Wholesale prices rose 1.4%. Zero-cut odds hit 69%. Warsh was confirmed 54-45. Trump landed in China as Hormuz stayed shut.
THE DAILY PULSE
The market recovered. The inflation story did not.
That is the surface.
Underneath, PPI confirmed what CPI started.
Producer prices rose 1.4% in April, almost three times consensus. Annual PPI hit 6%, the highest since December 2022. Core PPI rose 1% for the month. Services rose 1.2%. Trade services jumped 2.7%.
This is not just gasoline.
Energy still led. Final demand energy rose 7.8%. Gasoline surged 15.6%. But the pressure moved into services and trade channels.
The market bought semis after Tuesday’s selloff. It did not buy rate relief.
Kalshi prices zero cuts in 2026 at 69.3%. That is the highest line of the cycle.
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THE LEAD SIGNAL
The producer layer matters because it sits before the consumer layer. If companies pay more for energy, freight, components, and services, the next question is whether they absorb it or pass it forward.
April says they are passing more through.
Tuesday’s CPI put headline inflation at 3.8%. Wednesday’s PPI put wholesale inflation at 6%. That is the chain the Fed did not want.
Warsh was confirmed 54-45 as Fed chair. The vote was narrow. The inheritance is narrower. He takes over with inflation rising, oil above $100, and Powell still sitting on the Board.
The market is no longer debating cuts. It is debating how long the hold lasts, and whether hikes return if the next print confirms this one.
The timing matters because the market is no longer reacting to one print at a time. CPI moved the consumer side Tuesday. PPI moved the producer side Wednesday. The summit moves the geopolitical side Thursday. Warsh inherits the result Friday. Each day adds a layer. None removes the prior one. That is why a green session did not undo the damage. The sequence matters more than the index move.
The Pipeline Test
PPI killed the transitory defense. Inflation is no longer only at the pump. It is in the producer margin.
THE ARCHITECTURE
Trump landed in China with trade on the agenda and Hormuz in the background.
Prediction markets expect announcements. Kalshi prices an 86% chance China announces a major Boeing(BA) aircraft purchase. A tariff-truce extension sits near 81%. Soybean purchases sit near 79%. A formal U.S.-China Board of Trade sits near 69%.
Those are useful deals.
They are not the main price lever.
Oil and gasoline remain the source of the inflation break. Traders assign a 61% chance Iran is discussed at the summit and a 59% chance oil or gasoline is addressed. That is the right read.
Beijing has leverage because China is Iran’s key buyer. Iran has leverage because the Strait stays blocked. The summit can lower tariff friction. It cannot guarantee tanker traffic.
The Wrong Lever
A Boeing(BA) order helps the tape. A tariff pause helps margins. Neither reopens Hormuz. The summit matters only if it moves the energy channel.
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THE CROSS-CURRENTS
The AI trade recovered from Tuesday’s rate shock.
The Nasdaq gained. The PHLX Semiconductor Index rebounded after the prior session’s drop. Nvidia(NVDA), Alphabet(GOOGL), Micron Technology(MU), Texas Instruments(TXN), and Marvell Technology(MRVL) helped lead the move.
That rebound matters because it shows the market still trusts the earnings engine.
But the setting changed.
Cerebras Systems(CRWV) is pricing into that environment. The biggest listing of 2026 arrives while semis are rebounding but inflation is hardening. That is the test. Investors still want AI exposure. They do not want duration without proof.
The AI Rebound
Semis bounced because demand is intact. The multiple is less protected. Hot PPI raises the cost of waiting for future earnings.
THE FORETELL LENS
The market is trying to separate three things that now sit on the same line.
Trade policy. Fed policy. Energy policy.
The China tariff rate for July is priced between 10% and 20% with 84% odds on Kalshi. That is the trade box. The Fed box is tighter. Zero cuts are near 69%. The energy box is still unresolved. Polymarket puts Hormuz normalization by end of May at only 8%.
That is the mismatch.
The summit can improve trade optics while inflation worsens. AI can lift stocks while rates stay frozen. Oil can pull back for a day while the Strait remains closed.
The market wants to price each variable alone.
PPI says they are connected.
If Hormuz stays closed, oil stays elevated. If oil stays elevated, producer costs stay high. If producer costs stay high, CPI does not cool. If CPI does not cool, Warsh has no easing lane.
The Bottleneck
The limiting variable is still tanker traffic. Everything else is downstream.
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FINAL FRAME
The rally returned. The inflation problem deepened.
Stocks rose. Semis bounced. Oil eased. The VIX fell.
PPI rose 1.4%. Core PPI rose 1%. Zero-cut odds moved near 70%. Warsh takes over with no room.
Trump meets Xi with trade promises priced and Iran still unresolved. The market is betting the summit lowers risk. The data says the price problem is already moving through the pipeline.
What is priced: tariff truce, AI rebound, no cuts, and summit announcements.
What is not priced: Hormuz staying closed through May, PPI feeding the next CPI, or Warsh needing to sound tighter than Powell.
The calendar did not reset. It compressed.
Capital moves early. Coverage catches up. The gap between the two is worth watching.
