THE DEAN’S LIST: When the Ships Finally Moved

What a fortnight. Two weeks ago, all three indexes were at records. Last Wednesday, we got a hot inflation print and fresh strikes on Iran. This Monday, stocks and bonds are rallying, while oil is collapsing, as the war appears to be ending. If your stomach is in a knot, that’s normal.

Before you decide the market is either saved or doomed, pull up the Single-Digit Millionaire portfolio and look at how it is balanced across stocks, cash, gold, and a little crypto. A portfolio built for both directions does not flinch in a fortnight like this. It just keeps working.

Dean’s note:
Two weeks ago, when oil was spiking and everyone was sure it was headed past $100, I kept repeating the same boring line. Watch ships, not statements. This week, the ships won the argument.

Over the weekend, the United States and Iran apparently reached an agreement to reopen the Strait of Hormuz and lift the blockade. The formal signing is set for Friday. As the wise man always says, we will see. Oil, which was near $97 two weeks ago, is now falling below $80, a three-month low. The fear premium that drove half of this market's panic is draining out in real time.

Here is why that matters for everything else. The scary 4.2% inflation number that rattled everyone last Wednesday was, in large part, an oil number. Gasoline alone jumped 7% in a single month. Strip out energy, and the underlying trend actually cooled. So if oil keeps falling, the inflation fever should break with it. The thing that scared the market is now starting to fix it.

But I am not popping any champagne yet, and neither should you. A deal announced is not a deal signed, and a deal signed is not oil actually flowing. Supply chains do not heal overnight, and whether this peace holds is a fair question. Watch ships, not statements, still applies. The statement is that there is peace. The ships will tell us if it is real.

And in the middle of all this, the Federal Reserve meets on Wednesday. It is Kevin Warsh's first meeting as Chair. So exciting! A week ago, the market was terrified that he might be pushed to raise rates. We didn’t think so. The falling oil quietly took that fear off the table. Expect a hold. We don’t know what else he will say, so we will be glued to our screens. He’s no dummy, and he understands the assignment. He’s here to support markets and the economy first, then the Trump agenda. He’s not the guy to take the punch bowl away. Or is he? Let’s see.

So here is where I land. The biggest risk hanging over this market for two weeks keeps getting smaller. The easy risk-on money got its bounce. Ten companies account for 40% of the market. SpaceX at $2+ trillion just makes things more concentrated, not less. Stay invested, because the trend and the falling oil both point up. Stay selective, because the gains are concentrated and the headlines can still turn. And remember who was right about the ships.

A week that went straight down the middle and came roaring back. Here is how it played out.

Monday (June 8): Stocks bounced off the prior Friday's rout, led by the same chips that got crushed. Micron jumped into double digits. But oil surged toward $97 dollars after Israel and Iran traded missiles over the weekend. One fear eased, another flared.

Tuesday (June 9): The bounce ran out of gas. Tech couldn't hold its gains; the Dow eked out a small rise, and the Nasdaq slipped. The whole market was holding its breath for Wednesday's inflation number.

Wednesday (June 10): The ugly day. Inflation came in at 4.2%, the highest in three years, driven almost entirely by the spike at the gas pump. The same morning, the President threatened harder strikes after an American helicopter was shot down over the Strait of Hormuz. The S&P and Nasdaq sank.

Thursday (June 11): A violent rebound in the other direction. Word spread that an Iran peace deal was close, one that would reopen the Strait and let oil flow again. The Dow rocketed up 930 points. The S&P jumped 1.75% and the Nasdaq 2.54%, with small caps leading. Europe's central bank raised rates the same day, becoming the first to address oil-driven inflation. A hot wholesale-price report barely dented the mood.

Friday (June 12): SpaceX went public in the biggest stock offering in history. It raised about $85 billion dollars, jumped 19% on its first day, and closed at more than $2 trillion. The broader market gyrated but finished the week higher, on growing hope that the Iran deal was real. We don’t have much of a view on SpaceX aside from believing investors can get a better deal on shares later this year or next. But its ability to rally post-IPO is a sign this market has legs and enough animal spirits to make sitting on the sidelines a bad deal.

Monday (June 15): Over the weekend, it got done. The U.S. and Iran agreed to reopen the Strait of Hormuz and lift the blockade, with a signing set for Friday in Switzerland. Markets opened with stocks and bonds up, the dollar down, and oil falling more than 4%.

Last Wednesday's inflation report set off a panic. Prices rose 4.2% over the past year, the highest reading in three years, and the Dow fell 953 points. But the panic missed the most important detail in the report.

Almost all of the jump came from energy. Gasoline alone rose 7% in a single month because oil was spiking due to the war. Now strip out food and energy and look at the core. Core prices rose just 0.2% on the month, below what economists expected. The part of inflation not tied to oil actually cooled. One of the biggest banks on Wall Street called this reading the high point for inflation this cycle.

Dean’s note:
This is why I kept telling you to watch the oil, not the headline. The scary 4.2% was an oil number wearing an inflation costume. And now that oil is collapsing on the peace deal, that number should come down with it over the next month or two. The fever and the cure turned out to be the same thing.

When the next inflation print comes in cooler, the same crowd that panicked last week will call it a miracle. It is not a miracle. It is just the gas pump doing math in reverse.

On Wednesday, the Federal Reserve announces its rate decision, and it is Kevin Warsh's first meeting as Chair. Just a week ago, with inflation at a three-year high, the fear was real that he could be pushed to raise rates as his European colleagues have done. The weekend changed the math. With oil falling and the war winding down, the case for a hike is fading fast.

Almost nobody expects the Fed to move rates this week. The real event is the dot plot, the chart that shows where each official thinks rates are headed. That, plus Warsh's tone in his first press conference, will tell you far more than the decision itself. 

Dean’s note:
Do not trade the decision. The decision is a hold, and everybody knows it. If Warsh sounds calm and drops the talk of hikes, this market has room to keep healing. If he sounds worried, expect another bout of the whipsaw we have lived with for two weeks. Either way, I like our positioning going into this meeting. You do not have to guess when you are not over your skis.

On Friday, SpaceX went public, and it was a spectacle. The company raised about $85 billion dollars, the largest stock offering in history, jumped 19% on its first day, and closed at more than $2 trillion dollars. On day one, it became one of the most valuable companies in the world.

Here is the part worth noticing under the fireworks. As money poured into SpaceX, the smaller space stocks got gutted to pay for it. One well-known space-tourism name fell 34% the same day. And for all its brilliance, SpaceX still loses billions of dollars a year, and plenty of sober analysts question whether it is really worth $2+ trillion. It is also the first of a wave. Anthropic and OpenAI are filing to go public right behind it.

Dean’s note:
A remarkable company and a frothy debut can both be true at the same time. The crowd stampeded, the smaller names got drained to fund the giant, and a business losing billions is suddenly worth more than almost any company on earth. Offerings like this are built to be sold to you, not handed to you.

I am happy to watch this one trade for a few quarters before I form an opinion. There is no prize for being first into a crowded room. I don’t necessarily feel this way about Anthropic or OpenAI. But SpaceX feels very much like the early internet. Its time will come in the next bull market. The vision will become reality, and retail investors will be rewarded. Just not right now. 

Here is a number that should sit in the back of your mind through all the good news. By early this week, just 10 companies accounted for nearly 40% of the S&P 500. Every one of them is tied to the AI story. Nearly half of the market's expected earnings growth this year comes from the technology sector alone.

That concentration is wonderful on the way up. It is also exactly why a single disappointing earnings report, like Broadcom's last week, can knock a trillion dollars off the board in an afternoon. When the market leans this hard on a handful of names telling the same story, its health rides on those few names continuing to deliver.

Dean’s note:
This is the quiet risk nobody puts on a magazine cover. I am not telling you to avoid the leaders. I am telling you not to let them become your whole portfolio just because they have been winning. The cheapest insurance in investing is diversification, and it is never cheaper than when everyone has decided they do not need it. Own the winners. Just do not bet the farm that ten of them are right forever.

Stay invested. Stay selective. And remember who was right about the ships.

A fortnight that took us from records to below 50,000 on the Dow and back, capped by an Iran peace deal and the biggest IPO in history. Here is what I am holding onto.

• Watch ships, not statements, just paid off. The U.S. and Iran reached a deal to reopen the Strait of Hormuz, oil is falling toward 83 dollars, and the fear premium that drove half this market's panic is draining out. The signing is on Friday. Enjoy the relief, but watch the cargo, not the press release.

• The 4.2% inflation scare was mostly an oil scare. Gas rose 7% over the past month. Core prices cooled. With oil now collapsing, the inflation fever should break over the next month or two. The thing that scared the market is the thing now fixing it.

• Warsh's first Fed meeting lands on Wednesday. A hold is expected. The dot plot and his tone are the real signals, not the decision. The falling oil quietly took the rate-hike threat off the table. Trade the tone, if you trade at all.

• SpaceX is public, and it is the first of a wave. The biggest IPO ever, up 19% on day one, worth more than 2 trillion, and still losing money. Anthropic and OpenAI are right behind it. Remarkable companies, frothy moment. New offerings are built to be sold to you.

• Ten stocks are now forty percent of the market, all of them AI. That is great on the way up and unforgiving on the way down. It is also why one Broadcom report could erase a trillion dollars last week. Own the winners. Do not let them become your whole book.

• Keep contributing to your 401(k). The limit is $24,500, and if you are 60 to 63, you get a super catch-up that takes you to $35,750. The investors who win over decades are the ones who keep showing up, in the scary weeks and the calm ones alike.

Here is where I land. The single biggest risk hanging over this market for two weeks just got a lot smaller over one weekend, and that is real, and it is good. But the bounce has already done most of its work, the deal still has to hold on Friday, and the market is leaning harder on a handful of names than it has in years. Stay invested, because the trend and the falling oil both point up. Stay selective, because the easy gains are crowded and the headlines can still turn on a dime.

Stay calm. Stay invested. Stay selective. And the next time a wall of scary headlines tells you the world is ending, remember that two weeks ago, oil was going to 100 and the market was falling apart. This week, the ships are moving, and the screens are green. The noise changes by the day. The discipline should not.

- Dean

P.S. The number that sticks with me this week is 83. Two weeks ago, Brent crude was near 97 dollars, and every headline was sure it was headed past 100. Today it is near 83 and falling, because the ships are about to move again through the Strait of Hormuz. I have been saying it in this letter for weeks. Watch ships, not statements. The statements screamed war for a month. The ships just settled the argument in a weekend. Write that one down for the next crisis, because there is always a next crisis.

And one more thought. SpaceX going public on Friday was not a one-off. It was the opening act. Anthropic filed to go public at the start of the month, and OpenAI followed a week later, reportedly targeting a debut this fall at a valuation north of $ 800 billion. If both land before year's end, 2026 may be remembered as the year the public market finally had to put a price on artificial intelligence itself. That is a staggering amount of brand-new stock about to hit the market, and the cash to buy it has to come from somewhere. It will not move things tomorrow. But over the next year, where all that new equity gets funded from matters more than any single earnings report. Keep an eye on it.

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This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.