The eruption

Pow.

Within a half hour of trading opening this morning the Dow has added almost a thousand points. Bay Street was ahead about 1%, piling on to earlier gains. The S&P 500 had surged to a new all-time record high.

There’s more. Oil plunged in price – down an incredible 10% in less than an hour. Suddenly recent talk of $200-a-barrel crude turned into $80 reality. The US dollar dropped. The Canadian dollar gained. Inflation fears shrunk faster a dude in a lake. Gold added 2%. And bond yields sank.

The yield on benchmark Government of Canada five-year plopped 2%, and is back down to the 3% level. Mortgage rates may follow.

Bond yields tumble as oil plops, stocks fly

Source: Investing.com

This was the fastest recovery in decades for the world’s biggest equity market – a jump on the S&P or 9% in 11 trading days, sweeping it above 7,000 for the first time. Markets have swelled 12% since hitting bottom just over two weeks ago – at the end of March. Oil topped out at $119 and is now 32% cheaper. Outfits that consume massive amounts of fuel – like airlines – are seeing their stocks jump bigly.

Yeah, baby. It’s total risk-on for investors who are betting today that all the doomy, end-of-civilization-fakeJesus-nuke-Armageddon stuff is behind us.

As you likely heard, the Iranians said the Strait of Hormuz is cool for cruising again. Totally open. That happened right after Israel and Lebanon reached a ceasefire and a million displaced people started flocking back home in that ripped-up region. Trump posted triumphantly, boasting a peace deal with Iran is at hand, and the war fever immediately cooled.

Of course it will take a long time for the flow of oil to be restored. Energy facilities in the region have been brutalized. Production levels will be curtailed. Weeks of engineering are needed to get wells operating again. Prices are not going to drop to pre-war levels for months, it seems.

But investors’ bets that the war between US/Israel and Iran was too stupid to continue paid off. Markets were already shooting higher in recent days, before the shot of adrenaline at the opening this morning.

And there’s more than just peace and oil.

AI investing is stronger than ever. Big profits for Taiwan Semiconductor this week cemented that sentiment, along with the Mythos news from Anthropic. Semiconductor, Internet and hardware stocks are shooting higher as part of the AI orgy. That comes as earnings for major financials (like JPMorgan Chase and Bank of America) exceed expectations and analysts call for a 17% profit surge for S&P companies in 2026.

Now, is some of this overdone? Hopium? Irrational exuberance?

Without a doubt. The pendulum never stops in the middle, and right now is swinging hard towards the let’s-get-naked! indicator. Rest assured a wave of profit-taking selling will nip some of the hormones.

But at this moment the relief rally is real. The expectation of renewed economic growth is also real. And we all knew that Trump would at some point go TACO again, end this rash conflict and declare the Mother of All Military Victories (which has cost $1 billion a day).

For us little people, then lessons remain.

Ignore the noise around you. The headlines. The social media slop. The misinformation and spin. Invest and stay invested.

Don’t even try to time then market. You will almost always miss selling at the top or buying at the bottom. Did you know last night about today’s explosive rally? Of course not.

Invest when you have money to invest. Not when your gut or BIL tells you to.

Fight fear, the most destructive of all emotions and the first to arrive. Have confidence in society, the economy and human nature, as hard as that may be some days.

Buy ETFs, not individual stocks to reduce risk and gain more predictability. Have assets that pay you to own them – in interest, dividends and distributions – as well as growth things to kick out capital gains.

Use the tax shelters. They are essential in Canada to wealth creation and retention.

Most critically, have confidence. Optimism. If you’re feeling sorry for yourself, take a moment to Google life in Gaza, the Ukrainian border region or southern Lebanon.

The only true barrier to your success in this country is you. So get out of the way.

About the picture: “Her is Sonny is at the beach in Parksville, Vancouver Island,” writes Eileen.  “Poodles are natural water lovers. He and I used to go swimming everyday. He recently passed away at 15 years of age. Poodles are very intelligent and we have enjoyed them all our married life. Our first poodle was Jake and he welcomed our patients into our dental practice every day until he died when only 9 years of age because of bloat which kills many standard poodles.  Jack and I enjoy your blog. We miss our dogs.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/04/17/the-eruption/