Week in Review: Ceasefire Relief, Sticky Inflation, and Honest Portfolio Lessons

Sunday morning. Markets are closed, the coffee is hot, and I want to pick up where I left off in Ceasefire, Confidence, and Cutting What Isn't Working. That post was about execution gaps and the hard work of actually following through on what we know we should do. This week tested that idea in real time.

So let's talk about what happened, what it means for our 10 positions, and what I'm thinking about heading into next week.

The Big Story: A Ceasefire That Didn't Become a Peace Deal

The U.S.-Iran ceasefire held this week, and markets breathed a collective sigh of relief. But relief isn't resolution. And that distinction drove everything we saw.

After 21 hours of marathon talks in Pakistan, the U.S. and Iran failed to agree on a peace deal. VP Vance confirmed it publicly. Pakistan urged both sides to uphold the ceasefire, underscoring just how fragile the situation remains. So we have a pause in hostilities, not a lasting peace. Markets priced in the comfort of "no more shooting" while quietly acknowledging that the underlying risk hasn't gone away.

Here's the chain reaction that mattered for portfolios this week: ceasefire holds → oil's geopolitical risk premium fades → inflation fears ease slightly → markets shift back toward pricing in a potential Fed rate cut this year → growth and risk assets rally, energy and defensives lag. That single sequence explains almost every move below.

The VIX slipped to 19.23, down about 1.3% on Friday. That's a welcome drop, but let's be honest: 19.23 is still above the long-term average of roughly 17–18. The market feels better, not good. Asian markets had an especially strong session to close the week: Japan's Nikkei gained 1.84%, Korea's KOSPI rose 1.4%, and Taiwan advanced 1.6%. India was up over 1% across both the Sensex (+1.2%) and Nifty (+1.16%). Some analysts drew parallels between this Iran oil shock and the 1997 Asian Financial Crisis, but the consensus is that today's Asian economies are far better capitalized and less leveraged than they were three decades ago. Which helps explain the confident bounce rather than contagion.

For anyone who read my piece on what causes inflation and why central banks struggle to control it, this week was a textbook example. Inflation held sticky at 3% heading into the conflict, driven in part by oil supply disruption. Now, with $4 gas prices not expected to trigger rate hikes. And potentially opening the door to cuts. We're watching the Fed navigate exactly the kind of supply-side pressure I described. Their tools are blunt. They can't drill for oil or negotiate ceasefires. But the ceasefire doing the Fed's work for it (by easing energy costs) is precisely why rate-cut expectations have revived, and why the 10-year yield settled at 4.317% rather than pushing higher.

That yield level matters directly for our portfolio. A stable-to-lower rate outlook supports duration-sensitive growth stocks (helping TSM, MSFT, ADBE) while sustaining the steep yield curve that makes bank earnings attractive (helping BAC). At the same time, the fading oil premium pressures the energy names that benefited from the conflict. One geopolitical event, multiple transmission channels through the portfolio.

What the Numbers Actually Showed

Friday's close was mixed in the U.S. The S&P 500 edged down 0.11% to 6,816.89, the Dow fell 0.56%, and the Nasdaq managed a 0.35% gain. That tech-over-value split has been the story for weeks now, and the ceasefire-to-rate-cut logic above explains why: lower rate expectations favor long-duration growth earnings. Small caps via the Russell 2000 slipped 0.22%.

The sector breakdown tells the real story. The S&P 500 Information Technology sector gained 0.76%, leading the market as lower rate expectations boosted growth valuations. Financials, healthcare, consumer staples, and energy all declined on the session. In short, growth led, defensives lagged, and energy continued to pull back from its geopolitical highs as the ceasefire drained the oil risk premium.

European markets were mixed but leaned positive on aggregate. The Euro Stoxx 50 rose 0.51% and the broader STOXX gained 0.37%, buoyed by Spain's IBEX (+0.55%) and the Netherlands' AEX (+0.51%). However, the picture wasn't uniformly green: Germany's DAX was essentially flat (-0.01%) and the U.K.'s FTSE 100 dipped fractionally (-0.03%). The headline is cautious optimism, not euphoria.

Brazil's Bovespa jumped 1.12%, benefiting from the broader emerging-market risk-on shift. The global picture was mostly green outside the U.S., with emerging markets (VWO +0.55%) outpacing developed international (VEA +0.28%).

Our Portfolio: All 10 Positions

Rather than a dry ledger, let me group these by the stories driving them. Every position this week was pushed or pulled by the ceasefire → oil → inflation → rates chain described above.

Riding the Tailwind: Growth and Risk-On

TSM is our best performer at +10.76% from entry. Taiwan Semiconductor benefited from the broader Asian rally (Taiwan's index rose 1.6% Friday alone) and continues to ride the AI chip demand thesis. The ceasefire-driven risk-on mood and revived rate-cut expectations are exactly the environment where high-growth semis thrive. I'm comfortable here.

ETH-USD is up 7.9% from entry. Crypto continues to benefit from the risk-on shift that followed the ceasefire. Lower geopolitical fear means more appetite for speculative assets. I still consider this our highest-risk position, but the momentum is real.

SPY is up from our entry, with the ETF closing at $679.46 on Friday. I added this specifically because our track record showed we were trailing the S&P 500, and sometimes the smartest trade is the simplest one. Core beta exposure matters.

Fundamentally Sound, Navigating Cross-Currents

BAC sits at +6.4% from entry. Bank of America has been a solid addition. The 10-year yield at 4.317% supports the net interest margin story, and the steepening yield curve we anticipated when we entered this name is playing out. Here's the nuance: the market's shift toward rate-cut expectations could eventually compress that curve. But for now, the ceasefire repricing has actually helped banks by reducing tail risk without yet collapsing long-end yields. That's the sweet spot.

BABA is up a modest 1.32%. I'll be straightforward: our internal review flagged this as a position that entered the book at low confidence (0.48), and our learnings suggested exiting. Shanghai's index gained 0.51% on Friday, and the Hang Seng rose 0.55%, but the Chinese consumer recovery thesis remains unproven. "Fine" isn't a thesis. I'm watching closely.

MRK is basically flat, up 0.46% from entry. Here's where honesty matters. Healthcare was weak on Friday as the sector rotation into growth. Powered by the ceasefire-to-rate-cut chain. Made defensives less attractive. The dividend yield and reasonable valuation still make sense for a 6-month horizon as portfolio ballast. I'm holding.

MSFT is down 0.69% from our entry. Modest decline, and tech's Friday strength (Nasdaq up 0.35%, IT sector up 0.76%) is directionally helpful. Microsoft's strong margins and earnings growth trajectory haven't changed. I'm not losing sleep over less than 1%.

Under Pressure: The Energy Overhang

ADBE is our second-worst position at -7.11% from entry. Adobe's recovery has been slower than I expected. The AI transformation thesis needs more time, and the 12-month horizon reflects that. At the current valuation, I believe the math works, but I need to be honest that this one hasn't shown signs of life yet.

COP is down 6.95% from entry. ConocoPhillips entered on the oil price momentum thesis during the Iran tensions. As the ceasefire brought relief, oil's geopolitical premium started leaking out. And that's exactly the mechanism at work. Energy was weak again on Friday. I wrote last week about cutting energy exposure, and this position is Exhibit A for why that advice was correct.

XLE is down 6.93% from entry. Our internal review was blunt: this position is redundant with COP and was the worst performer in the book. Having two energy bets when the ceasefire was reducing oil premiums was a mistake. I've learned from this, and it's informing how I think about position overlap going forward.

The Bigger Lesson: Redundancy Kills Returns

If there's one concept worth taking away from this week, it's portfolio redundancy. COP and XLE essentially made the same bet: oil goes up on geopolitical tension. When the ceasefire weakened that thesis, both positions declined in lockstep. Our portfolio effectively had double the energy exposure we intended.

Compare that to our more diversified bets. TSM (semiconductors), BAC (financials), MRK (healthcare), and ETH-USD (crypto) are all driven by different factors. When one zigs, the others don't necessarily zag, but they also don't all fall at once. This week proved it: TSM rallied on Asian risk-on sentiment, BAC held up on yield dynamics, and COP/XLE both sank on the same fading oil premium.

A good rule I'm implementing: no two positions in the same sector unless that sector represents more than 15% of the benchmark. Energy doesn't qualify. This would have prevented the COP plus XLE overlap from day one.

What I'm Watching Next Week

Three things have my attention, ranked by risk to our portfolio:

Enjoy your weekend. Step away from the screens. The markets will be there Monday, and so will we.

This content is for educational and informational purposes only. It does not constitute financial advice. Always consult a qualified financial advisor before making investment decisions. Past performance does not guarantee future results.