Stock Markets Rally as Trump and the Fed Clash
The Weekend Edition is pulled from the daily Stansberry Digest.
The latest in Trump vs. Powell...
Earlier this week, President Donald Trump let fly another dig at Federal Reserve Chair Jerome Powell. It came up while he was onstage in the Netherlands to celebrate NATO member nations upping their defense spending.
"He is an average mentally person," Trump said to reporters. "I'd say low in terms of what he does. Low IQ for what he does, OK?... I think he's a very stupid person, actually."
It's classic Trump. It's not eloquent. It's personal. And it's blunt. You know what he means. As he has said many times, he thinks Powell and the Fed should lower interest rates (and should have a few months ago) to help the economy along.
Trump has said and repeated recently that the move should happen because "we have no inflation" and it would ease U.S. debt costs (by as much as $900 billion in Trump's estimation).
On Wednesday, Trump also said he is considering a list of three or four candidates to replace Powell, whose term as Fed head ends in May 2026. "He goes up pretty soon, fortunately, because I think he's terrible," Trump said.
Powell might cut rates eventually... even though I think every time Trump criticizes or insults him, the Fed chair becomes more inclined to not make the decision and blame uncertain tariff policy for the inaction.
That is, in fact, what Powell said on Wednesday in Washington. For the second day of his semiannual congressional testimony, he appeared before a Senate committee. He told the panel that the Fed is "well positioned to wait" on an interest-rate decision, pending more information about tariff policy and its impacts.
In the meantime, though, the market is already acting like more juice is coming (by way of lower rates and an easier cost of borrowing, or for any other reason).
All-time highs are here again...
The major U.S. stock indexes are at record levels again.
On Tuesday, the Nasdaq 100 Index (which represents 100 of the largest nonfinancial stocks listed on the Nasdaq exchange) hit a new all-time high, as semiconductor stocks surged higher.
And the benchmark S&P 500 Index and broader Nasdaq Composite Index reached fresh all-time highs on Friday. The S&P 500 last traded at a record high in February. The Nasdaq's previous high was in December.
What were major concerns not long ago seem to be in the rearview. Tariffs leading to a global economic slowdown? Not a concern anymore, Mr. Market says. We've seen a V-shaped recovery from Liberation Day.
War in the Middle East? Not as bad as it could be. Oil prices are back down, falling more than 10% this week. The CBOE Volatility Index has dropped, too – to below 17 – after spiking in response to Israel striking Iran.
War in Ukraine? Still happening, of course, but we'll worry about that another day, says the market. Companies are still earning. And a friendlier corporate-tax policy could be ahead in the "big, beautiful bill."
So could more inflation, assuredly more debt, and more related problems in the future... But we'll spare you too much more of the Debbie Downer side of things today.
The IPO Frenzy Signals a Risk-On Mood Across Wall Street
The IPO "frenzy" continues...
In last Friday's This Week on Wall Street, our Director of Research Matt Weinschenk highlighted the surge in companies going public this year. In short, the demand we've seen for initial public offerings ("IPOs") in 2025 shows that investors are "risk on." As Matt said...
Since the start of the year, we've seen a whole bunch of big-name, big-value IPOs soar for early investors. And it says something important about the state of the market...
Specifically, investors are gaining an appetite for risk... at a time when it doesn't make sense to do so.
So far in 2025, companies have raised about $27 billion through IPOs. That's up 45% from the same period in 2024. And more IPOs are on the way...
One of the next big names is Lime. Think of Lime as Uber for electric scooters. Folks pay on their phone to unlock a scooter, hop on, and ride it wherever they want. If you live in a city, you've likely seen the green scooters on street corners.
According to a Reuters report, Lime is looking to take advantage of investors' renewed appetite for IPOs. In 2020, a funding round valued Lime at about $500 million. Now, the company is hoping for a "significantly higher" valuation.
A cautionary tale...
Back in 2021, Bird (Lime's main competitor... the one with the black scooters) went public through a merger with a special purpose acquisition company ("SPAC"). Remember, 2021 was the peak of post-COVID-19 market sentiment – marked by SPAC deals, IPOs, and meme stocks.
And at the time, Bird was valued at $2.3 billion. But that didn't last long...
Within six months of going public, Bird's stock was down more than 90%. It went bankrupt in 2023.
Now, we're not saying that Lime will suffer the same fate as Bird. Unlike Bird, Lime turns a profit.
Bird's $2.3 billion valuation was about 10 times its 2021 sales.
Based on Lime's 2024 revenue of $686 million, it would easily surpass Bird's valuation at a multiple of only 4 times sales. At 10 times sales, Lime would be valued at nearly $7 billion.
But based on what we've seen from the 2025 IPOs so far, investors could take things much higher. For comparison, AI cloud-computing company CoreWeave (CRWV) trades at 29 times sales, and stablecoin business Circle Internet (CRCL), which went public earlier this month, trades at 26 times sales.
We'll be watching Lime's IPO for more signs of froth in the markets.
Risky assets are back in the driver's seat...
We don't have to wait for Lime's IPO to confirm that investors have grown more comfortable with risk. We can look at how stocks have traded since hitting their recent lows. As Matt said last week...
It's not just that the market has rallied. It's that the rally has come in many of the riskiest assets.
The market leaders since the April 8 bottom have been bitcoin, IPOs (as measured by the Renaissance IPO Index), and technology stocks...
Meanwhile, safer parts of the market like consumer staples and health care just can't catch a bid.
Investors are piling into the riskiest parts of the market like there are no warning signs about the economy. And for long-term investors, that's usually a good time to get cautious.
Now, it doesn't mean selling everything and holding cash... Instead, know the environment you're in, and don't get too caught up in high-risk bets.
In markets like this, folks should consider holding more defensive assets than risky ones. As Matt said, "Hot IPOs eventually cool off."
All the best,
Corey McLaughlin
Editor's note: On Wednesday, our friends at our corporate affiliate Chaikin Analytics revealed what they're calling the "biggest investment breakthrough" in their business's history.
That's saying something, considering Chaikin Analytics founder Marc Chaikin is the man behind the Power Gauge stock-rating system... and the Chaikin Money Flow indicator, which has been part of the fabric of Wall Street for decades.
Marc shared the new tool he created to help investors isolate the next opportunities to double or triple their money, while avoiding those high-risk bets. And just for tuning in, you'll hear four free recommendations... Check it out now, before it goes offline.