EP119: GPU’s, CPU’s, TPU’s rocket higher on IOU’s
The S&P 500 broke 7,500 for the first time. Consumer sentiment hit an all-time record low. April CPI came in at its hottest since 2023. The Iran ceasefire was described as on "massive life support." And yet Wall Street just kept climbing. Here is everything that mattered in…
TITLE: Records at the Summit: Markets Defy Inflation, Iran and a Week That Had Everything EXCERPT: The S&P 500 broke 7,500 for the first time. Consumer sentiment hit an all-time record low. April CPI came in at its hottest since 2023. The Iran ceasefire was described as on "massive life support." And yet Wall Street just kept climbing. Here is everything that mattered in markets this week. BODY: If you tried to write a week like this as fiction, an editor would send it back. Too much happening. Too many contradictions. Too many storylines running simultaneously, pulling in opposite directions, somehow resolving — at least for now — into another record close. The S&P 500 ended Friday above 7,500 for the first time in its history. The Nasdaq eclipsed 26,600. Chipmakers have now gained more than 60% year-to-date. Meanwhile, US consumer sentiment printed at 48.2 — the lowest reading since the survey began in 1952. Gasoline is above US$4.50 a gallon. April CPI came in at 3.8% year-on-year, the hottest since May 2023. Producer prices surged 6.0% annually — the largest gain since December 2022. And the Federal Reserve's new chair inherited all of it on his first day in the job. The market's answer to all of this was: buy. The Iran Standoff That Won't Resolve The conflict that has defined global markets since late February entered a new and arguably more dangerous phase this week. Iran submitted a formal response to the US peace proposal — and Trump rejected it within hours, calling it "totally unacceptable" and "a piece of garbage." The ceasefire, which had been fragile for weeks, was described by the president himself as being on "massive life support." The Strait of Hormuz remains effectively closed. Saudi Aramco CEO Amin Nasser issued a stark warning mid-week: even if the waterway reopened today, markets would not normalise until 2027. The supply disruption — the largest in history — is now embedded in forward oil curves. WTI broke above US$100 per barrel and Brent approached US$108 before modest Friday relief. Oil is up more than 60% for the year. Netanyahu complicated matters further, telling CBS that the war was "not over" and that enriched uranium still inside Iran needed to be physically removed. Reports emerged that the White House was seriously reconsidering resuming major combat operations. The drone strikes on shipping in Qatari territorial waters and the UAE and Kuwait interceptions confirmed that the ceasefire is nominal at best. The one constructive development came late in the week, from an unlikely source. Trump and Xi in Beijing The first US presidential visit to China since Trump's own 2017 trip dominated mid-week sentiment and delivered the most significant geopolitical signal of the week. Trump arrived in Beijing flanked by Elon Musk, Tim Cook, Jensen Huang and Boeing's Kelly Ortberg — an entourage that said more about the summit's priorities than any official agenda. Xi's most consequential statement was on Iran: China would not provide military equipment to Tehran, and Xi expressed personal willingness to help mediate and see the Strait reopened. Trump described it as "a big statement, said strongly." Markets interpreted it as the first genuine diplomatic opening in weeks. The commercial outcomes were significant. The US cleared H200 Nvidia chip sales to approximately 10 Chinese companies — a material reversal of what had been a zero-access policy — sending Nvidia 4.4% higher to an all-time record. China agreed to buy 200 Boeing jets, though Boeing's stock fell 4.7%, suggesting the market had priced in a more transformative deal. Discussions on agricultural purchases, rare earths and a broader trade framework were also confirmed as ongoing. Xi raised Taiwan as the "most important" bilateral issue, warning that mishandling it could lead to a "dangerous" place. That sobering note was noted, filed, and largely set aside by equity markets in the rush to price the Nvidia news. Inflation Arrives, Warsh Inherits the Mess Tuesday's CPI print was the week's sharpest macro jolt. April headline inflation at 3.8% year-on-year beat estimates. Core CPI at 2.8% also surprised to the upside. Wednesday's PPI reading compounded the anxiety — a 1.4% monthly gain, the largest since March 2022, and a 6.0% annual surge that demolished forecasts of 4.9%. The energy channel is the primary culprit: gasoline prices rose 28.4% year-on-year in April, the most since July 2022. But the more troubling signal was shelter inflation — supposed to be a disinflationary tailwind this year — accelerating instead. As one analyst noted, if shelter is rising while Iran-driven energy costs flow through other categories, the upward pressure has further to run. Kevin Warsh was confirmed as Federal Reserve Chair by a 54-45 Senate vote on Wednesday, replacing Jerome Powell. He arrives to an environment where Boston Fed President Susan Collins has publicly stated a rate hike "could be in the cards," where Goldman Sachs and Bank…
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