On this week’s webcast, we reviewed a market backdrop that remains fragile beneath the surface, even after a strong rebound day. While headline indexes bounced, market breadth has continued to weaken, with fewer stocks in uptrends, fewer stocks above key moving averages, and leadership becoming increasingly narrow. In that kind of environment, we believe it is important to stay disciplined, remain selective, and focus on areas showing genuine relative strength rather than reacting to every short-term rally.
We also highlight a broader shift in leadership across asset classes and regions. Rising long-term bond yields, wider credit spreads, and persistent inflation pressures are creating a tougher backdrop for long-duration growth stocks, while commodities, select industrial and materials names, and parts of international equity markets continue to look more constructive. We are seeing stronger setups in areas tied to pricing power, cash generation, and inflation sensitivity, while remaining cautious on broad-based U.S. growth until the underlying conditions improve more meaningfully.
Key Takeaways
We continue to prioritize defense while conditions remain mixed
Breadth has weakened, leadership has narrowed, and risk signals have not yet repaired. We are staying disciplined, holding cash where appropriate, and waiting for stronger confirmation before leaning more aggressively into risk.
International markets still look more constructive than the U.S
Relative strength continues to favor international equities over U.S. large cap growth. Markets such as Canada, parts of Europe, Latin America, and emerging markets have held up better through the recent volatility and remain more attractive on a relative basis.
Commodities remain the clearest leadership area in this market
Energy, metals, mining, and select agricultural names continue to show strong relative performance. These areas are benefiting from inflation sensitivity, pricing power, and better technical setups than most growth-oriented sectors.
Higher long-term bond yields are changing the investment backdrop
Bonds are not providing the diversification many investors expect. Rising long-term yields, wider credit spreads, and persistent inflation pressure are tightening financial conditions and creating a more difficult environment for long-duration growth assets. Dividend growth is preferable to help offset the impacts of inflation with a rising stream of dividends.
We still see selective opportunity, but not in broad-based technology
Technology remains under pressure, even after short-term rebounds. We are seeing much better setups in areas tied to real assets, cash generation, and inflation protection than in the major growth benchmarks. Our focus remains on leadership and building our farm-team, not on trying to call a bottom.
Our process remains tactical, patient, and opportunity-driven
We are re-evaluating positions continuously, tightening risk where needed, and rebuilding exposure only in areas showing genuine relative strength. In this kind of market, protecting capital and staying prepared for the next durable trend matters more than reacting to every headline-driven bounce.