There's a battle between a good economy/better-than-expected earnings and shocks (private credit, AI, Iran). The strong fundamentals are winning, causing the market to revert to companies reporting good numbers.

The key is whether shocks negatively impact the economy and earnings. Oil isn't spiking much, private credit issues look like sloppy lending, not economic weakness, and software companies are rallying as they don't see disruption. This pushback against negative themes during a good economy is a great opportunity to find strong-earning companies with weak stocks.

Sentiment started the year frothy with universal bullishness. These shocks are healthy; they shake out weak holders and speculative stocks. Feels better about market returns now than when stocks were red-hot, which signaled a late-stage bull market.

Compares it to insider buying, a bullish sign. Agrees with Jamie Dimon that problems so far are due to a lack of due diligence/lending to fraudulent companies, not broad economic weakness leading to private credit defaults. This gives comfort that private credit issues won't derail the strong economy.

Yes, volatility is expected in the second year of the presidential cycle. The US escorting tankers in the Strait of Hormuz is because Trump cannot afford oil to go through the roof before the midterms, as cost-of-living is a big topic and he needs to get inflation down.