Three Records, Cheap Oil, and a Deal Frenzy

The Weekend in One Breath

Stocks closed May at record highs — the Dow Jones Industrial Average (DJIA) cracked 51,000 for the first time ever, and the S&P 500 and Nasdaq both set records too. The engine? Oil. Brent crude had its worst month since the 2020 crash, down 19%, after President Trump said a deal to wind down the war with Iran is “within reach.” Cheaper oil is a tax cut for everyone who isn’t an oil driller.

Under the hood, three forces are pulling in the same direction: easing geopolitics, genuinely strong corporate earnings (AI demand is showing up in real numbers — Dell’s AI sales jumped 88%), and a deal market that’s wide open. JPMorgan’s (JPM) Jamie Dimon summed up the mood in one slightly nervous word: “exuberance.”

What We Did in the Book This Week

We’re leaning into the change in the weather — but not by selling energy. The drop in oil is a peace-headline dip, not a demand collapse, so we’re holding our energy overweight in names like ExxonMobil (XOM) and Chevron (CVX). Voya and other shops in this week’s paper argue the structural oil price is higher, not lower, once the war premium washes out — and we agree, because the bigger story is that the infrastructure is a mess. A decade of underinvestment in drilling, aging and capacity-constrained refineries, and a power grid straining under data-center and electrification demand all add up to tight supply that one peace headline doesn’t fix. That’s why we’re staying overweight in ExxonMobil (XOM), Chevron (CVX) and the broader energy book. Cheaper crude in the near term is a gift to the rest of the portfolio — not a reason to abandon our best long-term trade.

We’re adding to financials, where the deal machine is roaring: JPMorgan (JPM) and Goldman Sachs (GS) are the cleanest ways to own a market that’s minting fees on mergers, trading, and an 80%-bigger IPO calendar. And we’re putting Ingredion (INGR) on the buy list as a consolidator in the food-ingredients sector that private equity is actively bidding up (CVC just grabbed a $4.3 billion unit from IFF).

We’re reinforcing the AI-power complex — Constellation Energy (CEG), GE Vernova (GEV), and Vertiv (VRT) — because the data-center electricity story keeps getting bigger, not smaller. And we’re watching Nvidia (NVDA) carefully: China’s BYD just unveiled a self-driving chip at one-third the cost of Nvidia’s comparable part, the first real shot at the low end.

This Weekend’s Reads (Yes, Some Are Funny)

We pulled eleven of the best stories from the weekend Journal — mostly from the Exchange section — and translated each into what it means for your money:

• When the World Went on Sale — the 1873 crash and what it teaches us about the AI boom. (Our history pick of the week.)
• Silent Stan — the billionaire who conquered world sports by refusing to panic.
• The $665,000 Receipt — a charitable-giving horror story and the new 2026 rules. (Read this one.)
• Oil’s Worst Month Since 2020 — why cheap crude lifted stocks to records.
• ‘It’s Gung Ho’ — the big banks are minting money again.
• The Class of AI Reports for Duty — the weirdest job market in a generation.
• AI Cracked an 80-Year-Old Math Problem — for about $1,000.
• The $30 Billion Hoodie — Greg Brockman and OpenAI’s march to an IPO.
• BYD’s $14 Billion Bet — a self-driving chip that undercuts Nvidia.
• Ackman Swung $65 Billion at Universal Music — the family said non.
• Deal Frenzy — the unglamorous world of food ingredients is suddenly red-hot.
• Sonny Rollins, 1930-2026 — the saxophone colossus who walked off stage to get better. (Art & a lesson on compounding.)
• Vibes Don’t Pay the Bills — Everlane’s sale to Shein, and why a great story isn’t a great business. (Fashion.)
• Your Day Is Getting Longer — the science of Earth’s slowing spin. (Just for fun.)
• An Honest Word on Mental Health — why wellbeing belongs in a money newsletter. (Health & life.)

The Bottom Line

Records feel great and they make terrible decisions. The lesson from our 1873 history piece is that a real technology and a smart price are two different things — the gap is called valuation, and your protection is a margin of safety. We’re fully invested and optimistic, but we’re keeping our seatbelts on where the AI trade ran hot, diversifying our sources of return, and keeping our seatbelts on while the guy who runs the biggest bank in America says ‘exuberance.’

If we haven’t talked since your last review, this is the ideal week for a 15-minute check-in. The calendar link is below.