A Three-Year-High Inflation Print And A Widening War Sank Stocks. We Spent The Week Leaning Into What Holds Up When They Do.

This is the kind of tape I actually like to write into, because it tells you what's real. When inflation runs hot and a war keeps energy bid, the market stops paying up for stories and starts paying for cash flow, hard assets and contracts. That's been our posture for a while, and this week I leaned into it rather than away from it — not because I'm bearish, but because the names that hold up in a 4%-inflation, $90-oil world are the ones I'd want to own anyway.

Three threads ran through the week and they happen to be the three I watch hardest: a big macro print (inflation at a three-year high), the largest merger anyone's ever floated (Deutsche Telekom and T-Mobile), and the bond market doing the quiet work of repricing rate cuts out of the calendar. I reinforced defense, energy and the data-center utilities, added to the NextEra dip, and stayed patient on the frothier corners of AI. The reasoning is below; the cascaded positions are on the Portfolios page.

Inflation Hits A Three-Year High — And The War Is Part Of The Reason.

Consumer prices rose 4.2% from a year earlier in May, in line with what economists expected but the hottest reading in three years, as the Iran war pushed energy prices up and the conflict's toll on consumers deepened. Markets had been leaning on the idea that the Federal Reserve would be cutting rates by now; a print like this, with the fed-funds target still at 3.50–3.75% and the 10-year at 4.541%, pushes that hope further out and was a big part of why stocks fell so hard.

Here's the across-the-desk version: when inflation surprises nobody but still won't come down, the discount rate on every long-duration growth stock stays higher for longer. That's a headwind for the most expensive AI names and a relative tailwind for things that throw off cash today — energy, defense, dividend payers and regulated utilities. I didn't blow anything up over one print; I just kept tilting the book toward the cash-flow side of that line.

Deutsche Telekom Wants All Of T-Mobile — The Largest Merger Anyone Has Ever Tried.

Timotheus Höttges, who runs Deutsche Telekom — the West's largest telecom, with 273 million mobile customers and a 54% stake in T-Mobile US — is reportedly preparing to fully absorb its flashy American offshoot. If it happens, it would be the largest public-company merger in history. Höttges has called telecom a "crappy industry" even as he's won at it; pulling T-Mobile fully in-house would be the boldest bet of his twelve-year run.

I don't chase mega-merger headlines — the regulatory road on a deal this size is long and uncertain — but it tells you something about where confident capital is going: toward scale, cash flow and infrastructure, not speculative growth. It also keeps the deal-advisory pipeline fat for the investment banks we own. I'm putting T-Mobile (TMUS) on the watch list as a catalyst name and keeping the financials sleeve, Goldman (GS) and Morgan Stanley (MS), reinforced.

NextEra Is Buying Dominion To Build A Mega-Utility. The Market Hated It. I'm Buying The Dip.

Shares of NextEra (NEE), the largest U.S. utility, have fallen about 9% since it said it would buy Dominion Energy in a mostly-stock deal — creating a company more than double its size, with exactly the kind of data-center power exposure the AI build-out runs on. The Journal's own analysts called it a chance to "buy the dip on a top-notch utility." I agree. The deal pairs the best renewables operator in the country with a big regulated peer sitting right in the path of data-center demand.

This is the trade I keep coming back to: you don't have to guess which AI model wins to profit from AI — you can own the electricity all of them need. NextEra got cheaper on a deal that makes it more important, not less. I reinforced NextEra (NEE) on the pullback and kept the broader power sleeve — the regulated utilities and independent power names — as a core, cash-generating way to play the same theme the chip stocks chase.

SpaceX Is Going Public After A 2,000% Run. The Pros Are Telling Retail To Watch From The Stands.

SpaceX's valuation has grown more than 2,000% in a few years, and individual investors missed nearly all of those private gains — yet they'd have the most to lose if the shares fall after listing. "Most retail investors should avoid trading this like the plague," one veteran fund analyst said, expecting extreme volatility in the weeks after it goes public. It's the marquee name in an IPO calendar — SpaceX, then OpenAI — that's the busiest since 2021.

You don't need to own the hot IPO to benefit from the boom around it. The clean way to play a heavy listing calendar is the banks underwriting it, which is why I keep Goldman Sachs (GS) and Morgan Stanley (MS) reinforced. And it's a useful teaching moment for clients: the excitement is real, but a first-day pop is not a plan. We size into quality, we don't gamble on debuts.

A Cloud Startup That Refuses To Touch Nvidia Just Raised $350M — Led By AMD.

TensorWave, a Las Vegas cloud-computing startup, runs exclusively on Advanced Micro Devices (AMD) hardware — on principle, because its founder thinks Nvidia controls too much of the AI infrastructure market. It just closed a $350 million Series B led by AMD itself, at a $1.55 billion valuation. One data point doesn't make a trend, but it's another customer voting for a credible second source of AI compute.

My read: the AI-chip market is too big and too strategic to stay a one-company show, and every hyperscaler wants a second supplier for leverage and supply security. We own Nvidia (NVDA) as the bellwether, but I reinforced AMD (AMD) as the highest-quality alternative — the name that benefits specifically from buyers who want anyone but Nvidia.

The Bond Market Just Quietly Repriced The Year. Here's What 4.54% Is Telling Us.

With inflation back at 4.2%, the 10-year Treasury yield sits at 4.541%, the fed-funds target is still 3.50–3.75%, and the average 30-year mortgage is 6.57%. The quiet story of the week wasn't a stock — it was the bond market taking rate cuts back out of the calendar. Higher-for-longer isn't a slogan anymore; it's the price.

That cuts two ways for a balanced book. On the one hand, it pressures long-duration growth and rate-sensitive assets. On the other, it's the best environment for income in a generation: you're being paid a real yield to wait. For clients who need cash flow, I'd rather lock in today's coupons than reach for the riskiest equity. We keep the fixed-income sleeve in shorter and intermediate high-quality bonds — collecting the yield without betting the house on the exact month the Fed finally moves.

Battered But Not Beaten: Iran's Grip On Hormuz Keeps A Floor Under Oil.

Iran's regime was battered by bombing but came away with real leverage over the Strait of Hormuz, the chokepoint a fifth of the world's oil passes through. That's why crude firmed to $90.03 even on a brutal day for stocks. The interesting tell was gold: it fell $152 on the same day, a reminder that in a true risk-off scramble investors sometimes sell their winners to raise cash, and hedges don't move in a tidy straight line.

Our defense names — Lockheed Martin (LMT), RTX (RTX), Northrop Grumman (NOC) and General Dynamics (GD) — are built for exactly this backdrop, and the energy overweight (ExxonMobil (XOM), Chevron (CVX)) is anchored to a supply story that one headline can't undo. I reinforced all of them. I'm keeping the gold sleeve (IAU) too — one bad day doesn't change why you hold the hedge that nobody can price.

North Korea Arms Up, Taiwan Drills Live-Fire — The Defense Tailwind Stays Chronic.

North Korea is likely to expand its nuclear enrichment by about 75%, according to international researchers, even as Taiwan ran live-fire Himars drills aimed squarely at deterring Beijing. String these together with the Iran war and you get the same picture we've been painting for months: a more dangerous, more multipolar world where every major power is rearming at once.

This isn't a one-week trade for us — it's a multi-year tailwind. Defense budgets only go up in this environment, and the prime contractors sit on backlogs measured in years. The defense barbell against the AI trade is doing exactly what it's supposed to: when the growth side wobbles on inflation, the deterrence side holds. We keep it reinforced.

The Pope Weighs In On AI: Build A City, Not A Tower Of Babel.

In his first encyclical, "Magnifica Humanitas," Pope Leo XIV framed the future of artificial intelligence as a choice between two construction projects: Babel, built by people so captivated by their own ambition they never ask what they're building or whom it serves; and Nehemiah's Jerusalem, governed by the people who will have to live with what gets built. It's a striking moral marker laid down over the technology reshaping every portfolio on earth.

I'm not putting the Pope in an asset-allocation model. But the point is a good investing discipline too: be clear-eyed about what you're building. We own AI through profitable, accountable companies and the real-world infrastructure they depend on — the power, the fiber, the chips — not the most speculative promises. In a week the market reminded everyone that froth gets punished, that's a comfortable place to stand.