Morning Rundown

Virtually all things that have been working of late are taking quite the hit this morning. Oil importing regions and US tech stocks in particular.

Thus, days like these are ones we feel, given our current allocation… That said, clients, as you’ve noticed, we’ve been notably active of late... This morning, in fact, we reduced our US tech exposure by 30%, adding to US healthcare, financials, and communication stocks with the proceeds… The move essentially amounts to a rebalancing (a bit) away from an overextended area into notably under-appreciated sectors that have actionable theses in and of themselves.

Here’s this morning‘s macro rundown*:

Markets are digesting a hot April CPI print this morning, with consumer prices rising 0.6% on the month and 3.8% year-over-year — the highest annual reading since May 2023 and a half-point acceleration from March. The core measure, which strips out food and energy, was equally uncomfortable at 0.4% monthly and 2.8% annually, hotter than expectations. While energy alone drove roughly 40% of the headline gain, the deeper concern is that the inflation pressure broadened: shelter re-accelerated to +0.6% after several months of cooling, food-at-home posted its largest monthly gain since August 2022, and real average hourly wages fell 0.5% on the month — meaning workers are now losing purchasing power on a trailing-twelve-month basis. This is the textbook stagflation signature.

The geopolitical overlay deteriorated in parallel. President Trump rejected Iran’s latest peace proposal Monday, described the ceasefire as “on massive life support,” and is reportedly weighing renewed military action and escorted commercial transit through the Strait of Hormuz. Saudi Aramco’s CEO warned that the market is losing roughly 100 million barrels of supply per week, with normalization potentially pushed into 2027 if disruptions persist. WTI is back above $101, building on Monday’s gains, and the curve is repricing accordingly — the 10-year Treasury yield climbed to 4.44%, the 30-year is back above 5%, and Fed funds futures now imply roughly a 70% probability of a rate hike by April 2027, with zero cuts priced for the balance of this year. Equity markets are absorbing it reasonably well at the index level given the magnitude of the moves in rates and oil, with the S&P 500 down less than 1% midday, though the small-cap damage underneath is more pronounced and the leadership has narrowed sharply.

The takeaway for portfolio positioning is that the framework we’ve been operating under — protracted conflict, sticky inflation, a Fed unable to ease, and a real-asset/quality-cyclical tilt — received fresh empirical support today. Energy exposure, financials benefiting from curve dynamics, and gold as structural insurance remain appropriate; rate-sensitive duration and richly-valued growth names face continued headwinds until either the geopolitical or inflation picture inflects.​​​​​​​​​​​​​​​​

This note is for informational purposes and is not a solicitation to buy or sell any security. Past performance is not indicative of future results. Please contact your advisor with any questions.

*Prepared by Marty Mazorra, Chief Investment Officer, Private Wealth Advisors. Research synthesis and drafting assisted by AI tools under advisor review. All market views, analysis, and recommendations are those of the advisor.