Good morning, investors. The S&P 500 is coming off its best month since November, with every major index hitting record highs to close out May.

Predictably, AI explains most of those gains.

Odds are that will likely hold true in June — regardless of what happens with the Iran conflict and energy prices.

Rising gas prices are painful for households but a non-event for stock market investors. 

The Iran conflict has pushed prices at the pump to the highest in four years and consumer sentiment to a record low, yet a ProCap Insights analysis of historical data suggests these bearish metrics have zero impact on S&P 500 returns.

Digging through 537 non-recession months of data since 1976, forward returns for stocks had almost no correlation to gas prices. 

The ProCap report found that the top decile of real gas readings produced an average 12-month forward return of 11.2%, statistically indistinguishable from the typical return of 11.4% across all years.

Five of the six gas-spike episodes since 1979 left the S&P 500 flat or higher over the next year. 

The one clear exception was 2007-08 — a 23.5% drawdown that credit spreads and the yield curve had already flagged before equities broke.

Gas has climbed 53% since the war began February 28, lifting the AAA national average to $4.56 a gallon.

Meanwhile, the University of Michigan’s consumer sentiment index fell to 44.8 in May, the lowest ever, with nearly 40% of respondents volunteering gas prices as the reason.

Indeed, year-ahead inflation expectations have also climbed, and some strategists have forecasted that the national average for gas could hit $5 if the Strait of Hormuz remains closed.

All that and yet stocks are at all-time highs.

To be sure, supply-side shocks like the Iran conflict do behave differently from demand-driven ones.

But those channels still hit credit spreads and unemployment before they hit equity multiples.

History suggests the bond market will flash more reliable warning signs compared to gas prices or sentiment. 

Consumers and investors continue to live in different economies. Conflating the two outlooks is how investors leave upside on the table.  

Our team at ProCap Insights is publishing dozens of investment research reports every week using an army of AI agents. Subscribe to unlock our library of research built to help investors make money.

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📊 Mag 7 concentration has bled into the dividend derivatives market. The same handful of tech giants are reshaping prices in dividend futures and options, a previously niche corner where institutional investors lean on forward earnings signals. (Bloomberg)

🚀 AI spending has resurrected the dot-com era hardware names. Dell, Nokia and Lenovo Group are leading the cohort as data-center demand pulls Texas Instruments and Micron along for the ride. (Yahoo Finance)

🛢 Global oil demand has fallen 9% with no government conservation push behind it. JPMorgan strategists flagged that consumers are absorbing the Hormuz-driven price spike through behavior change rather than top-down rationing. (Bloomberg)

🗓 June 1, 2009: General Motors filed for Chapter 11 bankruptcy, ending the carmaker's 100-year run as an independent public company. It remains the largest industrial bankruptcy in US history.

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