Things are lining up in favor of the market bulls. How to proceed from here

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Things are lining up in favor of the market bulls. How to proceed from here Published Mon, Jun 15 20261:41 PM EDTUpdated 5 Min Ago Zev Fima@zevfima Stock market bulls are eating well to kick off a new week of trading. Oil is nosediving Monday on news of a memorandum of understanding to end the U.S.-Iran war and reopen the vital Strait of Hormuz. That's improving the inflation outlook and sending bond yields lower — just in time for Federal Reserve Chairman Kevin Warsh 's first policy meeting leading the central bank this week. Plus, SpaceX's massive initial public offering went well, soothing concerns about a deluge of new stock supply pulling down the whole market. The ripple effects could be setting us up for a very nice back half to the year — provided Hormuz officially reopens to oil exports and stays open. Monday's across-the-board stock rally, led by the Nasdaq up 3%, is being driven by optimism that will happen. We'll need to see the follow-through eventually. For now, this landscape Monday is exactly why we've argued that leaving the market — despite all the doom and gloom we hear on a daily basis — is simply too risky . If the U.S and Iran ink a durable peace agreement, it's hard not to be optimistic about the stock market. Sure, the valuation is a bit elevated, with the S & P 500 trading at about 21 times forward earnings, but if oil exports via the Strait of Hormuz are about to restart, then crude prices are set to come down. Of course, they likely won't immediately retreat to where they were before the Feb. 28 conflict began (in the mid-to-upper $60s a barrel on WTI crude ) because restarting a critical global oil supply line takes some time. But for a market more concerned about the direction of the commodity price, given it speaks to the future path of inflation and therefore interest rates, the update is definitely positive. @CL.1 YTD mountain WTI crude's year to date performance. It's certainly going to make Warsh's job a bit easier this week, when he hosts his first Federal Open Markets Committee meeting press conference on Wednesday afternoon. Lower oil prices on the back of easing geopolitical tensions should ensure he doesn't need to sound hawkish. Instead, he has cover to stress that the Fed's policy stance is appropriate for now and argue that lower inflation is on the way. The CME FedWatch Tool is still pricing in at least one rate hike in 2026. However, those odds will follow oil and bond yields — both of which are set up to favor the bulls. Of course, should bond yields come down and stay down — particularly on the long end of the curve (think the 10-year or longer-dated Treasuries ) — then that could help catalyze demand in the housing market. As the CEO of Lennar emphasized on the homebuilder's Friday earnings call , interest rates are a major factor in the homebuying process due to the impact on monthly mortgage payments. However, the price at the gas pump and the cost of electricity to heat or cool the home also weigh on consumer minds when making large purchase decisions. Housing tends to punch its weight economically, so any boost here certainly bodes well for the bull market. This is why Club name Home Depot is rallying Monday. One might argue the stock's over 1.5% advance seems relatively muted considering the potential benefits. The counter is that we've been fooled before on a potential rebound in the housing market, so until we see a real shift in rate expectations, it's understandable that the Home Depot buyers aren't out in full force. The successful SpaceX debut on Friday is the cherry on top. Most of the selling pressure to raise funds for SpaceX positions is likely behind us at this point — and while we've had a few rocky days in the market over the past week and a half, particularly for some hot artificial intelligence trade names, the bull market hasn't crumbled. We're not fully out of the woods on market risks, so we cannot simply throw all caution to the wind and buy up anything and everything. On the geopolitical side, the U.S and Iran have only agreed to extend a ceasefire for 60 days while they work on hammering out an official peace settlement. Thorny issues around Hormuz traffic and Iran's nuclear ambitions need to be worked out. Even if oil starts flowing through Hormuz again, we should expect there to be a risk premium on the waterway. Additionally, peace in the Middle East is tied to what happens between Israel and Hezbollah in Lebanon, so in reality, an end to the war may hang on much more than just Washington and Tehran. There may also be plenty more stock supply coming to market. For starters, Alphabet's at-the-money equity offering doesn't commence until the third quarter, and another megacap tech company could follow in its footsteps and sell equity to fun