April 2026

Issue #10

Inflation is Back on the Menu… But So Is Opportunity

THE BIG 3

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Inflation Plot Twist

Disinflation was fun while it lasted.

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Oil Shock

Energy is the everything input.

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Unlikely Growth

Market leadership has changed again!

Inflation Plot Twist

The soft landing crowd may need a stronger seatbelt.

A few months ago, markets were celebrating cooling inflation, lower rates, and the return of “Goldilocks.” Then oil happened. The recent energy shock has changed the tone fast. Crude prices just posted one of the largest supply-driven spikes since the 1970s, and history tells us these shocks rarely fade quietly. Headline CPI is now projected to reaccelerate sharply into the summer months.

At the same time, manufacturing and durable goods trends are strong, while wage growth and hiring are sluggish.

In other words: growth is happening, but inflation pressure can’t be ignored.

Unlikely Growth

The bull market in stocks isn’t dead, it’s just changing leadership.

What we are seeing:

• The “Mag 7” is not the only show in town.
• Industrials, healthcare, energy, and materials are all accelerating.
• As predicted, earnings growth is improving in several places – outside of giant tech companies.

Oil Shock

One of the clearest messages from recent data is fairly simple, but often overlooked: energy touches everything.

With at least 20% of global oil moving through the Straight of Hormuz each day, Europe and Asia have been forced to come up with emergency contingency plans.

Historically, oil shocks tend follow the same script. First comes the inflation spike, growth slows on a lag, central banks finally cut rates, then hard assets win. We estimate that we are somewhere between steps one and two. The new Fed Chair will have his hands full. As counter-intuitive as it sounds, scenarios like this still provide opportunity for decent investment performance. 

The Bottom Line

Markets don’t move in straight lines. A few months ago, everyone was celebrating disinflation and imminent rate cuts. Now inflation risks are everywhere, and policy makers don’t have any easy solutions. Even though growth may very well slow down at some point this summer, there are normally opportunities somewhere. This is why we stay invested, stay flexible, and stay diversified.