To the surprise of almost no-one, the fleeting US/Iran talks in Pakistan over the weekend were a dismal failure. Sometime in between attending UFC fights, unsuccessfully interfering in Hungary’s election, posting an AI image of himself as a messiah and picking fights with the pope, Trump still found time to announce a naval blockade of the Strait of Hormuz in a move designed to cripple Iran financially.
The main effect of such a move, of course, is to further deepen the world’s chronic energy supply shock (contemptuously dismissed last week by Treasury Secretary Bessent, net worth around $600 million, as "a small bit of economic pain") that is now resulting in soaring gas prices at the pump for Americans as well as thousands of flight cancelations, fuel rationing, commuting bans and power cuts in other parts of the world.
Entirely predictably, the oil price exploded back into triple digits and both stocks and bonds fell in Asia and Europe on Monday. US stocks also initially pulled back but in a relatively orderly fashion and on low trading volume. Trump then claimed that Iran had reached back out that morning to “make a deal” .
Oil prices swiftly retreatedbelow $100 and the indexes pushed back into the green, with the S&P 500 index wiping out its losses for 2026 and even closing above where it finished on February 27th, the day before the bombing began, when a barrel of oil cost a mere $67.
Q1 earnings season got properly under way on Tuesday morning with decent reports from some of the big banks. We also got another inflation indicator with PPI data proving to be sticky but stable. Stocks continued to march steadily higher throughout the session as energy prices continued to tumble to their lowest levels in three weeks, more on a lack of bad news rather than the presence of anything concrete or credible.
An extension of the ceasefire was strongly rumored on Wednesday morning and Trump called the conflict “very close to over”, although Iran pushed back heavily on that claim. Bank of America and Morgan Stanley reported very solid earnings.
The indexes drifted gently higher all day and interest rates eased, but it was enough to propel both the S&P 500 and the NASDAQ to new all-time record highs with the former closing above 7000 for the first time ever. This is absolutely astounding six weeks into a deadly oil-impacting war, despite Trump’s bizarre characterization of it last week as just “a minor skirmish”.
Wall Street’s happy clappy mood was initially bolstered on Thursday by more pre-market expectation-busting earnings reports from the likes of Taiwan Semiconductor, Bank of New York and Pepsi.
Gains were later pared, however, on reliable independent reports of a likely much longer timeline for any US/Iran agreement than the Trump administration is claiming which sent oil prices higher, but the indexes still managed to push deeper into record territory.
Netflix reported earnings after the close, providing the season’s first major disappointment relative to expectations but Wall Street’s voracious risk appetite continued on Friday, especially after oil prices plunged following Iran’s initial announcement that the Strait of Hormuz would now be fully open to all traffic (subsequently qualified to exclude ships and cargoes linked to “hostile” countries) for as long as a ceasefire was in place.
The indexes extended their upward charge. The S&P 500 completed its third consecutive week of 3%+ gains on a three day record-breaking streak and the NASDAQ also closed at record highs again after scoring its thirteenth straight session in the green, something it hasn’t done since 2013.
Some other things I’m thinking about ..
* Wall Street is done with the Iran war and ready to move on (see .. AND I QUOTE .. below). We’ve seen this movie many times before where geopolitical crises turn out in retrospect to have been great buying opportunities. The playbook of not freaking out and fading any geopolitical disruption which has essentially worked since the Second World War seems to have played out yet again. US and global indexes fully round-tripped their conflict-related losses and broke to new all-time highs again just a month and a half after hostilities began, marking the third speedy April V-shaped recovery in six years after 2020 and 2025.
* Trump went back to taking potshots at Fed chairman Jerome Powell last week, vowing to fire him if he does not give up his governorship position next month, something he is not required to do until 2028. However, as recently affirmed by the Supreme Court, the president has zero legal authority to do this and so Wall Street just rolled its eyes and shrugged it off as a non-story.
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ARTICLE OF THE WEEK ..
Coast FIRE (Financial Independence, Retire Early) has always been the most sensible diluted version of the somewhat dubious FIRE strategy of aggressive saving, investing and massive cost-cutting to build liquid assets to roughly 25-30X annual expenses and then switching to full spending mode well before traditional retirement age. AI could be causing a rethink.
.. AND I QUOTE ..
"So as far as the stock market is concerned, the war is over until further notice”.
Ed Yardeni, president of Yardeni Research
LAST WEEK BY THE NUMBERS:
Last week’s S&P 500 market color courtesy of stockanalysis.com
S&P 500 sector data courtesy of State Street Investment Management
* SPYM, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 4.5% in the last five days, is up 4.2% so far this year and ended the week at its all-time record closing high (04/17/2026).
* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 5.5% in the last five days, is up 12.0% so far this year and ended the week at its all-time record closing high (04/17/2026).
* VXUS, an International Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 3.0% in the last five days, is up 11.0% so far this year and ended the week at its all-time record closing high (04/17/2026).
INTEREST RATES:
* FED FUNDS RATE * ⬌ 3.625% (unchanged from a week ago)
* PRIME RATE ** ⬌ 6.75% (unchanged from a week ago)
* 3 MONTH TREASURY ⬆︎ 3.70% (3.69% a week ago)
* 2 YEAR TREASURY ⬇︎ 3.71% (3.81% a week ago)
* 5 YEAR TREASURY ⬇︎ 3.84% (3.94% a week ago)
* 10 YEAR TREASURY *** ⬇︎ 4.26% (4.31% a week ago)
* 20 YEAR TREASURY ⬇︎ 4.85% (4.89% a week ago)
* 30 YEAR TREASURY ⬇︎ 4.88% (4.91% a week ago)
Data courtesy of the Federal Reserve and the Department of the Treasury as of Friday’s market close.
* Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.
** Wall Street Journal Prime Rate as of Friday’s close. Tending to move in lockstep with the Fed Funds Rate, this measure is used as a basis for determining certain consumer loan interest rates such as credit cards, auto loans, personal loans, home equity loans/lines of credit and securities-based lending.
*** Used as a basis for determining mortgage interest rates.
AVERAGE 30-YEAR FIXED MORTGAGE RATE:
* ⬇︎ 6.30%
One week ago: 6.37%, one month ago: 6.15%, one year ago: 6.83%
Data courtesy of the Freddie Mac Primary Mortgage Market Survey.
INTEREST RATE EXPECTATIONS:
Where will the Fed Funds interest rate be after the next rate-setting meeting on April 29th?
* 0.25% higher than now .. ⬇︎ 1% probability (2% a week ago)
* Unchanged from now .. ⬆︎ 99% probability (98% a week ago)
* 0.25% lower than now .. ⬌ 0% probability (0% a week ago)
With six more rate-setting meetings in 2026, what is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts this year?
* ⬌ Zero (unchanged from a week ago)
Data courtesy of CME FedWatch Tool as of Friday’s market close.
All data based on the current Fed Funds interest rate of 3.625%
PERCENT OF S&P 500 STOCKS ABOVE THEIR OWN 200-DAY MOVING AVERAGE:
* ⬆︎ 60%
One week ago: 53%, one month ago: 50%, one year ago: 30%
Data courtesy of MacroMicro as of Friday’s market close.
This widely-used technical measure of market breadth is considered to be a very robust indicator of the overall health of the S&P 500 index.
A high percentage (above 70%) generally suggests broad market strength and a bullish trend, while a low percentage (below 30%) may indicate market weakness and a bearish trend.
FEAR & GREED INDEX:
“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffett.
Data courtesy of CNN Business as of Friday’s market close.
The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand.
Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment.
Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rallies in an excessively risk-on environment . This overcrowded positioning leaves the market potentially vulnerable to a sharp downward reversal at some point.
A “sweet spot” is considered to be in the lower-to-mid “Greed” zone.
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