In this live morning briefing from Grand Central Terminal, Kenny Polcari breaks down why the strong April non‑farm payrolls did not trigger a market sell‑off. He explains that the headline job‑creation number was eclipsed by softer wage growth, distinguishing wage‑push (cost‑side) inflation from demand‑pull (demand‑side) inflation and arguing that the former is not currently firing. Polcari details the resulting bond rally, modest equity gains, and sector‑by‑sector performance (notably tech and chips). He then shifts to geopolitics, describing the collapse of a potential Iran nuclear deal, its impact on oil prices, and the broader macro‑risk narrative. Upcoming macro data (April CPI, PPI) and the imminent Fed leadership change to Kevin Walsh are highlighted as potential market catalysts. Brief crypto price updates, a plug for Sleepstone Wealth, and a step‑by‑step tortelloni with salsiccia and gorgonzola cream recipe close the segment.
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Well, good morning. Yes, it's me, Kenny Polcari, coming to you live from New York City here at Grand Central Terminal at 8 o'clock in the morning. You can see it's getting a little bit busier as the morning goes along. But today is Monday, May 11th, 2026, and here are the things you need to know to get your day started. Well, on Friday, the NFP came in stronger than expected, but wages, well, that was the key to the market action. Now, is this a wage push or a cost pull inflation story? We'll talk about that in a minute. Iran over the weekend says no no deal and rebuffs any negotiation. Anything tech though on Friday, well, that continues to outperform. The CPI and the PPI are due later on this week as Kevin Walsh is expected to take control of the Fed on Friday, May 15th. And what do we have at dinner tonight? We're gonna have the tortelloni with salsiccia and gorgonzola cream. It is delicious. So we'll get to that in a moment. Okay, look, we are now in the middle of May. It is the 11th week of the Iranian conflict. Stocks are trading at all-time highs. Think the S&P, the, the, uh, NASDAQ and the Russell. The Dow and the equal-weight S&P are not that far behind. Bond yields remain on the edge. Oil is trading up $2 this morning at $97.50. Gold is down $50 at $4,665. The VIX is up a buck at 18.15, while the dollar index remains below all 3 trend lines. Now let's talk about what happened on Friday, because that is where it all begins. At 8:30, we got the April jobs report, right? The nonfarm payrolls came in at +115,000 new jobs. Well above the expectation of 62,000, and that is a blowout number, nearly double the estimates. And according to the old playbook, what should have happened? Stocks should have sold off. Why? Because a stronger labor market is supposed to mean a stronger economy, which means stronger and tighter labor conditions. And tight labor conditions mean higher wages, and higher wages means inflation pressure. And inflation pressure means that the Fed stays higher for longer. Yields rise and stocks are supposed to wobble. Simple, right? Except that's not what happened. Why? Because the market completely ignored the headline number and focused instead on wages. Average hourly earnings rose just 0.2% month over month versus the expected 0.3%, and year over year it was up 3.6% versus the expected 3.8%. And that changed the entire tone of the day. The market looked at that and said, okay, jobs are solid, but wage pressure is not spiraling outta control. And that matters because this is where people confuse two very different types of inflation. Wage pull Wage push versus demand pull. Now, wage push inflation comes from the cost side of the equation. Workers demand more money because labor is tight. Unions have leverage. Cost of living expenses go up. Employers pay up. The cost of goods go up, and then they pass that on through higher prices. That's how you get the ugly stuff, the wage-price spiral. Wages rise, prices rise, workers demand even more money, more wages to keep up. Businesses raise prices again, and around and around it goes. And once that cycle starts, it gets embedded. It's very hard to stop. Think late 1970s, early 1980s. It was ugly then. That's what the Fed was terrified about in 2022 and 2023. And it's exactly the kind of inflation that Paul Volcker had to crush in the early 1990s. Now, we discussed this last week and the week before when he took the federal funds rate to 21% to break the back of inflation, sending the US economy into 2-year recession. On the other side, we have demand pull inflation. That's when consumers have way too much money chasing way too many, uh, too few goods, right? The economy is running hot, demand explodes, supply can't keep up. Sellers realize that and they charge it. They change that and they charge prices, uh, that they're willing to sell their items for. Think post-COVID stimulus checks everywhere, pent-up demand unleashed, supply chains tied up in knots, everybody buying cars, appliances, vacations, and electronics all at the same time. That wasn't wages driving inflation. That was demand. Demand pulling prices higher. Now here's why all this matters, right? Demand pull inflation is easier for the Fed to control. They raise rates, they slow demand, they cool the economy, right? It's painful, sure, but that is a policy lever. Wage push inflation though is trickier because if wages are driving higher while the economy itself is not overheating, then the Fed risks crushing growth just to stop a cost problem. That's the stagflation trap. Slow growth, sticky inflation, the worst possible outcome. So now let's go back to Friday. The headline jobs numbers scream, uh, tight labor market. And under normal circumstances, the tight labor market should have been accelerating wage pressures, right? Bond yields should have exploded higher. Stocks should have sold off. But that is not what happened. Wages came in softer than expected, meaning the wage push mechanism isn't firing. And that told investors something very important, that the labor market may still be resilient without becoming inflationary. And that's why bonds rallied. The TLT and the TLH both up by 0.5% and 4/10 respectively, uh, causing the 2, the 10, and the 30-year yields to drop by 3/5. And that's why stocks ended the day a little bit higher. The Dow was up 12 points, S&P was up 6, uh, 62, the NASDAQ up 440 points, the Russell was up 22 points. The transports added 17, the equal-weight S&P rose 25, while the Mag 7 added 365 points. Of the 11 S&P sectors. The tech trade, and more specifically the chips trade, continues to amaze and attract investor dollars. The XLK itself was up 3.45%. The semis, right, they rose 5.7%. Anything remotely resembling a chip rose even more. AMD was up 11%, Intel was up 14%, Broadcom up 4.3%, Qualcomm up 8.2%. ASML up 5%, AMAT up 6%. Cybersecurity names are up 2.6%. Disruptive tech up 1.5%. Quantum names were gaining up 2.7%, while the growth trade gained 1.25%. Behind that, we had basic materials up 0.3%, consumer discretionary up 0.3%, consumer staples up 0.25%. Real estate was flat. Utilities and healthcare lost 0.9%, while industrials were down 0.5%. Financials lost 0.6%, energy and communications lost 4/10 of a percent. Down the chain, you saw strength in retail up 4/10. The value trade was up 3/10. Metals and miners was up 4/10 of a percent. Aerospace and defense up 1%. Biotech was up 8/10 while the small-cap 600 growth trade gained 0.5%. Emerging markets up 2 full percentage points. Now the contra trades, well, they're continuing to lose. The DOG is down 2.7% year to date. The SH is down 6.7% and the PSQ is down 13% year to date. Now, oil remains at the center of it all, but this is almost beginning to feel like investors really— they're pushing that to the back burner. They are decoupling the geopolitics from the US economy, at least for now. Something I think is a mistake. Oil is a cost-push inflation problem. It's the same dynamic as wage-push inflation, except instead of labor costs driving inflation, it's energy costs that's flowing through every part of the supply chain, right? Think transportation, manufacturing, chemicals, food, fertilizer, shipping, airlines. Plastics, everything. Over the weekend, we learned that Iran formally responded to the US proposal on Saturday, and apparently the response was not what Washington wanted to hear. Trump read the response on Sunday and immediately lit up his Truth Social saying that it was totally unacceptable while accusing Iran of playing games with the US and the world. Iran, on their, on their part, they fired right back, making it crystal clear that Iran has no intention of surrendering its nuclear ambitions. Or bowing to outside pressure. In other words, the optimism that fueled this market all week last week just slammed into reality. And here's the real issue: the two sides are still miles apart on the things that actually matter. The US wants Iran to halt uranium enrichment for more than a decade and physically remove its highly enriched uranium stockpile from the country. Iran, on the other hand, says, "Not happening." Enrichment is their red line in the sand. It's non-negotiable. They want war reparations. They want complete sovereignty over the strait and they want Israel to go away. Those are not small disagreements. And then Netanyahu goes on 60 Minutes last night and says that the war is not over and that there's still more work to be done. Translation: Don't assume that this thing is calming down any time soon. This appears to be dragging on for a little bit, and that's not going to be good for the economy. And add in reports of newly surfaced satellite images showing another alleged Iranian nuclear-related site, and suddenly the whole deal is— the whole deal is imminent narrative starts looking like not so much. This morning, oil is up $2 at $97.40. Bond yields are higher, taking back the 3 bps that they lost on Friday. European markets are mostly lower. The VIX is up 6%, and US futures are under a bit of pressure. The earnings parade continues, but we're getting mostly to the end of it, although Nvidia is the big one, and that is on the 20th. ECO data this week includes existing home sales today expected to be up 2%. Tomorrow is the April CPI, and this is important. Top line, uh, month over month is expected to be up 0.6%, while core is expected to be up 0.3%. Top line year over year up 3.7%, core up 2.7%. All figures up over last month. And the worry is that they're gonna be worse than expected, while the surprise is gonna be if they're better than expected. And Wednesday we're gonna get the April PPI report, and that's expected to be up substantially as well over last month. And so the inflation narrative is going to continue. Kevin Walsh, well, he's expected to take control of, of the Fed on Friday, uh, the 15th, but I don't expect the market to really react that much because it's had plenty of time to kind of voice its concerns. So the market's just going to kind of go along with it. In the end, it's a CPI on Tuesday, it's a PPI on Wednesday morning, and that could be the pins that pop this balloon. And with that, the Iran deal falling apart over the weekend, oil is going to be working against the inflation print before we even get the 8:30 AM report tomorrow morning. Now this morning, Bitcoin's trading at $81,000, Ethereum's at $2,350, and Solana is trading up at $95.20. US futures this morning are down. Dow's down 10, S&P's down 8, NASDAQ was down 20, and the Russell is down too. You can call me at 561-931-0190. Let's talk about how Sleepstone Wealth can help you navigate all this noise and reach your end goals. Okay. Now what are we having dinner tonight? We're gonna have the tortellini con salsiccia and gorgonzola. It's really tortellini pasta with sweet sausage and gorgonzola cream sauce. It is easy and so good. Now for this you need the pasta. Now tortelloni is like a bigger, longer rigatoni, right? You need sweet sausage— you can use hot if you want, I use sweet— olive oil, onions, soft gorgonzola. You need heavy cream, you can use light cream if you want, salt and pepper, and of course you need some of the pasta water. You want to bring a pot of salted water to a rolling boil on the back burner, let it sit there and wait until you're ready. In a big sauté pan, you want to begin by heating up some olive oil. Add the diced onion, sauté that for 5 minutes. Now add the sausage meat that you've taken out of the casing, crumble it all up, add it to the sauté pan and cook it until it's all browned all over. Season it with salt and pepper. Now remove the sausage from the pan and just set it aside for a moment. You're going to put it back in a second. Uh, you want to add the pasta to the boiling water. Now you're going to cook it for 8 or 10 minutes until it's just al dente. Do not overcook it. Now you're going to take the soft gorgonzola, a couple of tablespoons, and you're going to put it in the sauté pan and you're going to melt it slowly. You're going to— after it melts, you're going to add about 1 cup of the heavy cream or the light cream, whatever you're using. And then you're going to put the sausage back into the mix and you're going to mix it to coat it all well. When the pasta is done, you're going to use a slotted spoon, you're going to add the pasta directly to the sauté pan and you're going to really mix it well. If you need to, this is where you're going to add a ladle of the pasta water just to keep it moist. After you've mixed it, it's all nice and gooey and creamy. You're going to serve it immediately in warm bowls. Your, your, your guests will enjoy this one and this will soon become a family favorite. Until tomorrow, take good care.
