The Exchange Two Rate Hikes, Tensions Ahead of China Summit, and AI Economic Distortions 5/8/26
May 8, 2026
Stephen Whiting, chief investment strategist at CIO Group, outlines portfolio positioning amid energy shocks and the AI tech boom. Greg Ip, WSJ chief economics commentator, discusses how AI is changing macro indicators and concentrating gains. They talk two potential Fed rate hikes, Iran-related inflation risks ahead of a high-stakes China meeting, and where markets may rally or crack under concentrated AI-driven gains.
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Jobs Headline Masks Underlying Weakness
- Diane Swonk argues the April jobs headline masks weakness: household survey softness and a rising U6 underemployment to 8.2%.
- She warns sticky inflation from the Iran war and supply-chain echoes of the pandemic could force the Fed to hike by summer.
Iran Shock Is More Than An Oil Spike
- Diane Swonk says the current shock is broader than an oil shock: it's a supply-chain shock plus fiscal elements that make inflation more persistent.
- She cites pandemic research showing persistent shocks amid uncertainty lengthen inflation episodes and challenge central banks.
Watch Services Inflation, Not Just Jobs
- Steve Leisman advises the Fed might raise not because jobs overheat but to defend inflation credibility given persistent services inflation.
- He highlights services ex-energy and shelter running above pre-pandemic norms as the pressure point.