We continue to navigate a market shaped by volatility, inflation concerns, and shifting investor sentiment. While recent market action has shown some improvement, we remain mindful that sharp moves can occur in uncertain conditions. Our focus stays on what the market is actually telling us through breadth, relative strength, and the way different sectors and regions respond as conditions evolve.
At the same time, we are seeing strength emerge in parts of the market outside of the most defensive areas. Commodities, international equities, and selected cyclical sectors have been quick to attract investor attention, while fixed income remains challenged in an environment where inflation pressures have been persistent if not re-emerging.With this backdrop, we remain disciplined in how we position portfolios, emphasizing risk management and measured decisions rather than relying too heavily on any single forecast.
Key Takeaways:
The market is improving, but we continue to rely on evidence rather than headlines
- The major indexes recover from recent weakness, move back above key moving averages, and register follow-through buying. At the same time, we recognize that sharp rallies can occur in volatile markets, so we focus less on short-term narrative and more on whether breadth, leadership, and price action continue to confirm a durable improvement.
We protect capital first when market breadth weakens, and we add exposure only as conditions improve
- Over recent weeks, narrowing breadth leads us to raise cash, follow stop losses, and avoid putting capital back to work prematurely. As our risk models begin to turn positive again and more stocks move back into uptrends, we respond in a measured way by rebuilding exposure where the evidence is strongest.
Better leadership outside the most crowded areas of the U.S. market
- Canadian equities, international equities, and several emerging markets hold up well, recover quickly from March weakness, and in many cases move back toward or through prior highs. That relative strength matters. Leadership groups typically reclaim ground quickly after market stress, and we continue to see that pattern in a number of non-U.S. markets.
We treat inflation as a central investment issue and position portfolios accordingly
- Long-term bond yields remain elevated, bond prices remain under pressure, and the bond market continues to signal that inflation risk persists. In that environment, we prefer assets and businesses with pricing power, cash flow, and inflation sensitivity. Commodities, selected equities, and dividend growers continue to offer more attractive protection than long-duration fixed income.
The strongest opportunities in areas tied to real assets, industrial demand, and pricing power
- Energy, industrials, materials, gold, copper, uranium, agricultural inputs, and selected financials continue to show the most constructive leadership. These groups benefit from strong relative strength, improving breadth, and in many cases direct exposure to inflation, infrastructure spending, resource scarcity, or global supply disruptions. We continue to focus capital where market leadership remains clear and fundamental support is improving.
Our portfolios are built around discipline, diversification, and companies that can perform in the market we have today
- We do not invest based on forecasts about geopolitics alone. Instead, we focus on what the market confirms through leadership, breadth, and stock-specific behavior. That leads us to add selectively to areas such as materials, industrials, semiconductors, and select banks while maintaining cash reserves and staying underweight weaker groups where relative strength still fails to improve.