| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
The first quarter of 2026 was dominated by geopolitical tensions following attacks on Iran in early March, which significantly disrupted global energy markets and shifted investor sentiment from optimism to caution. The closure of the Strait of Hormuz and Iranian attacks on Persian Gulf energy infrastructure created worldwide energy supply concerns, with oil prices rising and stagflation fears emerging. This geopolitical shock reversed earlier positive momentum in international equities and caused volatility across asset classes. The S&P 500 declined 4.3% for the quarter, with defensive sectors outperforming as investors sought safety. Fixed income markets faced challenges as inflation expectations rose and Federal Reserve rate cut expectations diminished. Municipal bonds showed resilience despite late-quarter volatility, supported by strong credit fundamentals and investor demand. Private credit markets experienced stress with liquidity concerns emerging. The investment backdrop is characterized by persistent policy uncertainty, limited fiscal flexibility, and constrained monetary optionality globally. Risks appear elevated compared to any time since the pandemic, requiring careful monitoring and prudent asset allocation strategies going forward.
Global markets face elevated geopolitical and energy risks following Iran conflict escalation, with traditional policy tools constrained by high debt levels and inflation concerns.
The outlook emphasizes heightened uncertainty with risks appearing higher than at any time since the pandemic. Energy market stability and geopolitical developments will be key drivers of performance going forward. International equities may benefit if energy markets stabilize and currency volatility moderates, though a prolonged period of elevated uncertainty would favor a more selective, quality-oriented approach across regions.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 31 2026 | 2026 Q1 | - | energy, fixed income, geopolitics, inflation, international, Iran, Municipal, oil | - | Q1 2026 markets were upended by Iran conflict escalation in March, disrupting global energy supplies and sparking stagflation fears. The S&P 500 fell 4.3% as geopolitical risks dominated, reversing earlier optimism. Energy prices surged while defensive sectors outperformed. With policy tools constrained and risks elevated since the pandemic, prudent positioning is essential. |
| Jan 9 2026 | 2025 Q4 | - | Dollar, equities, Fed, infrastructure, international, Municipal, rates, Yields | - | Strong 2025 market performance masks underlying K-shaped economic divergence between income segments. International equities dramatically outperformed on dollar weakness from policy uncertainty. Municipal issuance hit records on infrastructure needs. Fed leadership change expected with more dovish successor. While strategists remain bullish for 2026, sustainability concerns exist given consumer spending concentration among top earners. |
| Oct 9 2025 | 2025 Q3 | - | AI, Fed, fixed income, rates, tariffs, technology, Valuations | MSFT US | Strong Q3 performance driven by AI momentum and Fed rate cuts masks concerning fundamentals. Market concentration and valuations have reached dangerous levels not seen since 2000, while persistent fiscal deficits and Fed dual mandate challenges create systemic risks. Despite solid corporate earnings and consumer spending, prudent risk management is essential given current market conditions. |
| Jun 30 2025 | 2025 Q2 | - | AI, Dollar, Federal Reserve, geopolitics, inflation, tariffs, technology, Trade Policy | - | Q2 2025 markets surged 10.94% after overcoming early tariff volatility, driven by AI enthusiasm and trade policy stabilization. Dollar weakness boosted international equities while fixed income stabilized. Key concerns include elevated valuations, persistent inflation, and fiscal risks from higher rates. Strong performance masks underlying macro uncertainties requiring continued vigilance. |
| Mar 31 2025 | 2025 Q1 | - | Bonds, fixed income, international, Multi-Asset, Municipal, uncertainty, volatility | - | Davidson Investment Advisors maintains disciplined multi-asset positioning amid Q1 volatility, with equities down 4% as AI unwound but bonds providing 2.4% ballast. The firm strategically emphasizes dividend growth and resilient balance sheets while finding opportunities in BBB bonds and international markets. Policy uncertainty creates near-term noise but reinforces their long-term opportunity-focused investment approach. |
| Dec 31 2024 | 2024 Q4 | - | AI, credit, Dollar, fixed income, international, Municipal, rates, technology | - | U.S. markets delivered exceptional 25% gains driven by AI-fueled Technology leadership, but face headwinds from rising long-term rates, dollar strength pressuring international markets, and stretched valuations. The Fed's rate cuts diverged from rising Treasury yields, reflecting economic resilience but creating bond market volatility. Geopolitical uncertainty and consumer credit strain add risks entering 2025. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
OilAttacks on Iran in early March significantly impacted markets amid talk of stagflation and worldwide crisis in energy markets. The Strait of Hormuz closure and Iranian attacks on energy infrastructure in the Persian Gulf have disrupted global oil flows, with twenty percent of the world's oil typically transiting the Strait daily. Higher energy prices impact consumer spending, manufacturing, and transportation globally. |
Energy Geopolitics Inflation Supply Chain Iran |
LNGThe market for Liquified Natural Gas has been significantly affected as exports from Qatar, the world's number two producer, have essentially ground to a halt as the country declared force majeure relating to existing contracts for delivery. This disruption affects global energy markets and supply chains. |
Natural Gas Qatar Energy Supply Chain Exports | |
AIQuestions remain as to the effects of artificial intelligence on entire industries such as software and the labor market, particularly among new college graduates. Optimism around productivity gains from artificial intelligence and technological investment continues to build, but those potential benefits must be weighed against inflationary pressure of higher energy costs. |
Technology Productivity Labor Software Innovation | |
Private CreditUncertainty in the private credit markets are causing concern. Isolated instances of gating and redemption limitations reminded investors that liquidity in private markets can disappear precisely when it is most needed. These developments sparked renewed debate about valuation transparency, risk premiums, and the role private credit should play alongside publicly traded bonds. |
Credit Liquidity Valuation Risk Markets | |
GeopoliticsGeopolitics was the dominant macro theme of the quarter, with escalating tensions and the effective closure of the Strait of Hormuz raising the specter of a sustained oil supply shock. Events surrounding Iran proved most consequential for global markets, driving energy prices higher and reviving inflation concerns. |
Iran Energy Risk Markets Conflict | |
| 2025 Q4 |
RatesFederal Reserve lowered rates by 25 basis points in December sensing labor market weakness. Trump's disapproval of Powell and preference for lower rates creates uncertainty about future Fed leadership and policy direction. Short-term rates controlled by Fed while long-term rates set by market participants through trading activity. |
Federal Reserve Interest Rates Monetary Policy Fed Chair FOMC |
Credit StressInvestment grade corporate bond issuance expected to reach $1.81 trillion in 2026, a 10% increase from 2025. Given already tight spreads, this elevated issuance volume makes potential spread widening plausible in the coming year as supply may exceed investor demand. |
Corporate Bonds Credit Spreads Issuance Investment Grade Primary Market | |
Infrastructure SpendingMunicipal new issuance reached record levels over $567 billion in 2025, surpassing 2024's $494 billion. Higher construction costs drove state and local governments to continue borrowing, with need for additional infrastructure and energy expected to continue growth into 2026. |
Municipal Bonds Construction State Government Local Government Public Works | |
DollarDollar dropped significantly during first half of 2025 due to market uncertainty from U.S. trade policy changes, budget deficit concerns, Federal debt levels, and Fed independence questions. This decline provided major boost to international equity performance and earnings expectations. |
Currency Exchange Rates Trade Policy Budget Deficit International | |
| 2025 Q3 |
AIArtificial Intelligence companies continue to rally on strong momentum and guidance regarding spending and demand. The excitement of AI was a main driver of stock market performance in Q3 2025, with Information Technology and Communication Services stocks leading the market. |
Technology Growth Momentum Semiconductors Software |
RatesThe Federal Reserve commenced its first rate cut, providing significant tailwinds to markets. The expectation and commencement of Fed cuts in short-term interest rates was a significant driver, though the Fed faces challenges with its dual mandate given persistent inflation above the 2% target. |
Federal Reserve Monetary Policy Interest Rates Inflation Fixed Income | |
Trade PolicyThe tariff picture is slowly coming into focus with preliminary agreements announced during the quarter. The effective tariff rate increased from 2.31% in November 2024 to 9.75% by July 2025, though the negative economic effects have been more gradual than expected. |
Tariffs International Trade Economic Policy Global Growth Emerging Markets | |
| 2025 Q2 |
Trade PolicyThe Trump administration's Liberation Day tariff announcement created significant market volatility in Q2, with reciprocal tariffs being broader and more aggressive than expected. A 90-day pause was implemented to allow for bilateral negotiations, with tariff levels ultimately settling at roughly twice their pre-Liberation Day levels. The tariff uncertainty contributed to dollar weakness and inflation concerns. |
Tariffs Trade War Reciprocal Negotiations Dollar |
DollarThe U.S. dollar experienced significant weakness, falling roughly 8% since peaking before Trump's inauguration and posting its weakest first half performance in over 40 years. This weakness was attributed to reduced foreign appetite for U.S. assets, particularly Treasuries, and the inflationary impact of tariffs offsetting traditional dollar strength from trade policies. |
Currency Depreciation Foreign Outflows Treasuries Weakness | |
InflationInflation remained a key market focus with core CPI holding around 2.8% year-over-year in May, though the 3-month annualized core rate slowed to its lowest level since 2021. Tariff uncertainty and dollar weakness created upward pressure on inflation expectations, complicating the Federal Reserve's policy decisions and keeping rates unchanged. |
CPI Core Expectations Pricing Pressures | |
AIRenewed enthusiasm for artificial intelligence drove strong performance in Technology and Communication Services sectors during Q2. AI-related themes contributed to the market's concentration among mega-cap companies and supported the continued outperformance of growth over value strategies. |
Technology Communication Services Mega-cap Growth | |
| 2025 Q1 |
DividendsThe firm has been moving to more exposure to dividend growth stocks as part of their disciplined approach. Defensive sectors such as Health Care, Utilities and Consumer Staples finished higher as investors became more risk-averse and sought safety in dividends. |
Dividend Growth Defensive Income Safety |
Trade PolicyThe main topic in markets has gone from interest rates to tariffs with the new Trump administration the focal point of news flow. Trade wars, deportation, DOGE and dramatic changes in international affairs are creating uncertainty. Consensus assumed tariffs would negatively affect foreign companies more, given the U.S.'s negative trade balance. |
Tariffs Trump Trade Wars Policy | |
AITechnology and Communication Services stocks underperformed as the Artificial Intelligence trade unwound. However, Chinese technology firms showed surprising progress in artificial intelligence, driving renewed enthusiasm and strong performance in China's equity markets. |
Technology China Innovation Unwinding | |
| 2024 Q4 |
AIArtificial Intelligence fervor drove Technology stocks and Semiconductor industry performance as datacenter buildout and Generative AI pursuit fueled capital spending. AI-related infrastructure investment was a key driver of market leadership in 2024. |
Artificial Intelligence Generative AI Data Centers Technology Semiconductors |
RatesThe Fed began cutting rates in September from 5.33% to 4.33%, but long-term rates rose with the 10-Year Treasury climbing from 3.88% to 4.56% for the fourth consecutive year. This divergence reflects economic growth resilience and above-target inflation expectations. |
Federal Reserve Interest Rates Treasury Yields Monetary Policy Inflation | |
DollarThe dollar posted its strongest quarterly performance since Q4 2016, driven by reduced Fed rate cut expectations and potential negative tariff impacts on trading partners. Dollar strength weighed on international equity performance. |
Dollar Strength Currency International Markets Trade Policy Fed Policy |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 9, 2025 | Fund Letters | Andrew Davidson | MSFT US | Microsoft Corp. | Information Technology | Systems Software | Bull | NASDAQ | AI, Bonds, cloud, Concentration, Credit, growth, Software, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| No ticker commentary found. | |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
