07.05.2026 - Blind Madness
Financial markets are increasingly betting on a resolution to the Middle East crisis. Several European equity indices gained more than 2% yesterday, marking one of the strongest sessions of the year. Meanwhile, Wall Street continues to push higher, driven by strong enthusiasm around AI, solid first-quarter earnings, and growing optimism that tensions with Iran may ease.
Markets: euphoria
Equities: higher
Bonds: yields slightly lower - Japan 10y at 2.48%, US 10y at 4.34%, US 30y at 4.92%
Commodities: oiI prices continued to fall - USD 92/barrel and Brent at USD 98/barrel.
Precious metals higher again- silver above USD 80/oz and gold above USD 4’700/ozCurrencies: USD softer
Cryptos: sideways - Bitcoin at USD 80k
Volatility: The VIX light uptick above 17
My View: Markets are once again trading on hope. Investors appear willing to look through geopolitical risks, rising long-term bond yields, and still elevated inflation pressures. Instead, the focus remains on growth expectations, liquidity, and the belief that central banks will eventually support markets again if conditions deteriorate.
I experienced the Dot-com Bubble, when almost any stock linked to e-commerce surged 10–20% in a single day, only to repeat the same move again the next day. I see very similar patterns now in stocks that merely have a potential future connection to AI.
The market increasingly prices possibilities instead of realistic future cash flows. Billions continue to flow into companies where the long-term monetization path remains highly uncertain.
The question is how long this blind investment cycle, what I would call a phase of market madness, can continue before investors start focusing again on valuations, profitability, and economic reality.
At the same time, markets appear extremely relaxed regarding geopolitical risks. The Middle East conflict is far from solved. There is one person in the WH desperately looking for such an end. However, Iran regime does not seem to be willing to give up and accept the rules set.
Energy supply disruptions remain a major unresolved issue. It is given, that this will have an impact on the economy with a certain delay. Yet investors continue to behave as if the next positive headline will permanently remove all downside risks.
History shows that periods of euphoria often last longer than expected, but they also tend to end very abruptly.
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