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* FIEND'S SUPERBEAR MARKET REPORT *

* April 20, 2026 *

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* e-mail: fiendbear@fiendbear.com *

* web address: http://www.fiendbear.com *

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Fiend Commentary
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The Market Is Trading the Happy Ending Before It Arrives

The market’s latest rally is saying something pretty bold: whatever the war did to energy, shipping, and nerves, investors think the worst either passed or will be papered over quickly enough not to matter. That is why the S&P 500 finished above 7,100, the Nasdaq closed near 24,500, and the Dow pushed back toward 49,500 even though oil is still elevated and the Strait story is not truly resolved. In the latest trade, Brent has been hovering around the high‑$80s to low‑$90s, well below the panic highs, but still far above the levels that felt comfortable just a few months ago.

What Wall Street appears to be seeing is not “peace,” but containment. Investors are effectively betting that shipping disruptions fade, reserve releases and diplomacy buy enough time, and the conflict never becomes the kind of prolonged supply shock that forces oil to stay near crisis levels. That belief has powered a rush back into U.S. equities: Reuters reported almost $23 billion in net inflows into U.S. stocks after the early-April ceasefire phase, reversing much of the earlier money that had fled into “there are real alternatives” trades overseas. That is a powerful signal of sentiment, but it is still sentiment—not proof.

The part that doesn’t fit neatly is the dollar and the balance sheet. The dollar has remained soft, even as stocks pushed to records, which usually tells you some investors still doubt the long-run policy mix. And the Fed’s balance sheet is quietly moving higher again: the latest H.4.1 still shows total assets around $6.706 trillion, reflecting the end of QT and the ongoing “reserve management” purchases that officials insist are not QE. Whatever label one prefers, markets tend to hear the same thing: the tightening era is over, and liquidity is no longer being drained the way it was.

That is why this rally can coexist with a lot of obvious discomfort. Consumer sentiment hit a record low in April, according to Reuters’ coverage of the Michigan survey, and inflation expectations jumped. So the average household is not acting like “everything is fixed.” The market, however, is acting like soft growth will eventually matter more than sticky inflation—and that if push comes to shove, the Fed will bend before the economy breaks. That is the essential bullish bet of 2026 so far.

The trouble is that inflation may not cooperate. New York Fed President John Williams said the war was already lifting inflation pressures, and that matters because energy shocks do not need to last forever to leave a mark. If oil stays merely “high enough” instead of crashing back to last year’s levels, it can still lift shipping costs, diesel, and consumer prices enough to delay cuts or at least make them uglier politically. So the market may be front-running a rescue that the Fed itself cannot yet honestly promise.

So what is really going on? The cleanest answer is probably the least glamorous one: short covering, passive inflows, buy-the-dip conditioning, and a widespread belief that U.S. markets still have no real alternative. That can keep prices rising for a long time. But if the war drags, if oil stops falling, or if the next inflation prints remind everyone that “temporary” price shocks have a nasty habit of hanging around, then this rally starts to look less like confidence and more like borrowed faith. Markets can absolutely keep celebrating. The question is whether they are celebrating a real turn—or simply the hope that someone else will solve the hard part later.

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