• Current read is 19 on the fear greed index vs 10 last week.

• I put this closer to 40. The market is at a healthy pullback so neutral.

• Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (consider buy puts/sell shares/take on less risk)

• I like to be bullish when there is extreme fear

• I like to be bearish when extreme greed.

• Opportunity is out there, just gotta find it!

• 30 year fixed mortgage rate up to 6.38% Today, vs 6.63% last week.

• 10 year treasury bond yield rose to 4.35% Today, vs 4.43% last week

• 2 year treasury bond yield rose to 3.85% Today, vs 3.92% last week.

• Bond yields decreased slightly on hopes the Iran conflict will be resolved soon. Expect more volatility!

• As I always say, interest rates are gravity!

• As interest rates/bond yields DECREASE, stocks become MORE attractive because bond yields go DOWN which makes the risk free bond look LESS attractive.

Upcoming Week Market Outlook | Week of Monday, April 6th

This Week's Scorecard:
S&P 500: +3.4% | QQQ: +4.0% | Dow: +3.0% | VIX: -22% | Oil: +11% | Gold: +3.5%

Last Week Recap

Markets bounced this week with the QQQ up 4% and VIX dropping 22%, but don't get too comfortable. This is still a volatile environment and we're not out of the woods yet.

The market went from being about 12% off the highs to recovering roughly 5% off the dip. That's a move a lot of people missed because they were waiting for the "smoke to clear." And that's the thing about markets. They're a pricing mechanism. By the time you read the headline that says "things are getting better," the market already priced it in two hours ago. You're buying at higher prices with less upside. That's what retail investors do and that's why they usually underperform.

The jobs report came in solid. 178K jobs added versus 65K expected. Unemployment ticked to 4.3% versus 4.4% expected. Yes, the labor market is softening and normalizing post-Covid, and AI is reducing some hiring needs. But a 4.3% unemployment rate is historically very low. Nothing to panic about.

Here's what matters most right now: the S&P 500 forward PE is somewhere around 19 to 20. That's basically fair value. We just came off back to back 20%+ years where valuations got stretched beyond what earnings growth justified. Now we're seeing a normal, healthy pullback to where things should be.

The EPS growth line and the actual S&P price line have converged. That's exactly what I said would happen. Earnings revisions briefly dipped but I called it in Discord on Liberation Day. I said the revisions would reverse and we'd see accelerated EPS growth. And that's exactly what happened. The data is showing roughly 13.2% year-over-year earnings growth expected. When you start at fair value, your future returns should approximate that earnings growth rate.

Two engines drive stock prices: PE expansion and EPS growth. Right now, EPS growth is full throttle. PE expansion is barely running at maybe 10% power because we're already at fair value. But as Q1 earnings roll in over the next month and a half, if the market stays flat, the PE will actually DROP because you're dividing the same price by higher earnings. That makes things cheaper. That's the setup.

Powell's speech was balanced. He acknowledged short-term inflation volatility from tariffs and oil but seemed confident that tariff inflation is mostly priced through and energy shocks tend to be short-lived. He's very bullish medium to long term. I agree 100%.

CPI is expected to come in at 3.3% next week, which is a jump from 2.4%. But Truflation data as of this week shows 1.34%, which tends to be a leading indicator. The CPI spike is likely transitory. Don't freak out if the number is hot. The underlying trend is still moving in the right direction.

The Iran Situation

I know we've been talking about this a lot in Discord. Here's where I stand.

Ships are still moving through the Strait of Hormuz. I would estimate roughly 35% of normal flow is getting through right now. It's not zero. Countries and businesses find solutions when there's this much money at stake.

Saudi Arabia's east-west pipeline is ramping up as an alternative route. And here's the thing people miss: Iran closing the Strait doesn't just punish the US and Israel. It punishes Saudi Arabia, UAE, Iraq, and even Iran itself as major oil producers. And it especially punishes the buyers on the other side like India, China, and Japan. There's too much incentive from too many powerful countries to keep this open. I believe backend deals are already happening to allow ships through with transponders off.

The Monday deadline for potentially hitting Iran's electric grid is the next catalyst. I think Trump backs off on that one but nobody knows for sure. He's negotiating the way he always does. Act unpredictable, make the other side think you're crazy, and get a deal done. If we do hit the energy infrastructure, expect a market dip. But even in a worst-case scenario, my thesis does not change. Five years from now, stocks are likely much higher.

I think we're within about 10-14% of the bottom. A $500 QQQ is my worst case and I don't think we actually get there, especially as Q1 earnings start making valuations more compelling. Expect higher lows and a Nike-swoosh recovery. Volatility both ways, but the direction over time is up.

This Upcoming Week

Next week is a data-heavy week. No major earnings yet, but Q1 earnings season fires up the following week with the banks and TSM. That's when things get really busy in Discord.

Monday April 6
Monitoring the Iran situation and Trump's deadline response.
ISM Services PMI — measures health of the services sector.

Tuesday April 7
Not much on the calendar. Levi Strauss reports earnings.

Wednesday April 8
Fed FOMC meeting minutes released — more detail on their latest rate discussion. Unlikely to move markets much but worth reading.
Crude oil inventories — important given current oil price volatility.
Earnings: Delta Airlines, Constellation Brands, Applied Digital.

Thursday April 9
Big day. Initial jobless claims, GDP, and the PCE index all drop.
PCE is the Fed's preferred inflation gauge. Expect some bumpiness here given oil prices. This will move markets.
Earnings: BlackBerry.

Friday April 10
CPI comes in — projected 3.3% versus 2.4% prior. This is a significant jump but likely reflects the oil shock and tariff pass-through that Truflation data suggests is already fading. Don't overreact.
Consumer sentiment also drops.
No earnings scheduled.

Final Thoughts

My bull/bear scale is at 7.0 right now. Fairly bullish but not pounding the table. The market is at fair value, earnings growth is strong, and the labor market is holding up. But there's real volatility ahead with Iran, inflation data, and the start of earnings season.

If you're not comfortable holding your portfolio through a year of market closure, you probably own the wrong things. Every holding in my portfolio, I'm fine with. Ratios are in check. Options all go out to 2027-2028. Shares have no expiration date. That's the advantage of being a long-term investor.

Q1 earnings start ripping the following week. Banks kick it off, TSM reports on the first Thursday, and it builds from there. We are going to have a LOT to cover in Discord and a lot of opportunities to capitalize on. The data will speak for itself.

Keep your ratios in check, keep your emotions in check, and we'll be fine.

As always, I am rooting for you and want nothing but wealth and health for you and your family!

-Brandon

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