Per the rundown below, general conditions continue to hold up better than one might expect given the present geopolitical state of affairs.
I listened to the President comment this week on how he had figured that the stock market would be down 20-25% once the war got started -- he then touted its counterintuitive ascent to all time highs (which I contextualized for you yesterday)... That (his minus 20-25% prediction) is actually understandable, as, when I think about market reactions to the policy shifts and/or threats (be they from the Administration or from the Federal Reserve) throughout his first term and this one to date, that's about the level of decline where the presumed cause got reversed, or notably diluted, and thus allowed markets to bottom and ultimately recover, in impressive fashion.
Therefore we have to ask ourselves, is the market holding up due to strong fundamentals and earnings outlooks, or is it all about the belief that the powers-that-be are not remotely inclined to experience any deep or lasting financial market pain? Or a bit of both?
Thinking back to the President's comments -- and the unambiguous importance he (and, clearly, the Federal Reserve) places on the stock market -- we have to wonder -- abysmal consumer sentiment, and rising inflation (see below) notwithstanding -- if it won't take something more than the volatility in US markets and the economic, etc., pain to Iran we've seen thus far to inspire a durable coming to terms between the two sides?
Literally as I type, weekend indicators have the Dow going from roughly flat to down nearly 300 points, and oil spiking 2.5% on news that plans for the US negotiating team to head to Pakistan for in person talks this weekend just got cancelled.
Stay tuned...
The weekly scoring of our PWA Index is complete and, as I suggested above, on-balance things aren't all that bad... Despite the depressing consumer sentiment reads, folks are still spending and the jobs market isn't crumbling...
Here's your read across the different categories we track... Note the inflation drag:
And here's your PWAI summation of our findings:
PWA Index — Week of April 21, 2026 Score: −4.41 | Stabilizing
The PWA Index stabilized this week, recovering modestly after last week's sharp deterioration and returning to exactly where it stood before the Iran conflict's macro impact fully registered. Conditions are not back to normal — the index remains in negative territory — but the acute disruption appears to be stabilizing rather than deepening.
On the positive side, consumers are still spending. March retail sales came in well above expectations, supported by this year's strong tax refund season. Mortgage applications surged to their best weekly level since February — with purchase applications up 10% on the week — as rates fell to their lowest point in three spring homebuying seasons, suggesting housing demand may be finding its footing. The job market remains solid. Commodity markets are healthy and in several cases re-accelerating — even with a ceasefire in place — suggesting the market is not yet convinced the geopolitical risk premium is fully resolved.
The concern is inflation. This week, market-based measures of long-run inflation expectations moved higher across the board — a signal that investors are beginning to price in a world where inflation stays elevated for longer, not just through the current energy shock. Consumer surveys tell the same story: even as the ceasefire brought some relief to sentiment, households' expectations for prices over the next one to five years remain near multi-year highs. Prices at the producer level are rising at their fastest pace in three years, and import costs are surging. The Federal Reserve is caught between a slowing economy and rising inflation — the classic stagflation dilemma — with limited room to maneuver in either direction.
The most important economic data of the quarter arrives this Wednesday, April 30, when the government releases its first official estimate of first quarter GDP growth alongside March consumer spending and inflation figures. These releases will tell us definitively whether the first quarter was simply soft or something more concerning. We will have a full update for you shortly after.
In the meantime, portfolio positioning remains appropriately aligned with the current environment — real assets, energy, and a meaningful cash reserve to deploy opportunistically as the picture clarifies.
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