PPI Hit. Warsh Arrived. President Trump landed. Bitcoin Held the Line.

The Nasdaq rose 1.3%. The S&P 500 gained 0.7%. The Dow lagged. The PHLX Semiconductor Index recovered 2.8% after Tuesday’s CPI selloff.

The move came despite another inflation shock.

PPI rose 1.4% in April, far above the 0.5% forecast. Core PPI rose 1%, more than double expectations. Annual producer inflation hit 6%, the highest since December 2022.

Energy led the move. Final demand energy prices jumped 7.8%. Gasoline rose 15.6%. Services rose 1.2%, the biggest gain since March 2022. Trade services climbed 2.7%.

The 10-year yield stayed above 4.49%. Mortgage rates hit 6.57%, the highest since March.

Still, AI held.

Nvidia(NVDA), Alphabet(GOOGL), Micron Technology(MU), Texas Instruments(TXN), and Marvell Technology(MRVL) helped carry the rebound.

The Signal

Inflation hit harder than expected. The market still chose AI. That is strength. It is also concentration.

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The Senate confirmed him 54-45, the most divided Fed chair confirmation since Senate approval became mandatory in 1977. Only John Fetterman crossed party lines. Warsh inherits CPI at 3.8%, PPI at 6%, oil above $100, unemployment at 4.3%, and a Fed already split over the next move.

Markets are no longer pricing cuts. Rate-hike odds climbed near 39% after PPI. That is the real shift.

Warsh has talked about smaller balance sheets, less forward guidance, and AI-driven productivity. None of that changes the first meeting he chairs on June 16-17.

The data is moving against cuts.

Trump wants lower rates. Powell is staying on the board through 2028. Warsh gets the title. Powell keeps a vote.

Macro Signal

The Fed transition is complete. The easing trade is not. Warsh starts with inflation moving the wrong way.

The first is chips.

Jensen Huang is in Beijing with Trump. Markets are betting China, AI export rules, rare earths, and semiconductors are all on the table. That helped reverse Tuesday’s chip selloff.

The second is networking.

Cisco Systems(CSCO) surged 15% after hours. Revenue rose 12% to $15.84 billion. Adjusted EPS was $1.06. The company lifted its AI infrastructure order forecast to $9 billion from $5 billion. Networking revenue rose 25% to $8.82 billion.

Cisco is also cutting fewer than 4,000 jobs as it shifts spending toward AI.

That is the broader pattern.

Companies are not slowing AI spending. They are cutting around it.

China-linked trades also rallied. Alibaba(BABA) jumped 8%. FXI gained 2.5%. Ford Motor(F) surged 13% as traders bet its CATL battery partnership could benefit from better U.S.-China ties.

Capital Signal

AI is still the market’s strongest engine. But it now depends on diplomacy, export rules, power, memory, networking, and China.

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Trump arrived in China seeking Xi’s help on Iran. Beijing wants Hormuz open, but it also wants Iran intact as a strategic partner. That limits how far Xi can push Tehran.

Oil stayed near $106. Brent remains above $100 because the physical system has not changed.

Iran still sees control over Hormuz as leverage. The U.S. is still blocking Iranian oil flows to China. A China COSCO Shipping tanker crossed without paying tolls, a symbolic gesture from Iran to Beijing before the summit.

The conflict is also widening.

Saudi Arabia and Kuwait intensified strikes against Iran-backed militias in Iraq. Netanyahu reportedly made a secret visit to the UAE. The Pentagon is moving to buy 10,000 low-cost cruise missiles after months of heavy usage.

Energy Signal

Diplomacy is active. The blockade is active. The market is pricing talks, while oil is pricing duration.

Bitcoin briefly fell below $80,000 after PPI, then stabilized near $80,000. Analysts now see $80,000 as the key support level. A break opens $78,000, then $75,000.

The pressure is macro.

Core PPI rose 1%. Annual core producer inflation climbed to 5.2%. That hit the rate-cut trade and pulled spot bitcoin ETFs into $233 million of outflows on May 12. Ethereum ETFs lost $131 million.

Still, the structural story is building.

The Clarity Act markup is tomorrow. More than 100 amendments were filed. Stablecoin rewards, DeFi oversight, sanctions enforcement, CBDCs, and ethics rules are all in play.

The biggest fight is ethics. Democrats want restrictions on senior officials and their families profiting from crypto. Republicans and the White House want broader language that does not single out Trump-linked projects.

Coinbase(COIN) CEO Brian Armstrong called the bill a true compromise. He said crypto could make finance faster and cheaper. Coinbase’s newer businesses have reached a $100 million annualized run rate in two months.

JPMorgan Chase(JPM) is launching JLTXX, a tokenized Treasury money market fund on Ethereum. The fund is designed for GENIUS Act stablecoin reserve rules. Tokenized Treasurys now account for $15.9 billion of the $32.2 billion RWA market.

The Verdict

Bitcoin held $80,000 through a hot PPI shock. The Clarity Act is tomorrow. JPMorgan is building tokenized reserve infrastructure. Macro is pressure. Regulation is the catalyst.

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Wednesday gave the market a clean split.

Inflation worsened. PPI rose 1.4%. Core PPI rose 1%. The 10-year yield stayed near 4.5%. Warsh was confirmed into the least friendly inflation backdrop for a new Fed chair in years.

AI still rallied. Chips recovered. Cisco Systems(CSCO) raised its AI order outlook. Jensen Huang joined Trump in Beijing. The market is still treating AI as the offset to every macro problem.

The Strait has not reopened. Trump needs China’s help. China has its own interests. Oil near $106 says the market does not believe resolution is close.

Bitcoin held $80,000. The Clarity Act markup is tomorrow.

Inflation is the pressure. AI is the support. Crypto is waiting for law.