Thu, May 21, 2026 | 7:50AM ET

$NVDA results good enough. FOMC minutes hawkish bias if inflation persists. Equities show impressive resilience

Equities are essentially flat for the week, a sign of impressive resilience considering oil is still near multi-decade highs and interest rates are at 1-year highs. To us, this reflects investors embracing the current strong fundamentals fueled by AI spending, the US’s relative energy surplus (in the face of high oil), relatively low consumer debt and general positive US economic momentum.

The April FOMC minutes were released today and the overall sense is the FOMC shifts to a hawkish bias if inflation persists:
– Rates: Majority see policy firming if inflation persists >2%
– Oil: Shock likely more limited than previous episodes
– AI: Impacting policy dynamics via input costs & labor
The meeting minutes included commentary around AI and its impact on policy:
“Several participants observed that price pressures associated with strong AI investment expenditures would likely raise input costs for a range of industries.”
“Several participants cited evidence reported by business contacts suggesting that firms were likely to delay or reduce hiring because of overall economic uncertainty or in anticipation of adopting AI technologies. Several participants pointed to the possibility that a fall in labor demand could push the unemployment rate sharply higher.”
These are somewhat intuitive observations. But the FOMC is noting there could be cost pressures (higher prices) due to AI spending (presumably consuming scarce resources) but at the same time, create slack in the labor markets (higher unemployment). In other words, AI’s impact is pushing against two of the Fed’s mandates: inflation stability and employment stability.
Kevin Warsh is set to be sworn in as new Fed Chair on Friday, May 22. And given these recent FOMC minutes, Warsh will have an obvious delicate balancing act. The FOMC members see risks to inflation credibility, while at the same time, see policy dynamics impacted by AI. And Warsh will want to navigate this while avoiding criticism from the White House.
Nvidia reported after the close and the results were impressive. The stock is barely reacting to the results, but this arguably reflects markets expecting good results. Revenues up 85% YoY to $81.6b ($325 billion annualized) and with gross margins of 75%. For a company of this size to grow 85% is astounding. Moreover, trading at 19X forward EPS, NVDA still trades at a puzzling discount to Costco COST and Walmart WMT which are 48X and 40.7X forward PE.
SpaceX filed its prospectus after the close on May 20th and the documents show that Starlink is the largest unit ($11 billion revs, 63% EBITDA margins), but the future growth engine is AI. We have included Vital Knowledge’s takeaways below. The SpaceX IPO is the largest IPO ever basically. The pre-money valuation would be 2.7% of the total US equity market.
This would rank as the largest US IPO ever by that measure. The 3 largest US ever:
– Ford in 1956 was 1.1% of the overall stock market
– Visa in 2008 was 0.8%
– Facebook in 2012 was 0.7%
Our team looked at the performance of equity markets post large IPOs. After all, an IPO represents a sizable increase in equity “supply” and then eventually these shares become tradable after lockup expiration. The does seem to be some impact 6 to 12 months later (when lockup expiries take place):
– overall S&P 500 performance after 10 largest IPO
– 1M +3.0% median, 60% win-rate
– 3M +4.5% median, 80%
– 6M +4.5% median, 70%
– 12M +3.1% median, 60%
Notice that gains stall 6M and 12M later. In fact, in many cases (see below), these IPOs took place at market highs. In our view, we do not see this as a “top signal” but rather, this highlights the actual supply impact from large IPOs.
By the way, OpenAI is planning to file its IPO prospectus soon as well, according to several media reports (WSJ).
As for the remainder of the week, Kevin Warsh’s term starting this Friday:
– 5/18 Mon 10:00 AM ET: May NAHB Housing Market Index 37 vs 34e
– 5/18 Mon 4:00 PM ET: Mar Net TIC Flows $151b
– 5/20 Wed 2:00 PM ET: Apr FOMC Meeting Minutes
– 5/20 Wed 4:20 PM ET: NVDA 1Q26 Earnings Release
– 5/21 Thu 8:30 AM ET: May Philly Fed Business Outlook 15.0e
– 5/21 Thu 9:45 AM ET: May P S&P Global Manufacturing PMI 53.6e
– 5/21 Thu 9:45 AM ET: May P S&P Global Services PMI51.3e
– 5/21 Thu 11:00 AM ET: May Kansas City Fed Manufacturing Survey
– 5/22 Fri: Warsh Sworn in as Fed Chair
– 5/22 Fri 10:00 AM ET: May F U. Mich. 1yr Inf Exp

BOTTOM LINE: Crypto, MAG7, Software, Small-caps lead since Iran War

We continue to see a 3-phase market in 2026. We are still in this rising phase and our original aspirational target was 7,300. We are above this level currently. We are not yet cautious, as we still see impressive market resilience, this week being an example. While oil and rates are near highs, equities are still managing to show resilience.

We continue to favor the following sectors:

MAG7 & Bitcoin & Ethereum MAGS IBIT ETHA
Industrials -> “bullet makers” XLI
Financials: Large-cap and regional banks XLF KRE
Small-caps IWM
Energy/Basic Materials XLE XLB

$NVDA results good enough. FOMC minutes hawkish bias if inflation persists. Equities show impressive resilience

Part I: 44 Large-cap Core Ideas: Updated list is below

Large-Cap Core Stock Ideas are large-cap stocks that appear in multiple of our investment strategies.

Consider these the stocks our top stock picks and thus, the higher quality ideas.

The Current Large-cap Core List as of 3/23/2026 is as follows:

Communication Services: GOOGL, META, NFLX, SATS
Consumer Discretionary: AMZN, TJX, TSLA
Consumer Staples: COST, MNST, WMT
Energy: CVX, OKE, TPL
Financials: AXP, BK, GS, HOOD, JPM, PNC
Health Care: AMGN, MRK
Industrials: CAT, DE, ETN, GE, GEV, NOC, PWR, TT, UNP
Information Technology: AAPL, AMD, ANET, AVGO, CDNS, KLAC, MSFT, MSTR, NVDA, PLTR
Materials: APD, PKG, PPG
Utilities: VST

Part II: 62 SMID Core Ideas: Updated list is below

SMID Core Ideas are small and mid-cap stocks that appear in multiple of our investment strategies.

We believe SMID Core List could benefit from the multiple themes and secular tailwinds.

The Current SMID Core List as of 3/23/2026 is as follows:

Communication Services: RDDT, SATS, TIGO
Consumer Discretionary: DPZ, H, IBP, SGI, SN
Consumer Staples: BG, ELF
Energy: CCJ, DINO, DTM, UUUU, WFRD
Financials: ALLY, EWBC, GLXY, SOFI, WAL
Health Care: EXEL, HALO, UHS, UTHR
Industrials: ARRY, AVAV, AWI, BE, BWXT, CARR, CRS, CW, DCI, DY, ENS, FIX, HII, IESC, ITT, KTOS, MLI, NXT, QXO, RKLB, STRL, VMI, WTS
Information Technology: FN, IONQ, LSCC, LITE, MDB, NBIS, ON, P, PATH, RIOT, SANM
Materials: ALB, MP, RGLD
Utilities: TLN

Key Incoming Data May:

~~5/1 9:45 AM ET: Apr F S&P Global Manufacturing PMI~~ Tame
~~5/1 10:00 AM ET: Apr ISM Manufacturing PMI~~ Tame
~~5/4 10:00 AM ET: Mar F Durable Goods Orders~~ Tame
~~5/5 8:30 AM ET: Mar Trade Balance~~ Tame
~~5/5 9:45 AM ET: Apr F S&P Global Services PMI~~ Tame
~~5/5 10:00 AM ET: Mar JOLTS Job Openings~~ Tame
~~5/5 10:00 AM ET: Mar New Home Sales~~ Tame
~~5/5 10:00 AM ET: Apr ISM Services PMI~~ Tame
~~5/7 8:30 AM ET: 1Q P Unit Labor Costs~~ Tame
~~5/7 8:30 AM ET: 1Q P Non-Farm Productivity~~ Tame
~~5/7 11:00 AM ET: Apr NY Fed 1yr Inf Exp~~ Tame
~~5/8 8:30 AM ET: Apr Non-Farm Payrolls~~ Tame
~~5/8 10:00 AM ET: May P U. Mich. Sentiment and Inflation Expectation~~ Tame
~~5/11 10:00 AM ET: Apr Existing Home Sales~~ Tame
~~5/12 6:00 AM ET: Apr Small Business Optimism Survey~~ Tame
~~5/12 8:30 AM ET: Apr CPI~~ Hot
~~5/13 8:30 AM ET: Apr PPI~~ Hot
~~5/14 8:30 AM ET: Apr Retail Sales Data~~ Tame
~~5/15 8:30 AM ET: May Empire Manufacturing Survey~~ Tame
~~5/18 10:00 AM ET: May NAHB Housing Market Index~~ Tame
~~5/18 4:00 PM ET: Mar Net TIC Flows~~ Tame
~~5/20 2:00 PM ET: Apr FOMC Meeting Minutes~~ Mixed
5/21 8:30 AM ET: May Philly Fed Business Outlook
5/21 9:45 AM ET: May P S&P Global Services PMI
5/21 9:45 AM ET: May P S&P Global Manufacturing PMI
5/21 11:00 AM ET: May Kansas City Fed Manufacturing Survey
5/22 10:00 AM ET: May F U. Mich. Sentiment and Inflation Expectation
5/25 8:30 AM ET: Apr Chicago Fed Nat Activity Index
5/26 9:00 AM ET: Mar S&P Cotality CS 20-City MoM SA
5/26 10:00 AM ET: May Conference Board Consumer Confidence
5/26 10:30 AM ET: May Dallas Fed Manuf. Activity Survey
5/27 10:00 AM ET: May Richmond Fed Manufacturing Survey
5/28 8:30 AM ET: 1Q S GDP
5/28 8:30 AM ET: Apr P Durable Goods Orders
5/28 8:30 AM ET: Apr PCE Deflator
5/28 10:00 AM ET: Apr New Home Sales

Economic Data Performance Tracker 2026:

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023:

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