There is a widening gap between how players in the financial markets perceive the future. Momentum traders in the equity market continue to push technology stocks to new highs while bond traders are becoming more bearish. Can both be right?

 

In the short run, yes, in the medium term, not so much. Friday, markets pulled back amid pressure on bond prices, which sent yields higher. Bond yields on the U.S. 30-year Treasury bond surpassed 5 percent this week. The benchmark ten-year U.S. Treasury bond hit 4.57 percent. Both are usually warning signs for the stock market.

 

Here's what you need to know. The higher the yields go, the more expensive it becomes to borrow. The more it costs to borrow, the less likely new investments are to be made down the road. Fewer investments lead to weaker earnings, which in turn lead to lower stock prices. Capisce?

 

The issue that has the bond market in such a dour mood is inflation. I have been warning readers for months that inflation is rising. The Iran war has made it worse. This week, the Consumer Price Index (CPI) and Producer Price Index (PPI) for April removed any doubt that inflation is making a big comeback. The PPI numbers were up 1 percent from the prior month. That's the highest since March 2022. The CPI was also hotter than expected and will be much higher when the May numbers are announced in a month's time.

 

That should come as no surprise to you, since you are paying north of $4.50 per gallon at the pump for gasoline, while diesel is above $6. You may have noticed your credit card bills are also higher (and you're spending less), as are your weekly grocery tabs. It is an inflationary spiral that will continue.

 

As inflation rises, bondholders will insist on a higher real rate of return — meaning returns after inflation. Consequently, as inflation increases, investors demand higher yields to compensate. This cause-and-effect relationship suggests bond investors see significant risk, so why is the stock market at record highs?

 

The rate of return has something to do with that. Market participants can't seem to get enough of anything and everything related to artificial intelligence. More than a trillion dollars a year is being poured into this area, with more expected next year. Ask any of the mega companies making these investments, and they will tell you that the rate of return they expect will be stupendous sometime in the future.

 

How much? Well, no one really knows but "a lot." Certainly, a "lot" more than whatever the inflation rate is right now and "a lot" more than whatever a measly old bond is yielding. That is the name of the game. Momentum traders are having a field day. There is a buying frenzy underway to protect one's capital. It will work until it doesn't.

 

Trump's tariffs, the continued closure of the Straits of Hormuz, the resulting rise in oil prices, the fiscal spending spree underway, the skyrocketing deficit and national debt — it's all inflationary. Buying stocks that can outperform inflation and bond yields both now and in the future is how it's done. Is that working? Just look at the returns of the semiconductor sector so far this year or technology overall.

 

In the meantime, Kevin Warsh has taken over as the central bank's head. Given the rise in inflation, it seems almost impossible for him to acquiesce to the president's desire to see interest rates lower. In reality, the betting markets are starting to price in the possibility of interest rate hikes by the end of the year.

 

As for the president's visit to China, it appears to have been mostly pomp with little in the way of circumstance. Disappointed by the lack of major trade announcements or other economic breakthroughs, investors sold off Southeast Asian markets, including China, as well as markets in Europe and the U.S.

 

The breadth of U.S. stock markets has been shrinking as indexes climbed. Fewer and fewer stocks, mostly large-cap tech stocks, have been largely responsible for the market's gains over the last few weeks. We are overdue for a bout of profit-taking in this "V" shaped recovery since March 31st. I would like to see a few percentage points shaved off this market. It would pave the way for further gains over the summer.

 

In his State of the Union speech in February, the president floated the idea of a new retirement savings vehicle for lower-income Americans without workplace plans. Last week, the president signed an executive order making good on his promise.

 

His executive order aims to establish an annual $1,000 match for individuals earning less than $35,000 per year who contribute to an Individual Retirement Account (IRA). The only caveat is that they cannot have an employer-sponsored 401(K) type plan at their job.

 

Say what you will, Donald Trump is trying to do something about Americans' subpar retirement savings rate. He knows (as we all do) that Social Security is in trouble and probably won’t be around for much longer. This new effort follows another incentive called the Trump Accounts, which are new custodial-style traditional IRAs for kids.

 

This new executive action will launch a website called TrumpIRA.gov, where workers can research, compare, and enroll in private-sector retirement plans. The hope is that the website will serve as a conduit between workers and plan sponsors, with the government acting as the broker.

 

More than 56 million Americans lack access to an employer-sponsored retirement plan at their place of employment, according to research by the Pew Charitable Trusts, an independent public policy nonprofit organization. And yet, nothing prevents any American worker from setting up an IRA and making tax-deductible contributions right now. So why don’t they do it?

 

Many workers say they cannot save for retirement, especially as inflation reduces their paychecks. Others find the application process too complicated or paperwork heavy. Some do not bother because they already have employer retirement plans. For many, retirement seems unreachable due to their background and income.

 

In 2015, Barack Obama launched a $70 million program allowing workers to make automatic payroll contributions to a government-backed retirement account. It closed 17 months later, after only 30,000 workers enrolled and contributed $34 million. It hasn't improved since.

 

The facts are that since 2020, as the financial markets roared higher, participation by lower-income workers in employer-sponsored retirement plans declined, even as their access to plans increased. The number of workers who opened accounts decreased by 8 percent. For many, the myth that Social Security will still be there in the future to take care of them persists, although confidence in that assumption has declined from 43 percent to 36 percent, according to AARP.

 

Truth be told, the president is simply hitching his wagon to a Biden-era plan called the Saver's Match, a provision from the 2022 legislation known as Secure 2.0. Under that legislation, single taxpayers with a modified adjusted gross income of up to $20,500 (joint filers, up to $41,000) qualify for a government match of up to $2,000 on a qualified retirement account contribution. The saver would receive a $1,000 match per year.

 

Single filers with annual incomes of between $20,500 and $35,500 (joint filers up to $71,000) would qualify, but for a reduced matching contribution. Trump would like to up the qualifying salary range. I suspect he is also hoping that the name "Trump" on this new website might attract more lower-income workers to at least consider saving.

 

His plan to increase the cap to $35,000 would require congressional approval. "To take it to the next level, we need congressional approval, which should be very easy to get. It should be bipartisan," Trump said. He is probably correct, since there is bipartisan support for persuading more low- to moderate-income people to open employee-sponsored plans.

 

There are already several proposals in Congress, such as the Retirement Savings for Americans Act and the Automatic IRA Act, that confront this issue. Readers know I've analyzed these measures in previous columns. The hope is that by sweetening the incentives to save, more Americans will become committed to saving for retirement. Given the grim state of Social Security, we'd better hope so, or future generations of retirees may erupt in protest.

 

The "Sell in May and go away" slogan of yesteryear should stay there. In the last decade, following that advice in the stock market would have lost you money. This year, you would have really been disappointed.

 

Stocks continue to climb despite the conflict in the Middle East, oil prices, and inflation worries. The old Wall Street adage about May hasn't held true at all over the last decade, with the average gain topping 7 percent for the May through October period.

 

This year, the gains have been much better than average for the first week in May, and most analysts believe markets are set to continue their bull run. This is despite the latest results from the University of Michigan's Consumer Sentiment Index, which dropped to a record low of 48.2 in early May. One-third of those polled cited higher gasoline prices, and another 30 percent mentioned tariffs as reasons for their dour outlook.

 

And speaking of those two concerns, this week the Court of International Trade ruled that Trump couldn't use the 1974 Trade Act to impose his 10 percent tariffs. These levies were put in place in February after the Supreme Court struck down his "Liberation Day" tariffs. But consumers should not expect refunds for the extra costs they have incurred due to these tariffs over the last few months. The government and businesses will pocket any refunds.

 

Gas prices, however, continue to climb higher as Trump's War remains bogged down in mistruths, exaggerations, and ineptitude. The administration is claiming that the ‘ceasefire (which isn't) marked the end of the war (now called an "excursion"). His secretary of war, Peter Hegseth, testified before the Senate Armed Services Committee that the ceasefire stopped the clock on the eve of the 60-day mark of the war.

 

That avoided a major statutory deadline for the president to withdraw forces or seek approval from Congress to continue the fight. Since then, despite both countries trading missile fire, the supposed ceasefire is still in effect. In any case, the Straits of Hormuz are still closed despite last weekend's two-day Operation Freedom scheme to escort boats through the disputed straits.

 

Trump's go-to reliance on his own interpretation of events: "Attack, Deny, and claim Victory," is wearing thin. A new acronym, NACHO — "Not a Chance Hormuz Opens" — is making the rounds of an increasingly cynical Wall Street. However, financial markets are looking beyond this debacle.

 

First-quarter earnings were stellar, with more than 84 percent of companies beating estimates. In addition, their guidance seemed to reflect a more upbeat future than present circumstances might dictate. Technology companies in the artificial intelligence space are the most positive, which is one reason both large-cap technology and AI names are leading markets higher.

 

Next week, we should see the entrance of the new Fed chief, Kevin Warsh, although I do not expect any moves in either interest rates or monetary policy in the immediate future. In addition, President Trump, along with a gaggle of U.S. CEOs, is scheduled to visit China before the end of the month. Investors are hoping that the two sides will play nice and may even come to an agreement on how to end the "non-war" with Iran.

 

Bulls evidently want to push stocks higher. Momentum traders keep buying on every little pullback. The war has become old news. Only some concrete turn of events, rather than this continued war of words, would put it back on the front burner. Inflation, while still a risk, is still some time further into the future. In the meantime, May seems to be destined for further gains.

 

The movies, like everything else, are getting more expensive. With the trend toward streaming at home, you might think attending the cinema is a thing of the past. Nevertheless, theaters are hanging in there, even as they've lost their former glory.

 

The average price of a movie ticket has more than doubled over the last two decades. In 2004, ticket prices hovered around $6.21; today, they are $12.75 nationwide for an adult ticket, according to EntTelligence data. A Harvard Gazette survey found that the percentage of moviegoers who saw films frequently fell from 39 percent in 2019 to 17 percent in 2025.

 

We all know the answer. A Harvard poll last year found that 75 percent of Americans had opted to stream a movie at home rather than watch it in a theater. Why that would be the trend is twofold — convenience and cost. Higher ticket prices due to Inflation, production and labor costs, upgrades and extra fees, to name just a few variables, simply cannot compete with the price of streaming a film on television for a fraction of the cost.

 

Convenience is another almost insurmountable barrier to movie-going. No hassle to find a parking space, no having to "dress up" (whatever that means in a land of hoodies and sweat pants), no dog or babysitting expense, raiding the fridge for dinner or snacks while watching (rather than buying $15 popcorn), you can make at home for less than a dollar. I am sure readers can come up with some other convenience reasons as well.

 

With all that stacked against them, why are movie theaters investing in new luxurious seating, wine bars and gourmet food, sound systems that would blow out your hearing aids, and advanced projection technology costing $90,000 or more that puts you dead center in that cockpit soaring through the solar system?

 

In many ways, hope for better days ahead keeps movie houses spending. Streaming has disrupted their market, and rather than give up, companies have attempted to adapt and extend their relevance. The death knell for movies predicted by many at the outset of the pandemic never quite occurred.

 

What COVID-19 did was force many theaters to rethink their business. Theater chains began offering other amenities beyond simply showing films. Bowling, arcade lounges, gaming, and whatever else they could come up with to keep their patrons lingering longer. Comfortable seating where Baby Boomers and others can assume the couch potato position also helped.

 

For an old Baby Boomer like me who watches his pennies, I find the prices for those 65 and over reasonable. A family of four, however, could easily spend close to $100 after tickets, food, and drinks. And the theater knows this is where their profit margins lie, which is why most houses prohibit bringing in any food or beverages (even water).

 

Call me paranoid, but ever since COVID, I still mask up and have been wary of crowds no matter where I go, so sitting in a crowded theater for two-plus hours is less than appealing. For me to expose myself to a theater, the movie must be terrific — something that just screams big screen and totally immersive surround sound. Preferably, I'll choose an unpopular screen time to avoid the crowds. Not so my wife, Barbara.

 

To Barbara, movies are an event, right down to the popcorn. She enjoys the collective atmosphere, celebrating films like "Barbie" with friends, focusing more on company than the movie itself.

 

Keep in mind, too, that no matter how long I slave over a hot popcorn maker at home, she swears movie popcorn is better. Readers, be warned — she does not share her popcorn even with me. It appears she is not alone. The Gen Z population appears to be a growing segment of in-theater event attendees.

 

They are particularly attracted to anniversary screenings, blockbuster movies, and special events. Gen Z is now the most active cinemagoing demographic, attending more films per year than their elders, according to a Fandango study. They also spend more per visit on concessions and premium format screens like IMAX.

 

An update to Cinema United's annual Strength of Theatrical Exhibition report analyzes industry metrics beyond mere box-office numbers. They found that 77 percent of Americans (more than 200 million) saw at least one movie in a theater last year, and the number of habitual moviegoers (six or more movies per year) increased by 8 percent. Gen Z attendance increased by 25 percent last year, the largest increase of any age group.

 

These youngsters averaged 6.1 visits per year, up from 4.9 in 2024. But it was not all about blockbusters. In fact, Gen Z, while seeking experiences like Barbara's, was also looking for immersive moviegoing and unique concessions. This desire translates into bigger screens, enhanced sound systems, and more snacks on their minds. Consequently, it appears that the more than $1.5 billion theater owners spent last year upgrading their theaters was well spent.

 

And on the price front, a record of sorts was just announced by Regal Cinemas. It appears they are charging $50 per ticket for advance opening-night seats at 70-millimeter IMAX screens to see "Dune: Part Three" in December.

 

Rest assured, I won't be in the audience, but I'll likely see it at my local theater with my wife. Even if I wait three months after its release, I could probably see it on a streaming channel for the price of my monthly subscription. I reason it's a small price to pay for a date with my wife. After all, you can't put a price on true love.

 

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.