The animated television show South Park has satirized many things over the years, but none more effectively than its creators' take on corporate business plans. Yes, we're talking about the "Underpants Gnomes" episode, which featured one of the greatest corporate presentations of all time!

Here it is, in all its technicolor glory and salty language (which is, of course, part of its DNA):

That scene with the Underpants Gnomes' business plan came quickly to the IIE team's mind thanks to the patented innovation we're featuring in this edition. Maria T. Portela's remarkable invention of Disposable Boxer Shorts, for which she received U.S. Patent 6,539,554 on 1 April 2003.

The patent illustrations don't really do it justice but here are Figures 5, 6 and 7, which give a sense of how the disposable material used to craft the undergarment comes together.

The patentable trick to making boxer shorts disposable isn't the pattern emphasized by these figures, but rather the material out of which they are made. The patent's description of its illustrations tell us exactly what inventor Maria T. Portela had in mind as she conceived her innovation:

A preferred embodiment of the present disposable boxer shorts is shown in an exploded front view in FIG. 1. It is comprised of a back panel 10, a right front panel 11, and a left front panel 12, all made of a strong cloth-like paper, such as the material used for making the paper towel sold under the trademark "VIVA" by the Kimberly Clark company.

At this point, we'd like to point out this is not a satire and we are not making any of this up.

Intellectual property attorney Gene Quinn was also quite impressed by Maria T. Portela's vision:

Essentially, these are boxer shorts made out of paper towels, but not just any paper towels. These boxer shorts are made out of VIVA paper towels. I personally would have thought that BOUNTY (i.e., the Quicker Picker-Upper) would have made a better choice, but what is objectively best is not what the best mode requirement is all about. To satisfy the best mode the inventor needs to provide description of his/her subjective preferences.

The "best mode requirement" is a legal concept that comes from a statutory requirement in U.S. patent law. To receive a patent, inventors must disclose what they think is the most effective means by which their concept may be put into practical application. Without that discussion, the patent would not have been issued.

We went looking to see if Maria T. Portela's patented disposable boxer shorts ever made it to the marketplace, and that's what ultimately led us to the Underpants Gnomes business model, which we modified for this product.

• Phase 1: Make disposable boxer shorts out of Viva paper towels.
• Phase 2: ?
• Phase 3: Profit!

Alas, we couldn't find any evidence of boxer shorts having been produced from Kimberly Clark's Viva paper towels and sold to consumers. We imagine the marketers at the paper products giant couldn't work out what Phase 2 needed to be to make disposable boxer shorts a mass-produced consumer product staple.

From the Inventions in Everything Archives

The IIE team has previously uncovered the following underwear-related invention, which involves quite different materials:

• Inventions in Everything: Bulletproof Underwear

This won't be our last time discussing disposable underwear. As part of our research for this edition, we came across another patent for disposable underwear, which may get a true shot at getting to the marketplace. We'll get to the story of that invention sometime later this year.

The U.S. and China represent the two largest national economies on Earth. Since President Trump's 2 April 2025 "Liberation Day" global tariff announcement, trade between the two nations has plummeted by 39%. Just released data for February and March 2026 however indicates a bottom is forming in the combined value of goods that are being directly exchanged between the two countries.

That's a lot of information to unpack, so let's get to it!

The 39% decline in trade between the U.S. and China represents the percentage difference between the actual combined value of goods traded between the two nations through March 2026 and a counterfactual based on a simple straight-line projection of what a rolling twelve month average of that trade would have looked like had it continued following the same trajectory it was on from March 2024 through March 2025.

The counterfactual projection would have seen the value of US-China trade clock in at $50.3 billion in March 2026. Trade data reported by the U.S. Census Bureau in March 2026 indicates the actual rolling twelve month average of trade between the U.S. and China was $30.7 billion. The following chart shows both the counterfactual projection (the red-dashed line) and the actual rolling twelve month average (the thick solid black line), where the current decline has taken place starting from April 2025.

The chart also shows the rate at which the actual rolling twelve month average is plummeting is starting to slow. That's mainly because the level of direct trade between the U.S. and China is stabilizing at a level between $27 billion and $34 billion per month, as indicated by the actual monthly data (the thinner purple line).

Looking again at the counterfactual and rolling twelve month average data, we estimate the cumulative loss of direct trade between the U.S. and China in the twelve months from April 2025 through March 2026 is $128.1 billion.

To put that level of trade into perspective, economist Gita Gopinath indicates that "China’s share in US imports at 9% is back down to what it was right before China joined the WTO (2001)."

Regular readers will note a change in how we're describing the U.S. Census Bureau's trade data for goods exported to and from the U.S. and China, which we now describe as "direct" trade. That's because of other trade research that finds a lot of trade is still occurring between the U.S. and China, which is being passed through other nations as intermediaries, particularly in southeastern Asia. In effect, the true national origin of those goods is being masked in both the U.S. and China's official trade data as appearing to be going to and from other nations.

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 5 May 2026.

Image credit: A large crane beside an empty container ship in Lianyungang, China photo by Bing Zhang on Unsplash.

The U.S. new home market has largely recovered from the disruption of January 2026's blizzards.

Political Calculations' initial estimate of the total value of new home sales in the United States during February and March 2026 as measured by a time-shifted, partial twelve month trailing average is $28.45 billion and $28.24 billion respectively, which are both up from January 2026's first estimate of $27.37 billion.

Overall, the time-shifted, trailing twelve month average of new home sales in the U.S. is holding fairly steady. The annualized total number of new home sales has ranged between 671,000 and 684,000 since January 2024.

New home prices however have been on a rising trend since bottoming in September 2024. The time-shifted, trailing twelve month average sale price of a new home in the U.S. has risen from $502,525 in September 2024 to $522,950 in March 2026. The average remains below the peak of $529,692 recorded for June 2022 at the height of the high inflation unleashed by the Biden administration.

The following charts present the U.S. new home market capitalization, the number of new home sales, and their average sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through March 2026.

Steady trend for new home sales:

Rising trend for new home prices:

We'll take a separate look at the relative affordability of new homes in the near future.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 5 May 2026. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 5 May 2026. 

Image Credit: Wooden structure under construction photo by Nate Johnston on Unsplash.

We're following up a question we first asked a little over a month ago: Which market event is bigger: the DeepSeek AI Shock or the Iran War event?"

Here's where the S&P 500 (Index: SPX) was at the time we asked the question:

The United States initiated Operation Epic Fury against the Islamic Republic of Iran on Saturday, 28 February 2026. The S&P 500 (Index: SPX) had closed its trading week the day before, ending at a value of 6,878.88. Through the close of trading on 30 March 2026 the index has dropped 535.16 points, or about 7.8% of its pre-geopolitical event level.

As major events go in the U.S. stock market, at this point in time, the impact of the Iran war is a little smaller in magnitude than 2025's DeepSeek AI shock that sent the S&P 500 crashing between 19 February 2025 and 13 March 2025.

A little over a month later, we now have a definitive answer. The DeepSeek AI Shock was the bigger market-shaking event.

That's because 30 March 2026 turned out to be the bottom of the Iran War geopolitical event as measured by stock prices. The S&P 500 has since proceeded to charge higher, reaching new record highs. It has even regained its relative position above its current long-running trend with respect to its underlying trailing year dividends per share, as can be seen in the following chart:

When we asked the question after the close of trading on 30 March 2026, it looked like the Iran War geopolitical event could become larger in magnitude than the DeekSeek AI Shock. But as we can now show, it did not. The Iran War event is smaller in magnitude than the DeepSeek AI Shock. And it is much smaller in its impact than the combination one-two punch of 2025's DeepSeek AI shock and the "Liberation Day" global tariff event.

Maybe we should have proposed the question to one of the prediction markets so readers could have wagered on the potential outcome.

The S&P 500 (Index: SPX) reached new record highs during the trading week ending on Friday, 1 May 2026. The index closed at 7,230.12 to end the week as investors increasingly put the Iran war geopolitical event into their rear view mirrors.

That's because the event has largely transformed from a kinetic event to the equivalent of an economic siege. Only here, the siege affects the flow of oil through the Hormuz Strait with the U.S. bottling up Islamic Republic of Iran's oil exports while the remnants of Iran's military try to do the same with exports from other nations.

The question investors are weighing now is how long will that state of affairs last? The closure of the Hormuz Strait largely represents the worst case geopolitical scenario and since it has already happened, the risk of the kinetic phase of the conflict resuming doesn't raise the same fears for investors it did when it began, even with oil prices at elevated levels. Because of that, investors are now looking past the event at other factors, because they see the impact of the geopolitical event is diminishing.

That reduced impact can be seen in the latest update of the alternative futures chart, where we find the trajectory of the S&P 500 is moving toward the center of the redzone forecast range we added to the chart before the Iran conflict began. Through 1 May 2026, the S&P 500 is just 2.1% below the center of the redzone forecast range, which is a reasonable projection of where the index would be had the geopolitical event not taken place.

With investors increasingly seeing the Iran War as a past-tense event, other factors like corporate earnings and how the Fed will set interest rates through the rest of 2026 have taken center stage in the market moving headlines of the week that was. Speaking of which, here they are.

Monday, 27 April 2026

• Signs and portents for the U.S. economy:
• Oil prices hit two-week high as Iran talks stall and Strait shipments lag
• US refiners' first-quarter profits expected to jump as war lifts fuel margins
• Price hikes, outlook cuts - What airlines are doing as fuel costs surge
• Budget airlines pitch US government aid under $2.5 billion relief plan, sources say
• Fed minions expected to leave U.S. interest rates alone, path for appointment of new chief minion is cleared:
• Fed likely to hold rates steady as Powell prepares for possible swan song
• US Senator Tillis says he's ready to advance confirmation of Warsh as Fed chair
• Bigger trouble, stimulus developing in China:
• China's DeepSeek slashes prices for new AI model
• DeepSeek's new AI model does not wow markets in fast-changing industry
• Under cover of trade truce with Trump, China expands economic pressure toolkit
• BOJ minions expected to leave Japan's interest rates alone, for now:
• Japan's core inflation stays below BOJ target, energy risks grow
• Bank of Japan set to keep rates steady as Iran war clouds outlook
• S&P 500, Nasdaq, close slightly higher in cautious start to a heavy earnings week
• Wall Street ended mixed ahead of Big Tech earnings and Fed meeting

Tuesday, 28 April 2026

• Signs and portents for the U.S. economy:
• Oil prices hit $110 and stocks fall on Iran impasse and AI
• UAE leaves OPEC in blow to global oil producers' group
• UAE exit weakens OPEC+ power over oil market but group to stay together, sources say
• US pump prices near 4-year high on Iran war disruption, refinery outages
• Fed minions to weigh big changes:
• Fed's policymaking table is set for the 'family fight' Warsh says he wants
• BOJ minions hold rates steady as expected, excited to hike them in June 2026:
• Bank of Japan keeps rates steady but hawkish split points to June hike
• BOJ keeps rates steady but 3 board members dissent, call for hike
• BOJ Governor Ueda's comments at news conference
• Wall Street ended lower while oil rallied on UAE OPEC shock
• Nasdaq, S&P 500 end lower on renewed AI growth worries ahead of big tech earnings

Wednesday, 29 April 2026

• Signs and portents for the U.S. economy:
• US single-family housing starts jump to 13-month high in March
• US mortgage rates tick up to 6.37%, MBA says
• Oil soars, stocks dip on Iran worries, earnings in focus after Fed
• Exclusive: OPEC+ likely to agree another oil output hike without UAE, sources say
• Fed minions keep U.S. interest rates unchanged as expected, chief Fed minion says won't undermine incoming new chief minion and that U.S. economy will keep growing:
• Fed holds rates steady amid sharp divide over policy easing bias
• Powell to remain at Fed amid legal 'battering' by Trump administration
• Powell says he won't be a shadow chair, would support Warsh where possible
• US economy 'quite resilient', should keep growing above 2%, Fed's Powell says
• Fed chief nominee Warsh clears key hurdle in Senate confirmation process
• Bigger trouble, signs of growth developing in China:
• China's factory activity set to expand at a slower clip in April: Reuters poll
• China's largest lenders' first-quarter profit up over 3%, sour loan ratios steady
• Bigger trouble developing in Japan:
• Japan faces unique oil, bond, FX triple whammy
• Bigger trouble developing in Eurozone:
• Euro zone economic confidence plunges, price pressures soar
• German inflation accelerates to 2.9% in April as energy costs soar
• Euro zone banks tighten access to credit as Iran war bites
• ECB minions thinking harder about ditching their perfect monetary policy for Eurozone:
• Inflation surge and eroding growth raise policy dilemma for ECB
• Wall Street ended lower after the Fed decision as attention turns to Big Tech earnings
• Wall Street ends mixed ahead of big tech earnings
• US oil stocks plummet, country becomes net crude exporter on weekly basis for first time, EIA says

Thursday, 30 April 2026

• Signs and portents for the U.S. economy:
• US growth picks up in the first quarter
• U.S. Q1 GDP rises 2.0%, less than expected in initial print; prices rise more
• Annual US inflation posts biggest gain in nearly three years in March
• Oil retreats after hitting four-year high on concern of US-Iran war escalation
• Trump says gas prices will drop as soon as Iran war is over
• BOJ minions focus on propping up Japan's currency, getting excited to hike Japan's interest rates:
• BOJ warns inflation could rise well above target in risk scenario
• Yen jumps 3% after officials' 'final warning'; oil swept lower
• Japan steps into FX market for first time in two years to boost yen, sources say
• VIEW Japan's yen surges, as Tokyo issues strong intervention warning
• BOJ locks in June rate hike in a risky bet that nothing gets worse
• ECB minions leave Eurozone interest rates alone, fret over rising Eurozone inflation and having to dump their perfect monetary policy:
• ECB keeps rates unchanged in a possible last hold before June hike
• Lagarde comments at ECB press conference
• Euro zone inflation soars further above ECB target on oil prices
• Bigger trouble developing in Eurozone:
• German economy grows in Q1 but unemployment climbs above 3 million
• Stock market hits record high as earnings strength continues
• Wall Street ends higher, S&P 500, Nasdaq notch biggest monthly gains in years

Friday, 1 May 2026

• Signs and portents for the U.S. economy:
• Oil prices fall after Iran sends updated peace proposal to mediators in Pakistan
• Trump says Iran war 'terminated,' as war powers deadline arrives
• US manufacturing sector holds steady in April; input costs hit 4-year high
• Fed minions all over the map on direction for next interest rate changes:
• Fed's Logan says central bank's next rate move could be cut or hike
• Fed should ditch rate-cut lean because of oil shock, policymakers say
• Fed's Hammack says no longer appropriate to signal rate cut bias
• BOJ, JapanGov minions working to prop up Japan's currency:
• Yen jumps sharply as Japan warns it is ready to intervene again
• Japan may have spent $35 billion in yen-buying intervention, BOJ data shows
• Bigger trouble developing in Eurozone, ECB minions thinking more about ditching perfect monetary policy:
• Trump says he will raise tariff on autos from European Union to 25%
• ECB policymakers make case for rate hike as inflation may linger
• S&P 500 gains for the week as oil retreats, earnings hold strong
• S&P 500, Nasdaq end higher, notch weekly gains after earnings-heavy week
• S&P 500 profit eyes sharpest quarterly growth in four years after Big Tech results
• S&P Dow Jones Indices considers new index rules as mega IPOs loom

The CME Group's FedWatch Tool continued to anticipate no Federal Reserve rate cuts in 2026, though with a bias for a quarter point rate cut before the end of the year.

The Atlanta Fed's GDPNow tool forecast of real GDP growth in 2026-Q1 held steady at +1.2%, which was lower than the BEA's initial estimate of +2.0% real GDP growth in the quarter. The Atlanta Fed's GDPNow tool first estimate of real GDP growth in the current quarter of 2026-Q2 is +3.7%.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull and bear who are driving a convertible from the perspective of a passenger in the back seat who see a road sign that says 'NEW RECORD HIGHS AHEAD', while the rear view mirror on the front windshield says 'IRAN WAR' in reversed letters".