Market Commentary
“When all is said and done, more is often said than done.”
Iran
Now that the Strait of Hormuz is open for business (for two whole weeks), I booked a cruise through it! Want to join me? Maybe bring the fam?
I am still not a geopolitical analyst or war correspondent, so I will keep my comments brief. As a God-fearing human being, I am glad that Trump didn't follow through on his threats to "wipe out an entire civilization." I can't say that I am surprised, though. This is the usual playbook for him. Apply maximum pressure, and then retreat. It's a pretty standard negotiating tactic that has led to what is now widely known as the "TACO" (Trump Always Chickens Out) Trade, which was in full effect on Tuesday night (4/7). Everyone knows Tuesdays are for Tacos.
The ceasefire is delicate at best. I personally don't expect it to last very long. As I am writing (mid-day on 4/8), the headlines coming across my Bloomberg Terminal include:
*IRAN'S FARS NEWS AGENCY SAYS OIL TANKERS PASSING THROUGH HORMUZ HAVE BEEN STOPPED AFTER ISRAEL'S 'CEASEFIRE BREACH'
*IRAN'S GHALIBAF SAYS CEASEFIRE AGREEMENT WITH US VIOLATED
*GHALIBAF SAYS BILATERAL CEASEFIRE, TALKS 'UNREASONABLE'
*GHALIBAF: BASIS ON WHICH TO NEGOTIATE HAS BEEN VIOLATED
*GHALIBAF: THREE CLAUSES IN CEASEFIRE PLAN VIOLATED SO FAR
And that is just a few of them.
After the news of the deal last night, Crude Oil fell 22% from yesterday's highs. Great. On the other hand, currently trading at $95, West Texas Intermediate (WTI) Crude Oil futures are still up 65% for the year!
The stock market is actually holding up very well, compared to what I would have expected if I had known in advance that oil would be up this much.
It is difficult to say anything meaningful about the situation as it seems to change every five seconds. Still, it is probably worth noting that the situation is impacting more than just crude oil.
Fertilizers are generally classified into two types: phosphate fertilizers and nitrogen fertilizers. A major commodity input for phosphate fertilizers is sulfur, and a major input for nitrogen fertilizers is urea, and about half of the global supply of each comes from the Middle East through the Strait of Hormuz. We are in the midst of the planting season now, and if farmers don't have enough fertilizer before planting, yields will suffer during harvest season. Lower supply will lead to higher food prices down the road.
Helium is a critical input in semiconductor production. About 30% of the global helium supply comes through the Strait. What are they going to fill those data centers with if semiconductor production is severely limited?
These are just a couple of examples of why the United States is looking for a deal to open the Strait without having achieved its originally stated objectives in Iran. The goalposts have been moved several times already, and I expect that to continue, because the alternative is a global economic collapse.
Presently, the Strait remains virtually closed, despite Iran's claims that crossings are "possible."
Performance Recap & Analysis
All the major indexes and prices we track were down in March, with Gold leading to the downside. We often refer to Gold as the "chaos hedge," because it normally performs well during times of, well... chaos. The current environment is nothing if not chaotic.
So why isn't Gold doing its job? A few reasons. Perhaps the simplest of which is that it had gone up so much leading into the current chaos. Over the past year or so, during its relentless rise, Gold has become a bit of a momentum trade, with people who normally shun Gold and make fun of "Gold Bugs" buying it simply because the price was going up. When it stops going up, those people all head for the exits at once.
Another reason is that both the US Dollar and interest rates have risen as expectations of a Fed interest rate cut have evaporated. Before the ceasefire was announced, markets were actually pricing in a higher likelihood of a Fed interest rate hike than a cut. Today, the market is not expecting any rate cuts going all the way out to July 2027. At the beginning of the year, the market was expecting two 0.25% cuts.
We have taken some profits on our Gold positions this year, but we'll continue to maintain some exposure. We probably always will. In the long run, Gold should keep doing the job it has done so well for thousands of years. Year-to-date, despite falling 11.1% in March, Gold is still outperforming all the other indexes we track, up 8.1% as you'll see in the chart below.
We added a Small Caps Index (Russell 2000) to the charts this month because we took a position in Small Cap stocks in 2025, sensing a rotation materializing. Small Cap stocks are a great complement to our positions in the Top 10 largest stocks in the S&P 500.
As you can see in the chart above, Small Caps are actually up slightly this year, while the Top 10 are dragging the benchmark S&P 500 down.
When people are buying the S&P 500, and it is rising, the largest stocks benefit the most - but when people start hitting that sell button, they suddenly become the biggest sources of cash and get sold the most.
We have reduced all of the Top 10 toward our minimum allocations, and none are at their maximum allocations.
Eli Lilly (LLY) finished the month just outside the Top 10, at number 11, just behind Walmart (WMT). LLY is down about 14% this year, while WMT is up about 12%. These two companies, and JP Morgan (JPM), have all held the number 10 spot over the past year, and I am glad we chose to stick with LLY rather than swap them out over and over. Complicating matters is the impending IPO of SpaceX, which may come to market with a market cap of $2 Trillion. However, it will not be added to the S&P 500 Index immediately. It usually takes a year for a company to become eligible for the index, but the official rules have not been published. Standard & Poor's, the company responsible for index construction, will likely make an exception and add it, especially if it trades at over $2 Trillion and maintains good liquidity over the first few months it is public. This would push Berkshire Hathaway into the number 10 slot and leave LLY, WMT, and JPM all outside.
For now, we'll stick with LLY. As you can see in the table above, LLY is cheaper than WMT from a P/E perspective, and it has grown revenue 4x faster over the past 5 years while producing superior Return on Invested Capital (ROIC) and Return on Equity (ROE). If another company can maintain its Top 10 position for 3 consecutive months, we'll consider a change. But even then, we probably won't exit our LLY position; rather, we'll just shift it to one of our Quality Stock holdings since it trades at a fair price and meets all our other criteria for a Quality Stock
Technical Analysis
The S&P 500 (as measured by the SPY ETF) fell over 9%, but less than 10%, from its highs to a low of $631.97 on 3/30, before rallying 2.91% on the last day of the month. Had the month ended a day earlier, the index would have been down 7.87% in March. It has since rallied further on "hopes" of a ceasefire, but has run into resistance at the declining 50-day moving average (DMA) and is now trading less than 3% from its all-time high.
Anything is possible, but given the geopolitical and economic backdrop, I don't expect it to race back to a new all-time high without some volatility. I will be watching for it to fall to a higher low (above $631.97) and for the 50DMA to begin rising, as a signal that we are in the early stages of a new intermediate-term uptrend. Meanwhile, the 200DMA, which is the long-term trend, remains up.
The NASDAQ 100 (as measured by the QQQ ETF) has fallen much more than the S&P 500. At the lows ($558.28), it was down 12.19% from its high of $635.77 reached all the way back in October 2025.
It was down 8% on March 30 before rallying 3.39% on the last day of the month, and then adding to those gains this month. It is trading above its falling 50DMA, which is a positive, but I won't be surprised to see some downside volatility here either. Again, I will be looking for a lower high and a rising 50DMA as a sign we are in the early stages of a new intermediate-term uptrend. Likewise, the 200DMA is still rising.
Again, anything can happen, but this feels like a bit of a trap.
Meanwhile, stocks remain expensive, as measured by the Buffett Indicator, despite a minor pullback that barely moved the needle.
On the other hand, as Buffett says, to be fearful when others are greedy and greedy when others are fearful, CNN's Fear & Greed Index shows plenty of fear in the market today.
Growth and Inflation
Last month, I noted that the first estimate of GDP for the 4th quarter of 2025 was disappointing at only 1.4% vs. expectations of 3%. I also pointed out that there would be one more estimate before it was finalized, as it was this morning. The second estimate cut the growth rate from 1.4% to 0.7%, and now that all is said and done, the final number is only 0.5%. Not good. So, growth materially slowed from 4.4% in the third quarter of 2025.
Inflation, meanwhile, is stable but expected to accelerate materially when reported tomorrow. The current consensus is for annual inflation in March to come in at 3.4%, thanks in no small part to the rapid rise in oil prices discussed earlier. The numbers come out tomorrow morning (4/10).
This could easily approach or even exceed 4% by the end of the year, particularly if the situation in the Middle East isn't resolved quickly. The longer this war goes on, the slower the global economy will grow, if it grows at all, the higher the unemployment rate will rise, and the faster prices will climb, putting the Fed in a tough spot as to whether to prioritize stable prices or maximum employment. Cutting rates would stimulate the economy but also force prices higher. Hiking rates would slow inflation but also slow the economy and hiring.
Rising prices and slowing economic growth are what we refer to as a Quad 3 environment. Our friends at Hedgeye are forecasting this environment for the next two quarters (Q2 and Q3) and potentially a Quad 4 in the fourth quarter. Of course, a lot can change between now and the end of the year, but the stagflation risks that I described last month remain front and center.
There are a couple of other risks we are facing: Private Credit and Software Stocks.
Private Credit
Private Credit is collapsing. Countless funds have "gated" investor withdrawals. Gating customer withdrawals means the manager temporarily restricts how much money investors can withdraw during a given period, usually because redemption requests exceed the liquidity of the underlying loans. By capping or delaying withdrawals, the fund avoids dumping assets at distressed prices, helping protect remaining investors from fire‑sale losses and preserving the long‑term integrity of the portfolio.
If you are an investor and request to liquidate your entire position, you might only receive 5% of your money, and you can submit a new withdrawal request next quarter. Usually, when this happens, it takes several quarters, and sometimes years, to get all your money out. And by the time you do, it is often (substantially) less in the aggregate than when you submitted your request.
Many investors who thought they had a low-risk way to earn 10% yields are finding out they are stuck. And the loans that back these yields are failing at alarming rates.
You might be thinking, "ok, bummer for them, but I am not invested in private credit, so no big deal for me." You would be wrong. What happens when investors, often institutional investors, need to raise cash but can't get it from the place they want to take it? Answer: they start selling other, higher-quality, more liquid positions in public stock and bond markets.
I am glad that we have saved more than a few of our clients from getting stuck in this market. Even if everything ultimately works itself out, the stress of not being able to get your money out when you want it is not much fun.
The takeaway: anytime someone tells you that they are earning above-market interest for below-market risk, they are either lying to you or have no idea what they are invested in. Never forget it.
SaaSpocalypse
The SaaSpocalypse continues. While it hasn't accelerated over the past several weeks, with the whole market under pressure due to the war and everyone focused on oil prices, software stocks have really not participated in the market rally since the March lows.
I have been waiting to see a new uptrend develop in a few of the best software stocks before adding one or more to our portfolios, and so far, it just hasn't materialized. These are some of the best, most profitable, and capital-efficient businesses in the history of the world. And I am excited to own them for the long run. But even though they are amazingly good business trading at more than fair prices, they could always get cheaper.
So even without the war in Iran, we are facing very real risks in markets. That doesn't mean we need to rush to cash and try to hide from market risk. That would only introduce significant purchasing power risk from inflation. In reality, there is no such thing as "no risk." There is always risk. We simply get to choose which risks we prefer over others.
Against the backdrop of all this noise, we are not abandoning markets or pretending there is a way to opt out of risk; instead, we are leaning into riskmanagement by holding a little more cash than normal, honoring our stops, emphasizing only the highest‑quality stocks, and, in more aggressive portfolios, favoring companies whose prices are already showing upward momentum. At the same time, for more conservative investors, we have increased allocations to short‑term fixed income, which can benefit from higher yields while limiting interest‑rate sensitivity and providing a reliable source of liquidity. The goal is not to time every twist in the headlines or every tick in oil, software, or Private Credit, but to stay invested in a way that acknowledges real risks, keeps portfolios resilient across different economic "quads," and gives us the flexibility to take advantage of opportunities as they arise rather than being forced into decisions by fear.
I hope you found this commentary both useful and enjoyable. Please tell me what you think - good, bad, or otherwise.
Would you recommend it to people you know? Why or why not? What about our portfolio management and financial planning services?
Click here and let me know!
Until next time, I thank God for each of you, and I thank each of you for reading this commentary.
Clients, I encourage you to click here to access your personalized performance portal and see how your portfolio performed compared to the market's last month.
Shane Fleury, CFA
Chief Investment Officer
Elevate Capital Advisors
Legal Information and Disclosures
This commentary expresses the views of the author as of the date indicated and such views are subject to change without notice. Elevate Capital Advisors, LLC ("Elevate") has no duty or obligation to update the information contained herein. This information is being made available for educational purposes only. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Elevate believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, including the information contained herein, may not be copied, reproduced, republished, or posted in whole or in part, in any form without the prior written consent of Elevate. Further, wherever there exists the potential for profit there is also the risk of loss.
