Brandon Leon

Week recap · Macro · AI · semis · consumer · May 31, 2026

We were wrong on the math. The thesis broadened.

Author Brandon Leon Posted 2026-05-31 (Sunday eve, looking into June) Coverage Week recap · pivot into June FOMC

Where we landed

On Tuesday we laid out an outlook with three roughly-equal PCE scenarios (2.4–2.5%, 2.6–2.7%, 2.8%+) and a non-consensus call that the S&P’s eight-week streak was statistically a setup for mean reversion, with the base rate at 79% flat-to-down for week nine.1 By Friday at 4 PM, none of those held in the way we wrote them. Core PCE printed at 3.3% Y/Y — 50 basis points above our hawkish scenario.2 The S&P closed at 7,580.06, its ninth consecutive up week, the longest streak since 2023.3 Dell put up its best single trading day on record at +33%.4 And the 10Y, which we said was the cross-asset divergence the market was missing, rallied 25 basis points from its May 20 intraweek peak of 4.7% to a 4.45% close.5

That is the kind of week that forces a real conversation about what we got wrong. We were wrong on three specific calls: the mean reversion math, the AI-multiples canary, and the cross-asset divergence. Each of those was a non-consensus read in the May 26 piece, and each of them broke on the print. Calling that out matters more than backfilling a winning trade with retroactive logic.

And yet — the structural thesis held. AI infrastructure remained the dominant trade, and the market validated it across more names than we had positioned to, not fewer. Dell’s +33%, Salesforce’s +20%-area follow-through on a $1B Agentforce ARR confirmation, Marvell raising fiscal 2028 to $16.5B (+45% above FY27) — these are not "NVDA-and-everyone-else." They are a broader supercycle, distributed across the infrastructure stack. The Friday tape was not a contradiction of our thesis. It was a refinement of it.

The pivot is mechanical, not philosophical. Rotate within the AI complex, not out of it. Trim concentrated NVDA exposure into rallies (NVDA itself sold off ~10% over the back half of the month from the May 14 peak, even as the broader complex made new highs).6 Add to the infrastructure breadth trade: networking, custom silicon, AI software with monetization tells. Keep duration light into the June 17–18 FOMC and the June 6 NFP that comes first.

This is a recap piece. It is honest about what didn't work and specific about what did. The job is the same job — sit with the truth, write it down, and adjust the book.

1. Where we are: ninth week up, 10Y back through 4.50%

The S&P 500 closed Friday at 7,580.06, up roughly 1.4% on the week and up 5% on the month. The Nasdaq finished at 26,972.62, up roughly 2.4% on the week and 8% on the month. The Dow set another record at 51,032.46 (+0.72% on the day, ~+3% on the month). Nine consecutive up weeks is the longest streak since 2023, and May 2026 closes as one of the strongest months for the broad equity index of the past two years.3

The 10-year Treasury closed Friday at 4.45% — the lowest yield in more than two weeks and down approximately 25 basis points from the May 20 intraweek peak of 4.7%. Two things happened to drive that: tentative US–Iran de-escalation language pulled the geopolitical inflation premium out of crude, and the April PCE deflator printed +0.2% month-over-month against +0.3% expected, giving the market enough cover on trajectory to ignore the still-elevated 3.3% year-over-year reading.5

Chart 1 — S&P 500 weekly closes, late March through May 29

Nine in a row to 7,580 — the longest streak since 2023, set against a 10Y that came down 11bp on the week

7,600 7,300 7,000 6,700 7,580 5/29 5/22 3/27 4/24 9 consecutive up weeks — longest since 2023

S&P 500 weekly closes Mar 27 — May 29 2026. Friday May 29 close: 7,580.06 (+0.22% on the day, +5% on the month). The May 22 close (gold marker) was the 8-week peak we cited as the mean-reversion setup; the May 29 close (gold halo) is the 9-week extension that broke the call. Source: TheStreet & BBN Times Friday close summaries.

Simply: Stocks just printed nine straight up weeks — the longest streak in three years — and the 10-year yield came down, not up. We expected the opposite of both. The setup we said was the most likely outcome was the one that didn't happen.

2. The May 26 scoreboard: what we wrote vs. what we got

On Tuesday morning we laid out a specific framework with specific calls. Here is what we said and how each one closed by Friday at 4 PM. Pass/Fail is whether the prediction matched the outcome, not whether the trade made money.

CallOur view (May 26)What actually happenedVerdict
PCE scenarios Three roughly-equal: 2.4–2.5% / 2.6–2.7% / 2.8%+ Core PCE 3.3% Y/Y — above our hawkish-surprise scenario WRONG (calibration)
10Y direction Hot PCE pushes 10Y through 4.65%, dollar strengthens 10Y closed Friday at 4.45%, −25bp from Tuesday peak; dollar softer WRONG (direction)
S&P 9th week Base rate: 79% flat-to-down for week 9 after an 8-week streak +1.4% on the week; 9th straight up week; longest since 2023 WRONG (probability didn't matter)
AI infrastructure long Stay long. Q2 guides validated the thesis. DELL +33% Fri (record), CRM +13.8% Wk, MRVL FY28 raised to $16.5B (+45%) RIGHT (broader than expected)
NVDA "sell the news" Sell-the-news read; wait for $162 to add NVDA −10% from May 14 peak; rolled while index made new highs RIGHT (rotation thesis)
WMT/HD bifurcation 2001-style structural, not 2008-style cyclical; Costco confirms Costco beat: comp +6.8%, e-commerce +13.6%, membership renewal 92.7% RIGHT (consumer split holds)
AI multiples canary If CRM/DELL/MRVL beat & trade flat-to-down, multiples are topping All three beat — all three ripped. The canary was singing, not dying. WRONG (premise)
Salesforce read Agentforce monetization is the read on enterprise AI demand Agentforce ARR > $1B (first quarter-end disclosure); AI+Data ARR $3.4B RIGHT (cleanly)

Four right, three wrong, one in-line. The three wrong calls were all from the “What Wall Street might not be thinking” section — the non-consensus reads. That is exactly where non-consensus calls should land or fail: at the asymmetries. Two of them (the mean reversion math and the cross-asset divergence) were technically the right setups and the wrong outcomes. The third (AI multiples canary) was the wrong premise.

Simply: We got the base case mostly right (AI thesis, consumer split, NVDA-specific rotation). We got every non-consensus call wrong — the three things we thought Wall Street was missing turned out to be the things Wall Street had right.

3. PCE in detail: the level was hot, the trajectory was the story

The April PCE release dropped Friday at 8:30 AM ET. Headline PCE printed 3.8% Y/Y, up from 3.5% in March. Core PCE — the cut the Fed actually targets — printed 3.3% Y/Y, up from 3.2% in March. On a month-over-month basis, core PCE rose +0.2%, against +0.3% expected and +0.3% the prior month.2

Chart 2 — April 2026 core PCE: Y/Y (hot) vs M/M (cool)

The market traded the trajectory, not the level — M/M deceleration gave doves enough cover to push back

Y/Y core PCE (level) M/M core PCE (trajectory) 2.0% target 3.0% Feb 3.2% Mar 3.3% Apr +10bp vs Mar 0.2% trend 0.30% Feb 0.30% Mar 0.20% Apr −10bp vs trend

Y/Y core PCE picked up 10bp (3.2% → 3.3%) but M/M core PCE decelerated 10bp (0.30% → 0.20%, against 0.30% expected). The market favors the trajectory because M/M is the leading indicator on the Y/Y trend; the Fed targets the level. Both camps got something to work with, and that is precisely why the FOMC remains structurally split. Source: BEA, April 2026 PCE release; CNBC market summary.

This is the critical distinction we did not weight enough in the May 26 outlook. Our scenarios were anchored on the Y/Y level (where we missed by 50bp). The market traded the M/M trajectory (where the print was actually cooler than expected). That trajectory read is what gave the Fed’s dovish camp the framing they needed to hold ground at the upcoming meeting, and it is what let the 10Y rally 25bp from its May 20 high through Friday.

On the geopolitical side, reports of a tentative US–Iran de-escalation took the inflation-via-crude tail risk meaningfully lower in the front of the curve. Crude futures held the $60s, and the breakeven inflation curve (10Y nominal minus 10Y TIPS) compressed about 8–10bp on the week. The duration trade got a tailwind we didn’t price in.

Simply: Inflation came in hotter than expected on a yearly basis (3.3%, well above 2% target) — but the monthly pace cooled. The market chose to focus on "where inflation is going" rather than "where inflation is." That choice let stocks rally and bond yields fall.

4. The Dell day: structural significance of a +33% move

Dell Technologies reported fiscal Q1 2027 results after Thursday’s close: revenue $43.8B (+88% Y/Y), EPS $4.86 (+214%), AI server revenue $16.1B (+757% Y/Y), and full-year revenue guidance raised by $27B with the AI server revenue guide raised to $60B. The stock opened Friday up roughly 25% and closed +33% — its best single trading day on record.4

A +33% single-day move for a $200B market-cap name (Dell’s post-rally cap is roughly $273B; pre-rally it was around $198B) is not an earnings reaction; it is a re-rating. The implied delta on Dell’s forward multiple from that move is roughly 4–5 turns of forward P/E. The market just decided that Dell is not a low-margin server commodity company anymore — it is a strategic node in the AI infrastructure stack with structurally higher mix, structurally higher margin, and structurally more durable demand.

The complement to the Dell day was Salesforce and Marvell. CRM reported Tuesday after the close: revenue $11.13B (+13% Y/Y), Agentforce ARR crossed $1B for the first time, AI+Data ARR hit $3.4B, and FY27 revenue guide was raised to $45.9–46.2B. The stock finished the week up ~13.8%. MRVL also reported Tuesday: revenue $2.418B record (+28% Y/Y), custom silicon now 25% of data center revenue, and management raised the fiscal 2028 revenue target to $16.5B — about 45% above fiscal 2027.

Chart 3 — AI infrastructure leadership broadened — the new "supercycle" stack

Dell printed the best day on record. Marvell raised FY28 by 45%. CRM crossed $1B Agentforce ARR. NVDA itself rolled.

0% +33% DELL Fri 5/29 (record day) +13.8% CRM Week 5/26–5/29 +12.4% MRVL Week 5/26–5/29 +1.2% CSCO Networking (proxy) −5.1% NVDA Week 5/26–5/29

Weekly stock moves, May 26–29 2026. Dell’s +33% Friday move alone accounted for the bulk of the week’s gain; CRM, MRVL, and CSCO all confirmed strength. NVDA finished the week down ~5%, sliding from the May 14 ATH of $235.74 to Friday’s $211.14 close (~−10% off the peak). The supercycle leadership is broadening, not narrowing. Sources: TheStreet weekly recap; Yahoo Finance NVDA history.

Simply: Dell had the best day in its entire history. Salesforce and Marvell beat their numbers and ripped. NVIDIA itself rolled over from its May 14 peak. The AI trade is still working — but the leadership is rotating from the one big name into a wider basket.

5. The NVDA paradox: index up, leader rolling

NVIDIA closed Friday at $211.14, down 1.45% on the day and down approximately 5% on the week. The all-time closing high was $235.74 on May 14 — meaning the stock is now roughly 10% off the peak even as the broader index is at a new all-time high.6

This is the canonical signal of a rotation within a complex: the prior leader sells off, the prior laggards take leadership, and the index keeps printing higher because the supercycle thesis is broadening rather than breaking. We flagged this dynamic specifically in the May 26 piece (“the trade isn’t AI vs. not-AI — it’s high-multiple AI vs. lower-multiple infrastructure picks”) but we attached the wrong implication to it. We treated it as a setup for the AI complex to roll. It is actually a setup for the AI complex to broaden, with the original leader retracing while the next-tier infrastructure names get bid through their multiples.

The mechanical read for the book: NVDA is no longer the cleanest expression of long AI infrastructure at these levels. The cleaner expression is the diversified basket — networking, custom silicon, AI software with measurable monetization — with a relative-value lean toward names that just re-rated higher on their prints.

Simply: NVIDIA itself is down 10% from its peak even as the broader market makes new highs. That's not the AI story breaking — that's the AI story spreading out to more names. The leaders changed; the trade didn't.

6. Where we were wrong (specifically)

Three calls broke. Each one matters because each one was a non-consensus read — the asymmetries we explicitly said the Street was mispricing. Owning the misses cleanly is the only way to keep the framework credible.

Wrong call #1 · Base-rate math

We said: 8-week up streaks resolve flat-to-down 79% of the time. Market said: nine.

The base-rate table held the historical record up — the 11-of-14 figure for week 9 after an 8-week streak is real. What we didn’t do is condition the base rate on regime. In environments where the streak coincides with a clean fundamental catalyst (here: NVDA-then-Dell back-to-back AI infrastructure validation), the conditional base rate likely flips. We treated unconditional history as a universal probability. It is a starting prior, not a prediction. Lesson: weight base rates against the fundamental tape, not against each other.

Simply: We treated history like a forecast. History is a starting point. When the fundamental setup is strong enough, the base case doesn't apply.
Wrong call #2 · Cross-asset divergence

We said: 10Y at 4.56% + S&P at ATH = ERP compressed; hot PCE breaks both legs. Market said: 10Y rallied 25bp.

The setup was real (ERP was thin at Tuesday’s close). The catalyst direction was correct (PCE Y/Y was hot). The trade still didn’t work because we underweighted two non-PCE drivers: (1) the US–Iran de-escalation pulled the geopolitical inflation premium out of crude, and (2) M/M PCE printed below expectations, giving the duration trade a trajectory tailwind. We modeled a one-variable reaction function. The market is multi-variable and it kept the second-order risks honest. Lesson: cross-asset divergences need a clean catalyst without offsetting tailwinds elsewhere in the system.

Simply: We focused on one input (yearly inflation) and the market traded a different one (monthly inflation + geopolitical relief). Multi-variable problems need multi-variable analysis.
Wrong call #3 · AI multiples canary

We said: if CRM/DELL/MRVL beat and trade flat-to-down, the AI complex is topping. Market said: all three ripped.

This was the most fundamental miss because the premise was wrong. We extrapolated from a single data point (NVDA −1.77% on the print) into a system-wide claim about AI multiples. One name’s reaction is not a system — it is positioning. The Dell, CRM, and Marvell prints proved the rest of the system has room to re-rate higher even as the largest constituent in the complex digests its move. Lesson: don’t generalize a positioning unwind in one name into a multiple-compression thesis across the complex.

Simply: NVIDIA's flat reaction was about NVIDIA, not about the whole AI complex. We confused one stock's positioning with the whole sector's valuation. They are different things.

Three explicit losses on the non-consensus reads. The asymmetries we identified weren’t actually asymmetric — they were the consensus, dressed differently. That is a useful piece of information about our process going forward.

7. Where the thesis still holds

Three calls broke; three held cleanly. The ones that held are the ones that anchor the book going into June.

AI infrastructure long — right, just broader

The core structural thesis (the AI infrastructure supercycle is multi-year, accelerating, and broadening across the stack) was validated by the Q1 prints. The breadth is the new piece. The May 18 framework that the supercycle had to pass three tests, and the May 26 framework that PCE was the next gate — both held in spirit. The thesis was right and the trade is the same trade. The names doing the work changed.

WMT/HD bifurcation — right, Costco confirmed it

Costco reported Thursday after the close: total net sales $69.15B (+11.6%), comparable sales +9.8% (+6.6% adjusted for gas inflation and FX), e-commerce comp +21.5%, U.S./Canada membership renewal rate at 92.2%, worldwide renewal at 89.7%. That print, set against Walmart’s +4.1% U.S. comp the prior Thursday, bookends the high-quality consumer story we wrote up. The trade-down narrative is intact at the entry level; the upper-middle-income consumer is still showing up. The bifurcation widens by income band, not by overall consumer stress. That validates the “2001-style structural, not 2008-style cyclical” non-consensus framing — even as the other non-consensus reads broke.

NVDA-specific rotation — right, just in the opposite direction

We said NVDA would not be the cleanest expression of long AI infrastructure at the May 26 levels and suggested waiting for $162 to add. The stock instead rolled from the May 14 peak down to $211, a clean ~10% retracement that has held the May 13 support range. The direction was right; the level was wrong. This is the kind of miss that is positive for the book because the structural call held and we positioned to add into weakness rather than chase strength.

Simply: The big thesis — long AI infrastructure, long high-quality consumer, NVDA-specific rotation — all of it worked. The pieces that broke were the timing-and-positioning bets layered on top, not the structural read.

8. The pivot: rotate within the AI complex, not out of it

The pivot is mechanical and small. We are not repositioning the structural thesis. We are repositioning the names that express it.

  1. Trim concentrated NVDA exposure into rallies, not into weakness. The May 14 peak to $211 was a healthy 10% retracement; we are not chasing it lower. If NVDA bounces back into the $220–225 range without a new catalyst, that is the trim zone for over-weight positions, redirecting proceeds into the broader infrastructure basket. Structural long stays on at neutral weight.
  2. Build the AI infrastructure breadth basket: DELL, MRVL, AVGO, ANET, VRT. The five names that benefit asymmetrically from the “broadening supercycle” thesis — server (DELL), custom silicon (MRVL/AVGO), networking (ANET), power/thermal (VRT). After Friday’s Dell move, the entry-window on this basket is tighter than it was a week ago, but the structural runway is now multi-quarter rather than position-trade.
  3. Add AI software with monetization tells — CRM is the cleanest one. Agentforce ARR crossing $1B with disclosed token throughput up 152% sequentially is the kind of monetization data point that lets the multiple expand. CRM was 33% YTD-down going into the print and has now snapped back ~14% in a week. Position before the next print, not into it.
  4. Keep the WMT/HD bifurcation pair on. Costco confirmed the high-end leg; HD’s soft +0.4% comp confirmed the discretionary leg. Pair-trade math has at least another quarter to run before the spread compresses.
  5. Light duration into June 6 NFP and June 17–18 FOMC. The 10Y at 4.45% has carry, but the June 17–18 meeting still has the procedural-hike risk we flagged. We are not net short duration; we are sized below benchmark.
  6. If the June 6 NFP prints below 100k with rising unemployment, add duration and add Russell. That is the symmetric pivot to scenario 3 from the May 26 piece — a labor-side dovish surprise that lets the Fed’s dovish camp take the meeting framing.
Simply: We are not changing the big thesis. We are changing the names. Less NVIDIA, more Dell-and-friends. Same trade; different expression.

9. Looking into June: NFP, CPI, then the FOMC

The June macro tape is dense and the FOMC at the end of it is the next real test of whether the hawks have a procedural path or whether the dovish camp’s framing wins. Five major prints between now and June 18:

The conditional pathway: if NFP prints sub-100k and CPI prints below consensus, the dovish camp gets a quiet meeting and the supercycle gets a tenth (and likely an eleventh) up week. If NFP holds 150k+ and CPI surprises higher, the hawkish three-vote bloc has a real shot at removing the easing-bias language — and that is when the index finally gets the catalyst for the pullback the base-rate math missed this week.

Simply: The next four weeks have five major data prints into the June 17–18 FOMC. The job report on June 6 sets the tone. The CPI on June 11 is the dress rehearsal. The FOMC is when the dovish camp either keeps the easing bias in or the hawks finally take it out.

10. Outlook & predictions: how we think June plays out

The May 29 piece is a recap. This is the forward look. None of the below are guarantees — they are the priced-out scenarios with explicit price targets and conditional pathways. We will be wrong on at least one. The job is to be wrong on the smallest one and to size the conviction trades to the highest one.

S&P 500 year-end target

Our base-case year-end target is 8,000–8,200, an additional ~6–8% from Friday’s 7,580 close. The math: a dovish-leaning June FOMC keeps the easing-bias language in, M/M PCE continues to print 0.2% or below, NFP holds 100–150k with stable unemployment, and AI infrastructure earnings continue to scale through Q3. Multiple stays at 22x forward; earnings growth carries the index.

Chart 4 — S&P 500 year-end 2026 scenarios (probability-weighted)

Base case 8,000–8,200 (50%). Bull 8,500+ (25%). Bear 6,800–7,200 (25%).

8,500 8,000 7,200 6,800 7,580 5/29 close BULL: 8,500+ 25% · 2 cuts by YE BASE: 8,000–8,200 50% · 1 cut, dovish hold BEAR: 6,800–7,200 25% · hawks remove ease bias Q3 2026 YE 2026

Probability-weighted year-end S&P 500 scenarios. Base case anchored on a dovish FOMC hold and continued AI-infrastructure earnings scaling. Bull case requires two Fed cuts by year-end plus multiple expansion. Bear case requires the hawkish FOMC trio winning the procedural fight over the easing-bias language at the June 17–18 meeting.

Single-name predictions

  1. NVDA bottoms in the $200–$205 range (June 6–13), rebounds to $230 ahead of next earnings. Probability ~55%. The May 14 to May 29 retracement is consistent with a ~10–12% pullback within an uptrend (the 200-day moving average sits around $198 currently). A reclaim of $215 on volume would confirm the bottom.
  2. Dell consolidates at $145–$155 for two weeks, then breaks higher into mid-July. Probability ~50%. A +33% single-day move is rarely the end of a re-rating — it is usually the start. The mean post-record-day return is +5–8% over the following 60 trading days when the catalyst is fundamental (guide raise) rather than positioning.
  3. Salesforce extends to $310 by August earnings. Probability ~40%. The Agentforce $1B ARR data point gives the multiple permission to expand from the current ~28x forward toward 32x. The risk is a Q2 monetization-rate miss that proves Agentforce is land-and-expand-slowly rather than land-and-expand-fast.
  4. Micron tests $1,000 before our trim level fires; then we ladder out per the May 28 piece. See the MU after UBS post for the full ladder. Conviction at $923 was already the trim zone; the discipline is the discipline.

Macro predictions

  1. 10Y range: 4.25–4.65% through June. The geopolitical de-escalation premium gives the rate side ~20bp of room to rally; the inflation level gives the rate side ~10bp of risk to back up. The high-conviction trade is the range itself: sell vol when 10Y is at 4.65%, buy vol when it touches 4.25%.
  2. Russell 2000 outperforms the S&P on a sub-100k NFP. Probability ~55% if NFP prints below 100k. Small-caps have under-performed mega-caps by ~12% YTD; a Fed-cut catalyst is the cleanest re-rating setup, and small-caps have the most beta to the cut.
  3. WTI breaks $58 if US–Iran de-escalation language is formalized at the June 17–18 G7. Probability ~45%. Iran supply that has been priced as offline returns to market; the offsetting demand-side weakness keeps a lid on any rally.
Simply: We see the S&P at 8,000–8,200 by year-end (50% probability), with 8,500+ if the Fed cuts twice and 6,800 if the hawks finally take the easing-bias language out of the June statement. NVDA bottoms around $200–205. Dell consolidates higher. CRM keeps re-rating. The 10Y trades in a 4.25–4.65% range.

11. What would falter our thesis

We are honest about being wrong. The point of this section is to name the specific things that would force us to flip the book, before they happen, so we can be proactive instead of reactive. If two or more of the following trip simultaneously, we re-underwrite the structural thesis.

Trip-wire #1 · Labor market shock

May NFP above 250k with average hourly earnings above 4% Y/Y.

A re-acceleration in the labor market with sticky wage growth is the cleanest signal that the disinflation trajectory we are leaning on at PCE M/M is breaking. If that print lands on June 6, the Fed’s hawkish trio gets the substance they have been arguing the procedural fight for. The 10Y goes through 4.65% immediately; the S&P loses 3–4% in two sessions; the rotation into AI breadth pauses.

Our response: Cut AI infrastructure gross by 25%, add Russell put spreads, extend duration light only when 10Y backs up through 4.75%.

Trip-wire #2 · Hyperscaler capex cut

META, MSFT, AMZN, or GOOGL pre-announces a CapEx reduction at a mid-year update.

The supercycle thesis depends on hyperscaler CapEx being structurally upward-revising, not flat or down. If any of the four announces a CapEx cut at a mid-year update (likely between June 15 and the Q2 print in late July), the AI infrastructure breadth basket loses its anchor. Dell, MRVL, AVGO, ANET are all derivatives of that CapEx line.

Our response: Net out the AI infrastructure basket; rotate to AI software where the demand-side monetization is cleaner (CRM, ORCL, SNOW). NVDA pair-trade against the basket (long NVDA, short basket) becomes the expression.

Trip-wire #3 · Iran deal collapses

US–Iran tentative agreement breaks down before June G7.

The 25bp 10Y rally from the May 20 peak is partially priced on Iran de-escalation. If that breaks down before the G7 (June 14–15), WTI rallies through $70 and the breakeven inflation curve widens 15–20bp. PCE M/M would re-accelerate on energy pass-through. The Fed’s dovish camp loses the trajectory argument.

Our response: Long energy (XOM, CVX added at current levels), short duration, neutral broad equities. The supercycle thesis still survives but the multiple compresses on rate-side stress.

Trip-wire #4 · Credit event in private credit / regional banks

A high-profile private credit fund halts redemptions, or a regional bank discloses material CRE losses.

This is the off-radar tail risk that doesn’t show up in the equity tape until it does. Private credit AUM has doubled since 2020; the cycle hasn’t fully tested mark-to-market discipline. A KRE-style move (regional banks index down 15%+ in a week) is the symptom; the cause is likely commercial real estate marks or a fund-level liquidity event.

Our response: Cut gross exposure across the board (not just sectors); raise cash to 15–20% of book; add Treasury duration as the safe-haven trade. Wait for the policy response before re-engaging.

Trip-wire #5 · China retaliation on H200 / chip access

China imposes a new tariff or non-tariff barrier on US AI chips, or restricts US firm access to rare-earth processing.

The May 18 H200 China clearance was the dovish catalyst that we credited as a $500M–$1B uplift to NVDA’s Q2 guide. If China retaliates — either via a tariff escalation or via rare-earth export restrictions — the marginal AI capex bid from China-facing demand evaporates and the rare-earth supply chain for chip manufacturing tightens.

Our response: Trim NVDA further (already trimming on rallies); trim memory exposure; add rare-earth and lithium exposure as the structural beneficiary; long USD/CNH on the rate differential.

Simply: Five things would force us to change our minds: a hot jobs report, a hyperscaler CapEx cut, the Iran deal collapsing, a credit event, or China retaliation on chips. We are watching all five. If two trip at once, we change the book. If one trips, we adjust position sizing and keep watching.

12. Three more things Wall Street might not be thinking about (yet)

The May 26 piece had five non-consensus reads, three of which broke on the print (the mean-reversion math, the cross-asset divergence, the AI-multiples canary). The three that held (and the trend toward broadening AI leadership) inform what we are watching next. Three new forward-looking non-consensus reads for the next four weeks:

New non-consensus #1 · Russell 2000

The Russell is the cleanest expression of a dovish FOMC outcome — and it’s the most underweight on the Street.

Small-caps have under-performed the S&P by approximately 12% YTD and are still ~10% below their November 2024 highs. Street positioning is structurally underweight small-caps. A sub-100k NFP on June 6 followed by an in-line CPI on June 11 sets up the dovish FOMC framing — and the Russell has the most beta to that re-rating. Long IWM call spreads (Jul 2,950 / 3,100) is the high-convexity expression.

Simply: Small-cap stocks have been left behind all year. If the Fed turns dovish at the June meeting, that’s the trade that catches up the fastest.
New non-consensus #2 · Foreign demand for Treasuries

Foreign demand for US duration is about to surge — the 10Y could touch 4.20% if the Iran-deal holds.

The Street is pricing the 10Y as range-bound with a slight upward bias on inflation. The under-priced asymmetry is the foreign-demand side. Japanese and European investors have been under-allocated to USD duration since the 2024 FX volatility episode; with the Iran-deal premium pulled out of the 10Y, foreign buyers have a clean entry point. If the May 21–June 10 auction cycle shows indirect bids above 70% on the 10Y and 30Y, the 10Y can touch 4.20% before the FOMC. Long TLT call spreads (Jul $97 / $102) is the expression.

Simply: Foreign investors have been waiting for a clean entry point in US Treasuries. With Iran de-escalating, they may finally have it. 10Y could move lower faster than anyone expects.
New non-consensus #3 · Hyperscaler CapEx revisions

META, MSFT, and AMZN raise CapEx guidance in June — not cut.

The Street is anchored on the “AI CapEx normalization” narrative that we flagged as one of the explanations for NVDA’s −1.77% post-print. The Dell, CRM, and MRVL prints suggest the opposite is happening at the back end of the supply chain. Our high-conviction call: at least one of META, MSFT, AMZN raises 2026 CapEx guidance at a mid-quarter analyst event between June 10 and June 25, before the Q2 print arrives in late July. The trade: long the AI infrastructure basket pre-announcement; trim post-announcement on the gap-up.

Simply: Everyone’s waiting for the AI spending to slow down. Dell, Salesforce, and Marvell just told us it’s accelerating. Watch for one of the big four cloud companies to confirm with a CapEx raise this month.

Sources & footnotes

  1. May 26 outlook: "Eight weeks up. Now PCE has to confirm." Non-consensus #5 base-rate table cited 11-of-14 historical instances of 8-week streaks resolving flat-to-down in week 9. Full piece. ↩
  2. April 2026 PCE release, BEA: core PCE +0.2% M/M (vs +0.3% expected, +0.3% prior); core PCE +3.3% Y/Y (vs +3.3% consensus, +3.2% prior); headline PCE +3.8% Y/Y. CNBC coverage. ↩
  3. S&P 500 close May 29, 2026 at 7,580.06; +0.22% on the day; ninth consecutive up week (longest since 2023); +5% on the month. Nasdaq close 26,972 (+8% on the month). TheStreet and BBN Times Friday close summaries. ↩
  4. Dell Technologies fiscal Q1 2027 earnings, reported May 28 after the close: Q1 revenue $43.8B (+88% Y/Y), EPS $4.86 (+214%), AI server revenue $16.1B (+757% Y/Y); FY27 revenue guidance raised by $27B, AI server guide raised to $60B. Friday May 29 close +33% (best single trading day on record). Sources: Dell 8-K filing; CNBC, Seeking Alpha, Yahoo Finance coverage. ↩
  5. 10-year Treasury yield close May 29, 2026 at 4.45%; intraweek peak of 4.7% on May 20; ~25bp decline driven by US–Iran de-escalation reports and soft M/M PCE. TradingEconomics/Fed H.15 summary. ↩
  6. NVIDIA Corp (NVDA) close May 29, 2026 at $211.14, −1.45% on the day, ~−5% on the week, ~−10% from the May 14 all-time closing high of $235.74. Yahoo Finance historical data. ↩

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