War? What-EV-er … High valuation? Big Whoop … Inflation, As If … Ms. Market’s just bopping along chirping all the 80’s phrases with that proud 80’s frizzy hair flying like the singer of The Go-Go’s.
See the people walking down the street
Fall in line, just watching all their feet
They don’t know where they wanna go
But they’re walking in time1
They got the beat, They got the beat … Yeah, you know the rest … and I’m sorry.
As of the writing of this the S&P 500 has surged to new all-time highs on Hopium that the conflict in Iran is over and that the fear over inflation from surging oil prices was ill-founded. The S&P crested 7,000 Wednesday afternoon, up almost 11% from its low on March 30th2. For those that are keeping score that’s $6 trillion of wealth creation in 12 days. Everyone has gotten in line and walking in time to buy back in, and how quickly that happened. 11% growth in 15 days. Call options volume, a measure of bullish bets in the market, has rocketed higher to the 2nd highest reading this year, and up 75% since the beginning of the month, while put volume (or bearish bets) have diminished 15%. The ratio of puts-to-calls, the put/call ratio, is 0.68, the lowest since May of 2025.3 Marking participants are lining up to put on risk. So how about this Dave Matthews Band song instead?4
When all of the little ants are marching,
Red and black antennae waving,
They all do it the same …
They all do it the same way …
Hopping in line seems the right course of action. It’s hard to be the ant marching the other direction loaded up with your bit of cheese cracker. Ahh well … If it’s wrong to get in line, at least we’ll have plenty of ants to keep us company. There are still risks out there. The conflict in Iran could still escalate. It just takes one stressed out solider to fire at the wrong target and we’re ratcheting this thing up to the next level. There’s still no deal with Iran and there are still troops in the theatre waiting in case we can’t get what we need from the blockade or economic means. It would seem we have the advantage with total air and naval supremacy over Iran but the clock is ticking on the War Powers Act timeline that started on February 28th and Iran has to know that Congress is unlikely to declare war which would allow us to continue hostilities beyond the 28th. I’m optimistic a deal can be struck, but just because you’re up 2 with the ball with 10 seconds to play doesn’t mean you’ve won the game. If you don’t believe me, just ask the Duke Basketball team.5
There are valuation concerns again suddenly, and an oddity about the market breadth of the rally that should be pointed out. Liz Ann Sonders, CIO of Charles Schwab, reposted a tweet from Scott Brown discussing Wednesday’s upwards price action. He said “Today was truly rare. An all-time high for the S&P 500, but only 12 stocks in the index made a 52-week high. Since 1999 we’ve only seen five readings that weak or worse.” This could be attributed to gains in the Magnificent Seven, but it seems not all parties came along for the ride to the all-time SPY high.
Inflation is a worry that the market is certainly ignoring. The Producer Price Index level was announced this week. This is a measure of the prices that manufacturers of goods are paying and is used to forecast prices that consumers may be paying in 4 to 6 months. The PPI is up 4.02% year-over-year6. This comes from oil of course, but there are many other goods that have been impacted. These include: Sulphur +67%, Jet Fuel +66%, Urea +51%, Heating Oil +40%, WTI Crude Oil +37%, Fertilizer + 31%, Coal +14%, Iron Ore +7%. The IEA is reporting that Europe only has 6 weeks of jet fuel left and flight cancellations are in the offing. But these items I’ve mentioned are the materials that flow into so many products, that even if the conflict in Iran winds down, will take time to filter from port to ship to port to train to plant to store to consumer. It was just reported by Rick Santelli on CNBC that industrial production in March fell 0.5%. There’s a supply chain there that takes damage from slowdowns and drags the malaise into our consumer future. This worry is overlaid on the stretched consumer. 47% of Buy Now, Pay Later (BNPL) users were late in paying their BNPL loans this past year. This percentage is up 13% in the last 2 years. The only good news with inflation is that Pepsi has lowered the cost of Cheetos and Doritos by 15%. Thanks to those of you in the Cool Ranch Doritos community for staying strong and drawing a line in the sand.
But Ms. Market is looking past all the negative things. For today Ms. Market is running on Hopium. For those wondering, Hopium (Hp) is the most changeable of all the elements. It can either occupy space 6.5 on the periodic table between the building blocks of life Carbon (6C) and Nitrogen (7N) or it’s the most toxic of things sitting at 80.5 between Mercury (80Hg) and Thallium (81Tl). Like Thallium, the stock market can also make your hair fall out. Look no further than my shiny cranium. Only time will determine if this week’s Hopium dose is building lives and giving life to a down market or flying down the path while blissfully missing warning signs.
When the market is hopping up on Hopium, strange and stupid things happen. The dumbest thing that’s happened in the markets in recent memory occurred Wednesday. The CEO for Allbirds, a sustainable shoe company whose stock had dropped from over $500 a share to $2.50 per share, announced they were getting out of the shoe business and were pivoting to GPUs and the AI cloud computing space and are now “Newbird AI”.7 It’s laughably ludicrous, but not so ludicrous as what happened next when the stock suddenly entered meme stock territory and launched 580% upwards to close over $16 a share. Sanity has left the building. In a lot of ways this AI-induced madness is reminiscent of the dotcom craze. Not every mention of AI should be worth billions of dollars, particularly not this one.
Rest assured we’re not investing in meme stocks. We’re not trying to turn $2.50 into $16 at one stroke. If you were still investing in a stock that dropped from over $500 per share to $2.50 you need your head examined by a qualified professional. There’s been an explosion of young people on X and elsewhere that think they are God’s gift to the investing world and recommending all kinds of meme and penny stocks. Buyer beware as many of these are subscription-based and the others are there for the click dollars.
The bearish things we’ve mentioned above are notes only. We’re still bullish on the market as it historically goes up 70% of the time, but we feel a duty of care to point out risks. We are definitely bullish about how technology is advancing so rapidly in so many places. We’re doing the best we can to understand where technology is taking us and this week have invested into a couple of photonics stocks in our Christian Values Growth portfolio. These companies are now crucial to the supply chain of the AI infrastructure build-out. As I mentioned a few weeks ago, it’s the Year of the Scientist and the Year of the Engineer. While there are plenty of reasons to be cautious, there are as many or more to be optimistic about the future, particularly when it comes to technology. It’s not all doom and gloom. With all these media pummeling us day after day it’s harder than ever to stay focused on what’s important – your family, your friends, your faith and your hobbies. We’ll stay focused on the investments and the financial planning so you can enjoy them all. If you’re worried about the Hopium in the markets just give us a call, and we’ll help you sort out if it can be a life-building element for you or if we need to keep it below toxic levels. Remember, if you listen to us, we’ll change your financial world …
Sincerely,
Scott Wright
Portfolio Chemist
The Wealth Training Academy
(Marketing Disclaimer: Past performance is never a guarantee of future results. We offer a lot of services. Our planning, tax, and insurance strategies are designed to improve financial outcomes when implemented as recommended. We’re confident in these strategies, but results will vary based on individual circumstances. Investment results cannot be guaranteed. Unless otherwise indicated, no third party individuals mentioned in this article are clients of our firm, nor have they been compensated for appearing. This article is for educational purposes only – we do not recommend anyone buy or sell any security discussed here. Instead, we recommend readers call our office for personal advice about your circumstances! ~The Compliance Department.)
Sources:
1The Go-Go’s – We Got the Beat Lyrics | Genius Lyrics
2Stock market today: Live updates
3@KobeissiLetter
4Dave Matthews Band – Ants Marching Lyrics | Genius Lyrics
5Every angle you didn’t see from UConn’s thrilling game-winner over Duke
