While geopolitical uncertainty continues in the Middle East and high energy prices have dampened the economic outlook, near-record earnings growth was May’s defining feature. Led by the technology sector, equities drew applause while bonds did the more honest accounting.
In our view, bond markets are being more forthright about latent and emerging risks. Equities, by means of comparison, have been steadily moving higher and testing new heights since March’s sell-off event. This isn’t necessarily uncommon for stock markets, where optimism and pessimism can quickly trade places. Looking under the hood, the V-shaped recovery seems far closer to a dismissal ofrisks rather than a preference for opportunity.
On the risk side, the Iranian conflict and effective closure of the Strait of Hormuz have yet to be resolved, keeping oil prices at elevated levels. News of salvo strikes often follows announcements of an imminent peace deal, which complicates investor predictions. By May’s end, the leading belief was that a deal was in the works. Again, oil fell sharply on the news.
Up until now, oil prices have been the concern. Recent warnings from oil executives at Exxon Mobil and Chevron, however, have drawn attention to depleted inventory levels and the potential for global supplyshortages should oil production not normalize soon. Fiscal stimulus and the drawdown of operational reserves have helped households thus far, but both have finite capacity—consumer spending and economic resiliency, in turn, also have limits.
So, what opportunity could be overshadowing these circumstances? In a word: technology. The AI complex refuses to cool down; an impressive 28% growth in first-quarter earnings doubled expectations, drawing more retail investors into already crowded trades.
Of concern is how business profitability and U.S. stock market performance are being determined by a fraction of companies. When we strip out Nvidia, Micron, Alphabet, and Meta, the earnings profile shifts dramatically. Such market concentration carries innate, and significant, risk. As a group project, tech-heavy indices are relying on their top students to continue showing up—any form of absenteeism or falling short of expectations could impact everyone’s final grade.
But we continue to find balance elsewhere, namely by carefully weighing the opportunity and growth that technology is known for against the risks identified above. Our strategies welcome the direct beneficiaries of the AI buildout—nearly household names at this point—without mimicking the overallocation found at the index level. Associated opportunities across industrials and power generation may be less celebrated, but they are just as crucial. Innovation is a staged process, with adoption typically following construction and commercialization—our investment team is active here as well, looking toward the future and monitoring how companies may utilize AI to improve their business models.
Alongside our unique approach to fixed income as a whole, we sit comfortably between the bulls and the bears. In a world trying to reconcile the threat of a global oil supply crisis with the growth prospects of AI, we believe that diversification, flexibility, and manoeuvrability are crucial assets in portfolio management.
Market Minutes, June 2026
While geopolitical uncertainty continues in the Middle East and high energy prices have dampened the economic outlook, near-record earnings growth was May’s defining feature. Led by the technology sector, equities drew applause while bonds did the more honest accounting.
In our view, bond markets are being more forthright about latent and emerging risks. Equities, by means of comparison, have been steadily moving higher and testing new heights since March’s sell-off event. This isn’t necessarily uncommon for stock markets, where optimism and pessimism can quickly trade places. Looking under the hood, the V-shaped recovery seems far closer to a dismissal of risks rather than a preference for opportunity.
On the risk side, the Iranian conflict and effective closure of the Strait of Hormuz have yet to be resolved, keeping oil prices at elevated levels. News of salvo strikes often follows announcements of an imminent peace deal, which complicates investor predictions. By May’s end, the leading belief was that a deal was in the works. Again, oil fell sharply on the news.
Up until now, oil prices have been the concern. Recent warnings from oil executives at Exxon Mobil and Chevron, however, have drawn attention to depleted inventory levels and the potential for global supply shortages should oil production not normalize soon. Fiscal stimulus and the drawdown of operational reserves have helped households thus far, but both have finite capacity—consumer spending and economic resiliency, in turn, also have limits.
So, what opportunity could be overshadowing these circumstances? In a word: technology. The AI complex refuses to cool down; an impressive 28% growth in first-quarter earnings doubled expectations, drawing more retail investors into already crowded trades.
Of concern is how business profitability and U.S. stock market performance are being determined by a fraction of companies. When we strip out Nvidia, Micron, Alphabet, and Meta, the earnings profile shifts dramatically. Such market concentration carries innate, and significant, risk. As a group project, tech-heavy indices are relying on their top students to continue showing up—any form of absenteeism or falling short of expectations could impact everyone’s final grade.
But we continue to find balance elsewhere, namely by carefully weighing the opportunity and growth that technology is known for against the risks identified above. Our strategies welcome the direct beneficiaries of the AI buildout—nearly household names at this point—without mimicking the overallocation found at the index level. Associated opportunities across industrials and power generation may be less celebrated, but they are just as crucial. Innovation is a staged process, with adoption typically following construction and commercialization—our investment team is active here as well, looking toward the future and monitoring how companies may utilize AI to improve their business models.
Alongside our unique approach to fixed income as a whole, we sit comfortably between the bulls and the bears. In a world trying to reconcile the threat of a global oil supply crisis with the growth prospects of AI, we believe that diversification, flexibility, and manoeuvrability are crucial assets in portfolio management.