The market looks like a teenager with an unlimited credit card: euphoric, spending nonstop, and refusing to fall. At the same time, there is a sign of relief for inflation, Intel forgot what gravity is, expectations for Big Tech increased, and Vanguard ETFs scared more than a few.
For now, here is what you need to know:
The market refuses to fall… Because of FOMAI?
Lower inflation? The PPI rises less than expected.
INTELesting what is happening with Intel.
The busiest (and most volatile) week of earnings season arrives.
The Vanguard split becomes effective.
1️⃣ The Market Refuses to Fall… Because of FOMAI?
The US stock market closed another week at an all-time high despite the conflict with Iran, rising layoffs (many related to AI efficiency), a 4% inflation projection for 2026, and the upcoming change of Fed chair.
All of these factors (excluding 2020) have been predecessors of historic stock market crashes. The market knows this, yet the stock market keeps rising and rising. 🤔 What is happening?
My opinion: The market doesn't want to miss the massive structural change that is happening thanks to AI. While current risks have justified an immediate exit from risk, this time it seems riskier to stay on the sidelines. It is suffering from FOMAI (Fear of Missing AI). 🤖
💡 What you need to know: Yes, it is true that we might be living through a shift more important than the introduction of the iPhone (which impacted almost every industry), and bigger than the Internet (which changed the entire world), but there is no denying that other risks still exist.
In this video I share 3 of those risks that can impact the stock market, and that is what we are paying the most attention to. 👇
2️⃣ Less inflation? The PPI rises less than expected
Although official March data was released last week, this week analysts finished digesting the impact of the Producer Price Index (PPI), which showed an increase of just 0.5%. This is music to the Fed's ears.
However, analysts' expectations remain the same: expecting the Fed not to make a rate cut, all due to the increase in energy costs (due to the war with Iran).
💡 What you need to know: A lower-than-expected PPI usually indicates a decrease in inflationary pressures, which increases the probability that the Fed will cut rates. However, the Fed doesn't base its decisions solely on the PPI, as it must consider other data and the overall economic picture. Given the significant increase in energy costs, a Fed rate cut seems unlikely anytime soon.
3️⃣ INTELesting what is happening with Intel
By the time you are reading this, Intel has appreciated more than 109% so far this year. From Thursday to Friday the stock shot up 24%, its best performance in decades. 📈
And you might ask, what happened?… (let's answer in chorus): Artificial Intelligence.
Intel spent years on the sidelines of the AI race watching everyone else win, while dealing with delays in its factories and waiting for a major customer for its chip manufacturing business. The market celebrated signs of renewed growth thanks to AI demand since much of the current growth is from its data center business.
💡 What you need to know: It seems like the projections of most investment banks for 2026 are being fulfilled: The AI revolution is not a "winner-takes-all" game, it is a game where everyone who participates can win.
How long will this last? We'll have to ask an AI chat.
4️⃣ The busiest (and most volatile) week of earnings season arrives
We are entering the busiest week of the Q1 earnings season. More than a third of the S&P 500 is going to publish its results, including 5 you might know: Alphabet (GOOGL), Meta (META), Amazon (AMZN), Microsoft (MSFT), and Apple (AAPL).
This will be the first report since 4 giants announced capital expenditures that together exceed $650,000 million. The market will want to confirm several things just to maintain current valuations: revenue growth, consistency in profits and, most importantly, the monetization of artificial intelligence.
While many investors are buying into the narrative that Alphabet, Amazon, Meta, and Microsoft will remain leaders in their businesses, very few are convinced that their capital expenditure on AI infrastructure will yield significant results.
Personally, I don't think these reports are going to be very revealing. I would be surprised if they show a return that satisfies investor patience. Even so, I have no idea what to expect from the market reaction.
💡 What you need to know: These 4 companies are being the main engine of the AI revolution. They are no longer the thermometer of the sector, they are the glass, the mercury, the fever, and the cure. This report will only be one of several that will measure the health of the revolution.
5️⃣ The Vanguard split takes effect
This week the stock splits of several popular Vanguard ETFs took effect (the split that was made is shown in parentheses):
VUG: Vanguard Growth ETF (6:1)
MGK: Vanguard Mega Cap Growth ETF (5:1)
VOOG: Vanguard S&P 500 Growth ETF (6:1)
VO: Vanguard Mid-Cap ETF (4:1)
VGT: Vanguard Information Technology ETF (8:1)
A stock split does not affect the value of the ETF, it simply artificially decreases the stock price while increasing the number of shares. Effectively, the value remains intact but the price per share goes down.
It's like exchanging a $100 bill for five $20 bills, you have more bills but all together they are still worth $100.
Many times stock splits are done with the intention of making funds more affordable for the average investor, but most of the time it is done to improve the liquidity profile of these funds, reducing the spread and increasing trading volume.
💡 What you need to know: Splits do not change the fundamental value of your investment, but they often generate positive sentiment by attracting new buyers who prefer lower nominal prices. VGT, for example, went from costing over $800 per share to just over $100.
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