. The next phase of the AI story is not only about whether the models get stronger. It is about who gets to set the terms under which they spread into schools, offices, militaries, hospitals and courts.

HOST: That broader argument has a very concrete Central Ohio version, because this region keeps absorbing the physical footprint of the AI buildout. And the most important Ohio development is still the updated price tag on the state tax break that helped attract those facilities.

HOST: WOSU, citing Signal Ohio and the Associated Press, reports Ohio's data-center sales tax exemption cost the state about one point five seven billion dollars in 2025, versus an original estimate of roughly one hundred thirty-six million. That came after a 2024 cost of about five hundred fifty-five million. In other words, this is no longer a rounding error or an incentive tucked away in the tax code. It is now a state-budget-scale story.

COHOST: And in Central Ohio, it is not abstract at all, because a lot of the data-center footprint, land pressure and power demand keep landing right here.

HOST: That is why this story stays active. The old argument was that Ohio needed a generous tax break to compete. The new argument is whether the break still makes sense at this scale, for this industry, under current demand conditions. Once the public cost jumps by more than a billion dollars above expectations, lawmakers do not need to be anti-tech to start asking harder questions.

HOST: So the near-term watch is whether the legislature's data-center scrutiny turns into hearings, tighter reporting requirements or another attempt to revise the subsidy. Even if nothing moves immediately this week, the political center of gravity has changed. The burden is now on supporters of the incentive to explain why the public is still getting fair value.

HOST: Back in Columbus, the housing-accountability story with the clearest visual proof remains Sawyer Towers. WOSU reports crews began dismantling the condemned towers on May nineteenth, with demolition expected to last several months and full teardown likely within about six months.

COHOST: That makes Sawyer one of those local stories where the image keeps doing the political work. As long as the towers are coming down in public view, the city's claims about housing reform are easier to test.

HOST: Exactly. Columbus officials have been trying to frame Sawyer as a lesson that leads to stronger enforcement, better relocation support and a more credible rental-registry era. The reason it still belongs in today's brief is that demolition keeps the accountability question alive. The city has already said what it learned. The next question is whether it has the staffing, timelines and enforcement capacity to stop another building from reaching the same point.

HOST: If there is one place where the local and national affordability stories meet most directly, it is still the mortgage market. Freddie Mac's weekly survey shows the average thirty-year fixed mortgage rate at six point five one percent as of May twenty-first, up fifteen basis points in one week. The fifteen-year fixed is at five point eight five percent.

COHOST: Which is enough to make the spring market feel normal in activity but still punishing in monthly payment math.

HOST: That is the right way to say it. Central Ohio's housing data still shows more selection, but not real payment relief. WOSU reports April closed sales in Central Ohio fell thirteen point six percent from a year earlier to two thousand two hundred two, while inventory rose and the market continued to normalize from the frenzy years.

HOST: The problem is that normalization in market behavior is not the same thing as normalization in affordability. Buyers may face fewer absurd bidding wars, but they are still trying to absorb mortgage rates north of six and a half percent while prices remain elevated. Fannie Mae's May housing outlook still shows the thirty-year fixed averaging about six point three percent this year, which is another reminder that the baseline forecast is for only gradual relief, not a fast drop back to cheap money.

COHOST: Around here, that means more listings are helpful, but they do not automatically become more closings unless the financing gap narrows.

HOST: Exactly. More choice helps buyers emotionally and tactically. It does not solve the monthly-payment problem on its own.

HOST: On markets, today is a reopening day, so the mood matters. Friday's close gave Wall Street its eighth straight winning week. AP says the S and P 500 finished Friday at seven thousand four hundred seventy-three point four seven, the Dow at fifty thousand five hundred seventy-nine point seven zero, and the Nasdaq at twenty-six thousand three hundred forty-three point nine seven.

HOST: This morning, the setup looks mildly risk-on again, with futures pointing higher even after the fresh Iran strikes. That tells you investors are still leaning on two ideas at once: first, that peace talks...