Spring has arrived — and with it, one of the most telling periods in the financial calendar. We wanted to reach out with a timely update on what this season typically brings to markets, and more importantly, how we're thinking about it on your behalf.
The Elephant in the Room: US / Iran Conflict
This is tough to predict, but the market seems to be looking past it. The economy has remained resilient, but we are now seeing the impact at the gas pump. Worst case, this can turn into a liquidity problem for the market — but we won't know until it does. We will continue to monitor. However, the backdrop and big picture remain pretty strong.
April showers bring May flowers — and productivity growth brings corporate profit growth. As we enter Q2, the early signs are compelling. Q1 earnings season is proving stronger than expected, and the productivity cycle we're tracking suggests meaningful upside ahead.
What the Numbers Tell Us
Q1 2026 Earnings: With 84% of S&P 500 companies reporting positive EPS surprises and 81% posting positive revenue surprises, earnings growth is tracking at 15.1% year-over-year. This marks the sixth consecutive quarter of double-digit earnings growth — a powerful signal of economic health and business execution.
Productivity Growth: The current productivity cycle is now outpacing the 1990s-2000s expansion, which was itself one of the best in modern history. Academic research (42 Macro) shows that when productivity accelerates, corporate profit growth follows reliably.
The median year-over-year corporate profit growth in periods of >5% productivity growth reaches 19.7% — compared to just -1.0% when productivity is negative. This is not a coincidence. It's the economic engine at work.
What This Means for Your Portfolio
We continue to actively monitor positioning relative to our tactical allocation framework. The confluence of strong earnings, rising productivity, and improving business fundamentals supports maintaining appropriate equity exposure. That said, adjusting to market conditions remains our north star — we adjust only when the data signals a material shift in market conditions, never on emotion or prediction.
One Important Request
If you haven't yet provided your most recent tax return(s), we'd like to make that process as simple as possible. Please upload your documents to our secure portal using the link below. This allows us to provide the most accurate planning and ensure we're not missing more suitable opportunities specific to your situation.
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Wishing you a bright and prosperous season ahead. I am hoping for good weather so our sports calendar doesn’t get cancelled (happened a lot thus far 😊)!
Best,
Aaron
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There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Because of their narrow focus, investments concentrated in certain sectors or industries will be subject to greater volatility and specific risks compared with investing more broadly across many sectors, industries, and companies. The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.