The Week in Charts (5/7/26)

View the video of this post here.

---

This week’s post is sponsored by YCharts.

By early May, advisors are already fielding mid-year client questions: How are things tracking? What should we change?

YCharts helps you answer in real time with quick portfolio analysis, performance comparisons, and client-ready charts – without rebuilding everything from scratch.

It can mean the difference between preparing for hours and being ready in minutes.

Learn more and get 20% off your initial YCharts Professional subscription (new customers only).

---

The most important charts and themes in markets and investing…

1) Money-Making Machines

Earnings are pouring in and investors have been absolutely ecstatic with the results, pushing the S&P 500 up to its 14th all-time high of the year and above 7,300 for the first time.

The S&P 500 is now up 8% on the year, a return that is more than double the average year at this point (+4%). This is a stunning turnaround from where it stood at the end of March (down 7%).

What’s driving this unrelenting surge higher?

An unrelenting move higher in corporate earnings with expectations of more gains to come. The S&P 500 is on pace to grow its quarterly earnings by 27% year-over-year, which would be the strongest growth rate since Q4 2021. And net profit margins are on pace to surge to another record high at 14.7% (the previous record high was 13.2% in Q4 2025). For the full year 2026 earnings are now expected to growth 22%, a significant uptick from expectations only a month ago (+18%).

Driving the lion’s share of these gains have been the biggest technology companies, which continue to be money-making machines:

• Google Q1 Revenues increased 22% over the last year to a new record high of $110 billion. Net Income increased 81% YoY to a record $63 billion. Cloud revenue grew 63% YoY to a record $20 billion. Operating profit margins moved up to 36%, the highest since 2010.

• Apple revenues increased 17% over the last year to a new Q1 record of $111 billion. Net Income grew 19% year-over-year to new Q1 record of $30 billion. Gross margins increased to 49% (from 47% a year ago), the highest margin in company history.

• Amazon revenues increased 17% over the last year to a new Q1 record of $182 billion. Net Income increased 77% YoY to $30 billion, the highest quarterly profit in company history. Operating margins increased to a record 13.4% from 12.0% a year ago.

• Microsoft’sQ1 revenues increased 18% over the last year to a new record high of $83 billion. Net income grew 23% YoY to a new Q1 record of $32 billion. Azure and cloud services revenue increased 40% YoY, beating estimates.

• Meta revenues increased 33% over the last year to a new Q1 record of $56.3 billion. Net income increased 61% YoY to a new record high of $26.8 billion. Net profit margin of 47.5% was a new all-time high.

2) Ignoring Iran?

While the stock market has been ignoring the ongoing stalemate in Iran, the bond market has not.

The 30-Year Treasury yield moved above 5% earlier this week, not far from its highest level in the past 20 years.

What’s driving this?

Rising gas prices and rising inflation expectations.

Gas prices in the US have moved up to $4.56 per gallon, their highest level since July 2022. The 53% spike over the last 10 weeks ($2.98/gallon to $4.56/gallon) is the biggest we’ve seen in the past 30 years.

Market-based inflation expectations have moved up to 2.72% (5-year breakevens), their highest level since August 2022.

If a peace deal is announced and the Strait of Hormuz is reopened, we would likely see a rapid reversal as the prices of many commodities would plummet. But the longer this drags on, the more impact it will have on global inflation rates which are already on the rise.

3) Where Inflation Is Made

The Fed expanded the money supply by nearly $9 trillion under Jerome Powell’s tenure and the US National Debt increased by $18 trillion.

And inflation has averaged >4% per year over the past 6 years, more than double the Fed’s target rate.

Powell’s explanation? It was nearly all due to rolling “supply shocks” over which the Fed has no control.

The truth: this inflation was made in Washington as it always is – from too much government borrowing/spending and too much government creation of money.

4) A Divided Fed

Kevin Warsh is set to take over as Fed Chairman next week when Jerome Powell’s term expires.

What awaits him is likely to be the most divided Fed we’ve seen in a long time.

The 4 dissents in the last FOMC meeting were the most for any meeting since 1992.

One of those dissents came from Stephen Miran, a Trump appointee that has been calling for further interest rate cuts. And the other 3 dissents (Beth Hammack, Neel Kashkari, and Lorie Logan) wanted to remove the “easing bias” from the Fed statement.

With Jerome Powell announcing he will remain on the board of governors as a voting member (saying he will only leave when the DOJ investigation of him is “well and truly over”), that’s one less vote for the dovish camp (President Trump would have been able to appoint a new governor had Powell stepped down). And while Powell said he plans to “keep a low profile,” it seems unlikely that he wouldn’t push back against continued attacks on Fed independence with the White House calling for immediate rate cuts.

What is the market pricing in?

No change in the Fed Funds Rate at all this year with a slightly higher probability of a rate hike by year end than a rate cut.

If Kevin Warsh pushes back against the market and argues the Fed should recommence with rate cuts in June despite all evidence pointing to higher inflationary pressures, his independence will immediately be questioned. Whether he’s willing to risk that remains to be seen.

5) A Few Interesting Stats…

a) 0.1% of the accounts on Polymarket have earned 67% of the profits.

b) South Korean stocks have more than tripled over the last 16 months, trouncing every other country.

c) Berkshire Hathaway’s Cash Pile soared to a record $397 billion in the 1st Quarter, more than tripling over the last 3 years.

d) Apple has bought back $732 billion in stock over the past 10 years, which is greater than the market cap of 488 companies in the S&P 500.

e) The combined revenues of the Big 4 US tech companies hit a record $1.94 trillion over last 12 months. That’s larger than the GDP of all but 13 countries.

---

And that’s it for this week. Thanks for reading and have a great rest of the week!

Every week I do a video breaking down the most important charts and themes in markets and investing. Subscribe to our YouTube channel HERE for the latest content.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.