Global Highlights for Next Week: April CPI Sets the Tone for the Fed's "Wash Era," AI Chip Star Stocks Go Public

In the past week, despite the Strait of Hormuz remaining closed, and rumors of sporadic clashes between Iran and the U.S. and Iran and Israel bouncing back and forth between “approaching a ceasefire memorandum,” global capital markets largely remained calm, with major global benchmark stock indices continuing to hit new highs.

Next week’s situation also has similar features: Markets will continue to observe geopolitical developments while迎接 macroeconomic data and the “AI trading” resonance.

On the macro front, the most critical focus next week is U.S. inflation data. The market is closely watching how the energy price increases triggered by the Iran conflict will impact U.S. prices and retail sales. Economists currently expect the April CPI to further rise by 0.6% month-over-month, against the backdrop of a 3% surge in March data.

Since the U.S. and Israel launched a war against Iran at the end of February, U.S. gasoline prices have risen by 50%, just breaking through $4.50 per gallon this week. Another point of observation for inflation data will be whether the rapid rise in fuel prices will be translated by businesses into higher prices for goods and services.

(U.S. CPI monthly rate, source: tradingeconomics)

Amid rising inflation, next week the Federal Reserve will also face a major personnel change.

According to the current consensus, the U.S. Senate will vote on Monday, May 11, whether to initiate a cloture vote on the nomination of Kevin Woor to become the 17th Federal Reserve Chair. After this step, the Senate will decide the final date to confirm Woor’s nomination. For reference, Powell’s term will end on May 15. However, due to ongoing criminal investigations involving the White House, Powell will remain on the Federal Reserve Board, theoretically until early 2028.

Given the upcoming U.S. April CPI release, the full-year inflation outlook, and the current situation in the Strait of Hormuz, expectations for the Fed to cut interest rates within the year are becoming increasingly unlikely.

Goldman Sachs economists, in a report on May 8, forecast that, due to more stubborn-than-expected inflation, the expectations for two rate cuts by the Fed have been pushed back by one quarter each, to December 2026 and March 2027, respectively. They also predict that U.S. core PCE inflation this year will be closer to 3%, rather than the Fed’s 2% target.

Meanwhile, with the Labour Party suffering a major defeat in weekend local elections in the UK, the situation in UK bonds and the pound may fluctuate following news from 10 Downing Street next week.

On the corporate earnings front, next week’s market focus will shift to Asian tech companies, Tencent, Alibaba, JD.com, SoftBank, and the storage giant Kioxia will all release their latest earnings reports.

The U.S. stock market will also see the largest IPO of the year (before SpaceX’s listing). Based on various market signals, the Cerebras Systems, known for producing wafer-scale ultra-large AI chips, will go public next Thursday. The company’s WSE-3 chip has an area of 46,225 mm² (56 times that of Nvidia’s B200), on-chip SRAM memory is 250 times that of the B200, and memory bandwidth is 2,625 times that of the B200.

(WSE-3 vs. B200 size comparison)

Due to strong demand, recent reports suggest the company may raise its offering price range from $115-125 to $125-135. With an issuance of 28 million shares, the fundraising could reach $3.78 billion.

Next Friday is also the deadline for institutional investors to disclose their U.S. stock holdings (Form 13F) as of March 31. Chinese investors of keen interest, such as Zhang Yongping, Li Lu, and the recently replaced Berkshire Hathaway leadership, will all “publish their holdings.” There are rumors that after new CEO Abel took the helm, Berkshire Hathaway has liquidated all of the approximately $15 billion holdings managed by former investment manager Todd Coombs.

During Warren Buffett’s era, Coombs and the current investment manager Todd Weschler jointly managed about 10% of Berkshire Hathaway’s stock holdings, with the remaining 90% decided by Buffett himself.

Important upcoming financial events (Beijing time):

Monday, May 10: China April CPI, U.S. April existing home sales annualized, U.S. Treasury Secretary Yellen’s visit to Japan

Tuesday, May 11: Eurozone May ZEW Economic Sentiment Index, U.S. April CPI, Bank of Japan’s April Monetary Policy Meeting Minutes

Wednesday, May 12: Eurozone Q1 GDP revision, U.S. April PPI

Thursday, May 13: U.S. April retail sales data

Friday, May 14: U.S. May New York Fed Manufacturing Index

(Source: Caixin)