Morning Forecast: Wednesday 13 May
Powell's last inflation print drops today. PPI cheat sheet inside.
This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).
👀 Today’s Stories at a Glance
🏛️ Hot Inflation Boxes In Warsh: Headline inflation hit 3.8% as Powell hands the Federal Reserve to a chair pitching cuts.
🛢️ Hormuz Becomes Iran’s Permit System: Iraq and Pakistan now move oil through the strait only with Tehran’s written approval.
💸 Refunds Trickle, Appeals Court Stalls: Oshkosh and Basic Fun get first cheques as Section 122 tariffs survive on appeal.
🛰️ Google, SpaceX Plot Orbital Compute: Trillium chips on satellites at 650 kilometres, with prototypes targeted for early 2027.
⚡ Electricity Outruns Inflation by 61%: Utility capex hits $1.4 trillion through 2030 as data centres bid up the grid.
📊 Chips Drag S&P Off Record: Qualcomm fell 11% and Micron 3.6% as semiconductors took a profit-taking session.
🤖 Anthropic Eyes $900 Billion Round: Claude maker could leapfrog OpenAI on a $30 billion raise closing this month.
🎮 eBay Slams Door On GameStop: Board calls Ryan Cohen’s $56 billion offer neither credible nor attractive.
🧠 One Big Thing
Three stories today point at the same constraint: compute. Anthropic is raising at $900 billion to lock in capacity, Google is pitching orbital data centres to SpaceX because ground-side power has become the binding cost, and electricity ran 61% faster than headline inflation in April for the same reason. The Federal Reserve cannot cut its way out of any of this. The real policy lever sits with state utility regulators and the PJM capacity auction, which now set the marginal price of running a graphics processing unit in the United States. Watch the July 23 Federal Energy Regulatory Commission conference more closely than the next dot-plot.
⚖️ Fear & Greed
📉 The Number That Matters
30% ODDS
Futures markets put December rate-hike odds near 30% against roughly 2% odds of a June cut, and that 30% figure suggests Kevin Warsh's confirmation pitch and his first meeting argue opposite directions on the policy rate.
⚔️ Winners vs Losers
Winners
EOSE 0.00%↑: Eos Energy Enterprises shares surged after reporting Q1 2026 revenue of $57 million and announcing the formation of Frontier Power USA with Cerberus, a new entity tied to a 2 GWh firm capacity reservation agreement to develop long-duration energy storage projects.
VELO 0.00%↑: Velo3D rallied after Q1 2026 revenue jumped 48% year-over-year to $13.8 million with gross margin expanding to 17.2%, alongside the announcement of a $9.8 million five-year IDIQ contract win with the Defense Logistics Agency.
WOLF 0.00%↑: Wolfspeed extended its torrid AI data center momentum rally to fresh all-time highs, with the silicon carbide chipmaker now up roughly 170% year-to-date as traders pile into its pivot toward high-voltage power semiconductors for AI infrastructure.
PENG 0.00%↑: Penguin Solutions climbed as enthusiasm built around its AMD and Shell collaboration deploying an Altus server cluster for AI data center workloads, extending a post-earnings rally fueled by management’s decision to double its FY26 revenue growth outlook to 12%.
SLS 0.00%↑": SELLAS Life Sciences jumped after Q1 results revealed its pivotal Phase 3 REGAL trial of GPS in acute myeloid leukemia has reached 78 of the 80 events required to trigger the final efficacy analysis, putting top-line data firmly within reach.
PSNL 0.00%↑: Personalis advanced after Deep Track Capital disclosed a 5.51% stake in the cancer diagnostics firm, adding fuel to a post-earnings rally driven by 258% year-over-year growth in clinical MRD test volumes and fresh Medicare coverage for lung cancer surveillance.
COHR 0.00%↑: Coherent Corp extended its blistering AI photonics rally after CEO Jim Anderson was named to the CEO delegation accompanying President Trump on his China summit with Xi Jinping, on top of an Nvidia-fueled momentum trade that has more than tripled the stock this year.
Losers
MIST 0.00%↑: Milestone Pharmaceuticals tumbled after Q1 2026 results showed just $0.2 million of CARDAMYST product revenue in the drug’s first full commercial quarter, with the net loss widening to $26.1 million as the launch tracks well below early expectations.
WIX 0.00%↑: Wix.com plunged after a sharp Q1 2026 earnings miss, with non-GAAP EPS of $0.68 falling well short of the $1.26 consensus and revenue of $541.2 million also coming in light against the $549.6 million expected.
📊 Market Snapshot
Cryptocurrencies:
Bitcoin (BTC): $80,506 (▲ 0.04%)
Ethereum (ETH): $2,300 (▲ 1.13%)
XRP: $1.45 (▲ 0.77%)
Equity Indices (Futures):
S&P 500: $7,417 (▲ 0.29%)
NASDAQ 100: $29,365 (▲ 0.67%)
FTSE 100: £10,275 (▼ 0.07%)
Commodities & Bonds:
10-Year US Treasury Yield: 4.46% (▲ 0.04%)
Oil (WTI): $102 (▼ 0.11%)
Gold: $4,701 (▼ 0.27%)
Silver: $87.25 (▲ 0.83%)
Data as of: UK (BST) 12:50 / US (EDT): 7:50 / Asia (Tokyo): 20:50
✅ 5 Things to Know
🏛️ Inflation Hits 3.8%, Warsh Inherits the Storm
April’s Consumer Price Index ran hotter than anyone wanted. Headline inflation rose 3.8% from a year ago, the highest reading since May 2023, and core inflation accelerated to 2.8%, both above forecasts. Energy did most of the damage. Gasoline is up 28.4% over the year, fuel oil up 54.3%, and electricity up 6.1%. The Senate confirmed Kevin Warsh to the Federal Reserve Board of Governors 51-45 on Tuesday afternoon, with the separate vote to make him chair expected today. Powell’s term as chair ends Friday, though he plans to stay on as a governor through January 2028. (CNBC)
Warsh has spent the run-up to confirmation pitching “regime change” at the Fed and a smaller balance sheet that, he argues, would allow for a lower policy rate. The April print pulls the rug from under that opening pitch. The energy shock is supply-driven and nothing rate policy can fix; real wages fell 0.3% over the year; and tech inflation has quietly turned, with computer software prices running 14% higher year-over-year after decades of declines. CME FedWatch now puts the odds of a December rate hike near 30% and a June cut at roughly 2%. His first FOMC meeting on June 16-17 already looks like a forced hold, the same dynamic that frustrated Powell and Trump alike. (Yahoo Finance)
Sensei’s Insight: Warsh arrives wanting cuts and inherits the kind of inflation no chair can cut through. Trump got the dovish nominee he asked for, then handed him an oil shock that argues for hikes. The honeymoon ends before it starts, and the dot-plot in June will say it out loud.
🛢️ Iran Turns Hormuz Into a Tollbooth
Iraq and Pakistan have each cut quiet bilateral deals with Tehran to move oil and liquefied natural gas through the Strait of Hormuz despite the war, Reuters revealed yesterday. Two Iraqi very large crude carriers, each holding roughly 2 million barrels, transited under the arrangement on Sunday. Qatar tipped off Washington before its tankers sailed for Pakistan. Neither buyer paid Iran in cash. Tehran now requires detailed voyage documentation for every approved vessel and escorts them through with its naval forces. Traffic through the strait is still running at about 5% of pre-war volumes, with Brent hovering near $107 and West Texas Intermediate settling at $102.18, up 4.2% on the day. (Reuters via Yahoo News)
Iran has effectively shifted from blockading the strait to controlling it, and that is the harder posture to dislodge. Saudi Aramco’s chief executive told analysts this week that market normalisation could slip to 2027 if disruption runs past mid-June. JPMorgan’s risk case has Brent topping $150 a barrel. The mechanics matter: every bilateral deal Tehran signs erodes the case for treating Hormuz as neutral international water, which is precisely the leverage Iran intends to bring to any settlement table when it demands sanctions relief, reparations and access to frozen assets. Trump dismissed those terms as “garbage” last week. (CNBC)
Sensei’s Insight: The headline reads as a workaround. Read it as a precedent. Once governments operate inside Iran’s permit system, the world has tacitly agreed Hormuz is no longer neutral water. The oil risk premium isn’t a war spike that fades. It’s becoming part of the long-run price, one deal at a time.
💸 $166 Billion in Tariff Refunds Begin Trickling Out
Heavy-truck manufacturer Oshkosh and Florida toymaker Basic Fun became the first publicly identified companies to confirm receipt of tariff refunds tied to the Supreme Court’s February ruling that struck down Trump’s emergency tariffs. Basic Fun’s CEO Jay Foreman said his company received $400,000 of a $7.4 million claim, calling it the start of a “trickle.” Customs and Border Protection said in court filings it has $35.46 billion in refunds queued across 8.3 million shipments. The total pool: roughly $166 billion owed to more than 330,000 importers across 53 million shipments. Companies including FedEx, Costco, Bausch & Lomb and L’Oreal have all filed claims. (CNBC)
The catch arrived the same day. The U.S. Court of Appeals for the Federal Circuit stayed last week’s separate trade-court ruling that had declared Trump’s new 10% global tariffs unlawful, the ones imposed in February under Section 122 of the Trade Act. Importers will keep paying those tariffs while the appeal proceeds. Roughly 170,000 importers have paid Section 122 deposits on 13 million entries since February, and CBP collected about $8 billion under the new tariff in March alone. Trump told WABC radio yesterday morning the refunds were “crazy,” adding: “We’ll fight that.” The Justice Department warned the appeals court that nationwide refunds would “severely undermine” trade policy. (Bloomberg)
Sensei’s Insight: The real trade isn’t the refund cheque. It’s spotting which importers are quietly preserving claims on the new Section 122 tariffs, the ones still being paid. Trump has now lost two tariff regimes in three months. The appeals court can stall the second one. It can’t save it.
🛰️ Google Talks to SpaceX About AI Compute in Orbit
Google is in advanced discussions with SpaceX to launch prototypes of Project Suncatcher, an orbital data-centre concept that would put solar-powered satellites loaded with Google’s Trillium TPU chips into low Earth orbit, the Wall Street Journal reported yesterday. The plan calls for two prototype satellites by early 2027, scaling toward an 81-satellite cluster at roughly 650 km altitude. Google has been talking to other launch providers too. The strategic backdrop matters: Google invested $900 million in SpaceX back in 2015 and reportedly owns 6.1% of the company. Both sides declined to comment. (Bloomberg)
Two real stories sit underneath the science fiction. The first is SpaceX’s IPO valuation, which Elon Musk is targeting near $1.75 trillion this summer. Starlink alone can’t carry that number, so orbital compute is the next growth pitch to investors. Anthropic just signed up for capacity at SpaceX’s Memphis Colossus 1 site last week, 220,000-plus Nvidia GPUs and over 300 megawatts of power. The second story is electricity (see below): Google’s bet only pays if it gets harder to run AI compute on the ground than off it. The economics still require SpaceX’s Starship to crush launch costs below $200 per kilogram from roughly $1,500 today. (TechCrunch)
Sensei’s Insight: Every deal Musk closes adds a brick to the IPO valuation. SpaceX news now reads better through the lens of the prospectus than the engineering. Starship reusability targets are financial commitments now, and every hyperscaler that signs up makes the $1.75 trillion number easier to defend.
⚡ Power Prices Climb 61% Faster Than Inflation
Tucked inside yesterday’s hot CPI sat a structural story. U.S. electricity prices rose 6.1% year-over-year in April, 61% faster than headline inflation. Goldman Sachs notes 2025 prices climbed 6.9%, more than double the 2.9% inflation rate, and the bank projects another 6% rise through 2027 before easing. The 51 largest investor-owned utilities are now planning $1.4 trillion in capital spending through 2030 to keep up with data centre demand, a 27% jump from last year’s projection. Residential customers are expected to absorb roughly $700 billion of that through rate increases. (Bloomberg)
PJM Interconnection, the mid-Atlantic grid that hosts most U.S. data-centre growth, tells the story in numbers. Capacity prices ran $28.92 per megawatt-day in 2024/25, $269.92 in 2025/26, and $329.17 for 2026/27. Maryland electricity rates are up 51% in five years; Illinois up 41%. The Federal Energy Regulatory Commission will hold a public conference on July 23 after PJM’s CEO called the current setup “not tenable.” Data centres consumed more than 4% of U.S. electricity in 2023 and are projected to reach 9% by 2030, with commercial demand set to overtake residential for the first time in 2027. (Bloomberg)
Sensei’s Insight: This is stagflation by other means. The Fed can’t cut its way out of an electricity squeeze caused by AI capex. The market story sits in regulated utilities and gas pipelines tied to data-centre contracts. The pain shows up first in lower-income consumer discretionary, well before it hits the headline indices.
Stories You Might Have Missed
📊 S&P 500 Slips From Record as Chips Take a Hit
U.S. stocks pulled back from Monday’s record close as hot inflation and rising oil weighed. The S&P 500 fell 0.16% to 7,400.96, the Nasdaq dropped 0.71% to 26,088.20, and the Dow eked out a 0.11% gain to 49,760.56. The Philadelphia Semiconductor Index slid 3% in a profit-taking session that included Qualcomm down 11% and Micron giving back 3.6% after climbing 37% last week alone. Zebra Technologies topped the S&P with an 11.4% gain on raised guidance. Humana jumped 7.7% on a Bernstein price-target hike. Hims & Hers cratered 14% after a quarterly loss tied to weight-loss-drug costs. The chip sector is still up 65% year-to-date. (CNBC)
🤖 Anthropic in Talks at $900 Billion Valuation
Bloomberg reported late Tuesday that Anthropic is in early discussions to raise at least $30 billion at a pre-money valuation above $900 billion, with the round potentially closing by month’s end. That would put the Claude maker above OpenAI’s $852 billion mark set in March, and more than double Anthropic’s February valuation of $380 billion. The company is engaging existing shareholders, including Google (which committed up to $40 billion at prior milestones) and Amazon ($5 billion). The push comes as Anthropic eyes an October IPO and races to lock in compute capacity, the same theme behind last week’s SpaceX deal and the Google-SpaceX talks now in the open. (Bloomberg)
🎮 eBay Rejects GameStop’s $56 Billion Bid
eBay’s board formally rejected Ryan Cohen’s unsolicited $56 billion takeover offer Tuesday, with Chairman Paul Pressler calling the bid “neither credible nor attractive” in a letter citing financing uncertainty and operational risks. The half-cash, half-stock proposal valued eBay at $125 per share and would have been an unusual reverse: GameStop’s market cap sits near $12 billion, roughly a quarter of eBay’s size. GameStop disclosed earlier this month it had built a 5% stake in eBay starting in February. eBay shares barely budged; GameStop fell 3.5%. Cohen has signalled he isn’t done shopping. (Bloomberg)
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🔍Deep Dive: US producer prices set to test how far the oil shock has reached up the pipeline
The Bureau of Labor Statistics releases the April Producer Price Index at 8:30 AM ET today, one day after a hot Consumer Price Index showed core inflation accelerating above forecasts (CNBC). Consensus already prices the largest year-over-year jump in producer prices since early 2023. The question now is whether the energy passthrough is broadening from goods into services and feeding directly into the Fed’s preferred PCE gauge.
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