New Highs, Old Questions

👋 ICYMI

This was one of the most extraordinary weeks in recent market history. The S&P 500 closed at a new all-time high of 7,126 on Friday — breaking above 7,000 for the first time ever earlier in the week — while the Nasdaq crossed 24,000 and the Dow hit 49,447. Every major U.S. index is now positive year to date.

The primary catalyst was Friday's announcement by Iranian Foreign Minister Abbas Araghchi that the Strait of Hormuz is "completely open for all commercial vessels" for the remaining ceasefire period, following a ceasefire in Lebanon. Oil prices plunged — Brent crude fell roughly 13% to $86 and WTI dropped over 14% to below $82 — their largest single-day declines since the ceasefire was first announced on April 8.

But the celebrations may be premature. Video footage showed ships turning away from the Strait despite the announcement, with maritime analysts telling CNBC the waterway remains "effectively closed" under the same conditions Iran imposed before.

Earnings season delivered. JPMorgan $JPM ( ▲ 0.11% ) , Goldman Sachs $GS ( ▲ 2.88% ) , Wells Fargo $WFC ( ▲ 0.2% ) , Citigroup $C ( ▲ 2.2% ) , Bank of America $BAC ( ▲ 0.75% ) , and Morgan Stanley $MS ( ▲ 0.8% ) all beat expectations, with strong trading revenue and resilient consumer spending offsetting war-related uncertainty. TSMC's $TSM ( ▲ 1.97% ) full Q1 earnings confirmed what its revenue preview showed — AI chip demand remains the strongest secular trend in the market.

👀 Signals I'm Watching

• ⚠️ The Strait May Already Be Closed Again

  Saturday's reports that Iran reversed its Hormuz opening — citing the continued U.S. naval blockade — mean Monday could open very differently than Friday closed. The market rallied hard on the "open" announcement. If ships can't actually transit safely, oil could spike and this week's record highs could face an immediate test. This remains the single most important binary variable for markets.

• 📊 Earnings Are Beating — But Guidance Will Matter More

  10% of S&P 500 companies have reported Q1 results, with both the earnings surprise rate and magnitude above recent averages. Revenue growth of 9.9% would be the highest since Q3 2022. Next week, 93 S&P 500 companies report — including 7 Dow components. Forward guidance will be the real test: will management teams guide conservatively given the oil shock, or lean into the recovery? Analysts are projecting 18% full-year earnings growth for the S&P 500.

• 🏃 "Too Far, Too Fast" Warnings Are Growing

  Some investors are warning the rally has gotten ahead of fundamentals. The S&P 500 has gained roughly 12% from its March low in under four weeks. The ceasefire remains fragile, oil supply hasn't normalised, and consumer sentiment just hit an all-time low. The VIX at 17.5 suggests markets are pricing in very little downside risk — which itself is a risk.

• 🤖 AI Narrative Reclaims the Spotlight

  With the war fading (for now) as a market driver, investors are rotating back to the AI trade. TSMC's record revenue, ASML's $ASML ( ▲ 3.47% ) strong earnings, and the Nasdaq's 11-day winning streak all point to renewed confidence in the AI buildout. Software names remain under pressure, but hardware and infrastructure plays are back near or at highs. The OpenAI IPO pipeline and Anthropic's potential listing could provide the next major catalysts for the sector.

⚠️ Red Flag to Note

The Market Is Pricing In Peace That Doesn't Yet Exist

The S&P 500 is at an all-time high. Oil has crashed 13% on a single announcement. And yet the Strait of Hormuz was reportedly closed again by Saturday morning. The market is pricing in a resolution to the Iran conflict that has not been finalised, and the ceasefire expires on April 22. If talks collapse and military operations resume, the unwind of the past two weeks of gains could be swift and severe. History shows that geopolitical relief rallies built on incomplete resolutions are among the most dangerous to chase. The next few days will determine whether this is a genuine inflection point or the setup for another whipsaw.

🔍 Insider Transactions I’m Watching

📬 Closing Note

Seven weeks ago, the S&P 500 was in its longest losing streak since 2022. The Dow had entered correction territory. Oil was above $112. Consumer sentiment was collapsing. And the dominant question was whether the Iran war would tip the U.S. into recession.

This week, the S&P 500 hit an all-time high. The Dow reclaimed all its war losses. Oil crashed below $83. Bank earnings beat across the board. And the Strait of Hormuz — the epicentre of the crisis — was declared open for the first time in nearly seven weeks.

The speed of this reversal has been remarkable. But it's important to be honest about what we don't know. The ceasefire is still fragile. Iran closed the Strait again by Saturday. The April 22 deadline looms. And the market is pricing in a level of certainty about peace that the negotiations haven't yet delivered.

What this week did prove is that the underlying economy is stronger than the headlines suggested. Banks are healthy. AI demand is accelerating. Corporate earnings are growing at their fastest pace in three years. And when the geopolitical fog lifts — even temporarily — the market is capable of explosive moves higher.

The opportunity now is to stay positioned for the upside while remaining clear-eyed about the risks that haven't fully resolved.

Stay patient. Stay selective. And as always, let the data guide the story.

Until next Sunday —

George ☕