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 — April 16, 2026, 8:15am PDT

Markets are pausing this morning after a historic session Wednesday that carried the S&P 500 back above 7,000, with the Nasdaq simultaneously breaking above 24,000 — a two-week recovery that has effectively erased the war discount that weighed on equities since late February.

This morning's economic data added to the constructive backdrop: weekly jobless claims fell by 11,000 to 207,000, the largest single-week drop since February, confirming that the labor market continues to absorb the conflict's macro overhang without meaningful deterioration.

The April Philadelphia Fed Manufacturing survey delivered a significant upside surprise this morning, printing at 26.7 against a consensus expectation of 10.3 and well above March's already-strong 18.1 reading — the highest reading in several months and a signal that regional manufacturing activity is not just holding up under the weight of the conflict but actively accelerating, suggesting the underlying domestic economy has more momentum than the headlines would imply.

And the advance retail sales report for March, originally scheduled for today, has been pushed to April 21st, though the Chicago Fed's advance estimate pointed to a 0.9% gain in core retail ex-auto for March on a seasonally adjusted basis, with tax refunds cited as the primary demand driver offsetting higher fuel costs — a dynamic we flagged as a likely tailwind heading into spring.

The diplomatic backdrop driving Wednesday's rally remains active but unresolved: Pakistan's Army Chief arrived in Tehran overnight carrying a new message from Washington, and the White House confirmed a second round of US-Iran talks is likely, again in Islamabad, ahead of the ceasefire's April 22 expiration.

Our portfolio is performing well in this environment — energy positions continue to hold despite the peace optimism, gold remains range-bound with our downside protected, and our options exposure is working in our favor — but we are maintaining discipline here, recognizing that a ceasefire extension and a genuine reopening of the Strait of Hormuz are two very different outcomes, and that oil markets are likely to stay structurally elevated well into mid-year regardless of how the next round of talks unfolds.