💥 AI Euphoria, Recession Risk, Inflation, And How It Affects You

The Truth About The Market, Economy, and Inflation (And What To Do Now)

My first real job after graduating, a senior manager told me something I still think about today.

“The market,” he said, “is never wrong. But it’s almost always early.”

I was fresh out of school. I didn’t fully get it then. After watching cycles come and go, it makes a lot more sense.

The market doesn’t price today. It prices tomorrow. And sometimes, it gets so far ahead of itself that today’s reality becomes almost unrecognizable when you compare it to what the market is implying.

This week is one of those moments.

The S&P 500 hit an all-time high. Cerebras Systems, a company that isn’t profitable, raised $5.5 billion and surged 68% on its first day of trading. Investors priced in a future built on AI, data centers, and technological transformation.

But here’s what’s actually happening in the present.

Inflation hit 3.8% in April. Wages grew only 3.6%. For the first time since 2023, the cost of living is rising faster than the average American’s paycheck. The 30-year Treasury yield just hit 5.127%, a level not seen since 2007. Consumer confidence hit an all-time low. And veteran economist Gary Shilling, who has one of the best track records on Wall Street, just called for a 30% market crash by year-end.

So who’s right? The market pricing a bright AI future? Or the data pointing to a struggling present?

I’ve learned to listen to both. Because in my experience, ignoring either one is how investors get hurt.

What I want to show you in this week’s issue is how everything connects. Because it isn’t separate stories. It’s one story. The Iran war. The inflation surge. The Fed’s impossible position. The AI boom. The tech layoffs. The office vacancies. The plastic shortage. They’re all part of the same picture.

And once you see the full picture, the investment moves become much clearer.

This week we’ll cover inflation outpacing wages, the AI IPO frenzy, a 30% crash warning from one of Wall Street’s best forecasters, rising tech layoffs, crashing office markets, and a war-driven packaging crisis along with the actionable advice, insider trades, top stocks, options flow, and market sentiment data that help you stay ahead.

Every week, I try to share what I’m seeing so you can make better decisions with your own money. That’s the whole purpose of this newsletter. To help you see what’s happening, understand why it matters, and know what to do about it.

If that’s valuable to you, please share this newsletter with others who will benefit from it. And consider becoming a paid subscriber.

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📬 In today’s newsletter, we’ll look at:

Part I - Market & Economy Update:

1. Analysis & Outlook

2. Important Finance News

Part II - Investing Research:

3. Insider Trading

4. Top Stocks Right Now

5. Today’s Trade

6. Market Sentiment (Fear & Greed Analysis)

7. Macro Technical Analysis

Part III - Tips & Advice:

8. Advice, Lessons & Recommendations

9. Final Thoughts

10. Your Top Questions Answered

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Part I - Markets & Economy Update

(1) Analysis & Outlook

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📈 Everything You Need to Know (in 1 minute):

1. Inflation hit 3.8% year-over-year in April, outpacing wage growth of 3.6% for the first time since 2023. Your paycheck is officially losing ground to rising prices.

2. PPI inflation surged 6% annually, the fastest rate in years. When businesses pay more to produce goods, you eventually pay more to buy them.

   1. Energy is driving all of it, up nearly 18% year-over-year. Oil hit $105 a barrel as the Iran war keeps the Strait of Hormuz blocked. Gas prices show no signs of slowing. More than 40% of April’s inflation increase came from energy alone.

3. Bond yields hit multi-year highs, signaling a new era of “higher for longer.” The 10-year Treasury reached 4.595% (highest since early 2025). The 30-year hit 5.127%, a level not seen since 2007.

4. Kevin Warsh became Fed chair by the narrowest Senate margin since 1977. He wants lower rates, but surging inflation may force him in the opposite direction. Markets are now pricing in zero cuts this year and a potential rate hike by year-end.

5. Consumer confidence just hit all-time lows. Nearly 75% of Americans say economic conditions are poor. “Uncertainty” and “stress” are the most common words people use to describe their financial future.

6. Copper hit a record $6.53 per pound, up 15% year-to-date. AI data center construction and supply chain disruptions from the Strait of Hormuz are squeezing the world’s most important industrial metal.

7. Cerebras Systems raised $5.5 billion and soared 68% on its Nasdaq debut. It became the biggest IPO of the year, proving that investor appetite for AI chips is red-hot despite the gloomy macro picture.

💡 Andrew’s Analysis & Advice:

Here’s a question almost nobody is asking right now.

How does a war in Iran make everything more expensive?

The answer is oil. Oil makes plastic. Plastic makes packaging. Packaging touches everything you buy. And oil at $105 a barrel ripples through every layer of the economy, from your gas tank to your grocery cart to the price of a streaming service raising its rates.

After 20 years in finance, the one thing I know for certain is that nothing happens in isolation. Markets love to treat each piece of economic news as its own isolated event. Inflation data drops. Markets twitch. Move on. New Fed chair confirmed. Markets shrug. Monster AI IPO. Everyone gets excited for a day.

But every headline this week tells the same story. And when you see the full picture, it’s both more alarming than any one story alone.

Let’s connect the dots.

The Iran war is the inciting event. The Strait of Hormuz blockade didn’t just spike oil prices. It triggered a cascade. Energy is up nearly 18% year-over-year. Gas is up 28%. Fresh produce prices surged because diesel trucks move food. Tomato prices jumped 15% for the second month in a row, partly from tariffs on Mexico. Polyethylene, the plastic wrapping almost everything you buy, hit a near four-year high, squeezing companies from Procter & Gamble to Pepsi to Coca-Cola.

The result? Inflation hit 3.8% year-over-year in April, outpacing wage growth of 3.6% for the first time since 2023. The chief economist at Navy Federal Credit Union put it simply: “Inflation is eating up all wage gains.” In a recent CNN poll, nearly three-quarters of Americans said economic conditions are poor right now.

Now here’s where it gets complicated.

The Fed’s traditional playbook says: if inflation is rising, raise rates to cool the economy. But this isn’t demand-driven inflation. This is a supply shock driven by war. Raising rates won’t make oil cheaper. It won’t reopen the Strait of Hormuz. It won’t lower tomato prices. It will, however, make mortgages more expensive, credit cards more brutal, and business investment harder to justify.

Kevin Warsh just became the new Fed chair, confirmed by the narrowest Senate margin since 1977. He wants to cut rates. The President wants lower rates. But with inflation running hot and economists warning it could hit 4.5% or higher next month, the Fed is stuck.

The 30-year Treasury yield hit 5.127%, a level last seen in 2007.

Translation. Borrowing will get more expensive before it gets cheaper. The housing market, already frozen, gets colder. Millions of Americans holding variable-rate debt feel more pain.

And yet. Amid all of this, the stock market just hit an all-time high.

How?

Two words. AI euphoria. Cerebras Systems raised $5.5 billion and surged 68% in a single trading session. Investors aren’t just pricing in today’s economy. They’re pricing in the future economy, one built on AI chips, cloud infrastructure, and the next technological revolution. Copper hit a record $6.53 per pound because it literally wires the data centers that run AI models. The Roundhill Memory ETF ($DRAM) hit $6.5 billion in assets in just 36 days, beating every ETF launch in history including Bitcoin’s.

This is the defining tension of the moment. A war economy crushing consumers on Main Street while an AI economy builds new fortunes on Wall Street. The question every investor needs to answer is simple: which force wins?

My view, built on years of watching markets through multiple cycles, is that both forces are real and both will last longer than most people expect. The smart money holds both.

And there are other signals worth watching. Regulators announced plans to let lenders use alternative credit scores alongside FICO for government-backed mortgages, a major shift that could open the housing market to millions of renters with thin credit histories. The SEC proposed allowing companies to report earnings every six months instead of quarterly, a change that could reshape how investors analyze stocks. And both Anthropic and OpenAI are eyeing IPO’s this year, which would be the largest tech IPOs since Meta.

The world is changing fast. The macro is messy. And the opportunity, if you know where to look, is hiding in plain sight.

My advice:

• Stay in AI infrastructure. Cerebras, copper, memory chips, cloud computing. The buildout is early and the market is rewarding it generously.

• Add inflation-protected assets. Energy stocks, commodity-linked ETFs, and materials companies tied to AI infrastructure (copper miners, industrial metals) all give you real cover when prices keep rising.

• Keep meaningful cash. High-yield savings accounts and money market funds are paying 4-5%. That’s real return with zero risk while you wait for better entry points.

• Track your personal inflation rate. Not the CPI headline number. Your actual monthly spending on gas, groceries, and bills. If it’s running above your income growth, you need to adjust your budget now.

• Attack high-rate debt immediately. Variable-rate credit cards, HELOCs, adjustable mortgages. Pay them down. The window for cheap refinancing is closing.

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(2) Important Finance News

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📬 Today we look at:

1) AI's Hottest New Trade: The Memory Chip ETF.

2) Wall Street's Most Accurate Economist Just Called a 30% Crash by Year-End.

3) 100,000 Tech Jobs Gone in 2026. And It's Only May.

4) America's Offices Just Hit a Record 21% Vacancy Rate.

5) The Iran War Just Caused a Global Plastic Shortage.

🤔 But first, Do you think a recession hits this year?

1. AI’s Hottest New Trade: The Memory Chip ETF.

The Roundhill Memory ETF, ticker $DRAM, reached $6.5B in assets under management in just 36 days after launching, making it the fastest ETF launch in recorded history, faster even than the Bitcoin ETF ($IBIT), which took 43 days to hit the same milestone after its 2024 debut.

$DRAM holds a basket of global memory chip companies, including SK Hynix and Micron Technology. Bloomberg ETF analyst Eric Balchunas called it one of the “most heads up, best-timed ETF launches” he’d ever seen. And the data firm Vanda called it the “poster child” for the ongoing semiconductor frenzy. Retail investors poured $200M in net buying into the fund in just 27 trading days.

Here’s the insight worth holding onto. Memory chips were once considered a boring commodity business, driven by volatile boom-and-bust cycles. Something structural has changed. Data centers powering AI are now signing long-term supply contracts for memory chips rather than the short-term spot deals of the past. That shifts the demand picture from unpredictable to more stable, and it makes memory chip companies look less like raw material producers and more like mission-critical infrastructure suppliers.

Marc Andreessen wrote in 2011 that “software is eating the world.” Today, chips are eating software. Every AI model, every cloud server, every autonomous system runs on semiconductor memory. $DRAM is a clean, accessible bet on that structural shift.

But here’s the caution worth sitting with. Funds that launch to record fanfare at market peaks carry extra risk. When retail investors flood in at record speed, it can signal froth, not just opportunity. The memory chip market is still cyclical at its core. A slowdown in AI spending, a global recession, or a wave of oversupply from chipmakers could hurt this ETF hard.

Use $DRAM as a signal, not a green light at current prices. If you want exposure, dollar-cost average in rather than going all-in after a record-breaking launch.

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2. Wall Street’s Most Accurate Economist Just Called a 30% Crash by Year-End.

Veteran economist Gary Shilling, a former Merrill Lynch chief economist with decades of market calls behind him, is predicting a US recession by year-end along with a potential 30% drop in the S&P 500.

Shilling has been bearish for years, which is worth acknowledging upfront. But what’s different now is the weight of evidence behind the call.

The housing market is frozen. Mortgage rates remain high, and buying activity has slowed after a brief window of relief last year. Business investment outside of AI has collapsed, with broader capital spending growth slowing to 3.9% from a pandemic-era peak above 24%. Consumer spending, which drives roughly two-thirds of US GDP, is under severe pressure. Real disposable income grew at just 0.4% annually in March, its weakest pace in about 3 years. The personal savings rate sits at 3.6%, also near a multi-year low.

Shilling flags three valuation metrics that say stocks are dangerously expensive. The Shiller CAPE ratio (which compares stock prices to 10 years of average earnings) is near its highest level since just before the dot-com crash. Price-to-sales and price-to-book ratios for the S&P 500 are both at all-time highs. Stocks are priced for perfection in an economy that is far from perfect.

A 30% drop from the current S&P 500 level of roughly 7,400 puts the index around 5,200. That would erase roughly 18 to 24 months of gains for most investors.

My advice: Don’t panic-sell. But stress-test your portfolio today. Ask yourself one question: if the S&P drops 30% over the next year, which positions hurt me the most? Trim the most speculative ones while keeping your core long-term holdings intact. And remember, short-term Treasuries are yielding over 4.5% right now. Holding cash and short-term bonds isn’t fear. It’s just being smart while the market figures itself out.

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3. 100,000 Tech Jobs Gone in 2026. And It’s Only May.

Layoffs.fyi, a site that tracks publicly reported job cuts in the tech sector, documented more than 100,000 tech jobs cut globally in 2026 so far, with about 81,700 coming in Q1 alone, the highest quarterly figure since early 2023. Companies like Meta, PayPal, and Cloudflare have all announced large cuts in recent months.

As the Statista chart shows, this marks a sharp reversal from 2025, when cuts stayed between 27,000 and 37,000 per quarter. After two years of relative calm, the layoff wave is building again and trending toward the scale seen in the brutal 2023 correction, when over 160,000 jobs were cut in a single quarter.

Here’s what many get wrong about these layoffs. Companies aren’t cutting because they’re struggling. Many are profitable and their stocks are near highs. They’re cutting because AI is letting them do more with fewer people. This is a structural shift, not a cyclical one. The jobs being eliminated today may not come back even in a recovery.

This creates the paradox that explains the two economies I described earlier. Companies building and deploying AI are thriving. Workers being replaced by AI tools (in coding, content creation, data analysis, customer service) are under pressure in ways that won’t resolve just because the stock market is up.

The gap between the AI beneficiaries and the AI-displaced is widening. And it will continue to widen before it narrows.

For investors, this is a bullish signal for AI infrastructure and productivity software companies. For workers in affected roles, the urgency to upskill has never been higher. If your income comes from a role that AI can replicate, treat the threat as real. Start building a hedge today, whether that means developing new skills, building income outside your job, or investing more in the companies driving the trend.

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4. America’s Offices Hit a Record 21% Vacancy Rate.

Moody’s reported that US office vacancies reached a record 21% in the first quarter of 2026, across 79 major markets nationwide, up from 17% before the pandemic in 2020. Put plainly: 1 in 5 American office buildings is now sitting empty.

The mechanics are familiar. Remote and hybrid work became permanent for a large share of the workforce. Companies downsized into smaller, higher-quality “Class A” spaces. And uncertainty about how AI will reshape future workforce needs has made businesses reluctant to sign new long-term office leases.

But here’s the financial risk still flying under the radar. A large share of the loans on regional bank balance sheets are backed by commercial real estate. As office values fall (vacancy and value move in opposite directions), those loans become riskier. Banks are already writing down some of these assets. Long office leases of 5 to 10 years mean the stress is still working through the system. As more leases expire and companies walk away or downsize, the pressure on landlords, and by extension on their lenders, will intensify.

The retail real estate parallel is useful. Brick-and-mortar stores spent a decade adapting to e-commerce or dying. The office market is in the early innings of the same transformation. Premium Class A spaces in top locations will survive and even thrive. Mid-tier commodity office buildings face a longer, harder road.

For investors in real estate: avoid office-heavy REITs right now. Look instead at industrial REITs (warehouses, logistics), data center REITs, and multifamily housing, which are benefiting from the opposite trend.

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5. The Iran War Just Caused a Global Plastic Shortage.

S&P Global raised its oil price outlook this week, and Chemical Market Analytics reported that the Iran war has created what industry experts call a “historic” crisis in global plastic markets, with polyethylene (the core material in most packaging) hitting its highest price in nearly 4 years.

The chain of events: the Iran war disrupted Strait of Hormuz shipping, which cut off Middle Eastern petrochemical feedstocks. Middle Eastern producers supplied nearly a quarter of global sulfur output before the conflict. With that supply cut off, plastic manufacturing costs surged. Every $10 increase in oil adds roughly 5 cents per pound to polyethylene costs. At scale, across billions of units of packaging, that adds up fast.

Procter & Gamble warned that if oil holds near $100 per barrel, it could face an extra $1B in annual after-tax costs, enough to wipe out its expected earnings growth for the year. PepsiCo, Coca-Cola, and Unilever face the same pressure.

The winners are North American plastic producers like Dow ($DOW) and LyondellBasell ($LYB). They use natural gas-derived feedstocks, which are far cheaper than the oil-based feedstocks that overseas rivals depend on. Both stocks have climbed to 52-week highs since the war began.

The investing angle is clear. Consumer goods companies with heavy plastic packaging exposure face real margin pressure. North American chemical producers are well-positioned. And for anyone reading inflation as temporary, this packaging crisis is a reminder that supply chain shocks can be both long-lasting and far-reaching.

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💡 Andrew’s Analysis & Advice:

We’re watching an economy pulled in two directions at once. The AI economy is generating record-breaking launches (DRAM, Cerebras) and the kind of structural shifts that define whole decades. The real economy is dealing with frozen housing, record office vacancies, a packaging crisis, rising layoffs, and a veteran economist warning of a 30% market drop.

The Iran war is the hidden thread connecting nearly all of it. It drove oil above $100. Oil drove energy, food, and packaging inflation. That inflation is making the Fed’s job nearly impossible, paralyzing rate decisions. And that uncertainty is both validating the bear case (recession, rate hikes, market correction) and accelerating the bull case (companies racing to cut costs through AI before conditions worsen further). Layoffs are rising because AI is being used to offset the cost pressures the war is creating. Office vacancies are rising because hybrid work, accelerated by AI-based productivity tools, made large offices redundant. The plastic crisis is adding yet another layer of cost inflation on top of the energy and food shocks already underway.

My advice:

1. Own AI exposure, but with discipline. Real revenue, real margins, defensible technology. Not 100x earnings speculation.

2. Protect purchasing power. Short-term Treasuries, I-bonds, real assets. Inflation at 3.8% is real and persistent.

3. Be selective in consumer and consumer goods stocks. Pricing power separates the winners from the losers in inflationary periods.

4. Review regional bank exposure. Record office vacancies and commercial real estate stress are building pressure on bank loan portfolios. If you hold regional bank stocks, check their commercial real estate exposure.

5. Keep dry powder. If Shilling is right and markets pull back 30%, the investors who stayed disciplined and kept cash will be the ones buying quality at a discount. History rewards those who are ready when others aren’t.

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Hope you’re enjoying this newsletter! It takes a week to research and write, so please help support our journalism and:

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Part II - Investing Research

3. Insider Trading

4. Top Stocks Right Now

5. Today’s Trade

6. Market Sentiment (Fear & Greed Analysis)

7. Macro Technical Analysis & Predictions

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(3) Insider Trades (from Billionaires, Politicians, and CEOs):

When people with deep knowledge, such as politicians who set policy, executives who run the company, or legendary investors, put their own money on the line, pay attention.

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1) On Holding AG $ONON

Co-CEO Caspar Felix Coppetti and Co-CEO David Michael Allemann (both) Filed: May 15, 2026 | Total per Co-CEO: $2,198,100 | Combined Total: $4,396,200

On Holding is the Swiss athletic footwear and apparel company behind the iconic cloud-cushion running shoe. It’s one of the fastest-growing premium sports brands in the world, carving out market share from Nike and Adidas through a combination of performance innovation and brand prestige.

Both Co-CEOs buying the exact same number of shares on the exact same day is a rare coordinated signal. Together they put over $4.4M of their own money into the stock. Synchronized insider buying at this level from the two people who run the company usually means one thing: they believe the stock is meaningfully undervalued relative to where the business is headed.

On has been expanding into tennis, trail running, hiking, and apparel while deepening its US and Asian market presence. The brand’s premium positioning gives it real pricing power in an inflationary environment. And its ongoing ambassador relationship with Roger Federer continues to generate outsized global brand awareness. If On maintains its growth trajectory and expands margins as the business scales, the company looks very different 3 to 5 years from now. The coordinated insider purchase this week adds conviction to that long-term thesis.

👉 For daily insights, follow me on X /Twitter; Instagram Threads; Facebook; or BlueSky (and turn on notifications)

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(4) Top Stocks Right Now

1) Cerebras Systems CB 0.00%↑ RS up +68.2% on Thursday 5/14

Cerebras Systems, the AI chipmaker, had one of the most explosive IPO debuts in recent memory, soaring 68.2% on its first day of trading on the Nasdaq on Thursday. Shares priced at $185, above their projected range, opened at $350, and closed at $311, giving the company a market cap of roughly $67B. The deal raised over $5.5B, making it the largest IPO of the past 12 months, surpassing CoreWeave’s debut.

Cerebras makes a chip called the Wafer Scale Engine, one of the largest chips ever built, designed for AI training and inference workloads. The company has been moving from hardware sales to a cloud services model, where customers pay to use Cerebras chips remotely. A major deal with OpenAI for computing capacity anchors that cloud strategy.

As a brand-new public company, Cerebras has no prior trading history to reference, but the investor demand tells the story. It priced at roughly 15x projected 2026 revenue, a richer multiple than Nvidia, reflecting how much appetite exists for AI infrastructure alternatives to the dominant chip player.

The risks are real. Cerebras is unprofitable and burning cash. Nvidia’s scale advantages are enormous. And growing into a $67B valuation without generating profits will not go smoothly. But for investors who believe we’re in the early innings of an AI infrastructure buildout, $CBRS is now a publicly traded way to bet on that thesis.

2) POET Technologies $POET up +43.2% on Thursday 5/14

POET Technologies, a semiconductor company focused on optical networking, surged 43.2% on Thursday after announcing a deal worth up to $500M. POET designs chips that move data using light rather than electrical signals, a technology that is increasingly critical as AI data centers need to move massive amounts of data between processors and memory.

Optical networking is one of the less-covered but increasingly essential parts of AI infrastructure. As AI models get larger and data centers get denser, the bottleneck shifts from raw computation to data movement. POET’s technology addresses exactly that bottleneck.

As a smaller-cap company, $POET carries more volatility than large-cap AI plays. But a $500M deal is a material catalyst for a company of its size, and it signals real demand from customers with large budgets. If data center buildout continues at its current pace, companies like POET that solve the data movement problem sit at a critical point in the value chain.

3) Ouster $OUST up +26.1% on Wednesday 5/13

Ouster, a maker of lidar sensors used in autonomous vehicles and robotics, jumped 26.1% on Wednesday after its sensors were qualified for Nvidia’s new self-driving platform. Lidar sensors use laser pulses to create precise 3D maps of the environment around a vehicle or robot, and qualification for Nvidia’s autonomous driving ecosystem is a major commercial validation.

Nvidia’s self-driving platform is becoming an industry standard that automakers and robotics companies build on top of, similar to how Android became the standard for smartphones. Getting qualified means Ouster’s sensors will likely be specified into a wide range of autonomous programs across the industry.

Autonomous vehicles and robotics remain a decade-long opportunity rather than a near-term certainty. But Ouster’s Nvidia qualification is exactly the kind of partnership that can transform a company’s revenue trajectory over multiple years as these systems scale. Investors willing to hold through the development phase are the ones who tend to capture the biggest returns in transformational technology categories.

4) Wolfspeed $WOLF up +16.5% on Wednesday 5/13

Wolfspeed, a maker of silicon carbide semiconductor chips used in electric vehicles and industrial power systems, surged 16.5% on Wednesday after Citrini Research released a note highlighting the company’s growth potential and the structural demand for silicon carbide in EV powertrains and renewable energy systems.

Silicon carbide chips handle high voltages and temperatures better than standard silicon chips, making them ideal for EV power electronics, solar inverters, and industrial motors. Wolfspeed (formerly Cree) has spent years and billions of dollars building out silicon carbide manufacturing capacity, making it one of the leading independent suppliers of the technology.

The EV and clean energy transition represents a decade-long demand driver for silicon carbide, even as near-term EV demand has been volatile. Wolfspeed’s challenge is converting its manufacturing investments into profitable revenue before its cash position becomes a constraint. Over 10 years, Wolfspeed has been one of the more interesting transformations in the semiconductor space, and the long-term thesis hinges on whether the silicon carbide market grows as projected. If it does, $WOLF looks undervalued at today’s prices relative to the addressable market it’s chasing.

5) Nebius $NBIS up +15.7% on Wednesday 5/13

Nebius, an AI cloud computing company that provides GPU-powered infrastructure to AI developers, jumped 15.7% on Wednesday after reporting a first-quarter earnings beat and raising its contracted power targets for 2026.

Nebius is the international technology business that was spun out of Yandex (Russia’s dominant internet company) when Yandex restructured its global operations. Now based in the Netherlands and operating as an independent AI infrastructure provider, Nebius offers the raw GPU computing capacity that AI companies need to train and run their models.

A first-quarter beat paired with raised guidance is the gold standard of near-term catalysts, especially in AI infrastructure where investors are hungry for proof that demand is turning into real revenue. Long-term, AI cloud computing is one of the highest-growth segments in tech, though competition from AWS, Google Cloud, and Microsoft Azure is intense. Nebius’ edge is its focus specifically on AI workloads and its ability to move fast as a leaner operator.

👉 For daily insights, follow me on X /Twitter; Instagram Threads; Facebook; or BlueSky, and turn on notifications!

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(5) Today’s Trade

The options market is where the smartest traders place their biggest bets. I monitor options flow activity daily.

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Wolverine World Wide $WWW

Wolverine World Wide is a footwear company behind brands like Wolverine, Merrell, Saucony, and Keds. The company has been in the middle of a turnaround, working to cut debt and streamline its brand portfolio after years of overexpansion.

After Wolverine reported a “beat and raise” quarter (beating earnings expectations and raising its forward guidance), something notable happened in the options market.

The call-to-put ratio came in at approximately 40:1, meaning for every put option (a bet the stock falls) purchased, roughly 40 call options (bets the stock rises) were bought. That is an extreme level of bullish positioning.

Option traders targeted the June 18th $15.00 call. Volume on this contract hit 3,941, compared to open interest of just 57 contracts beforehand. That means nearly all of this activity represents fresh new positions, not traders closing existing bets. The contracts were bought in mid-sized blocks (625, 625, 481, 478, 466, and similar sizes) all around the same time and all at the ask price of $0.85 each. Buying at the ask means buyers were willing to pay market price rather than waiting for a better fill, a sign of real directional conviction, not passive hedging.

My view: Bullish. Here’s why. A 40:1 call-to-put ratio after a beat-and-raise quarter isn’t random. The coordinated block buying at the ask, from multiple accounts at nearly the same time, suggests someone with real conviction made a deliberate bet that $WWW will trade above $15 by June 18th. At $0.85 each, the options are inexpensive, which means the risk-reward is attractive if the stock keeps its momentum.

Wolverine is also in the middle of a broader turnaround. Footwear companies with strong brand portfolios and improving fundamentals tend to re-rate in a meaningful way once the market starts to believe the turnaround is real. If this earnings beat shifts sentiment and analyst coverage starts to improve, the stock could see follow-through buying over the next several weeks.

From a bigger-picture lens, even in a difficult consumer environment, footwear brands with premium positioning and loyal customer bases tend to hold up better than pure commodity retailers. Merrell and Saucony, in particular, serve active lifestyle consumers who tend to prioritize their gear spending even when cutting elsewhere.

👉 For daily insights, follow me on X /Twitter; Instagram Threads; Facebook; or BlueSky (and turn on notifications)

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(6) Market Sentiment (Fear & Greed Analysis)

How do you cut through the noise and understand what’s really happening? The secret is to look at the feelings people, the actions of investors, and the facts about the economy.

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Current Reading: 63 (Greed)

The Fear & Greed Index sits at 63, firmly in “Greed” territory, but it has pulled back from 66 just one week ago. The trend is cooling slightly, not accelerating. That’s actually a healthy sign. Markets that stay in “Extreme Greed” for too long become fragile when sentiment finally shifts.

The more important story is why the index sits at 63 despite genuinely difficult macro conditions: inflation at 3.8%, real wages falling, record office vacancies, a new untested Fed chair, and rising recession calls from credible economists. The fact that the market remains in “Greed” territory tells you something about the gap between investor confidence and underlying economic reality. That gap doesn’t stay wide forever.

The seven components inside the index paint a split picture. On the greedy side: market momentum is “Extreme Greed,” options positioning shows traders buying far more calls than puts (also “Extreme Greed”), and stocks are outperforming bonds by a wide margin (”Extreme Greed” in safe haven demand).

On the fearful side: stock price breadth (how many stocks are actually participating in the rally, not just the biggest names) sits in “Fear,” and junk bond demand also reads “Fear.”

The other two, market volatility and stock price strength, are “Neutral.”

This divergence between the headline reading and the internals matters. When the index shows “Greed” but breadth and junk bond spreads are showing “Fear,” it means the rally is narrow. A handful of large-cap stocks (mostly AI and tech) are carrying the market higher while the average stock underneath is struggling. That’s a less healthy market than the top-line number suggests.

The macro context ties directly into this reading. The Iran war is keeping energy prices elevated and inflation persistent. The new Fed chair inherits a stagflation risk that rate cuts can’t solve and rate hikes could make worse. And Gary Shilling’s 30% correction call, while it may prove early, reflects valuation metrics that are genuinely stretched. All of this creates the conditions for a fast sentiment shift if the right data point hits at the wrong moment.

A reading in the mid-60s is not a screaming sell signal. Markets can stay greedy for months. But it’s a signal to be selective rather than aggressive. The investors who tend to regret decisions most are those who pile in when the index pushes into the 70s and 80s. At 63, there’s room for the market to run, but also room for a fast pullback if the macro deteriorates.

The rule that never changes: be greedy when others are fearful, cautious when others are greedy. At 63, we’re solidly in the “cautious” zone.

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(7) Macro Technical Analysis

Technical levels matter because they’re where millions of traders have programmed their buy and sell orders. When key levels break, algorithms kick in and magnify moves.

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1) S&P 500 SPY 0.00%↑

The trend for the S&P 500 is positive in the short term.

The S&P 500 remains in a rising trend channel in the short term, a sign of sustained upward momentum. There is no visible overhead resistance in the chart, meaning no clear technical ceiling is blocking further gains.

2) Tech Stocks QQQ 0.00%↑

The trend for the Nasdaq-100 is positive in the short term, with a notable caution flag.

The Nasdaq-100 broke through the floor of its rising trend channel in the short term. That’s a mild warning, not a reversal signal. It means the pace of gains may be slowing, or the index is entering a more sideways phase before its next move.

3) Bitcoin $BTC

The trend for Bitcoin is neutral in the short term.

Bitcoin has broken through the floor of its rising trend channel in the short term, mirroring the Nasdaq-100’s action, and signaling a loss of near-term upward momentum. Support sits at 74,200 and resistance is at 81,500. Bitcoin is currently pinned between those two levels, moving sideways while the market decides its next direction.

The short-term signal is Neutral (Hold). The medium-term signal is Negative, meaning the trend has turned lower on a weeks-long basis. The long-term signal is Positive, meaning the longer-term bull case is intact but under pressure.

Bitcoin tends to function as a risk-appetite barometer. When investors take risk, it rises. When fear spikes, it falls. The current neutral-to-negative short-term setup is consistent with the mixed macro picture: markets haven’t broken down, but the easy gains may be behind us for now.

4) Macro Analysis (what this all means)

The S&P 500, the Nasdaq-100, and Bitcoin are all sending the same message in slightly different ways. The market is still in an uptrend. But momentum is fading.

Negative RSI divergence across both major equity indexes, Bitcoin losing its trend channel floor, and the breadth weakness inside the Fear & Greed index all point in the same direction. The rally isn’t over, but it’s getting tired.

The macro picture adds important context. Hot inflation, a new Fed chair with limited good options, rising Treasury yields, record office vacancies, a packaging crisis, and a veteran economist calling for a 30% correction. That’s a lot of weight for a market running on fading momentum to carry. The technical setup is not a signal to panic out of positions. It is a signal to stop chasing and start being patient.

Watch these key levels. S&P 500 support at 7,130. Bitcoin support at 74,200. The Nasdaq-100 support at 24,700. If those levels hold on any pullback, the bull trend is intact. If they break, expect a faster move lower that could create real buying opportunities for investors who kept dry powder.

The Fear & Greed reading of 63, combined with fading technical momentum and a challenging macro backdrop, paints a clear picture. The best entries come to investors who wait for them.

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Part III - Tips & Advice

8. Advice, Lessons & Recommendations

9. Final Thoughts

10. Your Top Questions Answered

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(8) Advice, Lessons & Recommendations:

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1. The best investing decisions of the next 5 years will be made now, during the uncertainty. Every great market opportunity in history (2003, 2009, 2020) came packaged in headlines that looked terrifying at the time. The setup we're in right now, two opposing forces, fading momentum, stretched valuations, and a revolutionary technology buildout, is exactly where patient, prepared investors build long-term wealth.

2. The bond market tells you the truth before the stock market does. This is one of the most consistent patterns in financial history. Right now, junk bond demand is in "Fear" territory while equity markets show "Greed." When credit and equity markets diverge like this, credit is almost always right. Watch the 10-year Treasury yield weekly. At 4.60% and rising, it's already pushing mortgage rates, car loan rates, and credit card rates to painful levels.

3. Copper is the commodity that connects AI and clean energy. You can't build a data center or a solar farm without it. The simultaneous demand from both the AI buildout and the energy transition creates a structural supply squeeze that won't resolve quickly. Copper miners and materials ETFs belong in any long-term portfolio built for the next decade.

4. AI exposure belongs in your portfolio. But size matters. There's a difference between owning a diversified AI infrastructure play and chasing an unprofitable company trading at 100x earnings. Cerebras is exciting. But it's burning cash against Nvidia's enormous scale advantages. Own real revenue, real margins, defensible technology. Not just momentum.

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(9) Final Thoughts:

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There’s an old saying on Wall Street: markets climb a wall of worry.

Right now, that wall has never been higher. Inflation at 3.8%, a new Fed chair with limited good options, record office vacancies, a packaging crisis, a veteran economist calling for a 30% correction, and 100,000 tech jobs gone in five months. Yet the S&P 500 just hit an all-time high.

This is the wall of worry in real time. And the question every investor needs to answer is simple: which side of the wall do you want to be on?

The smart money uses these moments to build positions in quality assets at reasonable valuations. The reckless money chases the latest hot trend at the top of a cycle and wonders why they lost money when the inevitable correction came.

In my 20 years in finance, I’ve learned to recognize the difference. And every week, I try to share what I’m seeing so you can make better decisions with your own money.

That’s the whole purpose of this newsletter. Not to predict the future perfectly. Just to help you see what’s happening, understand why it matters, and know what to do about it.

If that’s valuable to you, share it with others who will benefit. And consider becoming a paid subscriber.

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(10) Your Questions Answered

Have a question? Comment below and I will answer it in the next issue!

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Q: Is it too late to invest in AI stocks?

Not at all. But be selective. The AI infrastructure buildout is early. We’re in the first few years of a decade-long transformation. The trap is confusing the real trend with the speculation around it. Companies with actual revenue, strong margins, and defensible technology (think data centers, chip infrastructure, enterprise software) still have a long runway. Companies trading at 100x earnings with no profit path are a different kind of bet. Own the picks-and-shovels companies, not just the headline names.

Q: Is the market in a bubble like 2000 or 2008?

A: Some parts are, some parts aren’t. The overall S&P 500 looks expensive by historical measures (the Shiller CAPE ratio is near dot-com era levels), but individual AI infrastructure companies like Cerebras are pricing in real revenue growth from a genuine technology shift. The difference is that in 2000, almost no internet companies had revenue. Today, AI companies have real customers paying real money. The risk isn’t a total collapse. It’s that specific sectors (AI chips, memory, speculative tech) are priced for perfection in an economy with real headwinds. Be selective. Own quality.

Q: Gary Shilling has been calling for a crash for years. Why should I listen now?

A: He’s been wrong on timing, not on framework. He correctly predicted the 2008 housing crash. The conditions he’s citing (stretched valuations, consumer exhaustion, frozen housing market, declining capital expenditures outside AI) are real and worsening. The question isn’t whether his framework is correct. It’s whether you position defensively enough to survive if he’s right, and opportunistically enough to profit if he’s early. Both can be true.

Q: What does Kevin Warsh becoming Fed chair mean for interest rates?

It’s complicated. Warsh wants lower rates. The President wants lower rates. But inflation at 3.8% and rising, combined with an oil shock from the Iran war, limits his options. He can’t cut rates when inflation is running this hot without risking an even bigger price spiral. And he can’t raise rates too aggressively without crushing a consumer that’s already stretched. The market is now pricing in zero cuts this year and a potential hike by year-end. Watch the next few CPI reports closely. If inflation hits 4.5% or higher as some economists predict, the pressure on Warsh to raise rates will be enormous.

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👋Last Words:

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