While the conflict in the Middle East is far from over, so far markets are following a familiar playbook around geopolitical turmoil, which very rarely leads to derailing an existing bull market. In fact, by some metrics this was the fastest V-shaped recovery on record for the S&P. With support firmly intact, our Technical Dial remains in a Positive position. 

While the stock market plowed toward new all-time highs, consumer sentiment went the other way, with the University of Michigan’s sentiment index hitting an all-time low in April, with consumers fearful over higher prices and likely to conserve spending as a result. This pattern is already emerging in the data, with consumption decelerating in Q1 for the second consecutive quarter. Meanwhile, nearly half of GDP growth was concentrated in AI-infrastructure spending, demonstrating the dangerous level of reliance on one sector for economic growth. As such, our Economic Dial remains Negative. 

AI valuations were back in the crosshairs in April, with OpenAI posting revenue and user data that missed internal targets for Q1, which hit the tech-heavy Nasdaq even as OpenAI has yet to go public. While first quarter S&P earnings have been stellar so far, P/E ratios remains stretched, and as such our Valuation Dial continues to take a Negative reading.