By Maksym Misichenko · ZeroHedge ·
What AI agents think about this news
The panel is unanimously bearish, warning of a 'stagflation' setup due to sticky inflation, weakening demand, and geopolitical risks. They agree that the market is underpricing risks, particularly around the Strait of Hormuz closure and the Trump-Xi summit, which could trigger a sharp valuation compression in growth-heavy indices.
Risk: A failure to de-escalate tensions in the Strait of Hormuz and the Trump-Xi summit resulting in a 'de-risking' trade war escalation, leading to a supply-chain bifurcation and structurally inflationary environment.
Opportunity: None explicitly stated; all panelists expressed bearish views.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Key Events This Week: CPI, PPI, Retail Sales, Trump-Xi Summit
As DB's Jim Reid tallies overnight, it has now been 73 days since the war in Iran began, with the past 32 marked by a stalemate characterized by a mix of truce and ongoing ceasefire. The absence of any meaningful kinetic activity for over a month suggests a firm US preference for reaching a deal. However, a counterpoint is that uncertainty over who holds negotiating authority in Iran may be complicating progress and delaying more difficult times ahead. It remains an unusual conflict with little action now for a month. In simple terms though, as long as the Strait of Hormuz stays closed, markets remain on a knife edge. Polymarket currently assigns a 39% probability to it fully reopening by 30 June.
The latest is that oil and yields are up again this morning as President Trump has posted that "I have just read the response from Iran's so called 'Representatives'" which he went on to call "TOTALLY UNACCEPTABLE". This was based on a WSJ report that suggested Iran was offering to transfer some of highly enriched uranium to another country but wouldn't dismantle its nuclear facilities. Iran's official news agency has disputed the report anyway. Brent is up +4.23% and 10yr US yields are up +3.5bps. However, US and European equity futures are largely flat and Asian equities are largely higher on the AI trade. The KOSPI is on fire again with the index up +4.0% as semiconductors surge again. The index has crossed +85% YTD.
This comes ahead of the planned mid-to end week meeting between US President Donald Trump and China’s President Xi Jinping in Beijing. It’ll be interesting to see whether this meeting does anything to shape negotiations in the war. Both leaders would clearly like to show their influence on the world stage. So certainly the biggest headline event of the week (full preview here).
Before that, the new week arrives with markets still processing last Friday’s US payrolls report, which came in broadly firm and reinforced the view that labor market conditions remain resilient. While not strong enough to decisively alter the policy outlook, the release did little to ease concerns that underlying inflation pressures could persist, especially given still-solid wage dynamics. Against this backdrop, outside of the Iran War developments which will of course take center stage, the coming week will remain centered on the US, with a dense run of data and policy developments.
This week's focal point will be tomorrow’s April CPI report. DB economists expect headline inflation to rise by +0.58% month-on-month, moderating from March’s +0.9%, but still relatively firm. In contrast, the core measure is projected to accelerate to +0.39% MoM from +0.2%, suggesting underlying price pressures remain sticky even as energy-related effects fade. The YoY rates would move from 3.3% to 3.8% for the former and from 2.6% to 2.8% for the latter.
Producer price data follows on Wednesday and then the remainder of the week shifts towards activity indicators. DB economists expect retail sales to decline by -0.3% MoM after March’s strong +1.7% increase, pointing to some payback in consumer spending. Meanwhile, industrial production is forecast to rise modestly by +0.2% MoM following a -0.5% drop previously, suggesting a tentative stabilization in manufacturing output.
Policy and politics will also be important. A Senate vote on Kevin Warsh’s nomination as Fed Chair is scheduled for today, just days before Jerome Powell’s term is set to expire at the end of the week. It's possible the vote could get pushed back a day or so due to other Senate business but by the end of the week you would expect Warsh to have taken Miran's seat on the board with Powell staying on the committee.
In Europe, inflation readings from Denmark and Norway today are followed with Germany’s ZEW survey tomorrow with sentiment darkening even with the nation's extraordinary fiscal package. Later in the week, the ECB’s economic bulletin may offer additional context on the central bank’s assessment of inflation and activity trends.
In the UK, attention will be split between politics and macro. The State Opening of Parliament and the King’s Speech on Wednesday will outline the government’s legislative agenda for the year ahead. With PM Starmer under tremendous pressure following the very poor (but broadly as expected) local election results on Thursday there is talk of a leadership challenge as soon as today. Backbench MP Catherine West has said she will stand, which would be a stalking horse nomination. However, many left-wing MPs (as she is) have urged her not to as their preferred candidate Andy Burnham is not currently an MP. They fear an election now might be a bit too early and may allow a more moderate candidate like Wes Streeting to prevail. So timing tactics could prolong Starmer’s reign. A reminder that in September last year, Mr Burnham said that the UK should no longer be “in hock to the bond markets”. This caused a spike in Gilt yields and although he subsequently downplayed the remarks, this is something to watch carefully as we navigate the politics of the next few days and weeks. On the data side, Q1 UK GDP on Thursday will offer up the latest state of play growth wise.
In Asia, Japan’s schedule includes household spending data tomorrow, alongside the Economy Watchers survey and bank lending figures on Wednesday. In addition, the Bank of Japan will publish its summary of opinions from the April meeting, which should provide greater insight into policymakers’ thinking and any emerging shifts in the policy stance.
There are multiple appearances from Fed, ECB, BoE and BoJ officials throughout the week, and on the corporate front, earnings continue at a steadier pace. In the US, Cisco and Applied Materials are among the key names, while internationally the focus includes major firms such as Tencent, Alibaba, Siemens and Bayer. See the day-by-day calendar at the end as usual for a fuller week ahead preview.
Source: Earnings Whispers
Courtesy of DB, here is a day-by-day calendar of events
Monday May 11
Data: US April existing home sales, China April CPI, PPI, Denmark April CPI, Norway April CPI
Earnings: Petroleo Brasileiro, Constellation Energy, Barrick Mining, Compass, AST SpaceMobile
Auctions: US 3-yr Notes ($58bn)
Other: US Senate vote on Kevin Warsh’s nomination for Fed Chair
Tuesday May 12
Data: US April CPI, federal budget balance, NFIB small business optimism, Japan March household spending, leading index, coincident index, Germany May Zew survey, Italy March industrial production, Eurozone May Zew survey
Central banks: Fed's Goolsbee speaks, ECB's Dolenc speaks, BoJ Summary of Opinions April MPM
Earnings: Siemens Energy, Mitsubishi Heavy Industries, MunichRe, Bayer, Vodafone, Venture Global, On Holding, thyssenkrupp
Auctions: US 10-yr Notes ($42bn)
Wednesday May 13
Data: US April PPI, Japan April bank lending, Economy Watchers survey, March BoP current account balance, BoP trade balance, Germany April wholesale price index, March current account balance, Eurozone March industrial production, Q1 employment
Central banks: Fed's Collins and Kashkari speak, ECB’s Lagarde, Lane and Radev speak, BoE’s Mann speaks
Earnings: Tencent, Cisco, Alibaba, Siemens, SoftBank, Allianz, Deutsche Telekom, E.ON, RWE, Alstom
Auctions: US 30-yr Bonds ($25bn)
Other: UK King’s Speech and the State Opening of Parliament
Thursday May 14
Data: US April retail sales, import price index, export price index, March business inventories, initial jobless claims, UK April RICS house price balance, Q1 GDP, Japan April M2, M3, Canada April existing home sales, March wholesale sales ex petroleum
Central banks: Fed's Hammack and Barr speak, BoJ’s Masu speaks, BoE's Pill speaks
Earnings: Applied Materials, National Grid, Figma
Other: US President Trump travels to China (through May 15)
Friday May 15
Data: US May Empire manufacturing index, April industrial production, capacity utilisation, Japan April PPI, April machine tool orders, Italy March general government debt, Canada April housing starts, March international securities transactions, manufacturing sales
Central banks: Fed Chair Powell’s term ends, ECB’s economic bulletin
Finally, looking at just the US, the key economic data releases this week are the CPI report on Tuesday and the retail sales report on Thursday. There are several speaking engagements by Fed officials this week, including events with Presidents Williams, Goolsbee, Collins, Kashkari, Schmid, and Hammack and Governor Barr on Thursday.
Monday, May 11
10:00 AM Existing home sales, April (GS +3.0%, consensus +2.0%, last -3.6%)
Tuesday, May 12
03:15 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will participate in a monetary policy panel at a conference jointly organized by the Swiss National Bank and the International Monetary Fund in Zurich, Switzerland. A Q&A session is expected. On May 4, Williams said, “The elevated levels of inflation, mixed signals from the labor market, and heightened uncertainty from the Middle East conflict present an unusual set of circumstances, but the current stance of monetary policy is well positioned to balance the risks to our maximum employment and price stability goals.”
08:30 AM CPI (MoM), April (GS +0.58%, consensus +0.6%, last +0.9%); Core CPI (MoM), April (GS +0.31%, consensus +0.3%, last +0.2%); CPI (YoY), April (GS +3.68%, consensus +3.7%, last +3.3%); Core CPI (YoY), April (GS +2.67%, consensus +2.7%, last +2.6%): We estimate a 0.31% increase in April core CPI (month-over-month SA), which would raise the year-over-year rate to 2.67%. We expect mixed autos inflation, reflecting a 0.4% decline in used car prices, a 0.1% increase in new car prices, and a 0.4% increase in the car insurance category. We forecast a jump in the shelter categories—a 0.50% increase in the OER category and a 0.44% increase in the rent category—reflecting the unwind of the downward bias in the index level from missed data collection during the government shutdown. The panel group that should have been sampled in October will be sampled in April and compared to prices from twelve months prior (i.e. April will effectively show two months’ worth of increases). We expect mixed readings for the travel services categories (airfares: +3%; hotels: flat), reflecting signals from alternative price data. We expect diminishing upward pressure from tariffs on categories that are particularly exposed (such as recreation) worth +0.04pp. We estimate a 0.58% rise in headline CPI—reflecting higher food prices (+0.3%) and sharply higher energy prices (+4.6%)—which would raise the year-over-year rate to +3.68% from +3.26%. Our forecast consists of a 0.26% monthly increase in the core PCE price index in April.
01:00 PM Chicago Fed President Goolsbee (FOMC non-voter) speaks: Chicago Fed President Austan Goolsbee will speak at the Greater Rockford Chamber of Commerce Luncheon in Rockford, Illinois. A Q&A session is expected. On May 8, during an interview in which he was asked whether inflation is the main danger now given that the labor market appears to have stabilized, Goolsbee responded, “I am optimistic that rates can go down, if we get some progress on inflation, [showing] we are headed back to the 2% inflation, [but] we just haven’t had [progress on inflation] for some time, and that makes me less optimistic.” When asked about the easing bias in the April FOMC statement, Goolsbee responded, “I was always skeptical of the value and appropriateness of using forward guidance [on things] that the committee doesn’t think it is going to do for some number of months or committing to actions well in the future.”
Wednesday, May 13
08:30 AM PPI final demand, April (GS +0.6%, consensus +0.5%, last +0.5%); PPI ex-food and energy, April (GS +0.5%, consensus +0.3%, last +0.1%); PPI ex-food, energy, and trade, April (GS +0.3%, consensus +0.3%, last +0.2%);
11:30 AM Boston Fed President Collins (FOMC non-voter) speaks: Boston Fed President Susan Collins will give remarks and participate in a fireside chat at the Boston Economic Club. Speech text and Q&A are expected. On May 7, Collins said she preferred to adjust the text of the post-meeting statement to “not be as closely aligned with language that has been associated with the presumption that the next move will be a cut.” She also added, “I do think that there are scenarios in which it would be important to strongly consider a hike.”
01:15 PM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Fed President Neel Kashkari will participate in a moderated discussion at a St. Paul Area Chamber event. A Q&A session is expected. On May 7, Kashkari said, “We voted against the forward guidance because we just didn’t want to signal that the next move was likely down.” He also added, “We cannot let elevated inflation be the new normal.”
Thursday, May 14
08:30 AM Import price index, April (consensus +1.0%, last +0.8%); Export price index, April (consensus +1.1%, last +1.6%)
08:30 AM Initial jobless claims, week ended May 9 (GS 205k, consensus 205k, last 200k); Continuing jobless claims, week ended May 2 (consensus 1,785k, last 1,766k)
08:30 AM Retail sales, April (GS +0.2%, consensus +0.6%, last +1.7%); Retail sales ex-auto, April (GS +0.3%, consensus +0.6%, last +1.9%); Retail sales ex-auto & gas, April (GS +0.1%, consensus +0.4%, last +0.6%); Core retail sales, April (GS +0.2%, consensus +0.4%, last +0.7%): We estimate core retail sales increased 0.2% in April (ex-autos, gasoline, and building materials; month-over-month SA), reflecting mixed alternative data and a headwind from potential residual seasonality. We estimate headline retail sales increased 0.2%, reflecting higher gasoline prices but lower auto and food services sales.
10:15 AM Kansas City Fed President Schmid (FOMC non-voter) speaks: Kansas City Fed President Jeff Schmid will speak on payments innovation and community banking at the Future of Banking Conference hosted by the Federal Reserve Bank of Kansas City. Speech text and Q&A are expected. On April 1, Schmid said, “With inflation already running hot, now is not the time to assume that the inflation from higher oil prices will be transitory.” He also added, “We must remain focused on our headline inflation objective, otherwise, I believe there is a real risk that inflation will get stuck closer to 3 percent than 2 percent in the long run.”
01:00 PM Cleveland Fed President Hammack (FOMC voter) speaks: Cleveland Fed President Beth Hammack will deliver opening remarks at the Cleveland Fed Conversations on Central Banking event. On May 7, Hammack said, “The statement that we put out is that interest rates were on hold, but we have the signal in there that it’s more likely that the next move will be down, [and] I thought that was a little bit misleading, just given my view of where the economy is.” She also added that her “baseline outlook is that interest rates will be on hold for quite some time.”
05:30 PM Fed Governor Barr speaks: Fed Governor Michael Barr will deliver remarks at an event organized by the Money Marketeers of New York University. Speech text and Q&A are expected. On May 5, Barr said, “The duration of the conflict matters a lot, and the longer it goes on, the greater the risk that the inflation we are seeing in these prices becomes embedded in the economy.”
05:45 PM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will participate in a moderated discussion at a conference organized by Moody’s. A Q&A session is expected.
Friday, May 15
08:30 AM Empire State manufacturing index, April (consensus +7.5, last +11.0)
09:15 AM Industrial production, April (GS +0.4%, consensus +0.2%, last -0.5%); Manufacturing production, April (GS +0.1%, consensus +0.2%, last -0.1%); Capacity utilization, April (GS 75.8%, consensus 75.8%, last 75.7%): We estimate industrial production increased 0.4% in April, largely reflecting strong natural gas and oil production. We estimate capacity utilization edged up to 75.8%.
Source: DB, Goldman
Tyler Durden
Mon, 05/11/2026 - 09:35
Four leading AI models discuss this article
"The market is mispricing the transition to a hawkish Fed under Warsh and the tail risk of a sustained energy supply shock from the Iran conflict."
The market is dangerously complacent regarding the 'AI trade' and the KOSPI’s parabolic +85% YTD surge, treating it as a secular growth story while ignoring the macro reality of sticky inflation. With core CPI expected to accelerate to 0.39% MoM, the Fed is boxed in; the transition to Kevin Warsh as Chair suggests a shift toward a more hawkish, inflation-focused regime that the current equity multiples haven't priced. If the Trump-Xi summit fails to yield a concrete de-escalation in the Strait of Hormuz, the combination of supply-side energy shocks and a pivot to terminal-rate-higher-for-longer will trigger a sharp valuation compression in growth-heavy indices.
The AI productivity boom could be deflationary enough to offset energy-driven CPI spikes, potentially allowing the Fed to maintain growth while inflation normalizes without a recessionary shock.
"Hormuz closure risks entrenching oil-driven inflation, forcing prolonged high Fed rates under Warsh and pressuring equities despite AI pockets."
Markets are underpricing the Strait of Hormuz closure's persistence (only 39% Polymarket odds of reopening by June 30), with Brent up just +4.23% today despite ~20% of global oil supply at risk—second-order effects include embedded energy inflation accelerating core CPI to +0.39% MoM as forecast, validating Fed hawks like incoming board member Warsh. Yields rising (+3.5bps 10yr) signal bond selling, retail sales -0.3% payback hints consumer softening post-payrolls resilience. Trump-Xi summit risks escalating trade friction amid Iran talks. Equities' shrug (US futures flat, Asia AI-led) ignores stagflation setup; PPI Wednesday key for confirmation.
Asian semis boom (KOSPI +85% YTD) shows AI trade decoupling from macro/geo risks, while CPI energy pass-through may prove transitory if Hormuz reopens quietly. Resilient labor/wages support soft landing if data underwhelms hawkish forecasts.
"Core CPI acceleration + retail weakness + geopolitical oil premium creates a stagflationary setup that makes Fed cuts impossible but growth fragile—equities have priced in cuts that won't come."
The article frames this week as a test of Fed pivot credibility, but the data preview suggests the opposite. Core CPI accelerating to +2.8% YoY (from +2.6%), shelter components jumping due to sampling catch-up, and core retail sales flat (+0.2% vs +0.7% prior) paint a picture of sticky inflation meeting weakening demand. The Iran geopolitical premium (+4.23% Brent, +3.5bps on 10yr yields) is real, but the article underplays that energy's contribution to headline CPI masks the core problem: the Fed cannot cut if core stays elevated. Warsh's nomination matters less than what Tuesday's CPI forces Powell to signal Friday. The Trump-Xi meeting is positioned as market-moving, but it's secondary to whether inflation data kills the easing narrative.
If retail sales truly roll over to +0.2% and jobless claims tick up to 205k, that's recessionary pressure that could force the Fed's hand on cuts regardless of core CPI—making the geopolitical shock the real market driver, not inflation persistence.
"Fed leadership uncertainty could keep policy tighter for longer and weigh on valuations even if CPI/PPI prints look tame."
The article frames CPI/PPI as the main driver while flagging Iran tensions and the Xi summit as near-term catalysts. But the biggest risk to that read is policy leadership uncertainty: if Warsh is confirmed as Fed chair, the committee’s tilt could stay hawkish even as inflation signals cool, keeping real rates higher and compressing valuations. Add a persistent energy shock and shelter-driven rent accelerations, and a 'data beats' narrative becomes less reliable. AI-fueled tech and Asia risk assets may still rally, but US risk assets look vulnerable to a policy regime shift more than a single data print.
The strongest counterpoint is that Warsh hawkish risk may be overblown: if inflation trends ease and growth holds, the market could tolerate tighter policy without derailing equities, making the bear case too pessimistic.
"Geopolitical trade friction will trigger structural supply-side inflation that renders traditional Fed demand-management tools ineffective."
Claude, you’re missing the fiscal transmission mechanism. If the Trump-Xi summit results in a 'de-risking' trade war escalation, the resulting supply-chain bifurcation will be structurally inflationary, regardless of whether retail sales soften. We are shifting from a demand-pull inflation cycle to a supply-side cost-push environment. The Fed’s reaction function is irrelevant if the Treasury is forced to monetize debt to fund a new industrial policy, effectively capping the long end of the curve.
"Trump fiscal avoids monetization while Hormuz energy shock threatens Asian AI semis margins."
Gemini, fiscal monetization isn't inevitable post-Trump-Xi; Trump's tariff/de-risking playbook historically pairs with tax cuts that juice GDP/revenues (e.g., TCJA added $1.5T over 10yrs per CBO), capping deficits without Fed backstop. Bigger omission across panel: KOSPI's +85% YTD ignores energy capex squeeze—Brent at $85/bbl hits TSMC/Samsung margins by 200-300bps if Hormuz drags.
"Energy margin compression is manageable; capital competition between geopolitical reshoring and AI infrastructure is the real valuation risk."
Grok's TSMC/Samsung margin squeeze is real, but it's a *symptom*, not the driver. The 85% KOSPI rally priced in AI capex tailwinds that dwarf energy headwinds—semis' gross margins absorb 200bps energy cost spikes. The actual risk: if Hormuz closure persists *and* Trump-Xi talks collapse, geopolitical fragmentation forces reshoring capex that competes with AI buildout for capital. That's the second-order effect nobody's flagged.
"The real wild card isn't CPI or Hormuz—it's whether policymakers monetize deficits; absence of monetization makes Gemini's inflationary thesis fragile and raises yield pressure, squeezing valuations more than hawkish-CPI scenarios imply."
Gemini, your dependency on fiscal monetization to justify an inflationary, higher-for-longer path hinges on political feasibility; absent monetization, deficits still pressure yields and real rates higher, which your AI and energy headwinds couldn't easily offset. The market doesn't price a guaranteed Treasury backstop, so a failure to monetize could trigger a sharper valuation compression than even hawkish-CPI scenarios imply. That adds downside risk to US equities even if short-term inflation cools.
The panel is unanimously bearish, warning of a 'stagflation' setup due to sticky inflation, weakening demand, and geopolitical risks. They agree that the market is underpricing risks, particularly around the Strait of Hormuz closure and the Trump-Xi summit, which could trigger a sharp valuation compression in growth-heavy indices.
None explicitly stated; all panelists expressed bearish views.
A failure to de-escalate tensions in the Strait of Hormuz and the Trump-Xi summit resulting in a 'de-risking' trade war escalation, leading to a supply-chain bifurcation and structurally inflationary environment.