Weekend Note

For those of you who track markets, and your portfolios, daily, if nothing changes between now and tomorrow's open, look for the equity market to give back a notable chunk of last week's gains (save for equities tied to the energy space).

As I type (9:36am PDT Sunday 4/12), oil is spiking higher/stocks lower in synthetic markets... Gold -- priced in crypto (which allows us to track it during weekends) -- is trading down notably.

Morning Note

We addressed stagflation (weak economy/rising inflation) risk in a video or two last year as conditions developed -- which was nevertheless not our base case heading into 2026... Although we had been flagging the inflation/interest rate risk that we felt could accelerate in the back half of the year... All the while our view of economic conditions remained constructive, largely due to fiscal oomph coming from record tax refunds and the OBBBA (One Big Beautiful Bill Act).

Now, however, per the PWAI narrative below, stagflation is suddenly a front-and-center, albeit potentially transitory, concern:

Quick Morning Note

In yesterday's note I asked you to recall our past commentary around sentiment and positioning; the message being how one-sided sentiment and positioning gets fiercely unwound when events or conditions throw cold water onto the market crowd... That happened yesterday.

Today, on the other hand, reality says "not so fast."  As markets digest yesterday's gains and grapple with the latest Middle East headlines.

Here's this morning's (at 8:02am PDT) succinct summary generated by our proprietary analytical engine (PWAI):

Important Morning Note: "Reprieve, Not Resolution"

Despite this morning's impressive rally, the ceasefire agreement itself is anything but a risk-on greenlight for markets -- other than for the obvious initial flow/position-driven spike higher (recall our past missives on sentiment, options dealer positioning, etc).

Here's our PWAI overview of the latest developments and our core allocation response this morning:

Quick Morning Note

Suffice to say that if markets hate uncertainty, while the year-to-date action in equities has indeed been negative, it could be a whole lot worse... Which of course is a distinct probability should present geopolitical conditions become a protracted affair.

Here's the succinct take on current events and our core allocation this morning generated by PWAI, our proprietary analytical engine:

Deteriorating General Conditions

This week's scoring of our recently-revised -- increased our featured data points to 68 from 43 -- PWA Index shows a marked deterioration in overall general conditions.

Here's the succinct assessment produced by our proprietary analytical engine:

"Timing is everything" -- And -- What If the bulls (on the economy) have it right?

I sympathize with the following from MRB Research's latest analysis:

"The outlook for capital markets is close to being binary, with the most likely scenario an easing of Middle East tensions in the near term and a rebound in asset prices. However, with the potential imminent landing of U.S. military on Iranian territory, there is a non-trivial risk of a severe escalation in the regional war that would almost certainly trigger widespread selling pressure. 

We are convinced that the U.S. seeks an offramp to ease tensions, but to a considerable extent, the global economic outlook hinges on whether and to what extent flows of energy and other commodities through the Strait of Hormuz normalize1. Timing is everything.