Equities rallied on signs of easing Middle East tensions and optimism around a strong IPO pipeline. That helped offset hot inflation in May, driven largely by energy prices tied to traffic disruption in the Strait of Hormuz. Despite elevated prices, the consumer continues to spend – especially for high ticket items such as homes. A U.S.-Iran peace deal should help further alleviate pricing pressures and give consumers more spending power through the busy summer travel season.
Economic Highlights:
- The Iran war continued to increase prices in May. The CPI Index rose 0.50% month-to-month, bringing the annual inflation rate to 4.20%. That was the highest annual rate in more than three years. Gasoline and other energy prices drove much of the gain as the Strait of Hormuz remains effectively closed to traffic. On a brighter note, core CPI, which excludes volatile food and energy, rose just 0.20%. That was below April’s 0.40%.
- Inflation numbers continued to flash red at the wholesale level. The Producer Price Index increased 1.10% in May, putting the 12-month inflation rate at 6.50%, the highest since November 2022. Just as was seen in the CPI, nearly 80% of the PPI gain came from a 10.70% jump in energy. Excluding food and energy, core PPI accelerated 0.40%.
- Despite high prices, more Americans appear to be on the move. In May, existing home sales rose 3.20% month-to-month to a seasonally adjusted annualized rate of 4.17 million. The strong demand pushed the median sales price up 1.30% YOY to $429,300. Inventory stood at 1.55 million units, representing 4.5 months’ supply. Historically, six to seven months is considered to be a healthy balance between supply and demand.
Stocks Rally on Possible Middle East Peace Deal and Hot IPO Summer
Stocks rallied to close out the week as President Trump called off strikes on Iran scheduled for Thursday evening and as Wall Street geared up for hot IPO summer. Trump’s last minute cancellation was a dramatic reversal from hours earlier in which he warned the U.S. would hit Iran very hard and soon take over Iran’s oil infrastructure, including Kharg Island. Kharg Island is the centerpiece of Iran’s oil industry, accounting for roughly 90% of the country’s crude exports. Tensions in the Middle East have kept the heat on energy prices, pushing inflation readings in May to multi-year highs. Thus far, elevated prices have yet to dent consumer spending, particularly on high ticket items with homebuyers pushing existing home sales to their highest sales pace since December. The trading week ended on a high note as the much anticipated SpaceX IPO kicked off hot IPO summer. The stock opened at $150 a share Friday morning under the ticker symbol SPCX, roughly 11% above the stock’s initial offer price of $135. Selling more than 555 million shares at the offer price, the company raised a total of $75 billion, making it the biggest IPO in history. The capital raise should help position the company for “a significant growth phase”, with plans to put over 100,000 satellites in orbit for communications and to build artificial data centers in space, among other initiatives. The stock finished the day’s session up 19% for a market capitalization of $2.10 trillion, making SpaceX the newest member of the trillion-dollar club. Investors will have more opportunities to grab mega-cap IPOs with AI powerhouses Anthropic and OpenAI waiting in the wings.
With Middle East tensions cooling with a possible peace deal on the horizon, investors were back to adding risk to close out the week. The tech space saw strong interest with semiconductor chips stocks up sharply as traders took advantage of the recent chip dip and SpaceX sparked renewed interest in mega caps. On an even more positive note, the market has shown signs of broadening. Retail stocks rose more than 6% this week, encouraging as the move comes on the heels of continued inflationary pressures. Thus far, the consumer has continued to outperform despite the negative global macroeconomic headlines and elevated prices. A peace deal that finally opens the Strait of Hormuz to container traffic will help further alleviate inflationary pressures and help consumers keep their spending streak alive through the summer travel season.
The Week Ahead
It’s a big week for markets with Kevin Warsh helming his first FOMC meeting as Fed Chair. In economic news, investors will pour over retail sales and housing starts.
More Than a Hill of Beans
It’s summertime which means barbecues and all the fixings, including for many, their favorite side of beans. Here’s where it gets interesting. Over the past few months, the bean industry has been in quite the tizzy. It all began when Rancho Gordo, a bean company based in California, started sending cease and desist letters to other bean companies for using the words “bean club.” Even the lowly bean is not safe from the trials and tribulations of trademark protections. The letters began with “Hello Fellow Bean Lover” which sounds friendly but then the letters went on to claim that only Rancho Gordo can use the words bean club much to the dismay of those who had bean clubs of their own.
For background, Rancho Gordo was started by Steve Sando in 2001 when he began selling curated selections of heirloom beans at Farmers’ Markets in Yountville, CA. What’s an heirloom bean one might ask? Great question. An heirloom bean or any heirloom food is one that has been passed down through generations, often for 50 years or more, preserving their unique genetic traits. They are open-pollinated, which means they are pollinated naturally by wind, insects, or birds and can be saved and replanted from year to year. They are also non-hybrid, which means they are not the result of crossbreeding between different varieties. Heirloom beans often have unique flavors, textures, and colors. They are also well adapted to specific regions and environments, making them more resilient to local pests and diseases.
Two years into peddling beans, Sando crossed paths with the famous chef Thomas Keller, owner of The French Laundry restaurant, when Keller stopped by Sando’s bean stand and later added Rancho Gordo beans to his menu. Other chefs followed suit, and foodies took note. Demand for Rancho Gordo beans spiked, and in 2013, Sando the bean king launched his bean club leading to a bean boon that added up to more than a hill of beans when memberships reached 11,000 by 2020 and then tripled to more than 30,000 members in 2025 with a waitlist of more than 36,000 people.
For his part, Sando shares that he’s not trying to be a bully in the bean world by sending his fellow bean lovers cease and desist letters, but rather he’s simply trying to “protect our small way of doing it, not to rule the world and bully people,” according to an article in the Los Angeles Times. Critics argue that bean club is too generic to be privately owned, and supporters say Sando should protect his bean empire. Trademarks are generally granted for how unique a name is, and how much hearing the name conjures a particular company in the consumer’s mind. Sando argues that he and his company started the concept of bean club and have the right to own and defend it. A challenge for Sando is the nine-year registration gap. Rancho Gordo used bean club as early as January 2013 but did not register it until March 2022, allowing competitors to get a foothold in the bean club business. If competitors can show that consumers use bean club as a generic term to describe a whole category of product or service – subscription beans – rather than as a brand identifier specifically for Rancho Gordo, the registration is vulnerable to cancellation.
Rancho Gordo isn’t the first brand to attempt to enforce a trademark related to food. Chef David Chang trademarked the term “chili crunch” in 2024 for a condiment sold under his Momofuku brand. Chang sent cease and desist letters to companies using the name. A backlash ensued, and Chang stopped enforcing the trademark and made a public apology. Subway attempted to trademark footlong, but the Trademark Trial and Appeal Board determined that footlong is a generic, widely used term in reference to a category of 12-inch sandwiches. A trademark existed for Taco Tuesday by two regional restaurants, but taco fans would have none of it, and the trademark was dropped after 34 years with the trademark holders not wanting to face taco behemoth Taco Bell in court.
The United States Patent and Trademark Office (USPTMO) granted Sando’s registration based on acquired distinctiveness, concluding that consumers had come to associate the words bean club specifically with Rancho Gordo rather than with the category. There’s a lot of beans at stake in these bean wars, and bean lovers will be watching to see if Sando’s bean kingdom might fall after all.