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.

 

In April, the White House asked Congress for $1.5 trillion more in defense spending for 2027. This is a 40 percent increase over the Pentagon's spending in fiscal year 2026. Half the funding will come from cuts to education, housing, and health programs. Welcome to the war economy.

 

While the stock market celebrates another two-week extension of a cease-fire between the U.S. and Iran, the wars are not over. There will be more, in my opinion, and preparing for them will cost money. The Pentagon needs $4.5 billion to replenish its Tomahawk cruise missile stockpile. The Navy wants more boats, and the $250 million in planes and helicopters we lost rescuing two downed flyers need to be replaced.

 

As more military resources disappear, the need to replace them grows. That never-ending story fuels a wartime economy. The money earmarked for defense may not be enough. At a private lunch last week, according to the New York Times, the president said we need to prioritize military protection. Otherwise, he said in a since-deleted video, the country could not continue to shoulder the financial burden of services including day care, Medicare, and Medicaid.

 

For those, like my daughter, who vaguely remember the term "wartime economy" from their history books, let me start with a definition. A wartime economy is an economic system that is reorganized by a nation to prioritize military production and resource allocation during periods of armed conflict.

 

What that means is that all the resources, including production, distribution, and financial systems, are adjusted to support military efforts while maintaining overall economic stability. If you are old enough to remember, it can and did mean rationing, price controls, centralized planning, inflation, and deficit spending here in the U.S.

 

For Americans, World War II is usually the go-to example of a wartime economy. Defense spending surged from 1.6 percent of Gross Domestic Product (GDP) in 1940 to over 40 percent four years later. By the end of the war, that number climbed to 119 percent of GDP. Non-military auto production was halted. Steel, rubber, and aluminum were rationed. Price controls artificially suppressed inflation, and black markets in everything from food to fuel proliferated.

 

Historians say this wartime economy pulled the U.S. out of the Great Depression. It sped up GDP growth and built the military-industrial complex. The war and draft created a job boom. By 1944, unemployment fell below 1 percent, the lowest ever. Women joined the workforce in large numbers. War also sparked major advances: radar, jet engines, computers, medicine, and the nuclear bomb.

 

All this is true; however, that is not the whole story. Under the hood, both private consumption and investment lagged badly. Civilian living standards were lower during the war than in 1940. That was before rationing and quality deterioration.

 

Much of wartime economic growth came at the private sector's expense. Tanks, ammunition, ships, and planes — many lost in combat — could have built schools, hospitals, housing, or consumer goods. Instead, Americans waited in line for basics like gasoline, meat, and shoes. The national debt more than doubled as a share of GDP during the war.

 

Could we see the same results 80 years later? It seems doubtful. War may not deliver the benefits people expect. War spending gives an output boost, and we may fight for a "good cause," whatever that means now. Yet do not expect the same job gains as before.

 

Next week, I will address the inflationary fallout from wartime economies and how countries worldwide are being forced to alter their own economies due to shifting post-war strategic alliances and geopolitics.

 

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.

 

By now, everyone understands rising beef prices are a never-ending story. Fewer consumers complain about seafood prices. That may change as sticker shock hits the fish counter.

 

The U.S. Bureau of Labor Statistics reported that fish and seafood prices increased by 3.89 percent so far in the first quarter of 2026 compared to prices in 2025. During the same period, the overall inflation rate was 1.19 percent. Of course, that was small potatoes compared to the price of beef, which surged 13 percent amid strong demand and tight supplies.

 

For the rest of this year, the U.S. Department of Agriculture expects seafood prices to rise faster than the historical average of 4.60 percent per year. For as long as I can remember, seafood in the U.S. has been a luxury item that, year after year, has climbed in price. Prices for fresh fish and seafood are 133.51 percent higher in 2026 than in 1997. In 2024, seafood had the highest average retail price among protein sources, surpassing beef and veal.

 

Beef, on the other hand, remained low and within the means of most Americans until recent years. Part of the price difference is attributable to growing demand for seafood in the U.S., one of the world's largest seafood markets. However, 90 percent of the seafood consumed is imported from other countries.

 

It was not until I began traveling the world in my teens that I realized that, in many countries, seafood was both cheap and plentiful. China, Indonesia, and Vietnam are the top suppliers of our fish, and all of them have been slapped with high tariffs thanks to Donald Trump. But don't just blame Donald Trump for the rising prices.

 

In recent years, consumers worldwide have begun paying more for fish. Climate change, despite deniers, has had a profound impact on the world's oceans. Rising temperatures and acidification are impacting the distribution and abundance of many underwater species. Just look at the Gulf of Maine as an example. The warmer water has led to a decline in the lobster population to the point where I paid $49 for a lobster roll last weekend in Martha's Vineyard.

 

Over the last six years, Maine's lobster catch has declined from 121 million pounds to 79 million. This drop reflects a broader regional shift, as the Gulf of Maine has been leading the oceans in warming driven by climate change. As a result, the codfish industry has been decimated, while shrimping has gone nowhere as marine life fled to cooler waters. Similarly, salmon populations in the Pacific Ocean are experiencing the same trend.

 

On a trip to visit relatives in Norway a few years ago, I also learned that many species are affected by pollutants such as plastics, pesticides, and industrial waste. Thanks to ocean currents, much of the world's ocean trash is winding up in the Scandinavian region. This has led to increasing regulation and certification as governments try to reverse this trend. The costs are passed on to consumers through higher prices and a smaller supply of fish.

 

Beyond production, the costs of catching fish are steep: harvesting is more labor-intensive, product spoilage occurs faster, and loss rates are higher at every stage from ocean to plate.

 

A pound of ground beef might cost $6.75 per pound, but a comparable portion of fresh salmon or cod will run you anywhere from $8 to $14 per pound. A whole chicken is even cheaper, about $2 a pound. The difference between catching fish and raising cattle, pigs, and chickens is that ranchers and farmers use a controlled environment to optimize feed, breeding, and growth timelines. Wild-caught fishing offers none of the above.

 

Commercial boats depart with a fully paid crew, fuel accounting for 5-10 percent of their earnings, ice, and refrigeration units, and face increasingly uncertain weather, shifting fish populations, regulations, and seasonal closures. There is no guarantee of a full catch, whereas a rancher can be certain of how many pounds of beef he will produce in a month.

 

At the supermarket, beef and chicken have much longer shelf lives as well. Fresh seafood is one of the most perishable items on a grocer's shelves. Anywhere from 8 to 20 percent of seafood is spoiled before it reaches consumers (the shrink rate). Supermarkets know this and mark up their fish to account for that spillage rate. Frozen seafood has a near-zero shrink rate, which is why it is much cheaper than fresh fish.

 

And keeping fish cold is expensive. Most commercial fishing takes place far from supermarkets. Many products, such as wild salmon, Atlantic cod, and imported shrimp, may travel thousands of miles by boat, truck, and air before hitting your local grocery shelf. At every step in the chain, keeping fish cold requires energy, specialized equipment, and speed. Unlike beef, which spoils more slowly, fish spoils quickly if it is not handled precisely.

 

Another difference between fish and a steer is that you get a greater yield from the beef carcass. About 63 percent of its live weight is boneless beef. A whole fish yields far less. No more than 30-50 percent of the fish is edible. If demand for wild-caught fish picks up, you can't just catch more. Harvests are constrained by quotas, seasonal availability, and the sheer biological limits of fish populations.

 

It is the reason aquaculture has exploded worldwide, with fish farms popping up everywhere. Today, roughly half of all seafood consumed globally is farmed fish. Fish farms can scale up like livestock if demand rises. That's why tilapia and catfish, for example, are much cheaper than wild salmon, cod, and shrimp. 

 

When it comes down to it, you may have noticed that not all fish are expensive. Canned tuna is practically a loss leader, with cans going for a dollar or less. 

 

The price differential between fish and meat is really a gap between industrialized livestock production and wild-caught fresh seafood. The more you consume farmed fish that is frozen for transport or canned, the cheaper it becomes.

 

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!