April 3rd, 2026

This report is for the first quarter ending March 31st, 2026. Stock prices declined during the first three months of the year. The standard and poor's 500 dropped 5% and the NASDAQ composite had a loss of 7.5%. The Cloak composite was down 3.9%. Interest rates were relatively stable; the 10 year treasury now yields 4.3%. The price of oil has risen approximately 80% to over $100 per barrel. The price of gold climbed $500 or 12%. Bitcoin declined by 23% and remains under $70,000. Real estate markets are lethargic. Inflation and gross domestic product measures are in flux. The second GDP revision is now .7 percent growth for the fourth quarter of 2025. Core inflation remains under 3% excluding the price of oil.

Considering the onslaught of world geopolitical events, financial markets are surprisingly robust. The first quarter of 2026 has been a wild ride. If not for the extraordinary snap back rally of the last two days the mood and sentiment may have been quite different. Looking under the hood, the price action of individual components has made even seasoned stock traders sit back and take a deep breath! We don't think it's an exaggeration to say that the world is on the cusp of multiple revolutions. An industrial revolution triggered by exponential advances in software and productivity and multiple political revolutions resulting from centuries old regional conflicts and dynamic, aggressive figureheads. Tensions and rhetoric are off scale. Bullets are literally flying. Most would prefer to keep their helmet on and their head below the top of the foxhole. We are paid to watch the purse strings, to have an opinion and invest people's money accordingly.

Market volatility is unsurpassed. When mega stocks like IBM fall from $320 to $220 or Oracle drops from $320 to $150 in short order, investors must realize they are subject to a higher power. Even coffee with your morning news show requires a seat belt. Precipitation is now called an atmospheric river. Winter storms are Bomb Cyclones. Don't forget elderly kidnapers or Nigerian massacres. Harvard president Haskins says school policies are responsible for the moral and intellectual crisis of young people. Just get out there and protest, that will make you feel better! Why it's the end of democracy…go too that website, print some signs, what is your passion sister?! Sorry, it's nightly news PTSD. Let's get back on task. The national debt or the Federal reserves' next move. Which would you prefer?

Jamie Dimon the chief executive of JP Morgan has a rather worldly perspective. He states, regarding Iran's leadership… these are bad people and this has been going on way too long. We need to finish the job. From his perspective financial markets play second fiddle to the situation at hand. National support for those in charge is imperative. The economic disruption is a price for a better world. The bifurcation of Europe is real and a growing impediment to civility. Civil war in the U.K. a probability? The same situation is now in the good ole U.S.A., witness recent protests with hundreds of hammer and sickle flags flying. That's right, communists and proud of it! One is forced to step back and ask….who's side are you on? Administration officials including the Vice President and Attorney General are moving themselves and their families to military base housing for their own protection. It's getting serious. Partisan legislative bickering regarding the current shutdown is so complex and contentious that even professional commentators do not fully understand what is going on. Meanwhile financial markets are forced to languish in uncertainty while travelers deal with log jams. Easy, slow down. Let's get back to savings accounts and stuff. A rehash of political current events is arguably not necessary in a financial newsletter; however, the overlap cannot be ignored. Change is coming, the days of Ozzie and Harriet and white picket fences are gone.

Don Luskin the CEO of Trend Macro says we are five years into a twenty year productivity cycle brought on by the pandemic which required innovation and new work environments. Now with the onset of Artificial Intelligence two years ago, we are seeing a huge boost in corporate productivity. Citadel CEO Ken Griffin speaking at the World Economic Forum praised recent deregulation as finally allowing business entrepreneurs to build their businesses! Leon Calvaria the Citi Group Chair of World Banking likes what he sees. Mergers and Acquisitions are up 25% and IPO's are lined up on the runway. Geoffry Hinton the Godfather of AI estimates that Artificial Intelligence is doubling every seven months, warns of unemployment. Both Oracle and Facebook announced large white collar layoffs resulting from AI efficiencies. Private credit concerns are likely overblown and limited to software companies. Economist Seagull of the Wharton Business School says his biggest worry is cyber security. Power, we need more power, Scotty! Nuclear energy resurrected with hot tub sized power stations. Coal fired antiques refitted with gas turbines. Boiler maker Babcock and Wilcox up 1500%. Memory chip and fiber optic component manufacturers besieged with orders, two year backlogs, Micron Tech, Seagate Tech, and Lumentum Inc stocks soar!

Despite the dramatic headwinds, the glaring risk, it appears ownership in corporate America is increasingly becoming a port in the storm. Capital expenditures by the four largest technology giants alone are estimated at $650 billion. Cross border investments by multinational corporations in the trillions and a recent small business hiring surge all foretell a very positive take for courageous investors going forward. For the optimists there remains a buffet of unappreciated opportunities. Its that third Industrial Revolution thing. We remain 100% invested. The four wheel drive portion of our journey is almost complete, for the next ascent we will be free climbing. We recommend hand chalk, goggles and layers.