1. Hot CPI In April: Can It Get Hotter?
April U.S. CPI just landed at 3.8% year-over-year — a tick above the 3.7% expected and the hottest read since May 2023. Do we get to 4% for May?
Energy drove it, with the energy index up nearly 4% in April, straight out of the Strait of Hormuz playbook. It was behind like 40% of the increase in CPI.
Look, rate cuts do not happen when inflation is running hot and can get hotter. Don’t forget inflation has a lot to do with expectations as well…and we’ve yet to see one place that isn’t expecting inflation.
Tomorrow, we get U.S. PPI (inflation at producer level). That will be interesting to watch as well.
2. Oil At $100 — The Biggest Supply Shock in History
WTI crude is holding near $100 a barrel this morning.
Trump rejected Iran’s latest peace proposal over the weekend.
The Strait of Hormuz is running at two to five ships per day versus seventy to 100/per day before the war.
This is shaping up to be the biggest supply shock for the energy market. But, that’s just one piece of the story. There’s more that’s stuck and it has potential to create a lot of headwinds/tailwinds depending on which side of the trade you are on.
At this point, its starting to look like no normalization until 2027 – assuming the war and blockade ends today.
3. Trump Lands in Beijing Thursday — Don’t Underestimate This
Trump’s state visit to China kicks off May 14, and he’s bringing Elon Musk, Tim Cook, Larry Fink, and the Boeing CEO along for the ride.
Trade deals — agricultural purchases, aerospace, AI — are on the table.
Let’s see how it goes. Likely will be noisy.
Also, as we’ve said before too: it is possible Iran peace deal happens in China. But, time will tell more.
If everything falls flat, that’s another headwind stacked on top of an already hot CPI – higher oil price, and anemic consumer.
This is worth watching closely.
4. Hantavirus — Noise, Not a Siren
A hantavirus outbreak on the cruise ship — three deaths, six-plus infected, person-to-person transmission confirmed — is starting to show up in conversations and investors are reacting a little bit.
Biotech names like Moderna spiked but couldn’t hold the moves
Prediction markets are assigning a slim probability to this becoming a systemic event, and the WHO isn’t ringing alarm bells. Every new headline is going to make noise.
Mark your calendars – 6-weeks incubation period (from essentially last week…so second-third week of June), will the numbers increase? Again, time will tell more. Don’t let it rattle you yet. Unless you see case count increase, hospital beds getting filled, or travel restrictions spreading, treat this as background static.
The memory of the pandemic is very recent, so seeing spookiness out there is not irrational.
P.S. we are not scientists or health experts.
5. Gold, Silver, Bitcoin And The S&P 500
Gold tested its 50-day moving average this morning and dropped. That’s something.
Silver is pulling back slightly to around $84.30 after a 7% surge on Monday. On the upside, the big test for silver is at $90. Also keep in mind there’s a range at play here – $70-$90. A move above or below could mean big gains or losses.
Keeping an eye on Bitcoin – just below its 200-day moving average. A break above it could mean meaningful upside.
Lastly, take a look at S&P 500 and the S&P 500 equal weight. It’s pretty clear few names driving the index higher. Equal weight is really struggling, and for technical analysts out there, seems to be making a double-top.