“The men on the trading floor may not have been to school, but they have Ph.D.’s in man’s ignorance.” ― Michael M. Lewis

1. US Trade Gap Narrows as Oil Exports Offset AI-Driven Imports — The gap in goods and services trade shrank 1.2% from the prior month to $55.9 billion, Commerce Department data showed Tuesday. The median estimate in a Bloomberg survey of economists called for a $56.1 billion deficit.
The value of exports rose 2.6% in April from the prior month, driven by a 60% increase in crude oil alongside advances in fuel oil and other petroleum products. Imports advanced 2%, led by computers and semiconductors. The windfall to US producers from higher oil prices has helped offset an ongoing surge in imports of capital goods tied to the buildout of data centers in the US. Imports of computers, computer accessories, telecommunications equipment and semiconductors were up 83% in April from a year earlier.
2. US Inflation Picks Up to Three-Year High — The consumer price index climbed 0.5% from April and 4.2% from a year earlier, the most since early 2023, according to Bureau of Labor Statistics data out Wednesday. An underlying gauge of inflation that excludes food and energy, however, rose a less-than-expected 0.2% from the prior month. More than half of the advance in the overall CPI was due to higher energy costs, though prices in some categories like transportation services, health insurance and new vehicles fell. That offers cold comfort for consumers who are already seeing price hikes eat into their paychecks. Prices of household essentials, aside from gasoline, rose at a more muted pace in May, the report showed. Grocery prices increased just 0.1%, held back by declines in beef, tomato and cheese prices. Energy services costs, a category which includes utilities prices like electricity and natural gas, also advanced at a slower pace. Gasoline climbed 7%.
3. Trump Cancels Planned Iran Strikes in Latest Reversal — President Donald Trump pulled back threatened military strikes against Iran, a stark reversal that came just hours after he vowed to hit the Islamic Republic “VERY HARD” and threatened to seize its oil infrastructure. Trump’s announcement is the latest in a string of threats he has pledged — and revoked — to strike since the start of the conflict in February. He has insisted a deal was within reach dozens of times, but none has yet materialized. Earlier Thursday, he promised to seize Kharg Island, a crucial energy hub for Iran, a move that would likely require US ground troops.
4. SpaceX Passes Tesla as Most Valuable Company in Musk’s Portfolio — The $75 billion initial public offering of Space Exploration Technologies Corp., or SpaceX, propelled the company’s value above $2 trillion on Friday, surpassing Tesla’s own 13-digit market capitalization of around $1.5 trillion. SpaceX stock jumped 19% in its trading debut, making Musk the world’s first trillionaire. On its own first day on the public market in 2010, Tesla’s shares rallied even more, some 41%. The stock has surged roughly 25,000% since then, compared with a 610% jump in the S&P 500. On Friday, though, it rose just a bit more than the broader market.

The week ahead — Economic data from Econoday.com:

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