General Market News

Kevin Warsh was confirmed as Federal Reserve Chair on Wednesday with just 54 votes, the lowest support for a Fed chair since the position became Senate-confirmed in 1977. President Trump nominated Warsh after years of regretting his 2017 choice of Jerome Powell, but the new chair faces significant challenges including rising inflation (3.8% in April) and market skepticism about delivering the rate cuts Trump demands. Warsh's ability to maintain independence while satisfying Trump will determine whether he can restore Fed credibility and avoid becoming another presidential disappointment.

• Warsh received only one Democratic vote (Sen. John Fetterman), compared to Powell's 80-19 confirmation in 2022 and even Janet Yellen's 56 votes in 2014, signaling weak congressional support that could leave him vulnerable to Trump's pressure.
• Markets assign only a 1% probability of rate cuts this year as core inflation has risen for three consecutive months, making Trump's demand for 'quick rate cuts' unlikely despite the president saying he would be 'very unhappy' if Warsh cannot deliver.
• Warsh plans to reform the Fed by ending forward guidance commitments, centralizing communications, updating data sources, and renegotiating Treasury Department coordination rather than focusing on short-term rate decisions.

U.S. beer sales fell 6.3% year-over-year through early May 2026, marking a sharp deterioration from earlier declines of just 3%. The weakness appears linked to surging gasoline prices, which have risen 52% since the Iran conflict began and now average $4.51 nationally, pressuring consumer discretionary spending especially at convenience stores.

• Convenience store beer volumes dropped roughly 9% year-over-year in the two weeks since April 26, with analysts finding negative correlation between state gas prices and beer sales growth
• California, with the highest gas prices at $6.16 per gallon, saw beer volumes decelerate 16% between early April and early May, while Arizona and Texas also showed notable 10% and 7% declines respectively
• The weakness is spreading beyond beer to other beverage categories, suggesting broader cyclical pressure on U.S. consumers as confidence hit record lows in May with one-third of respondents citing gas prices as their biggest concern

Kevin Warsh was confirmed by the Senate 54-45 as the next Federal Reserve chair, replacing Jerome Powell whose term expires Friday. The confirmation vote was the most divisive ever for a Fed chair, coming as President Trump pushes for lower interest rates despite fresh inflation data complicating rate cut prospects.

• The 54-45 Senate vote marks the narrowest confirmation margin in Fed chair history, more divisive than Janet Yellen's 56-26 vote in 2014
• Warsh previously served at the Fed from 2006-2011 during the financial crisis and has been a consistent critic of monetary policy, calling for 'regime change' at the central bank in 2025
• His first FOMC meeting as chair is scheduled for June 16-17, 2026, and he will be the wealthiest Fed chair ever with holdings exceeding $100 million

Kevin Warsh was confirmed by the Senate as the next Federal Reserve chairman, taking over from Jerome Powell as inflation surges to 3.8% in April—the highest since mid-2023. Warsh inherits an economy facing mounting inflation pressure while the White House pushes for lower interest rates, creating a difficult policy dilemma for the incoming Fed chief.

• Consumer prices rose 3.8% year-over-year in April, accelerating sharply from March's 3.3%, with core inflation at 2.8% and the Fed's preferred PCE gauge remaining above 3%
• Warsh faces conflicting pressures: typically the Fed would avoid cutting rates during rising inflation, but President Trump has repeatedly pushed for aggressive rate cuts
• Some economists now suggest the debate has shifted from 'why or why not cut' to 'why or why not hike,' indicating rate increases may be back on the table if inflation remains elevated

Mortgage rates climbed to 6.57% on Wednesday, the highest level since March, driven by a hotter-than-expected Producer Price Index report and geopolitical tensions related to Iran war negotiations. The increase dampened affordability gains that had begun to revive the spring housing market, though rates remain below the roughly 7% levels seen a year ago.

• The 30-year fixed mortgage rate rose 15 basis points from the prior Friday to 6.57%, with rates up roughly 40 basis points since February
• Home showings in April increased 8% year-over-year across all U.S. regions, driven by cooling home prices, though inventory remains 11-12% below normal levels
• Buyer purchasing power has declined approximately 4% from February levels due to the rate increase, making homes less affordable than early 2026 but more affordable than last year

President Trump's summit with Chinese President Xi Jinping in Beijing is being viewed as a critical moment for AI supply chains, with Nvidia CEO Jensen Huang and other top tech executives joining the delegation. Wedbush analyst Dan Ives sees the talks as potentially pivotal for resolving chip export restrictions and Nvidia's limited access to the Chinese market. Both nations have incentives to reach constructive outcomes as AI adoption accelerates globally.

• Nvidia's advanced chips have faced US export restrictions since 2022, with government-approved versions still not allowed into China as of February 2026
• China has developed domestic alternatives like DeepSeek to reduce reliance on Nvidia, though US restrictions have slowed these efforts
• Wedbush views any progress on export controls as positive not only for Nvidia but for broader AI infrastructure, networking, and software companies

U.S. health insurers reported strong first-quarter results with medical costs below estimates, signaling potential stabilization after three years of pressure from rising costs in government-sponsored plans. However, analysts are cautious and want to see similar performance in the second quarter before confirming the trend, as temporary factors like a weak flu season may have contributed to the positive results.

• The S&P managed care index has fallen over 12% since July 2023 due to elevated healthcare utilization in Medicare plans and changes to Medicaid enrollment that brought in sicker, costlier members
• Major insurers including UnitedHealth, Cigna, Humana, Elevance Health, and Centene beat Q1 expectations in their best performance since the COVID-19 pandemic
• Analysts identify the second quarter as the critical test period, with claims from Q1 being paid in April-May, and caution that one-time factors like weather disruptions and weak respiratory season may have artificially lowered Q1 costs

US grocery prices surged in April 2026, with food-at-home prices rising 2.9% year-over-year—the highest since August 2023—driven by multiple factors beyond fuel costs. While diesel prices jumped 61% annually due to conflict affecting global oil supplies, trade policies, droughts, and other supply chain issues also contributed significantly. The full impact of energy cost increases may not yet be reflected in retail prices, which typically lag production costs by three to six months.

• Diesel fuel prices soared 61% year-over-year, affecting transportation of 83% of US agricultural products, with independent grocers facing new fuel surcharges from suppliers
• Fresh fruit and vegetables increased 6.5% while meat rose 8.8%, but trade policies also played a role—tariffs on Mexican tomatoes led to 40% price increases over 12 months
• Some categories saw price declines: eggs dropped 39% as flocks recovered from avian flu, butter fell 5.8%, and milk and chicken dipped slightly year-over-year

The 10-year Treasury yield rose to 4.49% on Wednesday, its highest level since July 17, after April's Producer Price Index jumped 1.4% monthly—the largest gain since March 2022 and far exceeding the 0.5% consensus forecast. The hotter-than-expected wholesale inflation data, combined with elevated consumer prices, complicates the Federal Reserve's policy path as inflation runs well above the central bank's 2% target.

• April PPI surged 1.4% month-over-month (vs. 0.5% expected) and 6% year-over-year, the biggest annual increase since December 2022, driven by $100 per barrel oil raising production costs
• The 10-year Treasury yield reached 4.49%, the 30-year yield hit 5.05%, both at highs not seen since mid-July, while the 2-year yield rose to 4.004%
• Consumer price inflation also exceeded expectations at the highest rate since May 2023, creating a difficult environment for the Fed as it faces both elevated inflation and a slowing labor market ahead of new leadership

A Federal Reserve survey of over 13,000 U.S. adults conducted in October showed that 73% rated their personal finances as stable, unchanged from 2024. However, concerns about job security increased from 37% to 42%, reflecting a slowdown in hiring and longer unemployment durations in 2025. Views of the national economy remained weak, with only 26% rating it as good or excellent.

• Inflation remained the top concern for over 90% of respondents, though specific percentage details were incomplete in the survey results
• Job market worries rose to 42% from 37% in 2024, aligning with data showing slower hiring pace and longer unemployment periods in 2025
• 63% of adults said they could cover an unexpected $400 emergency expense, unchanged from the prior year, while certain groups including low-income households, young adults, and Black adults saw meaningful declines in financial well-being

US stock markets diverged on May 13, 2026, after hot PPI data (1.4% monthly, 6% annually) pushed Treasury yields to multi-month highs, with the 10-year yield reaching 4.49%. The Nasdaq remained stable supported by AI and semiconductor stocks like Nvidia, while the Dow fell nearly 300 points and the S&P 500 stayed flat as rate-sensitive sectors struggled with weakening Fed rate cut expectations.

• Producer Price Index surged 1.4% monthly versus 0.5% expected, marking 6% annual inflation—the highest since late 2022—following a similarly hot 3.8% CPI print the day before
• Nvidia and semiconductor stocks outperformed significantly, with Micron jumping over 5% on AI enthusiasm and reports of Nvidia's CEO joining Trump on a China visit
• Rate-sensitive sectors including financials, retailers, and housing faced immediate pressure as the 10-year Treasury yield hit its highest level since July and the 30-year yield pushed above 5%

US wholesale inflation surged 6% year-over-year in April, the largest increase since December 2022, driven by energy price spikes following US-Israel military action against Iran and Tehran's subsequent closure of a key shipping route. The Producer Price Index jumped 1.4% monthly, far exceeding economist expectations and complicating the Federal Reserve's monetary policy decisions ahead of November midterm elections.

• Energy prices climbed 22.7% year-over-year, with gasoline up 15.6% monthly and diesel (critical for shipping) rising 12.6% from March to April
• Core producer prices (excluding food and energy) increased 5.2% annually and 1% monthly, both well above forecasts, signaling broad inflationary pressure
• The inflation spike follows Iran's closure of a strategic waterway after Feb. 28 attacks, affecting one-fifth of global oil and LNG transit and forcing companies like Walmart to consider price increases

The Federal Reserve Bank of New York won an appeal against Puerto Rican lender Banco San Juan Internacional (BSJI), which challenged the closure of its master account to the U.S. central banking system. The 2nd Circuit Court ruled that regional Fed banks have discretion to grant or deny master accounts to nonmember banks as part of their role in promoting financial system stability. BSJI's account was terminated over concerns about non-compliance with U.S. sanctions and anti-money laundering rules related to Venezuela.

• The court ruled 3-0 that the Federal Reserve Act does not entitle nonmember banks to master accounts, which provide access to the Fed's electronic payment system
• BSJI's 11-year-old account was closed as part of a 2019 crackdown on Puerto Rico's offshore banking industry due to Venezuela sanctions concerns
• The court found no 'discriminatory animus' supporting BSJI's claim it was targeted because the bank was owned by a Venezuelan national

The U.S. Energy Information Administration projects that solar power generation will exceed coal for the first time in Texas's ERCOT grid in 2026. Solar is forecast to produce 78 billion kilowatt-hours compared to coal's 60 billion kilowatt-hours, with the gap widening further in 2027. Natural gas remains the dominant power source in Texas, accounting for 44% of generation.

• Solar generation in ERCOT is projected to reach 78 billion kWh in 2026, surpassing coal's 60 billion kWh for the first time
• By 2027, solar output is expected to grow to 99 billion kWh while coal generation rises only slightly to 66 billion kWh
• Natural gas remains the dominant power source in Texas, averaging 44% of total generation from 2021 to 2025

Europe's jet fuel imports from the Middle East collapsed from 330,000 barrels per day in March to just 60,000 bpd in April due to conflict in Iran and the effective closure of the Strait of Hormuz. The International Energy Agency warns that Europe has only replaced 70% of lost volumes, falling short of the 80-90% needed to avoid summer shortages.

• Middle East jet fuel flows to Europe dropped by over 80% between March and April, from 330,000 bpd to 60,000 bpd
• Europe increased imports from the U.S. and Nigeria to 221,000 bpd in April, but this falls short of the IEA's recommended 80-90% replacement threshold
• European inventories are declining rapidly, and with Middle East flows still offline, the IEA warns that rebalancing will take considerable time without resolution of the Hormuz situation

LinkedIn, owned by Microsoft, is planning to lay off approximately 5% of its workforce as part of a reorganization effort. The company is restructuring teams to focus resources on areas experiencing business growth. This move adds to the ongoing wave of job cuts across the technology sector.

• The layoffs affect about 5% of LinkedIn's total staff as the company reorganizes its teams
• The restructuring aims to redirect staff and resources toward business areas showing growth
• The cuts are part of broader tech-sector layoffs, with LinkedIn joining other major companies in workforce reductions

The U.S. Securities and Exchange Commission's new enforcement chief, David Woodcock, announced the agency is closely monitoring risks in private funds, particularly around liquidity, fees, valuation, and conflicts of interest. Woodcock also defended a recent decline in SEC enforcement actions, stating the commission has deliberately shifted toward prioritizing quality over quantity in its enforcement efforts.

• SEC enforcement is focused on private credit risks including liquidity concerns, fee structures, valuation issues, and conflicts of interest across the distribution chain
• David Woodcock took office as enforcement director following the abrupt departure of Margaret Ryan, who left after clashing with agency leadership
• The agency has experienced a decline in enforcement activity volume as it shifts strategy to emphasize quality over quantity to protect investors from 'real harm'

US stocks declined on Wednesday after April producer prices rose more than expected, reinforcing fears the Federal Reserve will maintain elevated interest rates longer. The Dow fell 230 points while the Nasdaq gained 0.3% as semiconductor stocks rebounded from Tuesday's sharp selloff, despite ongoing inflation pressures tied to the Iran conflict and rising oil prices.

• Producer prices jumped sharply in April, climbing 6% year-over-year (highest since December 2022) and exceeding the 4.9% consensus estimate, following Tuesday's hotter-than-expected consumer inflation data
• Markets now price in roughly 11 basis points of Fed tightening by December, up from 9.3 basis points before the data release, as Treasury yields hit 10-month highs
• Semiconductor stocks rebounded strongly with Micron up 4.5% and Nvidia rising 2.4% after Tuesday's steep selloff, supported by CEO Jensen Huang joining Trump's China summit with President Xi

Czech defence group CSG has made a bid to acquire a stake in Franco-German tank maker KNDS from its German owner families, who hold 50% of the company. However, the families are prioritizing an initial public offering and a potential stake sale to the German government, which has expressed interest in acquiring 30-40% in a pre-IPO move to safeguard national security interests.

• The German government has sent a letter to KNDS's German owner families outlining interest in acquiring a 30% to 40% stake before any IPO, while the French state already owns the remaining 50% of KNDS
• An IPO could value KNDS at around 20 billion euros ($23 billion), making it a significant opportunity in the European defence sector
• CSG's own market capitalization has fallen from 25 billion euros at its earlier IPO to less than 16 billion euros, following allegations by short-seller Hunterbrook Media about its business model and production capacity

The S&P 500 recovered from an intraday sell-off on Tuesday, closing nearly flat after a 1.5% rally, while the VIX 'fear gauge' declined despite briefly hitting its highest level since April 28. The muted VIX presents a potential hedging opportunity as individual stock volatility remains elevated, particularly in semiconductor stocks where volatility is 2.5 times more expensive than the benchmark index.

• VIX options saw four times more calls bought than puts, becoming the 10th most-active traded as traders positioned for potential volatility with oil above $100 and 10-year Treasury yields at July highs
• Tech stocks like Qualcomm, Intel and memory stocks pulled back significantly, though options flow in tech ETFs (SMH, SOXX, DRAM) remained moderately bullish with total premiums still leaning toward calls
• Bond traders showed clear bearish conviction, purchasing over 151,000 TLT puts while buying fewer than 76,000 calls, with one trader spending $1 million on July 81 puts betting on a 5% drop