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OVERVIEW

Tech Keeps The Market Soaring

US equity benchmarks marched to fresh all-time records this week. The S&P 500 broke north of 7,500, driven by a highly concentrated, top-heavy surge in artificial intelligence and Big Tech.

Key market drivers included:

• Nvidia leading technology gains by 4.4% after the US cleared H200 chip sales to China.

• Cisco soaring 13% on an earnings beat and strong AI-focused guidance.

• Cerebras Systems climbing 68% in the year's largest IPO.

However, macroscopic friction limited a broader market expansion. Energy shocks pushed consumer and producer inflation up, driving Brent crude past $105 amid geopolitical tensions. Strong job metrics and persistent price pressures simultaneously forced banks to predict that Federal Reserve rate cuts may be delayed until next year. 

The Numbers That Matter

The global financial markets experienced a highly active week, driven heavily by geopolitical developments from the U.S.-China summit and regional supply disruptions in the Middle East. Below is the summary table of how major benchmarks performed:

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SILENT DRAIN

Oil Inventory Collapse Still Not Taken Seriously

Global oil inventories have quietly collapsed to their lowest point this decade — and most investors aren't watching.

The numbers:

• ~700 million barrels drawn down since the crisis began

• Total storage now below any level recorded this decade

• Even a full resolution today still means another 300 million barrels lost before Middle East exports normalize

How we got here:

• March: The world leaned on floating storage, drawing from what seemed like a comfortable 8+ billion barrel global buffer

• April: Strategic reserves and industry stockpiles were tapped

• May: The first real cracks are showing — India is already urging businesses and citizens to conserve energy

Why this matters to your portfolio:

This isn't a slow bleed. It's a countdown. As inventories tighten, the buyers who are closest to running dry will start bidding aggressively for whatever supply remains. That price spike triggers demand destruction. Demand destruction hits earnings. Earnings hit equities.

The market is currently priced as if none of this is in motion.

It is.

The S&P 500's P/E ratio sits near 32 — roughly double its historical median. The buffer is gone. The timeline is now.

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THIS WEEK’S ECONOMIC CALENDAR 📅

The Data Behind the Headlines

• Tuesday, May 12 – Consumer Price Index (CPI): U.S. annual inflation accelerated to 3.8% for April, driven by broad pricing pressures that continue to complicate the Federal Reserve's timeline for potential interest rate cuts.

• Wednesday, May 13 – Producer Price Index (PPI): Wholesale inflation data confirmed sticky input costs for businesses, closely matching the consumer-side data and reinforcing the "higher-for-longer" interest rate narrative.

• Thursday, May 14 – Retail Sales & Jobless Claims: U.S. retail sales rose by 0.5% last month, proving that consumer demand remains resilient despite persistent inflationary pressures.

• Friday, May 15 – Options Expiry ("OpEx"): Heavy volume hit the tape as monthly derivatives expired, forcing institutional hedging and localized equity volatility following the heavy macro data load of the week.

READ THE FINE PRINT

Tax Refunds Are Juicing the Consumer

Retail sales are flashing green. The Redbook Index just posted a 9.6% YoY spike in same-store sales for the week ending May 9. Consumers, on paper, look unstoppable.

But dig one layer deeper, and a warning sign emerges: tax refunds are running 14% above last year, courtesy of the One Big Beautiful Bill Act. That's not organic consumer strength — that's a fiscal sugar rush.

Why this matters for investors:

• Tax refunds are progressive in reverse — the biggest checks go to the highest earners, who already drive 50%+ of consumption

• This artificially inflates retail sales data right now, masking how the bottom quartile is actually faring

• The refund tailwind fades as tax season closes — expect a potential pullback in retail figures heading into Q3

The longer-term risk: OBBBA provisions expire in 2028. Without an extension, consumer spending baselines revert — and the "strong consumer" narrative investors are pricing in today quietly disappears.

The data looks great on the surface. Just make sure you know what's actually driving it before positioning around it.

BETWEEN THE LINES

What A Bargain Clothing Company Knows About Your Wallet

Buried in Ross Stores' Q4 earnings call was a detail that had nothing to do with Ross — and everything to do with the economy.

When asked about Q1 momentum, management casually noted they hadn't built any tax refund benefit into guidance, then offered this in the same breath: refunds are tracking up roughly 7% year-over-year, with two-thirds of the season still to come.

That's a real-time read on household liquidity that most macro desks don't have.

Why it matters for investors broadly:

• Refund size is a proxy for wage growth and withholding behavior. Bigger refunds often mean consumers under-withheld — a sign of income volatility or gig-economy exposure, not financial health.

• Timing shapes the entire Q1 retail picture. A back-loaded refund season compresses discretionary spending into a narrow window — flattering late-quarter data and masking underlying softness.

• Off-price outperformance during refund season signals where the marginal consumer dollar is going — not into full-price retail, but into value channels.

Management said the words "we'll have to wait and see." For a company guiding 7–8% comps with confidence, that pause was telling.

The consumer still needs a check to shop.

Off-price retail runs on vendor distress. When brands overproduce, miss forecasts, or need cash, they quietly offload inventory to buyers like Ross — at steep discounts, no questions asked. Management's confidence about supply going forward isn't operational optimism. It's a window into what's happening upstream.

How to position for it

The Ross earnings call didn't just tell us one retailer is winning — it told us the consumer is operating with less margin for error than the headlines suggest. When a company guiding 7–8% comps still won't bake in tax refund tailwinds because "we'll have to wait and see," that's a management team quietly acknowledging that their customer lives quarter to quarter. That's not a recovery story. That's a fragility story.

The right portfolio response isn't to chase the off-price winner — it's to own the companies that get paid regardless of what the consumer does next.

The Recession Resistant strategy on Surmount is built exactly for this environment. It holds a diversified basket of defensive stocks across consumer staples, healthcare, utilities, and essential retail — the companies that don't need a tax refund season to go well, don't need consumer confidence to spike, and don't need the economy to accelerate. They need people to buy groceries, fill prescriptions, and keep the lights on.

That's a low bar. And right now, it looks like the right bar.

This is an automated, rules-based strategy that rebalances systematically — no emotion, no timing required. While the rest of the market debates whether the consumer is fine or quietly stressed, this strategy doesn't take a side. It just owns the companies that win either way.

VIEW FROM THE HELM

Susan Collins (President, Boston Fed)🎙️

Boston Federal Reserve President Susan Collins delivered a stark wake-up call to markets on May 13, 2026. Speaking before the Boston Economic Club, Collins warned that the central bank may be forced to execute direct interest rate hikes if stubborn price pressures fail to retreat toward the 2% target.

Her comments mark a definitive, hawkish shift in tone. They come at a time when geopolitical conflicts like the Iran war continue to inject fresh supply-chain volatility and energy-driven inflation into the global economy.

Why It Matters:

• Zero Tolerance for Supply Shocks: Traditionally, central banks "look through" sudden oil and energy spikes. However, Collins explicitly stated that "more than five years of above-target inflation has reduced my patience," signaling that the Fed will treat new price spikes aggressively to protect central bank credibility.

• No Cuts in 2026: Collins noted that she does not expect elevated inflation to moderate this year, pushing any potential easing baseline into 2027. The baseline is a prolonged hold in the current 3.50%–3.75% range.

• Watching Consumer Expectations: The ultimate trigger for an actual rate hike will be unanchored consumer behavior. The Fed is closely monitoring households and businesses whose long-term inflation expectations have drifted to the top of their historical ranges.

The Bottom Line:

While Collins is not a voting member of the Federal Open Market Committee (FOMC) this year, her stance mirrors a broader, growing hawkish consensus. Three FOMC members recently dissented in favor of signaling rate hikes. As newly appointed Fed Chair Kevin Warsh takes the helm, macro investors must entirely strip out any remaining expectations for interest rate cuts from their near-term playbooks. Instead, prepare for a higher-for-longer regime.

🗳️ Reader Poll: The Vibe Check

BOTTOM LINE

Uneasy Stability

The theme threading through every story this week isn't bullish or bearish — it's fragile. Markets are printing all-time highs, consumers are spending, and tech earnings are impressing. But beneath each of those headlines sits a quieter, less comfortable truth.

Inventories are draining. Inflation is reaccelerating. The Fed's most patient voices are now openly discussing rate hikes. The consumer's spending power is borrowed — from a tax season that will end and a fiscal bill whose provisions will eventually expire. And the equity market, priced at roughly double its historical P/E median, is offering very little cushion for any of this to go wrong.

None of this means a crash is imminent. It means the margin for error has quietly shrunk to near zero — and most portfolios aren't positioned for that reality.

The investors who navigate this environment well won't necessarily be the ones with the sharpest macro view. They'll be the ones who removed the single biggest variable from their process: themselves. When headlines are moving fast, crude is spiking, the Fed is shifting tone, and retail data is flashing mixed signals all in the same week, emotional discipline isn't a soft skill — it's the edge.

That's exactly where automated, rules-based strategies earn their keep. Platforms like Surmount AI let you codify a thesis and execute it systematically — no second-guessing, no panic selling, no chasing. In an environment this noisy, taking human emotion out of the equation might be the most rational trade you make.

— Surmount Markets