THE DEAN’S LIST: The Week That Didn't Break

Dean’s note:
This week threw a lot at markets. Iran tensions. A Supreme Court ruling on tariffs. Fed minutes that spooked investors. And you know what? The market shrugged. The S&P 500 ended up about 1%. The Magnificent Seven bounced back. Bonds barely moved.

Here's what that tells me: when markets can absorb bad news and still go up, the underlying trend is strong. That doesn't mean we're out of the woods. Iran is a wildcard. Inflation ticked higher. The Fed is divided. But for now, the foundation is holding. The lesson? Don't let headlines drive your decisions. The market has a way of handling drama better than we do.

A busy week with big headlines. Here's what actually mattered:

Monday–Tuesday: Iran dominated the news. The U.S. sent two aircraft carriers to the region. Iran closed the Strait of Hormuz briefly for military drills. Oil jumped. Gold pushed toward $5,000. But stocks mostly held steady as talks continued in Geneva.

Wednesday: The Fed released minutes from its January meeting. Surprise: several officials discussed the possibility of raising rates if inflation stays sticky. Markets dipped but recovered. The Mag 7 started climbing back.

Thursday: Oil hit a 6-month high as Trump gave Iran a 10-day deadline to make a deal. Geopolitical risk was at its highest point in months. Yet stocks only fell modestly.

Friday: The Supreme Court struck down Trump's tariff mechanism. Big headlines. But markets actually went up. The S&P 500 gained 0.7%. Why? Because markets had already priced in the uncertainty and gridlock in Washington is good for stocks.

Everyone is watching Iran. The U.S. has its largest military buildup in the region since 2003. Trump gave Tehran a 10-day deadline to cut a nuclear deal. Iran briefly closed the Strait of Hormuz where 20% of the world's oil flows every day. 

The worst-case scenario? A conflict that disrupts oil supplies and sends prices spiking. Some analysts see $90 oil or higher if things escalate. That would mean higher gas prices, higher inflation, and a Fed that can't cut rates. Not a scenario Trump can tolerate for long.

Dean’s note:
Here's my honest take: nobody knows what will happen with Iran. Not the experts, not the markets, not me. But here's what I do know: repositioning your portfolio based on geopolitical guesses rarely works.

Even if there's a conflict, history suggests the effects on markets are usually short-lived. Recall Iraq, Afghanistan, even last year's strikes on Iranian nuclear sites. Markets panicked, then recovered. If you have a diversified portfolio, stay the course. Don't make permanent decisions based on temporary headlines. Watch, but don't panic.

The Supreme Court ruled 6-3 that President Trump couldn't use the International Emergency Economic Powers Act to impose broad tariffs. Big headlines. But here's what actually happened: stocks went up. Bonds didn't budge. Why? Because markets discount headline probabilities ahead of time.

The ruling is forward-looking. It doesn't force refunds of tariffs already collected. And the administration immediately announced new tariffs under a different legal pathway. There's always Congress. The tariff story isn't over, but it’s been defanged to a degree.

Dean’s note:
Here's the insight most people missed: this ruling moves us closer to gridlock in Washington. And markets love gridlock. When the government is tied up fighting itself, it stops picking winners and losers.

That stability is good for business. That's good for your portfolio. The midterm elections later this year will likely establish even more gridlock. For long-term investors, that's not a bug, but a wonderful feature.

The Fed released minutes from its January meeting, and there was a surprise inside. Several officials said they'd support raising rates if inflation stays above 2%. This is the first time since 2023 that rate hikes have been seriously discussed.

Why does this matter? Because investors were expecting rate cuts. Now they're not so sure. The latest inflation data came in hotter than expected, partly blamed on tariffs. That's a red light for the Fed, no matter who the next chairman is.

Dean’s note:
I think we'll get through this. Inflation will cool again. But this throws a wrench into the timeline. The "monetary Gatorade" that some investors wanted heading into midterms may not come as fast as hoped.

If rates don't come down quickly, the dollar stays strong. That combination is not great for small cap and international stocks, which is why I'm comfortable with limited exposure to those areas right now. Think of this as a pause, not a reversal. Stay patient.

After weeks of bleeding, the Magnificent Seven had their best week of the year. The group averaged a 2.3% gain as investors rotated back into big tech. Meta announced it's buying millions of Nvidia chips. Bill Ackman increased his Amazon stake by 65%. The dip-buyers showed up.

Dean’s note:
Don't read too much into one week. The Mag 7 is still down about 5% for the year while the rest of the S&P 500 is roughly flat. That's actually healthy.

It means the market is broadening. The rotation we've been talking about, from concentrated mega-cap tech to the "other 490,” is still happening. One bounce doesn't change that. Nvidia earnings on February 25 will tell us more about where AI spending is headed. Mark your calendar.

This week tested investor nerves. Iran threats. Supreme Court drama. Fed hawkishness. And yet the market held. That resilience tells you something. When markets can absorb bad news and still move higher, the path of least resistance is up.

That doesn't mean we're out of danger. Iran could escalate. Inflation could stay sticky. The Fed could surprise us. But right now, the foundation is solid enough to handle the hits.

Here's my framework for the weeks ahead:

• Don't reposition your portfolio based on Iran. Geopolitical events rarely have lasting market effects. If you're diversified, stay diversified.

• Embrace gridlock. The Supreme Court ruling isn't bad news for markets. It's potentially good news. Less government action means more stability for business.

• Expect rate cuts to be delayed. The Fed is cautious. We can’t count on a summer rate cut until the data cooperates or Kevin Warsh’s mind-changing superpowers surprise us all.

• Watch Nvidia on February 25. This earnings report could set the tone for AI stocks and maybe the market, for weeks.

• Stay cautious on small caps and international stocks. A more hawkish Fed with a stronger dollar hurts both. Until rates come down, those areas face headwinds.

• Keep contributing to your 401(k). The $24,500 limit is in effect. If you're 60–63, you can put in $35,750 with the super catch-up. Use it.

The market survived a stress test this week. That's worth noticing. Stay zoomed out.

— Dean

P.S. Gold hitting $5,000 is a big psychological milestone. But remember: gold doesn't pay dividends. It doesn't grow earnings. It just sits there and looks shiny. It has a place in a portfolio as insurance, not as a growth engine. Don't chase the headline.

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