The Ridge Report

The market is doing something it loves to do: making the obvious trade the wrong one. Oil's up, equities are up, the Fed is frozen, and a new chair is walking in the door. There's a lot to talk about.

What's Actually Happening

Since late February, the U.S. and Iran have been at war — not a headline that any market strategist had penciled in for 2026. The Strait of Hormuz, the chokepoint for roughly a quarter of the world's seaborne oil, has been functionally disrupted. Oil prices surged well past $100 per barrel and have held elevated. Fuel costs are up worldwide, and diesel — the lifeblood of freight, agriculture, and heavy industry — has climbed faster than gasoline.

You'd expect that kind of supply shock to rattle equity markets. And it did, briefly. But the S&P 500 recovered, hit new all-time highs near 7,230 in early May, and the energy sector has been the market's standout performer — up more than 27% year-to-date at its peak. U.S. equities have been relatively steady while international markets have struggled, as investors rotate capital into American assets.

The Fed and the New Chair

The Federal Reserve held rates steady at its April meeting — the third consecutive hold — with the funds rate at 3.50% to 3.75%. What made that meeting unusual was the level of disagreement: four dissenting votes, the most in decades. The Fed is navigating a dual-mandate conflict it hasn't faced in forty years: inflation that won't fully cool, and growth that's solid but fragile under an energy shock.

Meanwhile, the Senate Banking Committee advanced Kevin Warsh's nomination as the next Fed Chair, with a full Senate confirmation vote widely expected before Jerome Powell's term ended May 15. Markets will be watching Warsh closely for signals on whether he leans more hawkish or more pragmatic as energy price pressure works through the inflation data.

The Real Risk Hiding in Plain Sight

First-quarter earnings came in stronger than almost anyone expected — S&P 500 earnings growth is tracking near 28% year-over-year, with beat rates above historical averages. That's genuinely good news. Semiconductors have had a historic run, and AI infrastructure spending is becoming one of the largest investment cycles the global economy has seen in a generation.

But here's what's worth watching carefully: the energy shock is not resolved, and sustained higher oil prices have a habit of spreading — into transportation costs, food prices, manufacturing inputs, and eventually into consumer behavior. The IEA revised its 2026 global oil supply forecast down significantly, and demand destruction is beginning to show up in Asia.

Some smart people are ringing alarm bells. Others see the strength in earnings and AI spending as a durable foundation. Our view: both can be true at once, which is exactly why the composition of what you own matters more right now than whether you own anything at all.

What This Means for Texas

If you're in the energy business, own mineral rights, or have significant exposure to midstream or E&P names, this environment has been good to you. Operators across the Permian, Eagle Ford, and Gulf Coast have watched their economics improve materially. Royalty income is up, land values are firming, and conversations around mineral rights deals have picked back up in ways we haven't seen since 2022.

That said, elevated oil prices are a double-edged sword for Texas business owners — what helps the energy producer squeezes the trucking company, the rancher, and the contractor. We're watching both sides of that equation for our clients across industries.

More Than Markets

We spend a lot of time talking about portfolios, financial planning, and what the markets are doing. But some of the most valuable conversations we have with clients have nothing to do with stocks or interest rates.

Over the years, we've built relationships across a wide range of industries — attorneys, CPAs, commercial real estate professionals, insurance specialists, energy lawyers, business brokers, healthcare executives, landmen, estate planners, and more. When a client needs an introduction or a trusted referral, that's part of what we do.

Our network spans

You don't need to figure out who to call on your own. If you've got a situation — a business transition, a real estate question, a legal matter, a tax issue you've been putting off, or just something you're not sure who handles — reach out. If we can't help directly, we can almost certainly point you in the right direction.

That's what it means to have an advisor, not just an account.