PPI Hit 6%. The S&P Hit Another All-Time High. Warsh Was Confirmed by One Democrat.
Wholesale inflation: hottest since 2022. Rate hike probability: 36%. 30-year near 5% for first time since 2007. Jensen Huang flew to Beijing.
📊 THE MARKET BREAKDOWN
Satirical daily market intelligence for traders who think in systems, not headlines.
Issue #234 | May 13, 2026
🔥 Headlines & Hysteria (powered by Forked Feed)
Forked Feed says: Tuesday’s 3.8% CPI was described as the worst inflation reading since 2023. Wednesday’s 6.0% PPI is what arrives before CPI in the inflation pipeline, which means Tuesday’s worst-reading-since-2023 was the lagging consequence of Wednesday’s number, which hadn’t been published yet. The inflation pipeline is currently full in both directions: the CPI shows what energy prices did to consumers in April, and the PPI shows what energy prices did to producers in April, and the PCE will show what both of those did to the Fed’s preferred measure in approximately three weeks, and the May CPI will show what all of this has done once it compounds for another thirty days. The S&P 500 set a new all-time high. Morgan Stanley raised its year-end target to 8,000. Both of these things happened on the same day as the 6.0% PPI, which is either the most confident equity market in three years or the most efficient system ever devised for not reading inflation data.
Forked Feed says: Kevin Warsh was confirmed to lead the world’s most powerful financial institution by the margin of one Pennsylvania Democrat who has previously voted to confirm Trump nominees while wearing a hoodie. Warsh inherits: a 3.8% CPI, a 6.0% PPI, a 36% market-implied probability of a rate hike this year, a 30-year Treasury yield approaching 5% for the first time since 2007, an inflation pipeline that is simultaneously full at the consumer level and overflowing at the producer level, a closed Strait of Hormuz, and an Iranian reparations proposal that Trump called garbage. He has stated he’d like rates around 3% in two years. He’s arriving at 3.5-3.75% with the data suggesting the next move might be up rather than down. This is the monetary policy equivalent of boarding a ship in the direction opposite to where you’d like to travel.
Forked Feed says: The U.S. government sold $25 billion in 30-year bonds on Wednesday and buyers accepted yields near 5%, which is the price of lending the federal government money for thirty years in an environment where the person in charge of inflation just inherited a 6% PPI on their first day. The bond market is not confused about what’s happening. It’s pricing a 30-year risk premium that accounts for: a war-driven inflation spike, a new Fed Chair arriving into restrictive territory with a mandate to lower rates that the data is actively preventing him from executing, and a federal deficit that requires $2 trillion in annual borrowing to sustain. The equity market, simultaneously, is pricing Jensen Huang going to Beijing, which is a different asset class expressing a different thesis about which variable is larger. Both prices are correct for their respective assets. They can’t both be right about the future.
Forked Feed says: Morgan Stanley’s 8,000 target assumes that the AI earnings growth story continues to outpace the inflation story, the rate story, the closed-strait story, and the reparations-proposal story in a straight line through December. This is a coherent thesis. The S&P has been executing it for seven consecutive weeks. Morgan Stanley presumably has access to the same 6.0% PPI print that everyone else received on Wednesday morning and has decided it’s not relevant to the thesis or is, specifically, already in the price. The S&P at 7,466 on Wednesday is 7.2% below the 8,000 target. Getting there in seven months requires compounding the last seven weeks’ performance without encountering the test that the last seven weeks’ data has been building toward. Morgan Stanley’s analysts have decided the test won’t come. The data has an opinion about this and the opinion is 6.0%.
Forked Feed says: The CEO of the company that makes the chips that run the AI that is the primary thesis driving the S&P to all-time highs during a war is in Beijing with the President of the United States, who is simultaneously trying to get the President of China to apply diplomatic pressure on the country whose closed shipping strait is generating the inflation that is threatening the interest rate environment that makes the chips valuable at their current prices. Jensen Huang being in Beijing is either the most consequential business trip in semiconductor history or a diplomatic backdrop for earnings commentary. The market added value to Nvidia shares when the news broke, which is the market correctly identifying that Huang’s presence in Beijing is worth something. What that something is, in diplomatic terms, has not been quantified, but the equity market has valued it at some number of basis points of Nvidia’s market cap, which is how asset prices work in 2026.
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🔎 Today’s Focus: The Inflation Stack
Wednesday delivered a data point that Tuesday’s 3.8% CPI hadn’t fully communicated: inflation isn’t just elevated at the consumer level. It’s elevated at the producer level, at the services level, and in the pipeline that feeds both. The 6.0% PPI headline is the number. The core PPI at 5.2% is the more alarming subcomponent, because core strips out food and energy and is still running at its highest rate in three years. “Stripping out energy costs still shows there’s inflation in the pipeline,” noted one analyst. The inflation stack is: energy from a closed strait, food from drought and supply chain disruption, services from labor costs and logistics, and now core production costs running at 5.2% annually, all arriving simultaneously in an economy where the new Fed Chair has explicitly stated he’d like rates lower and the data is explicitly stating he’s not going to get there soon.
The market processed all of this and hit a new all-time high at 7,466, driven by Nvidia specifically and tech broadly, because Jensen Huang going to Beijing generates different market inputs than the 30-year Treasury yield approaching 5%. These two assets are not describing the same future. The bond market’s 30-year yield and the equity market’s record close are competing forecasts, and one of them is wrong by approximately the distance between “rates are going to 5%” and “the S&P goes to 8,000 on AI earnings.”
Warsh was confirmed at 2:47 PM. Powell exits Friday. The slimmest margin in Fed history handed control of the world’s most consequential interest rate to a man who inherits a 6% wholesale inflation rate, an inflation pipeline that feeds into PCE in three weeks, and a 36% market-implied probability that his first policy action will be a hike rather than a cut. The market’s response to his confirmation was to add fractional gains. The bond market’s response was to price the 30-year at near 5%. Both responses are informative. One of them is more historically accurate about what 6% PPI typically requires from monetary policy.
Forked Feed says: The inflation stack has PPI at 6%, CPI at 3.8%, core PPI at 5.2%, rate hike probability at 36%, and the 30-year approaching 5% for the first time since 2007. The market has the S&P at an all-time high and Morgan Stanley targeting 8,000. These two descriptions of the same economy require one of them to be significantly wrong before the year is over. The question isn’t which one. The question is when, and whether the event that resolves the disagreement arrives before Nvidia’s May 20 earnings or after.
⚡ The Setup
SPY 742.31 | BTC 79532.08 | US10Y 4.461 | DXY 98.460
SPY at 742.31. A new all-time high achieved on a day PPI printed 6.0% and the 30-year Treasury yield approached 5% and the new Fed Chair was confirmed by the thinnest margin in institutional history. The index has now set new records on days containing: a $126 Brent overnight print, four FOMC dissenters, 3.8% CPI, 6.0% PPI, an Iranian reparations proposal, and a ceasefire described as on massive life support. The AI earnings buffer has absorbed all of this. The question the 30-year Treasury is asking at near 5% is whether it can absorb all of it for a full year while the Fed is simultaneously being asked to lower rates and being given data that requires raising them.
BTC at 79532.08. Bitcoin pulled back modestly from its recent $80,000+ levels as the rate hike probability reaching 36% introduced friction into the risk environment. At $79,500, it’s down about $1,000 from Monday’s close, which is proportional to a session where the primary news was two consecutive inflation beats at the CPI and PPI levels simultaneously. Bitcoin doesn’t have a direct opinion on who runs the Fed. It has an indirect opinion on whether monetary conditions are tightening or loosening, and Wednesday’s data moved that opinion in the tightening direction by a specific and measurable amount.
US10Y at 4.461. The ten-year is approaching its cycle high and the 30-year auction absorbing near-5% yields is the bond market’s most specific statement about its assessment of the long-run inflation path. The two-year yield at near 4% against the fed funds upper band of 3.75% means the market is pricing that Warsh’s first move is a hike rather than a cut, which is not the mandate he described at his Senate confirmation hearing or the preference he stated publicly before taking the role. The bond market is telling Warsh what the job requires. Warsh takes office Friday. The conversation is scheduled to continue.
DXY at 98.460. The dollar gained modestly as the rate hike probability increase from the PPI print provided rate differential support. It’s been oscillating in the 97.8-98.5 range all week as the competing forces of deal optimism, Beijing trip expectations, and successive inflation beats produce a currency that moves slightly in the hawkish direction every morning when the data arrives and slightly back in the afternoon when the chip stocks go up. The dollar at 98.46 is the currency market’s best approximation of a week where every input is arriving hot and every equity signal is pointing higher. These can’t both be right simultaneously at year-end. The dollar is waiting to find out which one wins.
🏛 Market Archetype: The Inflation Stack
A new all-time high set on a day of 6.0% PPI, 5.2% core PPI, 30-year Treasury yields near 5% for the first time since 2007, 36% rate hike probability, and the slimmest Fed Chair confirmation in history, with the S&P adding fractional gains because Jensen Huang is in Beijing and Morgan Stanley targets 8,000. The Inflation Stack describes the current configuration where every inflation input is simultaneously at its hottest point of the conflict while the equity market’s primary thesis operates on a track that has, for seven weeks, successfully avoided acknowledging what the bond market is pricing at near-5% yields for thirty years.
💧 Flow Pulse
Nvidia’s gain on the Jensen Huang Beijing announcement was Wednesday’s single most market-moving individual event. The CEO joining Trump’s delegation is interpreted as: AI policy cooperation between the U.S. and China is a topic at the summit, potential export license modifications for Nvidia’s China-specific chips, and the implicit endorsement of Nvidia’s centrality to U.S. geopolitical and economic strategy. All three readings are plausible. The market priced all three simultaneously by adding to Nvidia’s recent gains, extending the chip sector’s partial recovery from Tuesday’s 5% reversal. The chip sector is trading on Beijing-related optionality at the same time it’s being pressured by rate sensitivity from the inflation data, which produces a sector whose direction depends on which variable the market is looking at in any given two-hour window.
The bond market’s behavior deserves its own paragraph because it’s the session’s most structurally honest signal. A $25 billion 30-year Treasury auction clearing at near 5% yields is the U.S. government borrowing money at the highest 30-year rate since 2007, from investors who have decided that the 30-year inflation and growth outlook justifies requiring a near-5% return. This is not a speculative position. It’s the collective judgment of institutional fixed income investors about what the next thirty years cost, expressed in the only currency that bond investors use, which is yield. The equity market can ignore this signal while the chip sector goes up. The signal remains in the data regardless of whether anyone is reading it. It’s been in the data since at least the 3.8% CPI, and the 6.0% PPI has made it louder.
OPEC’s demand outlook cut is Wednesday’s most quietly consequential data point. The cartel reduced its 2026 global oil demand growth forecast from 1.38 million barrels per day to 1.17 million on the Iran war’s demand destruction effects, while OPEC+ output fell 1.74 million barrels per day in April on the Hormuz closure. The demand destruction that JPMorgan warned about two weeks ago is now appearing in OPEC’s own modeling. The war is simultaneously: closing the strait that constrains supply, destroying the demand that would normally absorb that supply, and generating the inflation that’s forcing the new Fed Chair to consider hiking rates rather than cutting them. These three things are all expressions of the same event producing contradictory market signals, which is why the S&P is at 7,466 and the 30-year Treasury is at near 5% and both markets are technically correct about different aspects of the same situation.
Forked Feed says: Nvidia up because Jensen Huang is in Beijing. Bonds pricing near 5% for thirty years because 6% PPI says they have to. OPEC cutting demand forecasts because the war is destroying the demand it’s also constricting the supply of. Morgan Stanley targeting 8,000 because the earnings growth story. The inflation stack, the bond market, OPEC, and the Fed’s new leadership are all telling the same story from slightly different angles. The equity market is telling a different story and it has a seven-week winning streak to support it. One of these narratives is going to be very right and very wrong in the same December, and the spread between them is exactly the distance between 7,466 and wherever rates end up if 6% PPI isn’t transitory.
🔮 Forked Forecast
Bull Case (28%): The Xi summit produces a specific commitment from China to apply meaningful diplomatic pressure on Iran’s nuclear terms, framed in language both sides can claim as progress. Iran withdraws the reparations proposal before the weekend and submits a sixth document without the Strait sovereignty demand. Warsh’s first statement Friday signals that his mandate is long-term price stability rather than near-term rate hikes, preserving 2026 cut optionality in a way that relieves 30-year yield pressure. Nvidia’s May 20 earnings confirm AI infrastructure revenue at the scale required to justify 7,466. The inflation stack is classified as war-driven and therefore temporary. The S&P extends toward 7,600.
Base Case (34%): The Beijing summit produces encouraging-but-non-binding trade and AI framework language. Iran doesn’t submit a sixth proposal this week. Warsh signals hawkish intent but defers action to the June FOMC, where the decision depends on whether May CPI continues May PPI’s trajectory or softens. The 30-year yield holds near 5% through the week. The S&P consolidates between 7,350-7,500 as the market digests PPI, Warsh, and Beijing simultaneously and finds no catalyst strong enough to break decisively in either direction. The inflation stack is acknowledged as real but treated as a June problem rather than a May one.
Bear Case (38%): The Beijing summit produces no specific Iran commitment, confirming that Xi’s leverage over Tehran’s nuclear policy is closer to “modest” than “decisive.” Iran defends the reparations proposal as its actual position. Warsh’s first statement Friday introduces rate hike language that the market has priced at 36% probability but hasn’t fully digested, sending the ten-year through 4.5% and toward a new cycle high. Nvidia’s May 20 earnings arrive in a rate environment that has repriced the AI multiple downward since the 6.0% PPI confirmed the inflation stack isn’t clearing. The S&P falls below 7,200 as the bond market’s 30-year signal proves to have been the more accurate forecast, and the equity market discovers what “inflation not transitory” costs at 7,466.
Triggers to Watch:
Trump-Xi joint statement Thursday-Friday: the specific language on Iran determines whether the summit produced diplomatic substance or diplomatic form. Watch for any language that uses the words “nuclear,” “uranium,” or “Hormuz” in binding rather than aspirational form.
Warsh’s first statement as Chair Friday: Powell exits Friday, Warsh takes office Friday, and his first communication in the role is the rate market’s most important input of the month. Whether he explicitly acknowledges the rate hike probability or signals he views the inflation as transitory will set the bond market’s direction for the summer.
Iran’s response to the reparations proposal rejection: whether Iran submits a sixth proposal or defends the fifth as its actual position. The distance between “negotiating extreme” and “genuine position” is the distance between a deal by summer and a war by summer.
The 30-year yield direction: it’s approaching 5% for the first time since 2007. Whether it crosses 5% before Nvidia reports on May 20 determines the valuation environment in which the AI infrastructure thesis is tested against actual revenue. A 30-year above 5% is a materially different discount rate than a 30-year below it.
Nvidia May 20 earnings: now seven days away in a context where the rate environment has materially changed since the stock hit its 2026 high. The 6.0% PPI is the data point that Nvidia’s guidance will need to overcome to maintain the multiple at which the AI thesis is currently priced.
OPEC demand cut follow-through: the cartel’s reduction to 1.17 million bpd growth forecast reflects a war-period demand destruction that’s now being institutionally modeled. Whether this produces a Brent price ceiling that limits the inflation pipeline’s upside is the supply-demand question underlying every inflation print for the rest of 2026.
SpaceX IPO timeline: prediction markets give 62% probability of closing above $2 trillion on IPO day. In the current environment, a $2 trillion IPO landing in the middle of a rate hike cycle and a hot PPI would be either the most confident market in three years or the most ironic transaction in recent financial history. Watch for the official filing date.
May PCE preview: the April PCE, the Fed’s preferred inflation measure, arrives in approximately three weeks and will incorporate the full 6.0% PPI and 3.8% CPI. The Fed’s next scheduled meeting is June 17. Whether Warsh’s first FOMC meeting produces a hike depends almost entirely on what PCE says when it arrives. The inflation stack has already told you what it’s going to say.
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💬 Final Thought
The inflation pipeline is full. CPI at 3.8% was the consumer end. PPI at 6.0% is the producer end. Core PPI at 5.2% is the part that survives after you remove the energy excuse. The 30-year Treasury at near 5% is the bond market pricing all of it over thirty years. The CME FedWatch tool has rate hike probability at 36%. Warsh was confirmed by one Pennsylvania Democrat who may or may not have understood that he was casting the deciding vote to hand someone an inheritance containing a 6% wholesale inflation rate and a closed shipping strait.
The S&P closed at 7,466. Another all-time high.
Jensen Huang is in Beijing. Morgan Stanley targets 8,000. The AI earnings buffer has survived eleven consecutive weeks of data that should have broken it and hasn’t. These are real facts. They describe a market that has correctly identified the AI infrastructure build as the largest structural investment cycle of the decade and correctly priced the companies benefiting from it above every prior valuation ceiling.
The bond market has correctly identified that a 6.0% PPI in an environment where the new Fed Chair is simultaneously trying to lower rates and inheriting data that requires raising them is a configuration with limited historical precedent and unlimited potential consequences.
Both markets are correct about their respective assets. They’re describing two different outcomes for the same economy in the same year. The distance between 7,466 and 8,000 is the equity market’s thesis. The distance between 4.46% and 5.0% on the 30-year is the bond market’s answer. These two distances are going to intersect somewhere before December, and the intersection is going to have a very specific date and a very specific oil price and a very specific Nvidia guidance number attached to it.
The inflation pipeline has a schedule. The pipeline doesn’t care about Jensen Huang’s Beijing itinerary.
-- Forked Feed
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