Market conditions have shown mixed performance across various sectors, with financials and energy maintaining strength, while technology and high-growth sectors face challenges. A cautious, defensive stance is being maintained with a significant cash allocation and flexibility for portfolio adjustments. Precious metals, especially gold, continue to perform well, and there are concerns over potential copper tariffs impacting certain companies. Global markets, particularly in Japan and India, are showing positive long-term potential, while corporate bond risks are being closely monitored. Seasonal trends may play a role in market performance over the next couple of months.
Financials & Energy Sector Leadership
- Financials are the largest portfolio weight, as they continue to perform well on a relative basis.
- Energy sector allocation at 14% is three times the S&P’s weight due to strength and performance.
- Materials sector includes gold and some copper, also holding a 14% allocation, aligning with inflation protection and strength in these areas.
High Cash Position and Defensive Stance
- 21% of portfolios are allocated to T-bills and corporate bonds (13% in short-term bonds, 8% in corporate bonds), maintaining flexibility.
- An additional 5% cash allocation allows for quick repositioning.
- Due to weak breadth in the market, the defensive posture continues, with caution towards sectors underperforming.
Declining Market Breadth
- Market breadth for the average sector fell by 5% over the course of the week.
- Weakest sectors include semiconductors, biotech, consumer discretionary, and high-growth tech stocks.
- Strength remains in financials, energy, and materials, while other sectors show weakness.
Precious Metals Sector Outperformance
- Gold and silver continue to show strong performance, with intermediate producers like Agnico Eagle, Kinross, and Alamos performing well.
- Large-cap miners such as Barrick and Newmont are underperforming due to operational issues and lack of new production.
Copper Tariff Concerns Affecting Teck Resources
- Potential tariffs on copper are influencing market dynamics, with concerns about how the US will handle these tariffs.
- Teck Resources (TECK.B) could face challenges due to trade policy uncertainties, though it has the ability to find other buyers outside of the US.
- Smaller US-based copper producers may benefit from favorable domestic policies encouraging quicker development.
Positive Long-Term Outlook for Japan & India
- Japan’s outlook remains favorable, with Warren Buffett increasing his exposure to Japanese equities and bonds.
- India’s market has corrected but is finding its footing after a sharp decline, signaling an early stage of a bull market.
- India’s consumer class growth is expected to be a key driver of long-term economic expansion, and it has outperformed China.
Weakness in Tech and High-Growth Sectors
- S&P 500, Nasdaq, and XLK (tech ETF) have shown underperformance in 2025.
- Bitcoin, robotics, genomics, and other high-growth tech sectors remain weak.
- Caution is maintained, with no significant investments in these sectors until performance improves.
Positive Seasonality Expected for April & May
- April has historically been the strongest month of the year for markets since 1950.
- May also tends to be strong, particularly in the first year of a presidential cycle.
- Seasonality could play a significant role, with an expected improvement in market conditions during these months.BUT MKT DATA DOES NOT YET SUPPORT
Corporate Bond Market Risk Is Elevated
- There is a slight increase in risk for corporate bonds (both high-yield and investment-grade).
- Credit spreads are not as high as during the selloffs of 2020, 2022, or 2023, but it remains under close watch for further widening.
- Volatility in the corporate bond market is something to monitor as it could affect broader market stability.
Market Reaction to News and Flexibility
- Flexibility in portfolio management remains key, with cash positions, T-bills, and corporate bonds ready to be deployed based on how events unfold.
- If there are major updates or significant news, an additional market video may be released.