Inflation just hit a 3-year high 😬

Welcome back to the Day Trading newsletter 📈

The inflation genie is officially out of the bottle.

Wednesday's CPI report confirmed what your gas station already told you. Prices are running hot again, and the Dow answered by shedding more than 950 points.

Let’s get into it 👇️ 

🔼 Oracle posted record fiscal Q4 results Wednesday: $19.2 billion in revenue, up 21%, with cloud infrastructure sales surging 93%, and the stock still fell hard after hours. The problem: management guided to roughly $70 billion in capital spending next year, reigniting fears that the AI buildout is swallowing profits.

🔻 Super Micro shares sank 12% Wednesday after the company announced plans to raise about $7 billion through equity and equity-linked deals. The cash funds a roughly $39 billion order backlog for its AI servers. Strong demand, but existing shareholders get diluted, and rising component costs threaten margins.

💵 Your paycheck officially isn't keeping up. Real average hourly earnings fell 0.7% in May from a year earlier, the biggest drop in more than three years. The Iran war's energy spike is outrunning pay gains, squeezing household budgets while the Fed holds borrowing costs at 3.50%-3.75% (meaning no relief on credit cards or mortgages anytime soon).

🚢 Iran declared the Strait of Hormuz closed to all vessels Thursday after fresh U.S. airstrikes, warning that any ship attempting passage will be attacked. Oil rose more than $2 a barrel on the news, and U.S. crude inventories have now fallen seven straight weeks.

🥇 Gold keeps falling even with a war on. Bullion has now slumped roughly 25% from January's record $5,589 an ounce. Rate expectations are doing the damage: with cuts off the table, the opportunity cost of holding an asset that pays no interest climbs, and not even Middle East escalation is offsetting it.

⛽️ Gas prices are actually falling, the national average hit $4.15 a gallon, down from $4.52 a month ago. That's still about 39% higher than before the Iran war began, but refiners and rerouted supply have clawed back some relief. Whether it lasts depends on the Strait staying passable.

📉 Bitcoin slid to about $61,500 Wednesday, down sharply for the week, as the hot inflation print crushed hopes for the rate cuts crypto bulls were counting on. The original "inflation hedge" pitch isn't landing: BTC now trades roughly $48,800 below where it stood a year ago. 

💰️ The bond market shrugged off the hottest inflation since 2023 — the 10-year Treasury yield held nearly steady around 4.55% Wednesday. Traders took comfort in the soft core reading, betting the energy shock hasn't yet bled into broader prices. The calm breaks if core starts creeping.

Consumer prices rose 4.2% in May from a year earlier, the hottest annual reading since April 2023, up from 3.8% in April.

The culprit is no mystery. Energy prices jumped 3.9% in a single month and are now up 23.5% over the past 12 months, as the Iran war and the blockaded Strait of Hormuz keep a war premium baked into everything from gasoline to airfares.

The quieter good news: core inflation (which strips out food and energy) rose just 0.2% on the month, below estimates, and sits at 2.9% annually.

The shock is still mostly an energy story, not an everything story.

A 4%-handle on inflation vaporizes the case for rate cuts (and revives the once-unthinkable case for a hike).

Stocks closed near session lows Wednesday (the Dow fell 953 points, or 1.9%), and the two quarter-point cuts Wall Street expected at the start of 2026 are off the table, with several Fed officials pivoting hawkish and some economists warning the next move could be a hike.

Meanwhile the energy spiral isn't cooling. Fresh U.S. strikes on Iran Thursday sent WTI crude up nearly 3% toward $93 a barrel, with Brent topping $95 after Tehran declared the Strait closed to all vessels.

What to watch:

• Kevin Warsh chairs his first Fed meeting June 16-17. A hold is near-certain (the CME FedWatch tool puts it at close to 100%) so the real action is the statement language and the press conference.

• If Warsh drops the Fed's easing bias or signals the door is open to a hike later this year, expect the rate-sensitive corners of the market (tech, gold, crypto) to take it hardest.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.