💰 Maniac Minute: The Mystery Biotech Up 17,650% YTD

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Good morning, Maniacs!

The S&P 500 just enjoyed its best May since the Goosebumps era. Unfortunately, markets ended the week with more twists than a Choose Your Own Adventure book.

We got courtroom tariff whiplash, a surprise Trump–Powell powwow, and ‘no more Mr. Nice Guy’ tweets as the China battle reheats.

Elsewhere, Ulta crushed earnings, Temu tanked, and one mystery biotech is up nearly 18,000% with zero explanation. Plus, the Equity Risk Premium reached a level that’s… less than inspiring.

🚨 Before we dive in, cast your vote in the Market Sentiment Survey below. Results will be shared on Friday.

Market Recap 📈

The S&P 500 closed the month with a 6% gain—its best May since 1990—but June is expected to test the rally’s resolve. After all, last week left plenty unresolved.

It started on Wednesday, when a trade court blocked the administration’s tariffs, sending stocks higher. But by Thursday, a higher court had already reversed the decision.

Soon after, trade war headlines piled up: Chinese visa restrictions, stalled rare earth negotiations, and whispers of new tech sanctions.

Tensions peaked Friday, when Trump claimed China “TOTALLY VIOLATED” the May 12 truce and vowed to ditch his “Mr. Nice Guy” stance. Translation? More tariffs could be on deck.

Markets didn’t love it.

Still, bulls found a silver lining in the data. April’s PCE report—the Fed’s preferred inflation measure—showed monthly price growth is nearly flat.

Core PCE dropped to 2.5% year-over-year, inching closer to the Fed’s 2% target. However, consumer spending slowed and the savings rate ticked up, pointing to a more cautious U.S. shopper.

Meanwhile, President Trump and Fed Chair Powell sat down at the White House for their first meeting in 2025.

While the Fed remains independent—and Powell is a staunch defender of that—Trump likely made his case for lower rates ahead of the next decision on June 18th.

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Winners & Losers 🚀

The market handed out glow-ups and gut-punches this week. Beauty boomed, biotech baffled, and clothing importers got clobbered by tariffs.

Winners

1. Regencell Bioscience ($RGC) – Market Cap: $11.4B (+56.6%)

Biotech bubbles don’t come with warning labels—that’s why I’m here. Regencell’s latest run-up brings its year-to-date gain to a casual +17,650%.

Revenue? Less than $5 million. Profits? Nope. The only known catalyst is insider buying from CEO Yat-Gai Au back in March.

With a very low float, tons of momentum, and no news to justify the valuation, $RGC ( ▼ 13.82% ) carries the kind of risk that only Reddit could love. If you’re tempted to chase, don’t say you weren’t warned.

2. Ulta Beauty ($ULTA) – Market Cap: $21.2B (+15.8%)

Ulta $ULTA ( ▲ 0.13% ) beat earnings thanks to fragrance sales and exclusive brand launches. With increases in both average ticket size and transaction volume, same-store sales climbed 2.9%—well above Wall Street’s flat forecast.

CEO Kecia Steelman called beauty a “comfort and escape” from stress, but warned of “uncertainty around how consumer demand could evolve.”

Losers

1. The Gap ($GAP) – Market Cap: $8.4B (-21.6%)

The Gap $GAP ( ▼ 0.36% ) crushed its Q1 earnings, but the market didn’t care. Why? One word: tariffs.

The retailer warned that new China tariffs could cost it up to $300 million this year, with most of the pain coming in the second half.

Even with mitigation efforts (i.e., diversifying supply chains), management expects a hit of $100–$150 million. The drag on profit spooked shareholders and immediately sent the stock into the red.

2. PDD Holdings ($PDD) – Market Cap: $137.0B (-19.1%)

Temu’s discount dominance is over. Tariffs and the repeal of the de minimis exemption forced $PDD ( ▼ 0.58% ) to raise prices in April. That, unsurprisingly, caused downloads and active users to plunge 73% and 43%, respectively.

The result? A 47% drop in profit and revenue that missed expectations by over $1 billion. With Temu now pivoting to U.S.-based warehouses to survive, it’s not just margins at risk—it’s the entire business model.

Equity Risk Premium Hits A New Low 🚨

The Equity Risk Premium (ERP) is a handy tool for gauging how much extra return investors are getting for choosing stocks over risk-free government bonds.

Right now? It’s flashing caution.

At just 2.35%, today’s ERP is well below its historical median of 5.18%. In other words, investors are paying more for stocks and getting less back in return.

Here, the ERP is calculated by subtracting the yield on 10-Year Treasury Inflation-Protected Securities (TIPS) from the S&P 500’s forward earnings yield.

Let’s break that down:

The 10-Year TIPS yield represents the return you’d get from 10-Year government bonds after adjusting for inflation, currently around 2.15%.

This is considered the “risk-free” rate of return, since inflation is removed from the equation and the U.S. government can always pay you back (worst case, they print the money).

The forward earnings yield is the S&P’s expected profit over the next year divided by its current price. Think of it as your projected return per dollar invested.

With the market trading at 22x forward earnings, that works out to a yield of roughly 4.50% (1 ÷ 22 = 0.045).

Subtracting TIPS (2.15%) from the earnings yield (4.50%) gives us an ERP of 2.35%—the expected “premium” the market offers to take on the risk of stocks.

As that premium shrinks, the case for loading up on equities gets a lot less convincing. At some point, investors may decide the reward just isn’t worth the ride.

At 2.35%, the ERP is near historic lows. That doesn’t mean dumping your portfolio, but it is a signal to tread carefully.

Here’s how to approach it:

• Avoid going all-in on equities. The upside isn’t as compelling right now.

• Favor income-generating plays, like dividend stocks or undervalued sectors such as energy.

• Consider adding exposure to bonds that offer solid returns with less potential risk.

• If you’re investing for the long haul? Keep dollar-cost averaging—but be valuation-conscious.

When the reward for risk is this slim, patience and discipline matter more than ever.

Worth The Read 📚

📜 What’s inside the latest tax bill? Tax cuts, higher SALT caps, tip income exclusions, and a $1K “Trump account” for newborns—plus sweeteners for seniors and car buyers.

📉 Nearly a quarter of Americans are functionally unemployed, according to a new metric that includes underpaid workers and job seekers stuck below the poverty line.

💰 Trump administration drops crypto guardrails for 401(k)s. Employers can now add digital assets, meme coins and all, without added scrutiny.

🏠 Mortgage demand rises despite higher mortgage rates, with purchase applications up 2% last week and 18% above year-ago levels.

🥇 Gold could hit $4,000 by 2026, says Goldman Sachs, citing tight supply and inflation fears. The bank calls the metal a safer hedge than Bitcoin.

🧾 Tariff workaround gains steam as importers dust off a 1988 loophole known as the “first sale rule.”

🌐 Crypto ownership surges in 2025, with Trump’s Strategic Bitcoin Reserve, spot ETFs, and a memecoin boom driving global adoption.

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The Week Ahead 🔍

It’s a lighter slate, but there’s still plenty to watch. Broadcom, CrowdStrike, and Lululemon headline earnings, while Friday’s jobs report will give the market its latest labor market checkup.

Monday

• Earnings from Campbell’s

• May ISM Manufacturing PMI (est. 48.7)

Tuesday

• Earnings from CrowdStrike, Hewlett Packard, and Dollar General

• April JOLTs Job Openings (est. 7.05M)

• April Factory Orders (est. -2.2% MoM)

Wednesday

• Earnings from Dollar Tree and Five Below

• May ADP Employment Change (est. 70K)

• May ISM Services PMI (est. 52.0)

Thursday

• Earnings from Broadcom, Lululemon, and DocuSign

• April Balance of Trade (est. -$132B)

Friday

• Earnings from GameStop

• May Non-Farm Payrolls (est. 130K)

• May Unemployment Rate (est. 4.2%)

• May Labor Participation Rate (est. 62.6%)

That’s it for today! If you made it this far, you’re exactly why I do this.

All I ask for? A little feedback. Your comments, questions, and suggestions help me improve—and shape future editions.

Just hit reply or leave a quick review below. It helps more than you know.

Keep stacking,
The Money Maniac 💸

DISCLAIMER: The information provided in this newsletter is for informational purposes only and should not be construed as financial advice or a solicitation to buy or sell any assets. All opinions expressed are those of the author and are subject to change without notice. Please do your own research or consult with a licensed professional before making any investment decisions.