Dear Valued Clients,
We hope this monthly update finds you well as we close the book on the first quarter and prepare for the start of Q2. The market narrative remains one of both strong momentum and increased complexity, but also increased volatility and risk, requiring a disciplined approach to investment and planning.
Market Overview & Key Drivers for Q2
Financial markets have been tested by escalating geopolitical developments in the Middle East, particularly the ongoing conflict involving Iran. While U.S. equity markets have shown resilience in recent sessions, with some recovery on hopes of de-escalation, volatility remains elevated due to spikes in energy prices and shifting expectations for global central bank policy.
Our team continues to monitor these dynamics closely, emphasizing diversification, long-term discipline, and opportunities that arise in uncertain environments. Below is a summary of key market movements and economic indicators as of late March 2026:
- U.S. Stocks - Major U.S. indexes have experienced choppy trading. The S&P 500 has hovered near the 6,500–6,800 level in recent weeks, posting modest gains in some sessions but facing pressure from higher oil prices and uncertainty. Broader rotation has been evident: Small and mid-cap stocks (Russell 2000) have shown relative strength at times, while technology-heavy sectors faced headwinds. Value stocks have gained some traction versus growth in parts of the quarter.
- Geopolitical Risks - Global tensions, particularly the conflict in the Middle East, have pushed oil prices above $100/barrel, creating upward pressure on headline inflation and complicating central bank policies globally. We are also monitoring what we view as an "acyclic capex cycle," driven by massive investment in defense, energy infrastructure, and Artificial Intelligence, which is expected to provide continued economic momentum even if markets fluctuate.
- Federal Reserve and Fixed Income - The expected Federal Reserve easing cycle throughout 2026 remains a key theme and is favorable for fixed income if it comes to pass. We continue to prioritize high-quality, investment-grade domestic credit to capture income with limited price risk, aligning with our view that bonds remain a stable component of a defensive strategy.
Our Investment Strategy & Focus
Our long-term conviction is unwavering: disciplined, diversified investing anchored to corporate earnings is the path to long-term returns.
- Artificial Intelligence (AI): We maintain our long-term belief in AI's growth potential. However, as market optimism is already heavily reflected in prices, the focus must shift to how this significant capital spending translates into real revenue growth and operating margin expansion across the broader economy.
- Portfolio Positioning: Our strategy remains positioned for growth with a defensive tilt. We continue to maintain a focus on diversification and the use of bond holdings designed to cover a multi-year window of expenses in case of a market downturn.
Preparing for Q2: Our Planning Focus
As we move past the bulk of tax season and into the second quarter, we are shifting our planning focus to the following items:
- Q1 Performance Review - Monitor your portfolio against a diversified benchmark
- Mid-Year Cash Flow Review: Verify your 12-month cash position to ensure adequate liquidity for upcoming expenses or opportunities.
- Tax Planning Opportunities: Review any outstanding tax preparation or planning items. Additionally, we can discuss taking advantage of any market dips for Tax Loss Harvesting or Roth IRA Conversion opportunities.
- Estate Plan and Document Review: Revisit and ensure your estate planning is current with your wishes and in aligment with beneficiary designations
As always, we are here to provide deep, research-driven insights. Please reach out to us directly if you wish to discuss your specific portfolio or any of the items covered in this update.
Warm regards,
Stephen
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