May 30, 2026 | Trading Desk Notes for May 30, 2026

Leading global equity indices hit new record highs

The S&P has closed higher for 9 consecutive weeks, up ~20% from the March lows.

The Nasdaq has also closed higher for 9 consecutive weeks, up ~32% from the March lows.

The Japanese Nikkei index is up ~31% from the March lows.

The South Korean ETF is up ~68% from the March lows.

The Eurostoxx 50 Index has rallied ~16% from the March lows but has not exceeded the February 2026 highs.

The Dow Jones World Index (heavily weighted toward US stocks) hit a record high this week, up ~14% from the March lows.

The Toronto Composite Index rallied to record highs this week, up ~12% from the March lows.

The S&P rally has been driven by big-cap tech stocks, with ~70% of the gains since the March lows coming from only 10 big-cap stocks. While the index is at a record high, only 21 individual stocks (~4% of the index) are at record highs. Breadth is narrow.

The BoA Fund Manager Survey found a record monthly jump in equity allocations.

While dividends have been increasing, share prices have been rising even faster, resulting in the S&P dividend yield falling to multi-decade lows. But who, other than Berkshire, buys stocks for the dividend?

Investors (if that term still applies) have been buying equity call options at an unprecedented rate lately, which means dealers (who sell the options) have to buy stocks at an unprecedented rate to hedge their gamma risk, creating a spot-up, VOL-up environment.

My perspective is that the powerful rally in equity indices has been primarily driven by earnings, earnings expectations, momentum, and FOMO, with only a modest amount of “lift” from expectations that the war in Iran is winding down. I also think that the equity rally is “over-leveraged” and vulnerable to a reversal.

I think the oil market and the bond market are much more “sensitive” than the equity market to the progress of negotiations between the US and Iran, and I think that all markets are “over-estimating” the chances that a deal will be reached (if a deal is reached at all) that will look anything like the deal Trump has been describing.

I’m pessimistic about a “big beautiful deal” because hardliners in both the US and Iran (and especially in Iran) have uncompromising and opposing views on the key issues of uranium and control of the SoH, and they definitely don’t trust each other. Yes, negotiations are better than escalation, but as my friend Stephen Innes says, “Diplomacy needs to deliver barrels, not just headlines.”

The clock is ticking in the energy markets

Here’s a chart by Robin Brooks showing spot prices for Brent, Dubai and WTI crude oil prices YTD.

Prices spiked as the Iran war got underway, retreated from the highs as “fear of shortages” subsided (as governments around the world released strategic reserves), and have continued to decline as the fighting has more or less stopped, and as “peace negotiations” have been begun.

Front-month Brent futures reached highs of ~$120 in March and April and are now in the $90 – $95 range, down ~$15 from last week’s highs, but still up ~50% from January’s lows. The decline in Brent oil prices in May is the result of a reduction in the “risk premium” as fighting subsided and negotiations began.

Front-month US wholesale gasoline futures are down ~18% from the April highs, but are up ~80% from January lows.

Senior officials at both Exxon and Chevron warned this week that inventory drawdowns were becoming a problem that could quickly get worse if the SoH remained closed. A number of analysts, including Helima Croft at RBC, also made similar statements.

Natural gas prices have been rising. Here’s a link to a great piece by Robert Bryce on the rise in natural gas, and here’s a link to another analyst I like, Riko Kardamow, about Germany’s “own goal” over natural gas.

Interest rates

US long bond yields spiked to 19-year highs last week as higher energy costs began to show up across global economies and markets experienced a wave of concern over inflationary fiscal and monetary policies. Bond yields fell back from last week’s highs, but will likely remain “more sensitive” than stocks to high energy prices because of the inflation pass-through effect.

Quote of the Week: “Before bonds can become a safe haven again, inflation and rates likely need to get even worse first.” Charlie McElligott, Normura Research

I think it’s safe to say that the Fed has given up its “aspirations” to get inflation back below 2%.

Currencies

The US Dollar is stronger due to capital flows into US stocks, likely higher US s/t interest rates, and a flight to safety in wartime, but currency moves have been very modest relative to moves in the stock and energy markets.

The Japanese Yen spiked on intervention in late April, with official reports indicating that they bought ~$70 billion worth of Yen. The Yen has declined for most of May, as have most of the G10 currencies. COT reports show speculators’ net short positioning is now back to July 2024 levels, just before a massive intervention program caused a 12% rally in the Yen over a two-month period.

My short-term trading

I shorted the S&P twice early in the week and was stopped for tiny losses both times.

I still hold (nearly worthless) Yen calls that expire this coming week. If the Japanese authorities intervene again, I’ve got a sell order waiting that will get me out of the trade with a tiny profit.

I bought the CAD on Thursday (blue ellipse) as it rallied back from 6-week lows. I held the position into the weekend.

I bought WTI crude oil on Friday (blue ellipse), thinking that the nearly $20 decline in risk premium over the last 2 weeks, on hopes of a “deal” between the US and Iran, was not going to deliver any physical barrels. I’ve got an initial $5 stop.

Thoughts on trading

I have very little patience with losing trades.

The Barney report

Barney and I spend a lot of time together. I take him out for a minimum of three walks a day, totalling at least two hours, and when I’m at my desk, he’s usually in the room with me. I think of him as the happiest dog in the world, but every once in a while, his serious/thoughtful side shows up.

Here’s a link to a short Facebook video of a Golden Retriever.

Listen to Mike Campbell and me discuss markets

On this morning’s Moneytalks show, Mike and I discussed how negotiations between the USA and Iran don’t mean much to the stock market but are a very big deal for the oil market and, to a lesser extent, the bond market. You can listen to the entire show here. My spot with Mike starts around the 1-hour-4-minute mark.

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Victor Adair retired from the Canadian brokerage business in 2020 after 44 years and is no longer licensed to provide investment advice. Nothing on this website is investment advice for anyone about anything.

Victor Adair May 30th, 2026

Posted In: Victor Adair Blog

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