Last month's stock market performance has left even the most cynical analysts scratching their heads. Markets just capped off their best May in 35 years—a rally so ridiculous it feels like someone's playing a practical joke on the bears.
The S&P 500 surged despite... well, despite reality. Or perhaps because we've all collectively decided that reality is optional in 2023's investment landscape.
Let me set the scene: Last week began with investors breathing a collective sigh of relief as Trump seemingly pumped the brakes on his threatened tariff extravaganza. Markets rallied accordingly—nothing gets Wall Street more excited than the temporary absence of bad news, right?
Then, with timing that would make a sitcom writer jealous, a court reversed the decision. Trump—never one to let judicial proceedings have the last word—jumped on Truth Social to announce that "CHINA VIOLATED THE AGREEMENT" (the caps lock apparently lending presidential gravitas to the declaration), and stocks promptly gave back some gains.
God, I've missed this dance. The market-moving social media declarations feel almost nostalgic now. Like finding an old, uncomfortable pair of shoes you forgot you owned but somehow still fit perfectly.
Two Markets, One Index
What's genuinely fascinating about our current situation isn't just the rally itself but how unevenly distributed the prosperity has become. We're essentially watching two completely different economies play out in real time: Big Tech and... Everyone Else.
The MAGS (Microsoft, Apple, Google, and—sigh—whatever we're calling Facebook these days) ETF jumped a staggering 11% in May. Meanwhile, most other sectors are white-knuckling modest gains and praying nobody notices they're underperforming.
I've started calling this the "Atlas Tech" phenomenon. A handful of gigantic companies are literally carrying the entire market on their shoulders like modern-day titans. When four or five corporations determine whether your 401(k) statement makes you smile or wince, can we really call it a "market" anymore? It's more like a small oligopoly with an extremely long tail of also-rans.
This concentration problem isn't new—I've been writing about it since 2018—but it's intensifying in ways that should make us uncomfortable. When market performance diverges this dramatically from economic reality, something's gotta give. Either the rally broadens out or we're due for a correction. History suggests the latter is more common, but history didn't have to contend with AI hype cycles and trillion-dollar market caps.
The Week Ahead: Jobs, More Jobs, and Trump's Twitter Fingers
Looking forward, this week's economic calendar features the usual suspects. Tuesday through Thursday brings job openings, manufacturing data, and earnings from tech darlings like Crowdstrike, Broadcom, and Lululemon (because nothing says "economic confidence" like $128 yoga pants).
But let's be honest—the main event is Friday's jobs report.
The consensus expectation of +130,000 jobs seems... fine? Not great, not terrible. What's more interesting is how binary market reactions have become. If the number comes in hot, yields will spike as the Fed's "higher for longer" narrative gains traction. If it's cold, recession fears will light up faster than a Christmas tree.
Finding that Goldilocks zone—just enough job growth to avoid recession concerns but not enough to freak out the Fed—seems increasingly like hunting for unicorns. Possible in theory, rarely spotted in practice.
Tariff Drama: Act II (or is it Act VII?)
Trump's tariff threats represent a genuine wild card for markets that have become, frankly, a bit complacent about policy risk. Having covered trade policy through the first Trump administration (those were long years, folks), I'm fascinated by how markets are trying to price in two conflicting narratives simultaneously:
- These tariff threats are just negotiating tactics that won't materialize in their most extreme form
- A significant trade disruption is coming that will fundamentally reshape global supply chains
These can't both be true, yet investors seem to be hedging their bets rather than picking a side. This suggests either remarkable sophistication or profound confusion—probably both, depending on which trading desk you visit.
For regular investors, this creates a nearly impossible forecasting environment. You're essentially being asked to predict not just economic fundamentals but also the outcome of political theater with an unpredictable lead actor who might change the script mid-scene.
No wonder options traders are having a field day—volatility is the only certainty in this environment. As for the rest of us, maybe there's wisdom in just holding quality companies and viewing the drama as entertaining background noise rather than actionable intelligence.
After all, in a market caught between "to the moon" and "collapse incoming," the most rational strategy might be to assume neither extreme represents our likely destination.
Look, I've been covering markets long enough to know that when everyone's convinced of one outcome, something else entirely usually happens. That's the beauty—and the terror—of financial markets in the age of social media, AI, and political unpredictability.
So buckle up for June. After May's performance, we're either due for a reality check... or an even more improbable continuation of the rally that defies explanation.
Either way, it'll make for good copy.
