If there's one shape that's come to define this market, it's the letter V. We saw it in 2018. We saw it in 2020. We saw a longer one in 2022, and short-lived one in 2025. And here we are in April 2026, tracing yet another one of those beautiful, gut-wrenching recoveries that leaves bears scratching their heads and bulls wondering why they ever doubted. Another year, another V.
This Time It’s Different
Just a few weeks ago, the mood was bleak. The Strait of Hormuz was feeling a lot like I-696, it was open, then closed, then partially closed, then we heard rumors it could open, but then it was confirmed that it was effectively closed, and so on... Oil spiked above $120 a barrel, gasoline was pushing past $4 a gallon, and the March 30 lows had investors questioning whether the great post-tariff, AI-fueled bull market had finally met its match. The VIX was high, headlines were ugly, and the whispers of “this time it's different” were getting louder by the day.
At the center of it was AI. The trade that had carried this market on its back for two years got tested. OpenAI stumbled. Valuation questions, leadership turbulence, and a string of product disappointments had cracked the story that once felt unbreakable. Even the strongest AI names couldn't catch a bid. The Nasdaq bled harder than everything else. It felt like it could be the end of something.
It wasn't.
The Rebound
Then came the ceasefires. Iran declared the Strait of Hormuz "completely open." Trump extended the Iran ceasefire. The Israel-Lebanon ceasefire continued to hold. And almost overnight, the entire risk equation flipped.
- S&P 500: +4.54% on the week, three new record highs, firmly into the 7,000s
- Nasdaq: +6.84% its best week in a year, pushing toward 25,000
- Dow Jones: +3.19% within striking distance of 50,000
- Oil: Collapsed to $83.85 per barrel in a single week
- VIX: Back to 17.48, well within its normal range
Every single dollar lost from the March 30 lows? Recovered. Another V etched into the charts.
AI Finds A New Champion
While the market was reevaluating AI, Anthropic was rewriting the story. In late February, the Trump administration ordered all federal agencies to immediately stop using Anthropic technology, then formally designated it a supply chain risk in March — the first time that label had ever been applied to an American company.
The market shrugged. Enterprise adoption kept accelerating. Annualized revenue surged from $9 billion to $30 billion in just three months, earning a $380 billion valuation along the way. Then came Mythos.
On April 7th, Anthropic unveiled Claude Mythos Preview — a model so powerful they wouldn't release it to the public just yet. In testing, it uncovered security flaws that had gone undetected for decades, then figured out how to exploit them on its own. The world took notice, and now Anthropic sits at over a $1 trillion valuation, recently flipping Open AI in valuation. AI isn't one company's story. It's a platform shift. And platform shifts can have many winners.
Dry Power
The story beneath the story is cash. Money market fund assets peaked at $7.8 trillion in December, the highest level ever recorded. As of this week, $7.6 trillion remains parked in cash, earning 4% while the S&P posts record highs.
What keeps it there? Uncertainty about the Fed, inflation, and geopolitics. But the ceasefires are holding, energy prices are retreating, and a Fed that's been frozen in place won't stay that way forever. As each excuse to stay on the sidelines disappears, that $7.6 trillion becomes harder to justify. That rotation hasn't started yet. When it does, it's the fuel for the next leg higher.
The Fed Soap Opera
With all the good news, the Fed remains the wild card. Powell's chair term expires May 15. His nominee to replace him, Kevin Warsh, sat before the Senate Banking Committee on April 21 and called for 'regime change' at the Fed. His confirmation is still in limbo, held up by Senator Thom Tillis, a Republican, who is blocking Warsh's path until the DOJ drops its investigation into Powell over alleged building renovation overruns. Powell, for his part, says he isn't going anywhere. Trump says otherwise.
The April 28-29 Fed meeting will almost certainly be a hold. Unemployment is holding steady and core inflation still above target, the Fed has little room to cut. With Powell potentially staying on past his term in a caretaker role, and a confirmation fight with no clear end date, markets are watching Washington as closely as they're watching the data. So far, they're shrugging it off. The ceasefire rally is louder than the Fed drama. For now.
Bottom Line
Another correction. Another round of headlines screaming that this time is different. Another V.
The ceasefires have held. The AI story found a new chapter. Nearly $7.6 trillion in cash is sitting on the sidelines waiting for a reason to move. And a market that everyone was ready to bury in March just hit three new record highs in a single week.
None of that means the road ahead is clear.
The Fed drama is real, the Middle East headline risk is certainly not gone, and volatility will come back. It always does. But if the last decade has taught us anything, it's this: the market always recovers. The only question is whether you're invested when it does.
Disclosures
This material has been prepared for informational purposes only and should not be construed as a solicitation to effect, or attempt to effect, either transactions in securities or the rendering of personalized investment advice. This material is not intended to provide, and should not be relied on for tax, legal, investment, accounting, or other financial advice. You should consult your own tax, legal, financial, and accounting advisors before engaging in any transaction. Asset allocation and diversification do not guarantee a profit or protect against a loss. All references to potential future developments or outcomes are strictly the views and opinions of Richard W. Paul & Associates and in no way promise, guarantee, or seek to predict with any certainty what may or may not occur in various economies and investment markets. Past performance is not necessarily indicative of future performance.