Record Highs, New Inflation Math, and a Spirit Bailout

Why Wall Street is ignoring the shipping blockade, how the next Fed chair wants to "trim" inflation, and Uncle Sam’s $500 million plan to save Spirit Airlines.

Wall Street is officially looking past the headlines. Despite ships being seized in the Strait of Hormuz and oil prices crossing the $100 mark, the S&P 500 and Nasdaq just hit all-time highs this week. We’re diving into the "disconnect" between record profits and global tension, including a potential "regime change" at the Fed that could rewrite how your inflation is measured. Plus, we break down the government's high-stakes gamble to keep Spirit Airlines in the sky and what it means for the future of budget travel. It's a week of big numbers and even bigger interventions.

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Wall Street’s Record Run: Looking Past the Blockade

The stock market is hitting new heights even as the situation in the Middle East remains messy. On Wednesday, the S&P 500 and Nasdaq both closed at record levels. The big catalyst? President Trump officially extended the U.S. ceasefire with Iran, giving Tehran’s “fractured” government more time to pull together a unified peace proposal.

But don’t mistake the ceasefire for total calm. While the missiles aren’t flying, the Iranian navy is still playing hardball, seizing two container ships in the Strait of Hormuz this week. That move pushed oil prices back above $100 a barrel, keeping the pressure on global energy supplies and transit.

There is increased pressure on Iran to comply with International Law and reopen the Strait of Hormuz to normal traffic

So why are stocks soaring? It’s all about the earnings. Over 80% of S&P 500 companies have beaten expectations so far, with big names like Boeing and GE Vernova leading the charge. Investors seem to be betting that strong American business growth can outrun the geopolitical drama for now.

The bottom line: The market has officially erased its war losses, but some experts warn the risk is now on the “downside” after such a massive run. With the Strait still essentially closed and diplomatic talks currently on a pause, the ride might stay bumpy even at these record highs.

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Inflation’s New Math: Be Careful What You Wish For

Kevin Warsh, the nominee for Fed chair, wants to shake up how we track inflation. Instead of the usual “core PCE” that just ignores food and energy, he’s pushing for “trimmed” gauges. Basically, he wants to throw out any extreme price jumps—whether it’s a sudden surge in the price of beef or a war-related oil shock—to find the “true” underlying rate.

Right now, this new math makes the economy look great. Under his preferred method, inflation sits at about 2.8%, compared to the 3% the Fed currently reports. Warsh is using these favorable numbers to argue that the inflation fight is going well, which usually signals that interest rates could start coming down sooner rather than later.

The Fed looks at many different data points to calculate the real rate of inflation

But there’s a catch. Experts at Bank of America warn that this move could backfire. If food and energy prices rise just enough to stay in the “trimmed” basket, inflation could actually look higher under Warsh’s system than it does now. If he ties the Fed’s credibility to this new formula, he might find himself forced to keep rates high—the exact opposite of what the White House is hoping for.

Uncle Sam’s Airline? The $500 Million Spirit Rescue

Spirit Airlines might have found its “Plan B.” The Trump administration is in advanced talks to provide a $500 million lifeline to the struggling budget carrier, which was facing an “imminent liquidation.” If the deal goes through, the government could walk away with a massive 90% ownership stake in the airline.

Spirit Airlines has been struggling since their failed merger with JetBlue

The goal is to save 14,000 jobs and keep low-cost travel options on the map. Spirit has been hammered by fuel costs—which have nearly doubled in some areas since the conflict in Iran began—and the fallout from its failed merger with JetBlue. While the White House blames the previous administration for blocking that merger, some top officials and rival CEOs are calling the bailout a “terrible idea.”

What does this mean for your next flight? For now, it’s business as usual: your tickets and miles are still good. But if the government becomes the majority owner, Spirit will become a major test case for whether federal intervention can fix a failing budget model during a global energy crisis.

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