Commentary for May, 2026

Hello all - we hope you had a nice May.

Markets continued their march higher and closed the month at record highs. The Dow was up 2.8%, the S&P 500 gained 5.3%, and the Nasdaq, which has a higher concentration of tech stocks, had another solid month up 8.4%.

Here’s a look at how the markets moved this month:

The market is back above its average return level.

Here’s a look at how the various market sectors performed this month.

Note how well tech has performed versus all other sectors.  Nearly all the new money in the market in the last two months has gone into tech.

Volatility keeps moving lower.

Oil prices saw the biggest monthly decline since the Covid outbreak.

Oil prices rose sharply during the Iran war and Straight of Hormuz closure.  Prices fell, though, every time a new “deal” was announced.  Yet the “deals” never materialized and the prices bounced back higher.  We closed the month with the announcement of another “deal,” so we’ll see if it sticks this time.

____

IRAN

The Iran war had the most impact on the markets this month.  

Actually, it was the Straight of Hormuz that had the most impact.  Its closure is keeping prices high for important commodities like oil.  This raises inflation and hurts the market.  That’s why headlines about the opening of the Straight would send oil lower and markets higher.

This month saw several “deal” announcements.  We put “deal” in quotes because officials would say a deal was near, but nothing every materialized.  And the terms of the deal we very different depending on which side you were on.  Missiles would be fired during ceasefires, complete annihilation would be announced, the “deal” would fall apart, and then we’d get another announcement that a new deal was near.

This makes for a very difficult investing environment.  We expected the constant headfakes and continued fighting to dampen the mood in the markets, but stocks keep rallying on the expectation that the Straight will be open with a new deal.  

The deal terms we’ve seen discussed seem very unpalatable and we’re not sure why anyone would agree to them.  But desperation causes people to do foolish things.  And stocks may rise as a result.  

____

CORPORATE EARNINGS

Corporate earnings were the other main factor behind the market rise.  Earnings have been very, very good and the results have been the best in several years.

A lot of the excitement has been around AI.  Its not just what AI means for tech companies, but it allows companies of any size or sector to be much more efficient and productive.  It may result in less employment, but it means more profitability and that means higher stock prices.  

____

FED

The Fed was in the news this month - not for any policy announcements, but for the announcement of the new Fed chief, Kevin Warsh.  In our opinion, he is a solid fit for the Fed and we think he’ll do a good job.  

However, new Fed chiefs nearly always see a lower stock market in the first few months of their term.  The reasons for the declines vary, but it’s an interesting statistic worth paying attention to.

____

INFLATION

As mentioned above, the war in Iran has caused inflation to remain high and prices are now up 30% since 2020. 

The month-to-month number shows a massive jump in prices. 

Most of the jump in prices was due to gas.

Prices have reached a point where Walmart is warning about its impact on shoppers who are getting squeezed.  

When excluding food and energy (what economists call the “core” inflation), prices are up, too.

Here’s a look at the inflation level for businesses, which is starting to get bad.

____

OTHER ECONOMIC DATA

Other economic data releases were mixed this month, though not as bad as they could have been.

Employment hasn’t been as bad as many had feared.

The manufacturing sector continues to look solid, but the service side of our economy weakened slightly. 

Retail sales showed a decent increase.

Durable goods had a solid month, but much of the jump was due to new aircraft orders. 

Consumer confidence continues its trend lower. 

There’s a different measurement of consumer sentiment conducted by the Univ. of Michigan that we don’t often discuss, but felt it necessary this month.  Their measure of consumer sentiment hit its lowest reading ever.  

You can see in the chart below all the other events that today’s sentiment is lower than.  This is very notable.

 

As for small businesses, their optimism saw little change from last month, but the level is still low. 

____

Where does the market go from here?

Last month we were cautious on stocks after the sharp rise they saw and the very little chance we saw for a deal with Iran.  However, the markets kept rising on the hopes for a deal.  We continue to believe the deal terms look very unfavorable, at least from what’s been publicly discussed, and we find it hard to believe they’d be agreed to.  Two months ago these terms would have been laughed at, but the market is looking to get back to normal, even if little remains resolved with Iran.  

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.

Commentary for April, 2026

Hello all - we hope you had as nice an April as the markets did.

It was another month for the record books, but at least this time it was positive.  After the war in Iran caused stocks to have their worst month in four years, markets rebounded for their best month in over five years.  For April, Dow was up 7.7%, the S&P 500 gained 10.5%, and the Nasdaq, which has a higher concentration of tech stocks, shot up 15.7% for its best month in six years. 

Here’s a look at how the markets moved this month:

The market is now back to its average return level.

Here’s a look at how the various market sectors performed this month.

Volatility subsided in a big way.

Oil prices also rose sharply since the beginning of the war.  Prices fell when the fighting subsided, but have risen again with the blocking of the Straight of Hormuz.  The longer this continues, the higher oil prices will go. 

____

CORPORATE EARNINGS

Surprisingly, corporate earnings have been very, very good and the results have been the best in several years.

Numbers for the first quarter began trickling in this month and we’re about 70% through the companies in the S&P 500.  Companies are on pace to grow their earnings almost 20%.  Revenue, what a company made in sales, are at the highest level in 15 years.

These numbers help explain the higher market values.  

____

FED

The Fed was in the news again this month.  

First, it appears the nomination for the new Fed Chief, Kevin Warsh, has gotten the green light to go ahead.  This is a very positive development.

Second, the Fed held another policy meeting this month, announcing no changes in the interest rate.  This was widely expected, so the market didn’t see a lot of action on the news. 

Investors don’t see the Fed lowering rates any time this year, either.

This also marked the last meeting for Fed Chief Powell, although he announced he will remain on the board until his term is up in 2028.  It does set up the potential for drama as other Fed members suggested they had no interest in lowering rates.  

____

INFLATION

Inflation numbers released this month showed a sharp increase in inflation due to the Iran war. 

The month-to-month number shows a massive jump in prices.   

Most of the jump in prices was due to gas.  Note that this measurement covers the month of March, which saw gas rise over 21% during that time.

When excluding food and energy (what economists call the “core” inflation), prices are up, but not as bad (since most of the gains were in gas).

Here’s a look at the inflation level for businesses, which wasn’t as bad as expected. 

Here’s a look at the price rises of some other important items. 

____

OTHER ECONOMIC DATA

Other economic data releases were mixed this month, though not as bad as they could have been.

Economic growth as measured by the GDP report came in at a decent 2%.

Employment saw a surprising improvement as more jobs were added than expected. 

The manufacturing sector continues to look solid, but the service side of our economy weakened slightly. 

Retail sales showed a decent increase.

Durable goods were up slightly.

Consumer confidence continues has been trending lower, but showed a slight improvement this month.

On the other hand, small businesses were less optimistic. 

____

Where does the market go from here?

Last month the market was very oversold and looked primed for a bounce.  The market did just that, but now things are looking a little more expensive.  Maybe the market grinds higher here, but we’re much less enthusiastic on stocks at this time.  A lot depends on the war with Iran, too, but we don’t see significantly more upside.



This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.

Commentary for March, 2026

Hello all - we hope you had a better March than the markets did.  

What a month.  The war in Iran sent stocks to their worst month in four years, while commodities like oil saw record gains.  For stocks, the Dow was down 4.6%, the S&P 500 lost 5.0%, and the Nasdaq, which has a higher concentration of tech stocks, was off 3.4%.  

We also closed out the first quarter, which was the worst quarter in four years.

Here’s a look at how the markets moved this month:

Here’s a look at how the various market sectors performed this month.

Needless to say, the markets were incredibly volatile this month.

Volatility in the bond market was also high.  We don’t talk about this very often, but the volatility in the bond markets often mirrors the level of the stock market.  

As you can see in the chart below, the gap between the two indexes has widened.

Will the stock market (black line) fall further to catch up with the bond market (blue line), or will the bond market rise to catch up to stocks?

Not everything was down, though.  With the rise in oil prices, energy stocks did very well.

We talked about natural resources companies last month, since they were immune to AI slowdowns. These are companies like Exxon, Newmont Mining, and Freeport McMoran.  This sector also held up well during the chaos of this month. 

____

As you are clearly aware, oil and gas prices have seen a historical rise this month.  Oil, in particular, saw its biggest monthly gain, ever. 

Here’s a look at the rise in gas prices:

Interestingly, as oil rose, stocks fell.

Why did stocks fall as oil rose?  It goes back to the Fed.  Higher gas prices mean higher inflation.  Higher inflation means the Fed is less likely to lower interest rates this year.  In fact, the market is predicting no rate cuts this year.  Some even think there could be a rate hike.

This caused the U.S. dollar to have its best month since 2024.

It also caused gold to fall. 

____

FED

Speaking of the Fed – and switching gears a bit – the Fed held another policy meeting this month.

They held rates steady, as expected, and signaled that it’s possible there will be fewer rate cuts this year than people expect.  This added to the pressure in the markets. 

____

INFLATION

Inflation numbers released this month showed a slight increase in inflation.  Note that this number was measuring inflation the month before the Iran war started. 

The month-to-month number shows inflation still rising, too.

When excluding food and energy (what economists call the “core” inflation), prices keep climbing.

The most surprising inflation number out this month was the PPI.  It showed inflation at the business level was much higher than expected.

____

OTHER ECONOMIC DATA

Other economic data releases were mixed this month.

The unemployment picture looks very poor as we saw a surprising drop in jobs.

The strength of the manufacturing and service sectors continues to hold up, though.

Retail sales were slightly lower.

Durable goods were lower, too, but when excluding a few large aircraft orders, the durable goods weren’t that bad.

Consumer confidence continues to be an issue.  It showed slight improvement in the last two reports, but it has been trending lower, overall.

Small business optimism was slightly lower.

____

Where does the market go from here?

Stocks look very, very oversold (cheap) and it’s a very attractive time to buy here.   As the month closed out, the risks with the Iran war seemed to fade, so a wind down in the conflict will be very beneficial for investors.  However, there’s no telling what may actually happen. 

 

Lastly, we will note that after oil shocks like we just saw, markets tend to languish so any rebound may be short-lived.

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.