The Morning Call
5/13/26
The
Market
Technical
Tuesday in the
charts.
https://www.zerohedge.com/markets/ai-tax-threats-nacho-nerves-trigger-market-tantrums
Summary:
A triple-whammy of 'AI
Tax' threats (suddenly stalling the melt-up in AI/Semis), zero
movement from Tehran towards a peace-deal (longer disruption fears
pushing oil higher, back above $100), and hot
CPI (rate-hike odds rising) sparked a lot of damage across markets
today with Big-Tech and Small Caps slammed (though an afternoon BTFD helped),
bonds dumped, precious metals pummeled, and bitcoin battered as the dollar was
bid. there are two narratives that are priced for perfection: 1) Iran
not causing larger problems and 2) AI CAPEX projections meeting massive
expectations. Damages to these narratives could cause some selling in
stocks, which is what we saw today.
Tuesday
in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Everybody
got sucked in to the upside.
https://www.zerohedge.com/the-market-ear/everybody-got-sucked-upside
Summary:
The AI melt-up finally hit its first real air pocket. Semis, AI, and momentum
names are now reversing almost perfectly from historically stretched levels. Positioning
came into today at extreme levels. Nasdaq entered the session massively
overbought, risk appetite surged to one of the highest readings in years, and
market concentration continues resembling prior late-stage melt-ups. Everybody
got sucked into the upside. That is when reversals start getting dangerous.
No
one cares about the downside anymore.
https://www.zerohedge.com/the-market-ear/nobody-cares-about-downside-anymore
Summary:
The AI melt-up is starting to resemble late-stage dot-com behavior. Upside
volatility is now behaving in ways we have not seen since before the 1987
crash. Nobody cares about downside anymore. Everybody is terrified of missing
the upside. That is usually when markets start losing control.
Another warning.
Counterpoint.
https://www.carsongroup.com/insights/blog/five-more-reasons-the-bulls-are-in-charge/
The technical picture
on gold.
https://talkmarkets.com/article/technical-analysis-gold---tuesday-may-12-1778593833
The bond market is
starting to crack.
https://www.zerohedge.com/the-market-ear/bond-market-starting-crack
Summary:
Rates everywhere are suddenly pressing against major breakout levels at the
exact same time bond volatility remains unusually subdued. Oil-driven inflation
pressures keep building, breakevens continue ripping higher, and Japanese
yields are starting to squeeze sharply higher again. The global rates complex
is beginning to look dangerously unstable beneath the surface.
Wednesday morning setup:
US equity futures are up (alongside oil and yields, go figure), reversing
yesterday's modest losses, as optimism around the earnings potential of AI
outweighs concerns over hot inflation readings bringing dip buyers back to
drive tech stocks higher, with traders betting that the tech rally has further
room to run while also hoping on good news from the Trump-Xi summit set to
start today in Beijing. As of 7:30am ET, S&P futures were up 0.2% and
Nasdaq futures rose 0.7% thanks to a rebound in Semi stocks in the Asian
and EMEA sessions. In premarket trading, semis are bid as yesterday’s dip
buyers appear to be once again rewarded. NVDA is up 2.5% as CEO Huang joining
Trump’s China trip. Chip and memory stocks, the key drivers of the past month’s
narrow rally in the artificial-intelligence trade, posted broad gains. While
there were no material updates on US / Iran, today attention shifts elsewhere
as Trump’s China trip kicks off (with both Elon and Jensen
on board AF1); the President appears to be in deal-making mode and China is
said to oppose SoH tolls, though the Middle East is not expected to be a focal
point. The dollar climbed 0.2% as commodities are mixed with strength in Ags
and copper, while oil is unchanged, erasing all of its overnight losses. Mag7
names underperforming broader indices as Cyclicals ex-Energy are outperforming.
Today’s macro data focus is on PPI following the hawkish CPI print yesterday.
Fundamental
Headlines
The
Economy
US
Weekly mortgage applications
increased 1.7% while purchase applications were up 4.0%.
Month
to date retail chain store sales were up 9.6% versus +7.8% in the prior week.
April
PPI jumped 1.4% versus projections of +0.5%; ex food and energy, it was up 0.6%
versus +0.3%.
International
Q1 EU preliminary
employment rate was up 0.1%, in line; Q1 (2nd est.) GDP grew 0.1%,
in line; March industrial production rose 0.2% versus +0.3%.
April
German PPI was up 2.0% versus forecasts of +1.0%.
Other
Update on the housing market.
Student loan delinquencies hit 20 year high.
What April’s
consumer spending numbers are hiding.
Summary:
Aggregate American consumer spending in April was strong. That is a true
sentence. It is also, increasingly, a sentence that obscures more than
it reveals. The growth is being driven by a top tercile whose wages,
refunds, and assets are all compounding in the same direction. It is being
supplemented by price increases passed through from oil and tariffs, which
register as "growth" but land, on the household paying them, like a
tax. And it is being quietly undercut by a bottom tercile that has begun to
behave defensively - easing back on travel, on restaurants, on clothing -
because the math no longer supports the alternative.
None of this points to an
imminent consumer collapse. The data is not screaming recession. It
is, instead, describing a slow narrowing: each month, a smaller share
of households generates a larger share of the spending that the headlines call
"the consumer." The shock absorbers that have historically
broadened a recovery - credit, refunds, savings - are concentrated in the
households that need them least.
Iran
Overnight news.
https://www.zerohedge.com/geopolitical/iran-specifies-5-demands-restart-peace-talks-us
And.
And:
The discussions
about possibly replacing “Operation Epic Fury” with “Operation Sledgehammer”
underscore how seriously the administration is considering resuming the war
started on Feb. 28, and could allow Trump to argue that it restarts the 60-day
clock that requires congressional authorization for war.
U.S. Intelligence
Shows Iran Retains Substantial Missile Capabilities. Secret new assessments say
Iran has operational access to 30 of its 33 missile sites along the Strait of
Hormuz, suggesting that its military remains far stronger than President Trump
has asserted.
Fiscal
Policy
Update on ‘draining the swamp’.
https://committeetounleashprosperity.com/hotlines/our-draining-the-swamp-update/
Inflation
Higher inflation is becoming baked into expectations.
https://www.capitalspectator.com/higher-inflation-is-becoming-baked-into-expectations/
Yesterday’s CPI
wasn’t just bad news for the inflation outlook; it was also carried a recession
warning.
https://bonddad.blogspot.com/2026/05/april-cpi-report-shows-further-surge-in.html
The
Dollar
The debate over currency swaps.
China
Trump’s China agenda:
SCHEDULE
- Trump is expected to arrive in Beijing on
the evening of Wednesday, 13th May.
- The main Trump-Xi talks are expected
across Thursday, 14th May and Friday, 15th May.
THURSDAY
- The White House said Trump will meet Xi
on Thursday at 10:15 Beijing time / 03:15BST / 22:15EDT.
- Thursday is expected to be the main
ceremonial and diplomatic day, including a welcome ceremony, Temple of
Heaven visit, formal bilateral meeting and state banquet.
- The banquet is scheduled for Thursday at
18:00 Beijing time / 11:00BST / 06:00EDT.
FRIDAY
- Discussions are expected to continue on
Friday, including extended talks and a working lunch before Trump’s
departure later in the day.
AGENDA
- Iran: A primary focus will be the war in
Iran, with the US pressing China to use its influence over Tehran to
support de-escalation, reopen the Strait of Hormuz and curb oil-funded
escalation.
- Taiwan: Taiwan is expected to be one of
the most sensitive issues, with concern focused on whether Xi pushes Trump
for softer US language on Taiwan independence or restraint on arms sales.
- Russia: The US is expected to raise
China’s economic ties with Russia, including revenue flows, dual-use
goods, components, parts and potential weapons-related support.
- Strategic guardrails: The leaders are
expected to discuss a possible formal AI communication channel to manage
military and cyber risks, alongside nuclear arms-control issues, although
Beijing remains cautious on nuclear arsenal transparency.
- Commercial: The summit could produce
major “big win” announcements, including Chinese purchases of Boeing
aircraft, agricultural products such as soybeans and beef, and energy.
- Board of Trade/Investment: Proposals are
on the table for a bilateral Board of Trade and Board of Investment,
designed to manage trade and investment flows through formal channels
rather than relying mainly on tariff escalation.
Investing
Irrational exuberance?
https://alhambrapartners.com/weekly-market-pulse-irrational-exuberance/?src=news
Stock duration and why it matters.
https://www.flyoverstocks.com/p/stock-duration-what-it-is-and-why
The most hated
market just made a new high.
https://trendlabs.com/the-most-hated-market-just-made-new-highs/
The Warsh trade
(lower rates) falls apart.
News on Stocks in Our Portfolios
What
I am reading today
Dawn of the electric
world order.
https://www.phenomenalworld.org/analysis/dawn-of-the-electric-world-order/
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