04 May 4th May 2026

Markets Year to Date

Oil is at $125. 30yr bonds have just gone over 5%. Inflation is up to 3.5%. Any interest rate cuts have been put off to next year.

Yet the market makes new all-time highs every week.

It pays to be a bull. In fact, I don’t think I have ever seen a bear make money. I have seen their accounts get obliterated though. Stay long and prosper. It’s as easy as that.

Some people have trouble understanding how markets can be at all time highs now. The reason is easy. AI. Take a look at the difference (above) between the performance so far of the Nasdaq (lots of AI) and Australia (No AI).

We have entered the next phase of the AI story. One where real world uses and profits are becoming more clear. Agentic AI will change things. And it will also continue to get better. That means more compute power and energy will be needed.

It is still safe to stick with the semi-conductor manufactures but software companies continue to come under pressure.

The good news is it isn’t just the Tech companies that are driving this market. Gains are across the board and margin expansion is the key. Profit margin is an underrated measure and worth repeating again this week.

This graph is from FactSet.

This reporting season has been stellar and analysts are rushing to increase their predictions. So it makes sense that stocks should be at all time highs.

In April, the Nasdaq saw its largest monthly rise since 2002. Intel (INTC) shares more than doubled in the chipmakers best month in its 55 year history.

Alphabet (GOOGL) had its best month since 2004, climbing 34% on strong earnings numbers. But Meta fell 10%. The difference – investors are separating companies into those that they can see a direct improvement in revenue against AI spend (Alphabet) and those where they can’t (META).

Apple is finally interesting again. For years now I have not been an Apple fan because in the 15 years that Tim Cook has run the show, the company has failed to produce any new real products. I was not a Cook believer. But what I missed was what he did do right. He might have failed with innovation, but he succeeded in efficiency and profitability. He took the accountants way to grow a company.

He has been replaced by John Ternus. Ternus is an engineer by trade so I am hoping we will see Apple get back to its roots and stun the world with new products once more. This is one to watch.

Oil

The Strait remains closed. Presumably not much Oil is getting through. The Chinese must be upset because 45% of it goes to them. Meanwhile the US is exporting 6million extra barrels of oil a day. At elevated prices.

Every war is really about money. Follow the money and find why it is happening.

The longer it remains closed the bigger a problem it will become. In another 10 days or so things could get really interesting. Because Iran will soon run out of storage capacity.

Once you get an oil well going it becomes hard to stop. And if you do stop it, it becomes very hard to restart. Things like changes in gas and water levels start affecting the well. The longer it is stopped for the worse it gets.

Normally, the oil is pumped up from the well and sent to storage tanks. From there it is pumped onto ships. The wells pumping are offset by the ships leaving. But when the ships are not there to take the oil away the storage tanks just fill up. At some point Iran might be forced to stop pumping as they cannot store any more. Then they will have a problem.

I do wonder if this is what the US is waiting for. Just sitting back until Iran are really in a hole.

So, it is possible Iranian Oil is disrupted for quite some time. Then add in the stories of mines floating around the Strait and you can see why Oil stays higher for longer.

A higher Oil price will get companies more interested in drilling for more Oil. Then they will need Oil Service companies.

Buying these service companies is a leveraged bet on Oil. These guys don’t need the Oil price to stay high or go higher like the producers do. They just need companies to start spending money on the sector.

The sector has really started to move. Last week I mentioned an ETF, OIH, as an easy way to gain exposure. But here are some names you could look at for direct exposure

• HLX – Helix Energy Solutions
• TDW – Tidewater
• BORR – Borr Drilling
• XPRO – Expro Group Holdings

Warning

Stock values can go down as well as up. It is possible to lose 100% of your investment in a stock. Any advice given by Capital 19 is general advice only and does not take your personal circumstances into account and might not be suitable for you.