Markets remain constructive, but increasingly selective. The S&P 500 and NASDAQ 100 have rallied sharply from the March lows and moved back to new highs, supported by stronger-than-expected earnings and resilient economic data. However, breadth has narrowed beneath the surface, with fewer stocks participating in the rally. This reinforces our focus on stock selection, leadership, and tactical risk management rather than broad market exposure.
Our portfolios remain positioned toward areas with strong relative performance, pricing power, and inflation protection. International equities, commodities, energy, materials, industrials, banks, and semiconductors continue to show leadership, while traditional defensive sectors and fixed income remain less attractive in an inflationary environment. We continue to monitor breadth, rates, seasonality, and volatility closely, staying focused on strong companies in strong sectors while maintaining discipline around risk.
Key Takeaways
Markets remain in an uptrend, but participation is narrowing
- The S&P 500 and NASDAQ 100 have rallied to new highs, but breadth is weaker beneath the surface, making selectivity increasingly important.
Earnings have been stronger than expected
- Sales and earnings growth have surprised to the upside, especially in areas with pricing power, strong demand, and cash generation.
International markets continue to lead
- Canada, Europe, Japan, Asia, Latin America, and emerging markets are benefiting from better valuations, improving manufacturing data, and more favourable sector exposure.
Inflation remains the key risk
- Bond yields are rising, bond prices are weakening, and inflation indicators are turning higher again, keeping pressure on traditional fixed income.
Commodities remain our preferred inflation hedge
- Energy, metals, agriculture, and gold continue to show leadership, while fixed income is not providing the same defensive value in this environment.
We remain focused on leadership and risk management
- Our focus remains on strong stocks in strong sectors, including energy, materials, industrials, banks, and semiconductors, while maintaining discipline through cash, stop losses, and ongoing breadth monitoring.