Consumers Buy Less | Grok Trails Rivals | Warsh Cornered

Markets lost momentum through the afternoon as Nvidia’s (NVDA) strong earnings failed to extend the AI rally further. 

The Nasdaq led declines while Treasury yields climbed back above recent levels. Oil prices also moved higher after renewed doubts around Iran negotiations pressured sentiment again.

Asian markets stayed stronger, driven by renewed excitement around robotics and physical AI themes. SoftBank surged after reports OpenAI could file IPO paperwork soon, reinforcing expectations that the next phase of the AI capital cycle is accelerating globally.

Strong earnings alone are no longer enough for AI leaders. Markets now need bigger surprises, broader participation, and easing macro pressure to sustain another breakout higher.

When he promised reusable rockets, NASA said it was impossible.

Nobody's laughing anymore.

Elon doesn't just build companies. He solves impossible problems everyone else gave up on.

And right now, AI is facing its biggest crisis yet — a genuine infrastructure bottleneck threatening to strangle the entire industry. Google, Amazon, Microsoft are all hitting the same wall.

Elon sees a fix. Bloomberg reports he's preparing to take SpaceX public to fund a breakthrough that could solve it once and for all.

But there's something mainstream media has missed — one little-known partner company at the heart of his mission that could soar as his plan unfolds.

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Walmart (WMT) reported revenue of $177.75 billion, beating estimates by 3 percent. Comparable sales grew 4.1 percent. On paper, solid. Then the guidance landed and the stock fell 6 percent.

The CFO explained why. Tax refunds had been quietly cushioning consumers from gas prices all quarter. Those checks have now stopped arriving. In Q2, consumers face the same high fuel costs with nothing to soften the blow. The average gas fill-up at Walmart stations fell below 10 gallons for the first time since 2022.

That is not a rounding error. People are literally putting less gas in the tank each visit.

What the Guidance Says

More people coming in but buying less each time. Target named the tax refund pull-forward last week. Walmart confirmed it and quantified what Q2 looks like without it.

The Q2 Picture

The cushion is gone. Gas is higher. The consumer who looked resilient in Q1 faces Q2 without any help. The direction is not ambiguous.

SpaceX filed its S-1 Wednesday night, built largely around xAI's Grok as the centerpiece of a $26.5 trillion AI opportunity. Today morning, Reuters published a different set of numbers.

Federal agency records show Grok has three documented government use cases. OpenAI and Microsoft (MSFT) combined have 234. Even Anthropic's Pentagon-blacklisted Claude has 26. Grok has been available to federal agencies for eight months at near-zero cost and still could not get traction.

Corporate data is worse. Grok users spend less than half as much time with the product as ChatGPT users spend with OpenAI's. The S-1 filed Wednesday night. The fact-check arrived Thursday morning. Rough timing.

The Gap

A valuation model that discounts xAI to near-zero and prices Starlink alone lands well below $1.5 trillion. That math will circulate before the June 4 roadshow begins. The SpaceX story gets simpler and smaller if Grok cannot find its footing fast.

"I was too dumb to realize it. I did not think Bezos could succeed on the scale he has."

By the time most people saw what Amazon was doing to retail, it was too late to get in early.

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Oil gave back its gains by end of day. That is not a signal the market has calmed down. It is a signal the optimism that drove Wednesday's drop could not survive Thursday's headlines either.

Iran's Supreme Leader said enriched uranium must stay in Iran. That directly contradicts Trump's stated non-negotiable. The intraday jump of 4 percent reversed. What held was the uncertainty.

Memorial Day weekend starts tomorrow. Gas is above $4.53 nationally. That is the exact level Walmart cited as where lower-income consumers start cutting back. Summer driving season opens right at that number.

What's Still Moving

The UAE pipeline is real progress. It just does nothing for this summer, this weekend, or June.

The Summer Setup

A day that opened with ceasefire hope and closed with an Iranian red line is not a market moving toward resolution. The deal has a ceiling. The price has no floor. That gap is what the next several weeks look like.

Kevin Warsh built his Fed pitch on three ideas. Cut rates using AI productivity as cover. Shrink the balance sheet. Communicate less through forward guidance. Every single one faces organized internal opposition before he has chaired a single meeting.

FOMC minutes showed a majority favors hikes if inflation persists. Three officials already formally dissented. Fed Governor Barr called balance sheet reduction "the wrong objective." Former Philadelphia Fed President Harker said plainly there is "no way they're going to be cutting rates this whole year."

Warsh has not even been sworn in and the committee has already moved past his framework.

The Swearing-In

His first public remarks Friday are the clearest available signal. Acknowledging the April minutes means he accepts the staff's inflation view. Silence means the internal fight starts immediately at his first meeting.

Med-X is moving toward a possible Nasdaq listing (ticker: MXRX) - and once that happens, the early window closes.

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Anthropic disclosed $10.9 billion in expected Q2 revenue, up 130 percent from the prior quarter. Growing that fast creates one specific problem. Someone has to supply the computing power to handle all of it.

Anthropic is in early talks to rent Microsoft's (MSFT) Maia AI chips through Azure. Maia is Microsoft's least mature chip product. Anthropic primarily uses Google (GOOGL) and Amazon (AMZN) processors, which are more proven and available in larger quantities.

So why talk to Microsoft? Because when you are growing at 130 percent quarterly, you take every call.

What's Strategic Here

For Microsoft, an Anthropic deployment would be Maia's most significant external validation yet.

The Timing

Anthropic targets an October IPO. A signed Microsoft chip deal in the S-1 turns a potential supply risk into a diversification story. That narrative difference is worth more than the chips themselves.

Thursday handed the week to the bears, quietly.

Walmart confirmed the consumer cushion is gone. Grok's adoption data undermined SpaceX's IPO thesis the morning after filing. One sentence from Iran reversed a full day of oil optimism. Warsh walks into a Fed that has already moved past his plan.

The headlines looked fine. The details did not.