It seems you can't keep a good market down. Oh, the bears tried, but equities managed another up week of record highs even as oil prices surpassed $100 a barrel.

 

The market's gains were helped by some mega-cap stocks that blew out earnings expectations (two exceptions: Meta and Microsoft). Big tech certainly delivered, sending markets higher on a day when oil hit $108 a barrel. And the Fed chair's swan song turned out to be anything but — at least for the president.

 

On Wednesday, Jerome Powell, the outgoing Chairman of the Federal Reserve, first announced that "nothing done" regarding interest rates. However, during the Q&A session, he told financial markets that he would not be stepping down from his position on May 15 as previously expected. He explained that political pressure was "battering" the institution, influencing his decision to stay.

 

It was almost comical, given the pressure on the Fed and its officials over the past year, to watch the president and his henchmen huff and puff at how this was an unorthodox position, and so political, etc., etc. The news was just a warm-up for what I see changing in the staid Federal Reserve Bank's future.

 

For example, the dissension among Fed board members at this week's meeting was the greatest since 1992. Four dissenting members (the Trump appointees) wanted further interest rate cuts, while the rest leaned toward holding rates steady; three dissented because they did not support the FOMC's easing bias in the statement.

 

Powell will remain a board governor and voting member for the foreseeable future. So, with Powell and others ready to "batter" back against any further politicization of the Fed, the new chair, Keven Warsh's job could be problematic. The divisions could also lead to greater volatility in financial markets, making FOMC meetings and policy far less predictable.

 

The latest data from the Fed's key Personal Consumer Expenditures Index (PCE) highlighted the need for an independent Fed as inflation expectations reignited. In March, PCE prices rose by 0.7 percent, the sharpest monthly increase since June 2022. Goods prices climbed 1.4 percent, mainly due to a 20.9 percent surge in gasoline and other energy goods.

 

In addition, the U.S. first-quarter 2026 GDP growth, a measure of the country's economy, expanded at an annualized rate of 2.0 percent, up from the previous quarter's 0.5 percent. Be cynical of government data. There is a tendency by the government to present the economy's best foot forward on their first estimate of quarterly GDP, only to revise downward the numbers later.

 

As investors try to stay focused on big tech, AI plays, and earnings, we are closing out the ninth week of a war that, it seems, nobody but the president wanted. It has gone on far longer than promised, with the annihilation of Iran's military capabilities greatly exaggerated. There doesn't seem to be any off-ramp.

 

The president continues to try to cow the Iranian Revolutionary Guard into submission with social media posts of death and destruction. These are followed by further extensions of a ceasefire based on nonexistent peace talks. In the meantime, the Straits of Hormuz remain closed, oil climbs higher (up 75 percent since Feb. 28), OPEC is on the ropes, and the polls, well, the polls say it all. The midterms are approaching, and nobody's happy.

 

The equation is quite simple. Rising oil price = higher inflation = higher-for-longer interest rates. And yet, we are at all-time highs. April was the best one-month return for the S&P 500 Index since November 2020, roughly a 13.6 percent gain. The Nasdaq and small-cap Russell Index gained even more. Are we overbought and extended? Yes. Are markets in nosebleed territory? Yes.

 

Given that the oil/Iran story is getting worse and is beginning to impact the world economies, why are markets celebrating? They believe that everything will come out all right in the end. The war will be over, or, if not, higher oil prices will surely slow economies, which in turn will reduce inflation growth, allowing the Fed to cut interest rates.

 

In the meantime, earnings have been stellar over this last quarter, so why complain? As for the future, we will worry about it when it gets here. Short-sighted? Uh-huh, welcome to the nature of the new market.

 

Stocks held firm this week. That was quite a feat, given the conflict and shaky ceasefire. Headlines will continue to drive markets, but strong earnings should provide some support.

 

First-quarter earnings are running at an 80 percent "beat" rate, but guidance matters more than everything else. Companies that beat but neither raised nor beat estimates were taken to the woodshed. Those who offered cautious guidance, however, really got smacked.

 

Next week, on Tuesday, four of the big mega caps report (Microsoft, Google, Meta, and Amazon), and all but Microsoft are expected to be strong. On the same day, the Federal Open Market Committee meets again, but expectations are that they will keep "on hold" until the data suggest otherwise.

 

Chairman Jerome Powell will be departing next month, and the new chair, Kevin Warsh, will take the reins at the Fed. There had been some question of exactly when Warsh would take over. One U.S. senator, Thom Tillis, had vowed to vote against his nomination unless the Department of Justice backed off their criminal case against Powell. The DOJ did just that on Friday, abandoning its Trump-directed case concerning cost overruns of the new Fed building.

 

Warsh, who spoke this week before the Senate Banking Committee, denied there was any quid pro quo between his appointment and the president's desire to reshape the Fed or loosen monetary policy further. I ignored the whole circus. Given the nature of today's politics, did anyone expect Warsh to say anything different?

 

To me, the whole affair was just another TACO moment. It can be chalked up to a president who delights in pursuing one simple strategy — Attack, Deny, and then claim Victory. Whether that works or not in fighting a war remains to be seen.

 

As it stands, traffic through the Straits of Hormuz is now locked in a double blockade. One conducted by the Navy and another by the Iranian Revolutionary Guard navy (that was supposed to be "totally destroyed" but isn't). Every day this continues is another day when the world's oil supply is diminished, and as it does, the price of oil creeps higher.

 

Markets were cheered this week when the Israelis and Libyans agreed to a ceasefire. It was supposedly a precondition of the ceasefire with Iran, according to the third-party negotiators and Iran (but subsequently denied by both the U.S. and Israel). So, two weeks later, another Kabuki performance is inked. I would expect a White House photo op shortly as both presidents join Trump in a kumbaya moment.

 

Of course, no one dared to mention that the party Israel is actually fighting, Hezbollah, was not included in the negotiations. Riddle me this, Trump man, how does this resolve the conflict, if at all? Hezbollah is still an independent, Iran-sponsored terrorist body, roaming at will throughout Lebanon. But heck, what do I know about it?

 

In any case, rather than selling off hard, equities consolidated this week. It is one of two ways that an overbought market can correct or work off that condition. The longer the consolidation, the higher the probability that markets will regain the primary trend. That trend is still up, so until something negative happens on the geopolitical front or next week's earnings disappoint, stay the course.

 

The bulls had their day in the sun this week. In a historic move, equity indexes roared back on a 13-day run that has wiped out all this year's losses and then climbed to new highs.

 

The move has been straight up since the lows of March 31. It was one of the fastest V-shaped recoveries the stock market has experienced since the 1950s. Those chart technicians who advised clients to wait for a pullback before committing money were blindsided.

 

I had warned skittish investors that a cease-fire or progress in ending this war would be a catalyst for an upside explosion. "The bounce should be breathtaking, and if you are not invested, you will miss it. There won't be an opportunity to chase," were my words written in my March 20th column. I hoped you listened.

 

I will call it the "Great Escape" and the fastest short-covering rally since 1950. The fact that there is no peace treaty but only a truce that expires in one more week means little. Why? Because at this point, financial markets have now gleaned that there is a huge difference between what the president says and what he does or does not do. You don't have to be political to recognize this.

 

The "blockade" of the Strait is more words than actions. Yes, ships are passing through, but traffic is heavily restricted and limited to vessels from a few nations. Nine tankers carrying crude and other cargoes have passed through unmolested. That is 90 percent less than when the conflict started. Supposedly, negotiations with the Iranians are ongoing, but no date has been set for further talks.

 

Israel and Lebanon have agreed to a 10-day ceasefire, and the two countries' leaders are scheduled to meet in Washington next Wednesday. That gives Trump the opportunity to show progress, if not with the Iranians, at least with the Lebanese. Of course, the Hezbollah are not included. Who are the Israelis fighting? You can't make this up. In any case, the announcement sent crude oil plummeting.

 

The decline in oil remains critical to the stock market's fortunes. I have advised readers to watch oil prices as a guide for stock direction. By mid-morning Friday, West Texas Intermediate (WTI) is trading down 12 percent at $83.33/BBL, while Brent crude is at $89 a barrel. Is it any wonder the S&P 500 is up 1.3 percent?

 

We also kicked off the first-quarter earnings season, and although it's early, results from financial companies and some other major companies have been strong. Next week, almost 20 percent of the S&P 500 are set to report. More importantly, Google, Amazon, and Tesla will test the market's newfound optimism.

 

Technology — especially semiconductors, AI darlings, and most of the MAG 7 — has led this bull run. Once again, current quarterly earnings and sales matter less than management's guidance about the future.

 

On Friday of last week, I wrote: "I need to see the NASDAQ's QQQ ETF decisively break above 615 to get more bullish." That happened on Monday. The Qs are now sitting at 648 while the S&P 500 is trading at 7,133. A fully extended rally could take us as high as 7,250 in a blow-off late-stage rally. I could be dreaming because this "V" has already pushed the limits, but let's ride it while we can.

 

Remember, this whole move can still turn on a dime with just one launched missile. We are still in the hope stage, and hope is not an investment strategy.

 

Markets are betting that a ceasefire will hold between the U.S., Iran, and maybe even Israel. They are also gambling that the outcome of this weekend's negotiations between those parties will end with the opening of the Straits of Hormuz.

 

Place your bets, ladies and gentlemen, black or red. In the meantime, we wait for the next social media post to determine which way the markets and your fortunes will go. I continue to keep my eye on the ball, which is the price of crude oil, although I have noticed that the price of equities and the price of crude are beginning to decouple.

 

This week, an 18 percent decline in West Texas Intermediate (WTI) equaled an almost 3 percent gain in the stock markets. Don't be misled by those gains. They weren't based on anything fundamental. The rise came from short covering — traders who had bet against the market buying shares to cover those bets. The president's post on Truth Social, vowing that "a whole civilization will die tonight," drove traders to hedge their positions by shorting the market. What choice did they have when the leader of the so-called "free world" made such a threat?

 

Sure, it was likely to end in another Trump TACO before the Tuesday night deadline (which it did), but professionals couldn't risk Trump actually following through on his threats. When he didn't, traders who had shorted the market had to quickly cover their positions — a process known as covering shorts. That, my readers, is why the S&P 500 and other indexes rallied.

 

And now back to reality. The Fed's key inflation index, the Personal Consumer Expenditures Index for February, rose 0.4 percent versus 0.3 percent in January. That's the steepest monthly increase in a year and right in line with my expectations. Higher costs in motor vehicles and parts, recreational goods, gasoline, clothing, and food were fueling inflation.

 

U.S. personal incomes in February fell, while personal spending rose. Fourth-quarter 2025 GDP was further revised downward, to only a 0.5 percent gain. While the administration blamed the entire decline on the government shutdown, the real driver was a cooling of consumer spending, investment, and exports.

 

I know none of this matters to most market participants right now, but in time it will. The Consumer Price Index (CPI) for March was also higher than expected. Headline CPI was 3.3 percent higher than a year ago. It was the largest monthly gain (+0.9 percent) since 2022. The spike was almost all attributable to gasoline prices. Just wait until you see the next report!

 

You can forget any Fed interest rate cut as a result, at least until the new Fed chair arrives in May. At that point, we will see how much independence the Federal Reserve Bank has left. There would have been a time when I would have led with the CPI news in this column, but the talks with Iran are what investors are most worried about right now.

 

A weakening economy and rising inflation will have to wait until we know whether there will be a workable ceasefire, the opening of the Straits, and relief from rising energy prices. Right now, the market's reaction to the high inflation numbers tells me the numbers were already priced-in. It could also be that investors believe this inflation spike is transitory and will fade as the price of oil fades. 

 

The S&P 500 has recouped almost all its year-to-date losses over the last two weeks. That is a good sign, and if next week sees the indexes continue their bullish climb, I may start to breathe a bit easier. I need to see the NASDAQ's QQQ ETF decisively break above 615 to get more bullish. Otherwise, this rally is simply a bounce in a bear market. Color me cautiously optimistic.

 

Trump's Iran war speech on Wednesday night was not the hit that he hoped it would be. It only lasted 19 minutes, but it was more than enough to send investors' hopes crashing and the price of oil higher by 11 percent. Yet hours later, on Thursday morning, Iran hinted at some progress toward opening the Straits of Hormuz. Stocks rallied back to even. Go figure.

 

It was a fitting ending to a wild holiday-shortened week for the markets. The S&P 500, after dropping 70 points on Monday, hit 6,343.72, down 9.1 percent from its record high made on Jan. 27. On Tuesday, the last day of the quarter, and Wednesday, markets gained more than 3.5 percent but then fell flat on its face on Thursday. A combination of events provided the triggers.

 

After five weeks of declines, markets were oversold and were stretched to the downside. We were within 1 percent of my 10 percent downside target. The indexes were flirting with a level that, if broken, would have led to a lot more downside. To me, markets seemed primed for a relief rally. All we needed was a couple of comments from the administration.

 

The tendency of professional money managers to "window dress" their clients' portfolios (by selling their losers and buying the quarter's winners) helped set the stage. In addition, the execution of a quarterly $30 billion hedging trade fueled the fire. And lastly, as I warned readers before, with the markets teetering on the edge, Donald Trump announced that the end of the war was all but over and the Straits of Hormuz was someone else's problem to fix. Markets roared higher.

 

It seemed to be all coming together for the bulls. Wall Street anticipated that the president, in his first wartime, primetime speech to America on Wednesday night, would further clarify his earlier comments. That was not to be. Instead, his words seemed to indicate additional short-term aggression and at least 2-3 weeks of further conflict. The president's key takeaways on Iran were his vow to "send them back to the Stone Age" and that the war would end soon.

 

Shortly thereafter, a U.S./Israeli airstrike launched a large-scale attack on Iranian infrastructure across Iran. Trump did not mention the Straits of Hormuz in his address, although the open passage of oil through that body of water is key to a return to global growth and to reining in inflation. Yet from the market's point of view, there was still no clear pathway to peace.

 

Overnight, futures plummeted, and markets were down by more than 1 percent Thursday morning. However, stocks recovered on reports that Iran and Oman are drafting a protocol to monitor transit through the Straits. That was old news, but in this market, the bulls were looking for any port in this storm. Traders used it as an excuse to bid up stocks anyway.

 

Equities ripped higher just before the Iranian public announcement was released on Thursday morning. Leading one to wonder if Iran was joining the ranks of the administration's insider traders, or did someone in the White House profit once again? We will never know.

 

The Iranian release did not specify which nations will be permitted passage, or at what cost. The statement reportedly originated from the Iranian state news agency. Oil, as I wrote at the onset of this conflict, is my primary indicator for predicting financial market direction. The Iranian news barely impacted the $11 surge, raising a barrel of oil to $110. For context, this translates to an overnight jump of 60 cents or more per gallon in gas prices.

 

For readers who may have missed it, and I assume most did, Iran's parliament approved a bill a week ago that imposes transit fees of up to $2 million on all ships passing through the Straits. It also bans vessels from countries imposing sanctions on their country and allows selective access to friendly states such as China, Russia, India, Pakistan, Iraq, and Bangladesh. The monitoring and control of maritime traffic news was part of the same bill.

 

Based on statements from over 40 European leaders and ministers, forcing passage through the Straits is no longer an option, regardless of Donald Trump's wishes. They would rather pay a toll or negotiate with Iran than join Trump's war. None were consulted before the attack, but after the fact, they were expected to participate in a decision made without their input.

 

On Friday, the March non-farm payroll showed 178,000 new jobs added. Although this exceeded expectations, as I've noted before, don't accept this figure at face value. Typically, at least 60,000 jobs are overstated each month. Furthermore, revisions are large, for instance, last month's loss of 133,000 jobs was revised downward by 41,000, while January saw an upward revision of 34,000.

 

Year-to-date, the S&P 500 is only down 6 percent after gaining more than 3 percent in two days this week. That is encouraging given the noise and destruction of the past weeks. This is also a holy week for much of the world, which may invite more violence. In addition, weekends, especially three-day weekends, have become too risky for most traders to hold longs.

 

Are we out of the woods? Not yet. We need to see oil and the dollar both drop substantially next week before calling a bottom in the market. In the meantime, to those who celebrate, Happy Easter, and for those who don't, bless you anyway!