Good morning, investors. It’s been the case for months that AI as a theme has overwhelmed traditional macro.

That doesn’t mean macro is irrelevant, but trading on monthly fluctuations in economic data feels like overcomplicating an obvious play.

Two hot inflation reports in 24 hours did nothing to derail the record-breaking stock rally.

In the age of AI, economic data simply doesn’t move markets like it used to. Investors instead remain fixated on cash flows and spending ambitions for the largest companies in history.

April CPI rose to 3.8% year-over-year, the hottest inflation rate since May 2023, while PPI hit 6.0% for the worst wholesale print since December 2022.

Both the S&P 500 and Nasdaq, however, continued to trade near record highs after each report.

Indeed, the math seems to justify prioritizing AI as the new macro.

The trillions in planned capital expenditures for Meta, Microsoft, Alphabet and Amazon move the needle much more than incremental changes in decimal points on an inflation report.

Without the exuberance around the AI trade, it’s possible investors would respond negatively to the traditional macro signals:

All that and yet animal spirits have only fueled AI names in equity markets.

Over the last month:

The picks and shovels of the AI trade continue to outperform and carry the broader market, shrugging off not only hot inflation reports but a series of mixed headlines coming out of the Middle East.

As much as investors like to clamor for positioning around inflation reports or Fed meetings, that approach suddenly seem outdated.

That said, it isn’t an obvious trade off in terms of risk.

The same market that ignores back to back hot inflation reports is now prone to drop if a tech CEO issues the wrong guidance.

Staying on top of markets that hit a new all-time high seemingly every week, a never-ending news cycle and volatility that’s frankly...volatile is a lot of work.

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🚀 Cisco stock surged double-digits after hours following strong earnings. The company demonstrated new networking switchers and routers during the quarter, and Wall Street loved what it saw on the quarterly report. (CNBC)

🏦 Kevin Warsh is the next Fed chair. Lawmakers confirmed his nomination in the narrowest margin since Senate approval became a requirement in 1977. (WSJ)

📈 Producer prices came in hotter than expected for April. The index for final demand surge 1.4% last month after an upwardly revised 0.7% advance in March, according to the BLS. It marked the biggest jump in PPI since early 2022. (Reuters)

🇨🇳 President Trump arrived to China with a cadre of top CEOs. Among the delegation: Elon Musk, Jensen Huang, and Tim Cook, as well as Larry Fink of BlackRock, Stephen Schwarzman of Blackstone, Sanjay Mehrotra of Micron, Jane Fraser of Citi, and many more top executives. (CNBC)

🗓 May 14, 2012: Facebook raised its IPO price range from $28–$35 to $34–$38 per share, signaling intense investor demand four days before its $104 billion debut. The offering would ultimately price at $38 and mark the then-largest tech IPO in history.

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