Juggling Dynamite

Expectations for a resolution of blockages in the Strait of Hormuz have driven a risk-on rebound over the past 2 weeks. Since 1928, this is the first time the S&P has made new all-time highs within 11 days of falling 5-10% (Bespoke).

Under the hood, breadth was extremely weak, with just 12 companies making new 52-week highs. This feat is historically rare and cautionary, to say the least (highlighted by Scott Brown below).

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 pic.twitter.com/tSKV0sCpsn

— Scott Brown, CMT (@scottcharts) April 16, 2026

Some of us oldtimers lived through the 2000 tech bubble when adding .com to a company name was enough to excite speculative inflows before prices imploded. Yesterday, unprofitable shoe company Allbirds saw its stock leap 875% after it announced it was rebranding as an AI company. $BIRD shares were down 99% from their record high of more than $500 to around $2.50 before the announcement.

The jump back to $17 doesn’t restore $4bn in destroyed value nor investment prospects. Today, the stock has tumbled 28% back to $12.10. Whatever this is, it’s not investing.

Meanwhile, S&P Global Ratings has just joined a few of us forward-looking analysts in warning that:

Banks’ soar­ing expos­ure to hedge funds and trad­ing firms has cre­ated “an inher­ent fra­gil­ity” in fin­an­cial mar­kets, with record lever­age and the scale of fin­an­cing advanced by a hand­ful of big lenders adding to risks, S&P Global Rat­ings…

Record-low consumer sentiment (in grey below since 1980) suggests poor S&P 500 returns in the months ahead (as shown in blue below since 1980). Unless this time is different.
An inflated S&P 500 Shiller Price-to-Earnings ratio (below in black, inverted) has led to below-average annualized returns over the subsequent decade and has been near 40x (like now) only in 2022 and 2000 since 1950. Mean reversion is overdue, unless this time is different.This cycle also has the US Presidential Cycle to contend with, and the period between April and November has historically been negative for stock markets (as shown below, courtesy of ISABELNET).

🇺🇸 S&P 500

The S&P 500 is following the familiar midterm‑year script, with gains often building into mid‑April before the market starts to lose momentum as the election comes into view. That midterm effect shows up almost every cycle
👉 https://t.co/yIk7SZYp6p@NautilusCap $spx pic.twitter.com/s85Gq1cy33

— ISABELNET (@ISABELNET_SA) April 16, 2026

One way or another, we are about to find out if this time is different. We must all place our capital bets and live with the consequences.

As of January 2026, 3.1 million Canadian mortgages, or 52 percent of all outstanding, were due to renew by the end of 2027, according to the latest report from the Office of the Superintendent of Financial Institutions (OSFI).

“The near standstill in new condo activity and condo construction builds,” OSFI wrote, “is straining builders and has negative implications for the labour force they employ.”

President Donald Trump announced the United States would apply its own blockade of the Strait of Hormuz in retaliation for Iran’s de facto shutdown, which is now stretching into its seventh week. But, as Andrew Chang explains, responding this way to Iran’s control of 20 per cent of the world’s energy supply could pose several risks as the war in the Middle East escalates. Here is a direct video link.

We all hope for a speedy, lasting solution to the current Iranian conflict. An upside of the turmoil is that high fossil fuel prices intensify efforts to reduce dependence via greater fuel efficiency and substitution. In some countries, employees are being told to work from home more to reduce fuel demand. The transition to electric vehicles is also accelerating, see interest in EVs surges in Europe as fuel prices jump after Iran war:

Carwow, which links buyers with dealers in the UK, Spain and Germany, reported 20% to 30% increases in inquiries about electric cars in all three markets between February and March. In the UK, electric demand was up 23% over the month, while hybrid interest was up 19%.

“We’ve seen a shift away from internal combustion engines for quite a while now,” said Iain Read, Carwow’s content director. “But what we’ve seen with the war is it’s accelerating. Consumers are worrying about cost of living and wanting to keep their regular bills down.”

Figures last week from the Society of Motor Manufacturers and Traders (SMMT) showed that in March battery electric car registrations, based on sales several months before the break out of hostilities, totalled 86,120. This was a jump of 24.2% compared with the same month last year and a record high.

La Centrale, one of France’s largest car marketplaces, said that its searches for electric vehicles had increased by 160% between the start of March and the start of April.

No surprise then that the International Monetary Fund has downgraded its global economic outlook as the Mideast war drives an oil shock:

In its latest World Economic Outlook, published Tuesday, the IMF projects the global economy will grow 3.1 percent in 2026, 0.2 percentage points slower than its January forecast and below the 3.4 percent pace achieved in 2025. Global inflation is expected to average 4.4 percent in 2026, up from a projected 3.8 percent in the January forecast.

“Once again, the global economy is threatened with being thrown off course – this time by the outbreak of war in the Middle East at the end of February 2026,” the IMF said in the report, which was published as central bankers and finance officials from around the world gather in Washington for the biannual meeting of the IMF and World Bank.

Alongside its “reference forecast,” the IMF published two downside scenarios which see significantly worse outcomes for global GDP growth and inflation if the ceasefire between the United States, Israel and Iran breaks down and oil prices once again surge.

In the adverse scenario, where the benchmark price for a barrel of oil stays around US$100 through 2026 and US$75 in 2027, the IMF sees the global economy growing only 2.5 per cent this year, while global inflation would hit 5.4 per cent. In a severe scenario, where oil costs US$110 a barrel in 2026 and US$125 in 2027, global growth would slow to around 2 per cent. “This would mean a close call for a global recession,” the IMF said.

Although Canada is a major oil exporter, trade uncertainty and weakness in the domestic economy are ongoing headwinds that the IMF predicts will reduce Canada’s GDP growth to 1.5% in 2026 from 1.7% in 2025.

Imagine how much further ahead we would be if the resources being blown up in the Middle East were directed towards making us more resource-efficient. Nevertheless, high fuel costs are ultimately a cure for high costs, so the smarter energy evolution will proceed either way.