Nick Hodge,
Publisher
May 12, 2026
Inflation is surging.
Monthly CPI for April came in at 3.81%. It’s on its way to +4% as base metals, agricultural products, and energy remain significantly elevated since the President of the United States started dropping bombs on Iran.
Yesterday morning, that same President said he was going to sign executive orders to lower tariffs on beef in an attempt to improve affordability.
By the afternoon, he took it back in an abrupt 180 that has become par for the Mar-a-Lago administration course.
Watching markets instead of the malicious mouths of politicians is the only way to get real info in this Bizarro World.
And though it’s hard to believe, markets have brushed off war and the resultant inflation like a politician brushes off a scandal.
As covered in the May issue of Foundational Profits, the S&P 500 (SPX), NASDAQ (IXIC), and Rusell 2000 (RTY) indices are all at all-time highs, and are up 7%, 10%, and 15%, respectively, for the year.
The stock markets of several other major economies are also at or near multi-year or all-time highs, including China (000001), Germany (DAX), Japan (NIKKEI), and South Korea (KOSPI). South Korea, with its heavy tech and industrial exposure, is up 65% so far in 2026.
Tech stocks have come roaring from behind like Golden Tempo in the Kentucky Derby. In last month’s issue, the Information Technology sector of the S&P was up less than 3% year-to-date. Now it’s up more than 15%.
Energy (XLE), while still leading as of this writing, is starting to roll over, being pulled lower by crude oil prices (WTI) that are down more than 12% over the past month.
Yes, inflation is rising.
But growth has so far hung in there on multiple fronts, and that’s what the market is clinging to for now. That will likely shift later this year as the oil shock works its way through the system, but expect the asset price upside to continue through mid-summer.
The slowdown is coming, it’s just been postponed.
As it stands, the economy is running hotter in the short term than people think.
Oil prices are surging because of geopolitical disruptions, but instead of hurting the economy immediately, the market sees it as adding fuel to an already hot economy. There’s so much money and liquidity in the system that businesses and consumers are still spending, so rising energy prices are boosting inflation without yet killing growth.
Examples?
US GDP for Q1 came in at 2%, an acceleration from the paltry 0.5% growth in Q4 2025. It will likely be a similar to slightly higher number for Q2 before beginning to contract in Q3.
Jobless claims also fell off a cliff to end April, coming in at 189,000, the lowest weekly level in more than 55 years.
Adding fuel to the fire has been a US Dollar Index (DXY) that has done nothing but go down since the end of March. This has given a tailwind to many assets, including stocks, commodities, and cryptocurrencies.
Commodities, for their part, have broken out to levels not seen since 2008 as evidenced by the CRB Commodity Index. I have told you before that we are in a commodity supercycle that started with the uncertainty of supply brought on by Covid and the resultant inflation from vast government stimulus. It ran hard until 2022, and then took a few years to catch its breath as all cycles do. An economy that’s running hot, coupled with new war-induced supply fears, has now kicked off the next leg of the cycle.
It’s not just one commodity. The CRB Commodity Index includes 19 commodities across Energy, Softs, Metals, Agriculture, and Livestock:
- Energy (39%): Crude Oil, Natural Gas, Heating Oil, RBOB Gasoline.
- Soft Commodities (21%): Sugar, Cotton, Coffee, Cocoa, Orange Juice.
- Metals (20%): Gold, Silver, Copper, Aluminum, Nickel.
- Agriculture/Produce (13%): Soybeans, Wheat, Corn.
- Livestock (7%): Live Cattle, Lean Hogs.
It’s been mainly oil and the soft/agricultural commodities that have been driving the index of late, with cotton leading the pack, but also wheat, soybeans, corn, live cattle all outperforming copper, silver and gold over the past three months.
Later this year, perhaps as we ring in the nation’s 250th birthday, the inflation will eventually temper growth, and it will be precious metals that regain the lead.
If you’ve been offside in these fast-moving markets, now is the perfect time to get positioned for the next move in gold.
Call it like you see it,
Nick Hodge
Publisher, Bizarro World