Morning Note

Our main current conditions message over the weekend was the following:

“…should geopolitical conditions improve -- political incentives virtually demand that they do -- heading into the back half of the year, it makes sense -- heavy volatility (and inflation risk) notwithstanding -- to remain on-balance constructive on the economy, and on risk assets for the time being.”

MRB Research concurs:

“Absent a meaningful re-escalation in the war and rebound in energy prices, we expect the global economic expansion to stay on track.

Risk-on should persist as long as bond yields are flat-to-lower, as the global corporate profit outlook remains supportive. The main cyclical risk, however, is that inflation will eventually trigger another meaningful upleg in bond yields.”

Despite the weekend breakdown in negotiations (see PWAI commentary below), the action in US equities early-session was constructive (flat to slightly down)... Since then, the following headlines hit: 

"Trump: Highly unlikely I'll extend the ceasefire with Iran." 

"Will not open the Strait of Hormuz until deal signed."

And, yes, stocks took a hit, but not nearly what one might expect given the catalyst (S&P 500 is now down 0.5% as I type [8:15am PDT])... For the moment anyway, market action reflects the "political incentives" point I made Saturday (and featured above).

Here's this morning's PWAI rundown:  emphasis mine

PWA Morning Commentary — April 20, 2026

Markets are opening modestly lower this morning as the U.S.-Iran ceasefire enters what may be its final days. President Trump said he is unlikely to extend the truce beyond its Wednesday expiration, and has made clear the Strait of Hormuz will not reopen until a fully signed deal is in place. Iran, for its part, has reasserted control of the strait and its foreign ministry is signaling no plans for a second round of talks in Islamabad — even as the White House says negotiators are en route.

The backdrop deteriorated over the weekend. Iran briefly opened Hormuz on Friday, sending oil prices sharply lower, then reclosed the waterway Saturday after the U.S. refused to lift its naval blockade of Iranian ports. The U.S. Navy subsequently seized an Iranian cargo vessel Sunday, drawing vows of retaliation from Tehran. With both sides' stated conditions for de-escalation remaining mutually exclusive, the path to a near-term resolution has narrowed.

Oil is responding accordingly, with WTI up roughly 6% this morning to near $87-88 per barrel. Equity markets are softer but relatively contained given the headlines — the S&P is off about half a percent, the Nasdaq down roughly 0.85% — suggesting markets have either largely priced in an extended period of Hormuz disruption, or believe that ultimately the political risk is too great for the current setup to extend much further.

Gold is pulling back over 1% this morning despite the escalating geopolitical backdrop — a somewhat counterintuitive move that we attribute to it's present interest rate sensitivity, and, potentially, emerging market central banks selling bullion to stabilize their currencies amid oil-driven currency pressure, rather than any change in the fundamental thesis for the metal. We view this as a tactical dynamic and are not reading it as a structural reversal. Our downside protection on the position remains well in place.

PWA's core portfolio remains positioned for this environment. Our energy holdings are benefiting from the sustained oil price premium. Gold continues to anchor the real assets allocation with downside protection in place. Cash reserves remain meaningful, providing flexibility as the situation develops. We continue to monitor the Islamabad talks closely — a confirmed second round of negotiations would be the most significant near-term catalyst for a shift in tone across risk assets.

Fluid, Frustrating, Yet We Remain Fundamentally Constructive

Per the below, general conditions continue to deteriorate at the margin... Nevertheless, we remain constructive on markets, particularly if the geopolitical setup continues to improve.

I mentioned yesterday that we weren't taking the latest positive tone/headlines for granted, and that "this is an extremely fluid situation, subject to change on a dime."  Which, per the following, has been frustratingly borne out since yesterday's note:

Important Morning Note

Markets are celebrating Iran's announcement that the Strait of Hormuz is now fully open during the ceasefire... While the US, however, has stated that its blockade will continue as negotiations move forward.

We came into the year positioned for geopolitical tensions (tariffs included) abating -- and fiscal oomph appearing -- as the mid-term election approaches... In the meantime, the Iranian conflict of course has called the geopolitical element of our thesis notably into question, which in turns threatens the fiscal element... It's been estimated that, for example, higher gasoline prices will effectively absorb the record tax refunds that are now beginning to flow into consumer pockets.

Morning Note

Per the below, the S&P 500 recaptured 7000 yesterday, however the breadth was, let's say, uninspiring... I.e., roughly 60% of its constituents were actually red on the day -- and while the index presently sports an all time high, over 40% of its members are still down on the year, with half of those by more than 10%.

So, while we're not complaining -- we're finding bargains here and there as a result of the messy action thus far -- and while we remain constructive if geopolitical waters begin to calm very soon, this is no time just yet to be letting the pigeons loose.

Here's your PWAI morning rundown:

Morning Note

In my weekend note I cautioned that if nothing changed around Iran sentiment market pain would be felt come yesterday morning. 

Well, at the open, stocks were indeed lower (though not nearly what futures were pointing to the night before), however, by the close, the major averages were nicely in the green.

While, per the below, there's no peace deal to trumpet at this point -- it's clear that for the moment both sides are in the mood for one.

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.

Quick Morning Note: Noisy by definition!

The budding narrative that sent stocks soaring Tuesday, with some follow through yesterday, got abruptly turned on its head last night.

Reuters this morning:

“Hopes for a swift end to the ​Middle East war faded on Thursday after U.S. President Donald Trump vowed more aggressive strikes on Iran, sending oil prices back well over $100 a barrel in a blow to consumers around ‌the world.”

Me yesterday, referring to Tuesday:

Brief Morning Note

I'm on the road this morning, so I asked our AI engine to draft a succinct macro note.

But first, with regard to yesterday’s market action, while the rally was impressive, and relatively broad-based, positioning and sentiment was notably bearish going in… Thus, that upside move was no doubt exaggerated via short covering, options dealer positioning, etc… Not to discount the message of the market, just putting the extent of the move into its proper context… The second paragraph below is key to the near term set up.

Here you go:

Client Brief | Macro Developments — April 1, 2026

Global manufacturing data out of Europe this morning delivered a meaningful upside surprise, with Germany's PMI printing at 52.2 against a 51.7 forecast and Switzerland beating by over six points — both readings consistent with an economy absorbing the energy shock better than consensus feared. The eurozone's unemployment rate held near historic lows at 6.2%, and purchasing manager surveys across Italy and France showed continued expansion. Separately, the U.S. dollar is showing early signs of weakening after its conflict-driven safe-haven rally, with the euro climbing to 1.1601 against the dollar — a Reuters survey of economists this morning explicitly flagged the expectation that the war-driven dollar rebound is beginning to fade.

On the geopolitical front, the most consequential development of the day is a quiet but significant one:

Quick Morning Note

Contradictory signals hitting the tape this morning... 1. The Wall Street Journal is reporting that the President told aids that he's willing to end the war without opening the Strait of Hormuz... 2. Hegseth, while claiming that regime change in Iran has been accomplished, implies that strikes will be stepped up this week, in "decisive" fashion... 3. Headline: "Iran sets giant oil tanker ablaze off Dubai."

The market is clearly leaning into Trump's comment for the moment, and interpreting that "decisive" means conclusive in the very near-term, and, for now, leaning away from the implications of Iran's simultaneous strike on the oil tanker.

Morning Note

Very interesting action this morning... While one session does not nearly a trend make, those intuitive correlations among asset classes I've been talking about that haven't played out so far, are playing out this morning.

Fed rate odds, inflation. stocks, gold, etc. (video)

An additional point regarding the action in gold that I didn't detail in the video -- from our internal chat this morning:

"...it's so tethered to real interest rates right here though, unrelentingly!  You saw how it rallied yesterday on presumed de-escalation... If we get escalation, and we get higher yields, we could actually get gold selling off hard (higher yields being the key)... When escalation finally has the market thinking global recession, and treasuries get bought (yields fall), then gold turns golden... I.e., nominal yields fall faster than inflation expectations (the opposite of the current setup), then that (real rates falling) is big for gold."

Quick Morning Note

Reports emerged this morning that back-channel conversations are underway between the United States and Iran... More concretely, a commercial tanker successfully transited the Strait of Hormuz this morning after direct talks with Iranian officials -- the first tangible sign that the critical shipping corridor that carries a meaningful share of the world's oil supply may remain open.

Stocks are up broadly, gold is surging, and oil prices are pulling back -- all the logical responses to a world that looks slightly less likely to tip into a full-scale energy supply crisis.

Quick Morning Note

I can't help but sympathize with Peter Boockvar's bottom line this morning:

"Strictly from a market and economic perspective, the war either ends or continues and the Strait of Hormuz either fully reopens safely or does not. There is no in between at this point it seems."

Quick Morning Note

Per yesterday's video commentary, during the weekend we went from preparing to withdraw militarily to a 48 hour ultimatum, with weekend equity market proxies responding as expected -- rallied on the former, plunged on the latter... In the wee hours this morning the US headlines read that the US and Iran had constructive talks over the weekend and that strikes on energy infrastructure would be halted for 5 days while negotiations continued... Iran reported that there were no such direct talks, thus, assuming they indeed occurred, they were no doubt via the channels I referred to yesterday.

What's Working, What's Not, And Why (video)

Dear Clients, please be sure and watch this one when you have a few minutes.

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note

Well, that (fed meeting) didn't go well for markets!

In yesterday morning's note I suggested that if Powell came across the least bit hawkish the market would hate it... While he actually did the balancing act he virtually had to, markets clearly needed to hear that the Fed was ultimately concerned with the consumer economics of higher energy prices.

Quick Morning Note

I suggested that I'd be popping in regularly this week (while away), but up until this morning, while the news has come fast and furious, the market action -- generally positive -- hasn't inspired me to grab your attention.

This morning's release of February's producer price data turned what, in last night's futures action, looked to be a green open for equities (globally), quickly into a red one... Escalation, by way of threats out of Iran, of the Middle East conflict isn't of course helping, with oil up over 2% as I type.

Morning Note

Global equity markets are seeing yet more downside this morning (I'm typing this at 8:50am pt) on the latest out of the Middle East... Iran's new leader declared publicly that they intend to keep the Strait of Hormuz closed, and that attacks on neighbors and US military bases in the region will continue... I.e., we're looking at escalation at this point.

Oil is up markedly on the news, and, again, global equities are getting slammed.

Quick Evening Note

As promised, clients, I'll be communicating more frequently as things continue to unfold... We know that times like these can bring angst and, as you long-time clients (we managed through Covid, the 2008 crisis, and the early 2000s tech bubble burst with many of you) have experienced over the years, when times are most uncertain is when we feel that you should be all-the-more hearing from us.

Quick Morning Note

Equity markets (US in particular) recovered intraday yesterday from a notable initial selloff on news out of Washington (Trump comments) that the war is very near over… Of course there is much pushback on that notion from the punditry, and today’s headlines either suggest there’s much more to come, or that this is the final salvo/show-of-strength before talks begin.

The market, as I type, is discounting the latter.

A Succinct Assessment Of The Action In Stocks, Commodities, Gold, etc. (video)

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Beneath the Counterintuitive (video)

Dear Clients, this morning's commentary is an important one to take in...

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Perspective

As I type (7:40am pt), we're experiencing one of those infrequent, but, alas, inevitable risk-off days where virtually all correlations move to one... Meaning, asset classes and individual securities that tend to complement each other from a risk standpoint -- i.e., tend to not always move in the same direction, or, better said, not move for the same reasons -- are, so far this morning, moving in the same direction (down), for the same reason(s).

Some Data and Anticipating Market Reaction to This Weekend's Events (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note

US equities are seeing a leg lower today: Dow down 700 points, S&P 500 down 0.80%, and the Nasdaq down 1%. 

Headlines say it's the hot Producer Price Index for January, released this morning... The overall market action, however, doesn't really jibe with that sentiment.

Morning Note

As I type (~8am pt), and as anticipated by weekend events, US equities are taking a notable hit this morning… Dow down 800pts, S&P down 1.25%, Nasdaq down 1.5%.

The news being the president upping the new global tariff scheme to 15%, vs the 10% (which was greeted with a rally) announced Friday after the Supreme Court ruled against the existing scheme.

Noodling On The News (Tariffs, Iran), Market Reaction, Internals, etc. (video)

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A Quick Look at General Conditions, Markets, etc. (video)

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US Debt, A New Japan, Global Sentiment, Gold, Silver, etc. (video)

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Jibes With Our Thesis

One last blog post for this week... The below jibes with our global infrastructure theme for 2026... Our Mexican equity exposure is seeing quite the lift on this news today... Our other infrastructure plays are trending nicely as well:

A Decent -- Yet Ultimately Messy -- Setup

I for the most part concur with MRB Research’s Prajakta Bhide’s assessment of the macro setup for 2026.

Highlights:

Kevin Warsh, Weekly High and Lowlights & Today's Metals Mess (video)

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Quote of the Day

The following from Bloomberg this evening jibes with the notion that indeed the recent rally in precious metals owes itself, to some degree, to the proverbial safety trade — as I suggested in Wednesday's video.

On Silver and Gold (video)

FYI email recipients, per the intro, recorded this last evening

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Market Response to World Affairs (video)

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Engrained Thinking And A Wile E. Coyote Metals Market (video)

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Quote and Chart of the Day

I sympathize with Jamie Dimon’s macro view right here:

“The US economy has remained resilient. While labor markets have softened, conditions do not appear to be worsening. Meanwhile, consumers continue to spend, and businesses generally remain healthy. These conditions could persist for some time, particularly with ongoing fiscal stimulus, the benefits of deregulation and the Fed’s recent monetary policy. However, as usual, we remain vigilant, and markets seem to underappreciate the potential hazards - including from complex geopolitical conditions, the risk of sticky inflation and elevated asset prices.”

Quote of the Day: Picking Up "Nickels In Front of A Steamroller"

As I've expressed of late, there's some cause to be bullish -- for the first half of this year in particular... But, then again, as I've also stressed, hedging is more than warranted right here as well -- particularly, since, per the following, investors are largely not doing so.

Bloomberg's Ed Harrison is, as usual, making sense this morning:

Lots To Play Out (video)

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Forward Thinking, and the Beauty of Hedging (video)

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