🔎April 2026 Market Strategy 🇺🇸
Time to bet on the American consumer!
In my March 2026 Market Strategy, I argued that we need recession fears before a buyable bottom can occur. These recession fears would then move Treasury yields and investor positioning to more balanced levels. The Treasury’s tax drain could facilitate that sentiment shift. Let’s see how the picture has evolved since then.
TLDR Summary
So far, markets are defying fiscal seasonality. They have staged a stunning comeback, also completely seeing through any uncertainty associated with the Strait of Hormuz standoff. I believe this is risky for anyone vulnerable to high oil prices. US assets are not vulnerable to high oil prices. As I discussed in my recent piece on crude oil, this energy crisis can act as a catalyst to move capital back into the US.
The US Treasury has drained $164bn from the US economy in April so far and will likely drain another $100bn until the end of the month. Fiscal seasonality will then turn sweet and remain supportive until May 15, the next Treasury interest payment.
Over the last month, institutional investors have rotated from international assets to US assets. But there is still plenty of room left for further rotation. I expect continued strength in US assets and US Dollar.
From a sector perspective, investors love B2B industries and they hate B2C industries. Consumers are always the final demand. B2B can’t live without B2C. If everyone loves the former, the latter likely has positive inflection ahead. I consider this sector positioning a pristine signal to bet on the American consumer.
