Friday, 15 May 2026

Top of the morning

• Beijing day two: Trump and Xi take tea at Zhongnanhai as China pushes to reopen Hormuz

  The summit's second day moved into the leadership compound itself — Trump and Xi held tea at Zhongnanhai, the Communist Party's walled headquarters, with Xi walking Trump through the site's imperial history. The headline deliverable so far is energy and agriculture: Trump said Xi likes the idea of buying more US oil, and US trade negotiator Greer said Washington expects dramatic Chinese agricultural purchases and that both sides are willing to extend the trade truce. Most consequential for the macro picture, Beijing is now explicitly urging a reopening of the Strait of Hormuz, and Trump said China offered help on Iran. The structural caveat from Bloomberg's Businessweek read still holds — Trump brought CEOs, but Xi holds the leverage, and the Iran war keeps pulling US bandwidth away from trade, tech and Taiwan. Watch for any concrete signal on rare earths or Chinese purchases of Iranian crude before the summit closes.
• Powell's Fed-chair term ends today; Warsh sworn in, Miran steps down as governor

  The leadership handover is now mechanical: Jerome Powell's term as chair ends today, Kevin Warsh is being sworn in, and Stephen Miran is stepping down as a Fed governor on Warsh's swearing-in. The transition lands into a bond market already unsettled — Treasuries are leading global yields higher on inflation angst, with the US 10-year at 4.52%, and gold is heading for a weekly drop as faster inflation fuels rate-hike bets even as it trades higher this morning. Fed officials are still talking past each other: Barr called shrinking the balance sheet the "wrong objective," underlining that the policy debate does not pause for the change at the top. For Luca's rates exposure, the cleaner read remains a long end carrying a credibility-and-fiscal discount rather than a confident front-end call.
• Inflation woes drive the tape: yields up, copper down, Asia softer despite Wall St records

  Wall Street closed Thursday at fresh records — the S&P near 7,501 and the Nasdaq near 26,635 — but the overnight session flipped the mood. Bloomberg's markets wrap has stocks slipping and bond yields climbing on inflation worries; copper extended its retreat on faster inflation and a stronger dollar; and Japan's producer prices jumped by the most since 2014, a print that backs the BOJ's hike path and feeds the global-yields story. Asia traded broadly lower — the Nikkei off around 0.9%, the Kospi down roughly 1.3% from its record, Hong Kong modestly lower — with the Trump–Xi talks the swing factor. The read for the European open: a risk-tone wobble layered on top of a market still priced for a soft landing, with US inflation sensitivity now the dominant driver rather than the summit.
• UK: Burnham opens a path to challenge Starmer after a Labour MP quits

  The leadership threat to Keir Starmer has shifted shape again. A Labour MP resigned, freeing a House of Commons constituency that Greater Manchester mayor Andy Burnham — Labour's self-styled "King of the North" — would need to re-enter Parliament and mount a bid. Sterling tumbled on the escalation, slipping toward 1.34. Bloomberg's columnists frame it two ways: a dismal 1970s-style warning for Britain, and Starmer's last gambit being "project fear." The market tell stays the cleanest part of the story — UK political risk is being carried in the pound and in gilts rather than equities, and a contested transition measured in weeks keeps the move orderly for now. The longer-arc question is whether any plausible successor changes what gilt investors are actually pricing.
• Cerebras jumps 68% in the year's biggest IPO; the AI capital wave keeps widening

  AI chipmaker Cerebras climbed 68% on its debut after the year's largest IPO, leaving its CEO worth around $3.2bn and handing Benchmark and Eclipse billions in returns. The listing sits inside a still-widening AI capital story: OpenAI's CFO says the company may raise more money as the compute crunch deepens; Alphabet sold the biggest yen bond on record by a foreign issuer to fund the buildout; and JPMorgan lifted its bull-case target for Taiwan's Taiex to 50,000 on the AI hardware cycle. The counter-tells are still worth holding — Global funds are speeding up their exit from Korean stocks even as the record rally extends, and an Anthropic dispute with the US government has emerged as a named risk factor for Figma and others. Separately, the Apple–OpenAI alliance is fraying toward a possible legal fight, and Musk and Altman made their final pitches to the jury in the OpenAI control trial.
• Iran file: a ship sunk in the Gulf of Oman, oil bid, US House split on the war

  The operational picture around Iran stayed tense overnight. A ship was attacked and sunk in the Gulf of Oman near the UAE — India condemned the attack, having had crew or cargo exposure — and crude pushed higher, with WTI back above $102 and oil heading for a weekly advance as the war resolution sits at an impasse. The politics are fracturing in Washington too: a GOP-led House tied on a measure to halt the Iran war as opposition mounts, the clearest sign yet of eroding congressional support. Trump said he wants Iran's uranium mostly for "public relations" purposes, and ECB official Stournaras warned that a sustained high oil price could force the ECB's hand on rates. India hiked domestic fuel prices for the first time in four years — the first-order inflation pass-through from the shock now showing up in a major emerging economy.
• Asia macro: Japan PPI hottest since 2014, Korea outflows accelerate, Adani settles with the SEC

  Japan's producer prices jumped by the most since 2014, a hot print that strengthens the case for the next BOJ hike and adds to the global-yields pressure. Korea is the region's pressure point: the record equity rally is still running, but global funds are accelerating their exit, and the Kospi slid from its high overnight — the speculative-mania concern flagged earlier in the week has not gone away. In India, Gautam Adani and his nephew Sagar agreed to pay a combined $18m to settle SEC allegations of false and misleading representations, with US authorities moving to end the related fraud cases — a near-close to a multi-year overhang on one of India's largest groups. Romania's central bank is set to hold rates with stagflation risks clouding the outlook, a reminder that the inflation-versus-growth bind is not just a developed-market story.
• European session: defence, deals and the gilt-stress anchor

  The European open carries three threads. First, the corporate tape: LVMH agreed to sell the Marc Jacobs brand to WHP Global, and Elliott struck a board settlement at Dexcom after taking a stake — activist and portfolio-reshaping activity rather than macro. Second, the auto file: Honda and Nissan's shifting fortunes may revive the case for a tie-up, the on-again merger logic that has shadowed Japanese carmakers for over a year. Third, and the session's risk anchor, is the UK — the Burnham challenge keeps gilts and sterling as the cleanest live political trade in Europe, with no UK data catalyst today to either confirm or calm it. Around the tape: Germany is weighing roughly €3bn in subsidy cuts to ease budget strain, and Kushner's Thrive Capital put $100m into Shopify.
• FX & commodities: dollar steady, gold and oil both bid, copper the weak link

  On Bloomberg's live tape, EUR/USD held around 1.17 and GBP/USD around 1.34 — the dollar broadly steady, with sterling still carrying the UK political discount. Gold traded up about 1.4% near $4,619 on the day even as it heads for a weekly drop, caught between inflation-hedge demand and the rate-hike repricing. WTI crude is around $102.5, up more than 1% and set for a weekly gain on the Gulf of Oman attack and the unresolved Hormuz disruption. Copper is the divergent signal — extending its retreat on faster inflation and a firmer dollar, and a useful tell that the metals leg of the commodity move is demand-sensitive in a way oil currently is not. The US 10-year at 4.52% is the number doing the most work this morning.
• Health & science: hantavirus reassurance holds, Supreme Court keeps abortion-pill mail access

  Two threads for Luca. First, hantavirus: the story stays in the reassurance lane — Bloomberg reports no further US cases, and the clinical framing is unchanged (high case fatality in severe HPS, very low person-to-person transmissibility, a surveillance story rather than a pandemic mechanism). The lasting point remains the funding fragility of vaccine pipelines rather than the pathogen itself. Second, US reproductive-health policy: the Supreme Court has, for now, preserved access to the abortion pill by mail — a procedural hold rather than a final ruling, but it keeps the current telehealth-prescribing pathway intact in the near term, relevant context for anyone tracking US clinical-practice and pharmacy regulation. On the lifestyle-medicine side, Bloomberg's feature on midlife men facing pressure to extend their "hotspan" is the cultural counterpoint to the healthspan conversation — worth a glance for how longevity messaging is being marketed.

Markets snapshot — live levels at the Rome open

Levels read this morning from Bloomberg's live Europe homepage ticker via Control Chrome. US cash equity values reflect Thursday's record close carried into pre-open; crude and gold are intra-session; Asia values are the most recent prints available from cross-referenced reporting and are labelled as such.

Geopolitics & today's watch

Beijing remains the centre of gravity, and day two moved the venue from formal halls into Zhongnanhai itself — a deliberate intimacy signal. The deliverables that have surfaced are economic: a willingness on both sides to extend the trade truce, an expectation of large Chinese agricultural purchases, and Trump's claim that Xi is warm to buying more US oil. The most macro-relevant line is Beijing publicly urging a reopening of the Strait of Hormuz and Trump saying China offered help on Iran — if that translates into Chinese pressure on Tehran, it is the first plausible diplomatic off-ramp for the oil shock in twelve weeks. Hold the structural caveat: Xi has the leverage, the harder files (Taiwan, rare earths, any signal on Iranian crude) may stay unresolved, and the summit's close today is the binary moment.

The Iran file is still the operational pivot underneath everything. A ship was attacked and sunk in the Gulf of Oman near the UAE overnight, India condemned it, and crude pushed back above $102 with oil set for a weekly gain. The Washington politics are fracturing — a GOP-led House tied on halting the Iran war as opposition mounts, the clearest erosion of congressional support yet — while Trump downplayed the uranium issue as mostly "public relations." India hiking domestic fuel prices for the first time in four years is the inflation pass-through becoming concrete in a major economy, and ECB official Stournaras's warning that high oil could force a rate hike shows the shock is now feeding directly into the European policy debate.

Two adjacent threads. First, the UK: the Burnham route to challenge Starmer makes British politics the cleanest live event in the European session, with sterling and gilts carrying the discount and no domestic data today to settle the question either way. Second, Russia/Ukraine: Bloomberg reports Russia is pressing college students to fill the ranks of drone pilots — a manpower-strain signal worth tracking as the war grinds on, and a reminder that the conflict's trajectory remains a slow-burn risk for European energy and defence even with Iran dominating the headlines.

Central banks & the rate-cut narrative

The US story is now a transition story in real time. Powell's term as chair ends today, Warsh is sworn in, and Miran steps down as a governor on the same day — a clustered handover landing into a bond market already repricing. Treasuries are leading global yields higher on inflation angst with the 10-year at 4.52%, gold is set for a weekly drop as faster inflation fuels rate-hike bets, and Fed officials remain audibly split, with Barr calling balance-sheet shrinkage the "wrong objective." The practical read for the curve is unchanged from earlier in the week: a front end still theoretically open to cuts against a long end carrying a credibility-and-fiscal premium, with the steepening bias the cleaner expression than any single directional call. Today's US data — Empire State manufacturing, industrial production and the preliminary U-Mich sentiment and inflation-expectations read — are the first numbers the Warsh-era narrative gets measured against.

Outside the US, the picture is one of inflation pressure building rather than easing. Japan's producer prices jumped the most since 2014, hardening the BOJ-hike case; Romania's central bank is set to hold with explicit stagflation risks flagged; and the ECB debate now openly includes oil-driven upside scenarios after Stournaras's hawkish warning. The through-line across regions is that the disinflation narrative that underpinned the soft-landing trade is under visible strain — the FT's "disinflation disappears" framing, sitting open in Luca's tabs, captures the mood. There is no major European central-bank decision today; the next set-pieces are the ECB and BOJ in June and the first Fed meeting under the new chair on 16–17 June.

Big Tech, AI & corporates

The AI capital story keeps widening rather than consolidating. Cerebras jumped 68% on debut in the year's biggest IPO, minting a $3.2bn fortune for its CEO and billions in returns for Benchmark and Eclipse; OpenAI's CFO says it may need to raise more as the compute crunch deepens; Alphabet sold the largest-ever yen bond by a foreign issuer to fund the buildout; and JPMorgan lifted its Taiex bull case to 50,000 on the hardware cycle. But the breadth tells matter as much as the headline momentum — global funds are accelerating out of Korea even as its rally extends, and an Anthropic dispute with the US government is now a named risk factor for Figma and peers. The legal overhang around the sector's origins is also live: the Apple–OpenAI alliance is fraying toward a possible court fight, and Musk and Altman delivered their closing pitches to the jury in the OpenAI control trial.

Around the deal and corporate tape: LVMH agreed to sell Marc Jacobs to WHP Global; Elliott struck a board settlement at Dexcom after building a stake; Honda and Nissan's diverging fortunes have revived merger speculation; Kushner's Thrive Capital invested $100m in Shopify; and Gautam Adani's $18m SEC settlement moves a multi-year legal overhang toward resolution. Germany weighing roughly €3bn in subsidy cuts is the European fiscal-strain note threaded through the corporate news. The composition picture for Luca's equity exposure is unchanged: a market still rewarding AI-infrastructure scarcity and defence, with the risk concentrated in how much of the soft-landing assumption survives a genuine re-acceleration in inflation.

Health & science (worth a glance)

The hantavirus story stayed in the reassurance lane overnight — Bloomberg reports no further US cases, and nothing in the reporting changes the clinical picture: high case fatality in severe hantavirus pulmonary syndrome, but very low person-to-person transmissibility, which keeps this a surveillance-and-rodent-exposure story rather than a pandemic mechanism. The durable lesson from the week's coverage remains the funding fragility of vaccine and antiviral pipelines, not the pathogen itself.

On US health policy, the Supreme Court has — for now — preserved access to the abortion pill by mail. It is a procedural hold rather than a final merits ruling, but it keeps the current telehealth-prescribing and mail-dispensing pathway intact in the near term, useful context for anyone tracking how US clinical practice and pharmacy regulation are evolving under the current administration. And on the lifestyle-medicine front, Bloomberg's feature on midlife men facing pressure to extend their "hotspan" is the cultural mirror of the longevity conversation — a reminder of how quickly healthspan science gets repackaged as consumer wellness marketing, which is itself worth a clinician's skeptical eye.

Week ahead (CET)

• TodayFri 15 May · Trump–Xi summit day two (Zhongnanhai; summit expected to close) · Powell's Fed-chair term ends · Warsh sworn in · Miran steps down as governor · US — May Empire State manufacturing 14:30 · US — April industrial production & capacity utilisation 15:15 · US — May U-Mich sentiment & inflation expectations, prelim 16:00
• Mon 18Eurogroup · EU — March trade balance · China — April activity data overnight · NY Fed services index
• Sun 17FT Business of Luxury Summit continues (Borgo Egnazia, Puglia)
• WatchHormuz "week twelve" & the Gulf of Oman ship attack · whether China's push to reopen Hormuz produces anything concrete · oil's weekly advance above $100 · UK leadership timetable & gilt/sterling stress · Korea outflows vs the record rally · Warsh-era Fed tone · US 10y at 4.52% and the inflation-angst repricing
• Ahead11 June ECB (June move still in debate, now with oil-upside risk) · BOJ June meeting (hike case hardened by hot PPI) · Fed 16–17 June (first meeting under the Warsh chairmanship) · Trump–Xi commitments follow-through (agriculture, oil, truce extension)