Today
Yesterday’s CPI print pushed U.S. markets mostly lower, and this morning hotter PPI print is not helping. U.S. futures that were in the green earlier, have now gone south as higher than expected inflation data hit the tapes. On top of digesting the recent inflation report, investors will look to geopolitics and trade. Markets are awaiting further developments out of Iran, while Trump is set to travel to China later today for a meeting with Xi Jinping, putting the focus on the leaders of the world’s two largest economies. Trump won’t be travelling alone. More than a dozen business leaders are expected to join the trip, including Tim Cook, Larry Fink, David Solomon, and Elon Musk. A last-minute addition was Jensen Huang, after reports suggested the NVIDIA chief was initially not expected to attend. This comes as the International Energy Agency (IEA) released their monthly report stating that the Middle East conflict is causing oil inventories to fall at a record pace and the market will remain “severely undersupplied” until October even if the conflict ends next month.
Feeling hot, hot, hot. U.S. wholesale prices in April rose 1.4%, much more than expected. The data confirms what many already knew, that upstream cost pressures are expanding well beyond consumer gasoline prices and are now deeply embedded across production and transportation channels. The acceleration in both headline and core PPI suggests that businesses are facing broadening input cost strain, increasing the likelihood that further consumer price pressures may follow in coming months. This creates difficult backdrop for the Fed, as persistent wholesale inflation raises the risk that restrictive policy may need to remain in place longer (or potentially tighten further) despite growing political pressure for easing.
Yesterday’s CPI report marked a setback for the U.S., confirming that energy and food price shocks are eroding real consumer purchasing power and raising stagflation risks. What started as a temporary energy shock, appears to be turning into a broader consumer affordability issue, as gas, food, shelter, and transportation costs all pressure household budgets. The fact that real wages have now turned negative again is important, as it signals that inflation is no longer just a macro policy concern, but a direct drag on consumer spending which has helped power the U.S. economy. With inflation once again outpacing wage growth, households, particularly middle and lower-income consumers, are facing renewed financial strain as political and economic pressures build ahead of midterm elections. For the Fed, resilient employment combined with accelerating inflation reduces flexibility for easing and may extend restrictive monetary policy well into next year.
The Senate confirmed Kevin Wash’s nomination to the Federal Reserve Board of Governors yesterday, with the chamber expected to confirm him separately as chair later this week. Warsh’s near-confirmation as Fed chair represents a potentially significant leadership transition at a delicate moment for U.S. monetary policy. While Warsh has publicly advocated for institutional reform and suggested rates could eventually be lower, he inherits an environment defined by elevated inflation, geopolitical energy shocks, and a labour market that remains resilient enough to avoid immediate easing. All of this means that Warsh will quickly face a credibility test, balancing discipline with Trump’s demands for lower rates.
The rollout of tariff refunds in the U.S. marks a major fiscal and political shift, with potentially significant implications for corporate earnings, government borrowing needs, and broader economic sentiment. For businesses, these refunds effectively act as a sudden liquidity injection, improving balance sheets and in some cases directly supporting wage growth or operational reinvestment. However, for the U.S. Treasury, tens of billions in repayments could widen fiscal deficits and increase near-term financing pressure, potentially influencing future debt issuance strategies. As more refunds roll out, we will get a reminder of how trade policy can reshape both corporate financial conditions and macroeconomics, while also introducing new political uncertainty ahead of midterm elections.
Ripple effects. The Middle East conflict has evolved from a regional geopolitical crisis into a broad-based global macroeconomic shock, impacting currencies, inflation, transportation, food systems, and sovereign debt. Asia appears vulnerable due to its heavy energy import dependence, while rising fuel, fertilizer, and shipping costs threaten to raise global inflationary pressures, especially in emerging markets. The disruption extends beyond traditional commodities into consumer affordability, airline viability (RIP Spirit), and financial stability, raising the risk that what began as an oil shock could mature into a more systemic stagflationary environment. While global markets remain resilient for now, if the conflict persists, economic growth will suffer.
Still room to run? Strategists are noting that the current bull market resembles a late-cycle expansion rather than an imminent end-cycle collapse, with AI-driven capex remaining the dominant force underpinning equity leadership despite concentration and valuation concerns. While momentum and mega-cap leadership may remind some of a mature market phase, the scale of AI investment still appears below the excesses of the late-1990s dot-com era, particularly when adjusted for stronger corporate cash flow, profitability, and balance sheets. It’s also worth noting that broadening capital investment, potential tariff-related fiscal relief, and a stabilizing labour market could suggest that the economic and earnings backdrop remains supportive enough to extend the cycle.
He’ll still be alright. Even the world’s most valuable chip company isn’t immune to slowing momentum. NVIDIA CEO Jensen Huang saw his total compensation fall 27% to US$36.3 million (~$50 million in Canadian dollars) in fiscal 2026, largely due to a 36% year-over-year decline in stock awards. The reduction comes as Nvidia’s share price gains have moderated following back-to-back years of outsized performance. After tripling in 2023 and more than doubling in 2024, the stock rose a comparatively modest 39% last year and is up 18% so far in 2026. It’s all relative. Huang’s base salary and incentive compensation were largely unchanged, suggesting the decline reflects equity valuation dynamics more than any shift in leadership confidence.
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