Weekly Market Recap
| Index / Asset | Level | Weekly Change |
|---|---|---|
| Dow Jones | 49,526 | -83 (-0.17%) |
| Nasdaq | 26,225 | -22 (-0.08%) |
| S&P 500 | 7,408 | +10 (+0.14%) |
| MSCI EAFE | 3,024.90 | -52.20 (-1.70%) |
| U.S. 10-Year Treasury | 4.595% | +23.1 bp (+5.29%) |
| WTI Crude | $101.02/bbl | +$6.34 (+6.70%) |
Reality Hits?
Apparently, markets spent the early part of the week ignoring blistering inflation data in favor of summit optimism. Reality set in when the summit delivered exactly what any reasonable observer would have expected: nothing.
The Summit
The summit consisted of both leaders agreeing that the Strait of Hormuz should "remain" open. Why they used the word "remain" when the Strait is effectively closed is anyone's guess. Since nearly half of all of China's crude comes through the Strait,¹ that position should surprise no one. China also agreed to buy an undisclosed amount of U.S. crude. Boeing received an order for 200 jets, well short of the whisper number of closer to 500,² and Nvidia (NVDA) was granted permission to begin selling its H200 chipsets to ten approved Chinese firms.³
Inflation Spikes
April inflation data was ugly across the board. Headline CPI climbed to +3.8% year-over-year,⁴ but the real shock was in wholesale prices, with headline PPI surging +6.0% year-over-year, the biggest annual increase since December 2022.⁵
Fiddling While Rome Burns
Meanwhile, our foremost experts on inflation see a completely different story in the data. Treasury Secretary Scott Bessent, unbothered by conventional wisdom or evidence, said Thursday that he believes inflation, while elevated, is transitory and will decline substantially by the end of the year.⁶ And our new Fed Chair, Kevin Warsh, cut from the same cloth, has similarly called for lower rates. The bond market, apparently, did not get the memo, with the U.S. 10-year Treasury yield spiking 5.29% on the week, and the CME FedWatch tool now predicting a quarter point hike by December and no rate cuts in 2026. As a reminder, we entered the year expecting two quarter point reductions.
The Week Ahead
AI darling and chipmaker extraordinaire Nvidia (NVDA) reports on Wednesday and will need to continue to produce out-of-this-world results to keep the AI party going. Other than Nvidia, it is retail week, with a slew of retailers set to reveal the current condition of the U.S. consumer. Given this week's inflation data, the results could not be more timely.
- Monday: No major economic releases. Earnings: none.
- Tuesday: No major economic releases. Earnings: Home Depot (HD).
- Wednesday: FOMC May meeting minutes. Earnings: Lowe's (LOW), Target (TGT), TJX (TJX), Nvidia (NVDA).
- Thursday: Initial Jobless Claims, May Flash Services and Manufacturing PMIs. Earnings: Walmart (WMT).
- Friday: May Final Consumer Sentiment. Earnings: none.
Closing Perspective
Markets have been remarkably resilient in the face of an ongoing war, a Strait of Hormuz that remains closed, and inflation that continues to run hotter than expected. At some point, the distance between market optimism and economic reality has to close. We continue to monitor developments closely and will make thoughtful adjustments where appropriate. As always, if you have any questions or would like to discuss your portfolio in more detail, we welcome the conversation.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets...ACHR, NVDA, RIVN, SMCI and TCPC.
Footnotes
² https://www.cnbc.com/2026/05/14/china-boeing-order-airplanes-737-max-trump-says.html
³ https://finance.yahoo.com/sectors/technology/articles/trump-clears-nvidia-h200-sales-193006781.html
⁴ https://www.bls.gov/news.release/pdf/cpi.pdf
⁵ https://www.cnbc.com/2026/05/13/ppi-inflation-report-april-2026-.html