CPI Day, Brent $105, Trump 'Life Support', Warsh Confirms Today, CEG Beats But Sells Off.

Tuesday pre-market, 7:30 AM ET, one hour to the April CPI print at 8:30 AM. The set-up overnight is the cleanest hot-CPI tail trade we have had in the cycle so far, and the price action is showing it. Brent gapped to $105.07 in early London, up 0.8% on the day, with WTI also through $99 for the first time since the early-April spike. The driver is the Sunday and Monday Trump rhetoric escalation, with the President describing the ceasefire as on “massive life support” and calling the Iranian counter-proposal “garbage” alongside the “totally unacceptable” framing from Sunday. Tehran’s foreign minister responded yesterday afternoon with the “we will never bow” language, which is a deliberate echo of the 2019 Khamenei address and is read by the back-channel team as confirmation that the May 14 to 15 Trump-Xi window is now the negotiation deadline rather than the negotiation runway. Equity futures are repricing the energy passthrough plus a Cleveland-Fed-style hot CPI tail, with June S&P 500 e-mini futures at 7,378, down 0.40%, Nasdaq 100 futures at 29,096, down 0.70%, and Russell 2000 futures at 2,841, off 0.35%. The VIX is 18.41 in pre-market, up 7.1%. The 10Y has rallied a touch to 4.39%, three basis points tighter on the day as positioning unwinds into the print, and the curve is a few ticks steeper after the 49-44 Warsh cloture vote Monday evening. The day’s catalyst stack is dense: April CPI at 8:30 AM (consensus 3.7% headline, 2.7% core; Cleveland Nowcast carrying 3.5% to 3.9%), JD.com BMO, Senate vote on Warsh’s Fed-governor confirmation through the day, Honda and Tencent prelims AMC, and the WSJ-flagged 17-CEO Beijing delegation departing for Trump-Xi day one Thursday. The CEG print Monday AMC delivered a clean beat at $2.74 EPS versus $2.61 consensus on $11.12B revenue versus $8.71B consensus, with the new framework targeting 20-plus percent base EPS growth 2026 through 2029, but the stock paid the multiple-compression tax with a 1.3% give-back in the regular session after a 4.1% pre-market lift. The Kospi reversal at minus 2.29% after Monday’s plus 4.32% is the other notable Asia tape, and Stoxx 600 is open down 1.2% with every sector and major bourse lower into the US CPI window.

Three things to internalize before the print:

1. The Cleveland Nowcast at 3.5 to 3.9 percent headline against the 3.7 percent consensus is the cleanest setup for a hot-tail outcome in the cycle, and the right structure is a 2Y put spread plus an XLE call spread, not an outright duration short. The energy passthrough from the Iran-war oil shock is now mechanically inside the April reference period for the gasoline and fuel-oil sub-indices, with retail unleaded averaging $3.97 in April per AAA versus $3.28 in March (up 21 percent), and Northeast fuel oil running plus 54 percent year-over-year per EIA. The Kiplinger-Trading Economics consensus is that energy contributed more than 40 percent of the monthly headline move, with gasoline up 28.4 percent year-over-year and fuel oil up 54.3 percent. The core line is the cleaner read for the Fed: if core prints 2.9 percent or higher against the 2.7 percent consensus, the December cut probability moves below 30 percent and the front of the curve gets a real bear-flattening. We hold the 2Y June 17 4.10 / 4.30 put spread at 12 ticks entry, mark 17 ticks Friday close, and we hold size at 0.25 percent NAV into the print rather than pressing.

2. The Warsh confirmation today plus the chair vote Wednesday is the structural hawk re-rate the curve has been pricing since March, and it is now becoming spot. The 49-44 cloture vote Monday evening was three votes lighter on the yes side than our 53 to 56 model, with Fetterman and Coons as the only Democratic crossovers and three Republican absences. The governor confirmation today should clear 51 votes comfortably for the 14-year term, with the four-year chair-track vote landing Wednesday. The Warsh installation by Friday close ends the Powell-Williams policy era cleanly, and the structural read is that the June FOMC dot plot shows two fewer cuts than the March SEP, with the 2026 median moving from 75 basis points of additional easing to 25 basis points. The duration trade into June is a clean steepener, with the front-end re-rate now the cleanest reflection of the Warsh hawkish tilt. We are running the 2s10s steepener via the OFR pair at plus 8 basis points entry from May 7, mark plus 14 basis points.

3. CEG selling off 1.3 percent on a clean beat plus a 20-plus percent EPS growth framework is the multiple-compression tape the AI-power complex has feared since the Vistra Q4 print, and it is the cleanest read on where the NVDA print May 20 sets up. The Constellation result was structurally strong: $2.74 EPS on $11.12B revenue (up 64 percent year-over-year on the Calpine close pace), the $11 to $12 full-year guide reaffirmed, a new 2026 to 2029 framework targeting 20-plus percent base EPS growth, free cash flow before growth ramping to $11.5B to $13B by 2028 to 2029, and the Pin Oak Creek 460 MW and Pastoria Solar 105 MW assets entering commercial operation. The reaction was the de-rating: the stock opened up 4 percent and closed down 1.3 percent, with the implied multiple compressing from 38x to 35x forward earnings. The lesson is that the AI-power complex has now priced the 20 percent growth case, and the NVDA print on May 20 needs to confirm the demand-side capex cycle to re-anchor multiples, not the supply side. We are taking off the May 16 $310 / $330 CEG call spread on the open at the mark $3.90, locking the 0 percent gross before commissions, and rolling the proceeds into the SMH June 19 $310 / $330 call spread at $4.20 net, sized 0.20 percent NAV.

What Posted Overnight

April US CPI Preview (Print at 8:30 AM ET)

Our take on the April CPI tape: The Cleveland Nowcast at the midpoint is the most reliable single-print model we run, and the spread between the Nowcast 3.7 percent midpoint and the consensus 3.7 percent has been collapsing into prints since the February release. The bigger question is whether the core line surprises on the upside through the OER reset that the BLS is implementing this month to make up for the shortfall from the fall 2025 shutdown window. If OER prints plus 0.45 percent month over month or higher (versus 0.30 percent run rate), the core line lands at 2.9 percent and the December cut probability collapses below 25 percent on the headline. The structural read on a 3.8 to 3.9 percent headline plus 2.8 to 2.9 percent core is bearish for duration, modestly bearish for Mag 7 multiples, bullish for energy and materials inflation hedges, and constructive for gold haven flow on the haven-plus-real-yield dynamic.

Iran Counter-Memo Aftermath (Monday Through Sunday Night)

Our take on the rhetoric: The “garbage” and “life support” framing yesterday is the deepest rhetorical escalation we have seen from the White House since the Day-1 strikes on Feb 28, and it pulls the marketed memo probability down a third leg in three sessions. The structural pivot we are watching is whether the US team tables a stripped-down one-page MoU on Wednesday or Thursday morning that defers Hormuz language to Geneva Phase 2 and parks the war damages compensation file at zero. If that pivot lands before the Trump-Xi summit gavels Thursday, memo probability resets to 35 to 40 percent on the headline and Brent compresses $5 to $8. If it does not, the kinetic ceiling on Brent re-anchors at $108 to $112 and the energy long sizing carries higher. We mark memo probability at 21 percent Tuesday morning, the lowest since April 2.

Asia and Europe Overnight

The Kospi reversal at minus 2.29 percent is the cleanest read on Monday’s plus 4.32 percent memory-led rally being a one-day position-square rather than a structural re-rate. SK Hynix is off 4 percent and Samsung off 3 percent on the back of profit-taking and a Goldman Sachs note flagging Q3 NAND oversupply risk into the Hyperscaler 2 capex window. The US semis cohort reads through soft: MU is indicated down 2 percent pre-market, WDC down 1.8 percent. Europe at minus 1.2 percent on the broad Stoxx 600 is the cleanest read on the Trump “life support” language being a real risk-off catalyst rather than a Sunday-talk-show flutter, with all sectors and all major bourses in the red and the DAX bearing the autos weight on the EU-Iran-tariff overhang.

Iran / Hormuz Box Score (Tuesday 7:30 AM ET)

Memo Probability Path (Updated Tuesday)

The path is now consistently lower for a sixth straight session, and the structural read is that the Iran negotiation has rolled past the Trump-Xi window into Geneva Phase 2 (May 22 contingent) territory. The most likely path remains a stripped-down one-page MoU that parks Hormuz language for Phase 2, but the Tuesday morning marks have that probability at 27 percent over the next 10 sessions, down from 30 percent Monday. If the US tables that MoU on Wednesday before the CPI follow-through digestion, memo probability resets to 40 percent on the headline and Brent compresses $5 to $7 from the $105 mark. If not, the kinetic ceiling re-anchors at $108 to $112 and the energy long carries on the OPEC+ production response set-up for May 21.

Macro Calendar | Week Ahead Recap (Updated Tuesday)

CEG Quick Reaction | Monday AMC

Our take on CEG: The result was structurally strong on every line that matters. EPS beat by 5 percent, revenue beat by 28 percent on Calpine pace, the framework conversion to a 20-plus percent base growth target through 2029 is the cleanest single-name structural growth story in the AI-power complex, and the FCF ramp into 2028 to 2029 is the right balance-sheet anchor for the buyback story. The market reaction was the multiple compression tape we flagged Sunday: forward P/E moved from 38x to 35x on the close, which is the AI-power complex de-rating that has been priced into VST since the Vistra Q4 print in February and that we now have to bake into the NVDA print expectations for May 20. The right read is that the AI capex demand side, not the power supply side, is now the binding catalyst, and NVDA on May 20 has to confirm the demand-side ramp to re-anchor the multiples. We took the May 16 $310 / $330 call spread off Tuesday open at the $3.90 mark (versus $4.20 cost), locking a 7 percent loss on the position before reroll. The reroll is into SMH June 19 $310 / $330 at $4.20 net debit, sized 0.20 percent NAV.

CSCO Preview | Wednesday AMC

Cisco prints Wednesday after the bell with consensus at $1.00 EPS and revenue around $14.3B for the fiscal Q3. The structural read is on Silicon One hyperscaler order momentum against Arista and Broadcom, plus the Splunk integration revenue ramp into year two. The buyside whisper has the AI infrastructure order book past $5B for the trailing four quarters, which is the read-through into the print. Margins are the swing factor: last quarter beat the top and bottom lines but the stock fell on the gross-margin walk-back tied to memory-cost pressure, and the same dynamic is the binary into Wednesday. CNBC pro trader read flagged a potential 25 percent post-earnings drift over the next quarter on the AI router-attach math. We have no position into the print but are watching for a sub-3 percent pre-print drift, which would unlock the May 16 $72 / $78 call spread at $1.45 net debit at 0.10 percent NAV.

WMT Preview | Thursday BMO

Walmart prints Thursday before the bell with consensus at $0.61 EPS on $169B revenue, US comps the key metric (consensus plus 3.8 percent, with grocery the carry). The structural question is whether the tariff passthrough into Q2 guidance is plus 50 basis points or plus 100 basis points on COGS, which is the differentiator between a soft beat reaction and a hard beat reaction. The April retail sales print at 8:30 AM Thursday is the cross-check. We have no position into the print but are watching for the read across to TGT (May 20 BMO), DG, and DLTR.

What to Watch Tuesday Into Wednesday Open

Tuesday May 12 morning to midday

• 8:30 AM APRIL CPI: 3.7 percent headline / 2.7 percent core consensus; Cleveland Nowcast 3.5 to 3.9 percent; OER reset window in play
• 9:00 AM Pakistani Foreign Ministry briefing window (typical Tuesday slot)
• 10:00 AM White House readout on Beijing-summit prep
• 11:00 AM IRGC commander statement window on the Iran “never bow” follow-through

Tuesday May 12 afternoon and close

• 13:00 $25B 3Y Treasury auction. Bid-to-cover below 2.55 is the cleanest tail risk
• 14:00 to 16:00 Fed speaker window (Goolsbee, Bostic possibly)
• Senate vote on Warsh Fed-governor (14-year term)
• AMC Honda, Tencent prelim

Wednesday May 13 (PPI Day, pre-open)

• Asian session response to CPI carryover and possible second Iran response from Tehran
• 8:30 AM April PPI (+0.3 percent m/m / +2.7 percent y/y consensus)
• 13:00 $42B 10Y Treasury auction (rescheduled, with the tail risk on hot CPI carry-through)
• Senate vote on Warsh Fed-chair (4-year concurrent)
• AMC Cisco (CSCO)

Trade Ideas | Sized for the CPI Hot Tail + Trump “Life Support”

Long Brent August $95 / $108 Strangle (Hold)

Hold from Friday at $4.30 entry, mark $5.65 (+31%). The structure pays max on either a memo signing rally back to $94 by mid-July (now 21 percent probability, down from 24 percent Monday) or a Hormuz re-escalation through $108 over the next 10 sessions (now 45 percent probability, up from 42 percent Monday). Sized 0.3 percent NAV. We are not adding given the +31 percent mark and the OPEC+ ministerial overlay on May 21. PT trim level $8.50 (Hormuz tail) or $0.40 (memo signed clean).

Risk: Brent settling in the $98 to $103 range collapses both wings. Sized to be losable.

Long XLE June 19 $99 / $108 Call Spread + Short May $96 Put (Hold)

Hold from Sunday add at $2.55 mark, current mark $2.85 (+12% vs Sunday entry, +46% from Wednesday entry), total energy long sizing at 0.60 percent NAV. The Trump “life support” rhetoric plus the OPEC+ May 21 ministerial overlay plus the Brent through-$105 break is the cleanest tape for the energy complex this cycle. PT $108 spread max.

Risk: A surprise US tabling of a stripped-down MoU Wednesday morning collapses the front of the energy curve. Structure caps loss at $96 strike assignment.

Long 2Y June 17 4.10% / 4.30% Put Spread (Hold Into CPI)

Hold at 12 ticks entry, mark 19 ticks (+58%) into the 8:30 AM print. We are not adding into the rally. The Cleveland Nowcast at the 3.5 to 3.9 percent midpoint plus the OER reset window is the cleanest setup for a hot core surprise that resets the December cut probability below 25 percent. PT trim level at 24 ticks; stop on a sub-2.75 percent core US print.

Risk: Cool US CPI at 2.85 percent / 2.75 percent reverses the steepener bid. Vertical caps loss at 12 ticks.

Long 2s10s Steepener via OFR Pair (Hold)

Hold from May 7 entry at plus 8 basis points, mark plus 14 basis points (+75% on the basis-point move). Sized 0.10 percent DV01. The Warsh confirmation track this week is the structural hawkish anchor at the front end, and the 10Y is range-bound on the haven flow into the kinetic Iran tape. PT plus 22 basis points; stop plus 4 basis points.

Risk: A surprise dovish Powell speech in the Friday Geneva schedule resets the front-end repricing. Position is sized to be losable.

Long SMH June 19 $310 / $330 Call Spread (New, From CEG Roll)

Open new at $4.20 net debit Tuesday, sized 0.20 percent NAV. The roll is funded by the CEG May 16 $310 / $330 take-off at $3.90 mark. The structural read on the AI-power de-rating is that the demand-side, NVDA-print-led, capex ramp is now the binding catalyst, and the SMH cohort is the cleaner expression of that catalyst on the equipment plus design plus memory complex. The Kospi reversal at minus 2.29 percent on memory profit-take pre-NVDA is the entry. PT $330 spread max.

Risk: NVDA print on May 20 walks back the Blackwell ramp guidance. Vertical caps loss at $4.20.

Long PetroChina ADR (Hold)

Hold from Monday tactical at $63.40 mark, current mark $64.85 (+2.3%), sized 0.10 percent NAV. The Brent through-$105 break plus the China PPI petroleum sector at plus 5.7 percent year-over-year is the cleanest read on the SOE upstream margin lift. PT $68. Stop $59.

Risk: A clean US-Iran one-page MoU on Wednesday compresses Brent to $94 and unwinds the SOE bid.

Short COIN May 16 $200 / $170 Put Spread (Trim Half)

Hold from Friday entry at $7.20 net debit, mark $9.10 (+26%). Sized 0.20 percent NAV. We trim half the position at the +26 percent mark and hold the second half into Friday expiry on the bitcoin range trade. PT $200 close on the remaining half.

Risk: Bitcoin rally above $90K in May would close half the realized loss path. Stop on a 4% rally on the remaining half.

Short NET May 16 $230 Puts (Hold)

Hold from Friday entry at $5.40, mark $11.60 (+115%). Sizing 0.25 percent NAV. We took profit one-third Monday at the +93 percent mark. The remaining position is now mark $11.60 against the $5.40 cost, and we hold the residual through Friday expiry. PT $215.

Risk: Q2 commentary that re-frames the layoff as productivity gain. Stop on a $260 close.

Long PLTR June $160 / $185 Call Vertical (Hold)

Stock at $136.40 Monday close, down 1 percent on the AI capex de-rating session. Hold the June $160 / $185 call vertical at $4.85 net debit from Friday roll, sized 0.3 percent NAV. The +85 percent revenue growth print is the structural validation; the recent valuation pullback is tactical. PT $185. The NVDA print May 20 is the cohort halo catalyst.

Risk: Burry-style short escalation or a softer Q2 print from peers that disappoints. Vertical caps loss.

Long Gold via $4,650 / $4,800 Call Spread vs Short $4,500 Put (Hold)

Hold from Friday at net entry $0.30, mark $1.35 (+350% on the small entry). Geopolitical bid intact, NACHO regime supportive, real yields drifting tighter, “life support” rhetoric haven flow re-anchored. Spot $4,742 marks the path into $4,800 strike. PT $4,900.

Risk: A clean memo signing plus dollar rally would compress gold to $4,550. Put strike caps downside.

Long BA June 19 $230 / $260 Call Spread (Hold Into Trump-Xi)

Hold from Wednesday entry at $4.10 net debit, mark $5.05 (+23%), sized 0.20 percent NAV. The 17-CEO Beijing delegation including Boeing’s Kelly Ortberg is the cleanest single-name signaling on the aircraft purchase deliverable expected at the summit. CSIS preview pegs the range at 200 to 500 units. PT $260 spread max.

Risk: Iran agenda crowds out tariffs and Boeing deliverable is deferred to a working-level follow-up. Vertical caps loss at $4.10.

Signal Tracker | Tuesday 7:30 AM ET Mark

Assessment: 8 BULL / 16 BEAR / 6 NEUTRAL. The mosaic flipped meaningfully more defensive overnight on the Trump rhetoric escalation, the Kospi reversal, the Stoxx 600 minus 1.2 percent open, and the CEG multiple-compression signal. We hold the book at +5.8 percent net long gross (down from +6.4 percent Monday morning), with the CPI Tuesday hot-tail hedge in place via the 2Y put spread, the steepener at plus 14 basis points, the SMH reroll from CEG, and the energy long sizing carried at 0.60 percent NAV. The book is positioned for a 45 percent CPI hot tail (up from 38 percent Monday), an 80 percent Hormuz steady-state through Q3 (up from 65 percent Monday), a 55 percent probability the Trump-Xi summit produces no incremental tariff surprise on day one, and a 21 percent memo signing probability against the market-priced 36 percent.

Quick Earnings Reactions Watch | Tuesday BMO and AMC

The JD print is the cleanest read on the China consumer rebound thesis post the March stimulus package and the April PPI 2.8 percent pickup. The read-across is to BABA (May 15 BMO), PDD, and the broader China internet cohort. Tencent prelim AMC is the second China consumer-tech read, with gaming and advertising the binary plus the Yuanbao AI capex line under watch.

What Could Be Wrong

The Tuesday mark is a structurally bearish read on duration, a structurally hawkish read on the Iran path, and a structurally cautious read on the AI-power multiple. The three biggest sources of error in this setup are:

1. A cool US CPI print at 3.5 percent headline / 2.6 percent core that reverses the steepener bid and unwinds the duration short. This would make the Cleveland Nowcast look like an over-reach and would reset the December cut probability above 60 percent on the headline. The 2Y put spread caps loss at 12 ticks, the energy long takes a 10 to 15 percent give-back on the move, and the steepener compresses to plus 8 basis points. We model this at 25 percent probability and it is the cleanest reason to keep the position size at 0.25 percent NAV rather than 0.50 percent.

2. A US tabling of a stripped-down one-page MoU on Wednesday before the PPI print that defers Hormuz language to Geneva Phase 2. This would mechanically lift memo probability to 35 to 40 percent on the headline and compress Brent $5 to $8 on the move. The energy long would take a 25 to 30 percent mark down before the kinetic pattern reasserts. We hold size and let the dust settle, not chase the headline.

3. A surprise dovish Warsh confirmation speech Wednesday that resets the hawk re-rate on the front end. This is the lowest-probability scenario (10 percent), but the front-end positioning is the most asymmetric to the surprise. We are running the steepener at plus 14 basis points entry, and a dovish Warsh speech would compress that to plus 4 basis points within two sessions. The right play is to hold the position size at 0.10 percent DV01 and not press into the Tuesday or Wednesday confirmation cadence.

The book is not betting on any single catalyst; it is positioned for the dispersion across the calendar to widen, which is the cleaner read on a week that has CPI, PPI, Warsh confirmation (governor Tuesday, chair Wednesday), four major US prints, the Trump-Xi summit, and the Israel-Lebanon Washington round all within five sessions.

This note reflects information available as of May 12, 2026, 7:30 AM ET. Markets open at 9:30 AM ET. The April CPI print at 8:30 AM may reset the entire positioning. For internal use only. Not investment advice.