Three developments defined April 2026: (1) Rise of the Machines -- The AI trade stormed back with the SOX Semiconductor index posting its second-best monthly performance on record, driven by long-term chip and cloud partnerships between Google, Intel, Broadcom, and Anthropic; (2) The Strait Remains Narrow -- Iran conflict talks in Islamabad failed twice, the US announced its own blockade of the Strait of Hormuz, WTI surged above $105 and Brent hit $114, with damage concentrated in oil, bonds, and insurance rather than equities; (3) Losing Energy -- The IMF cut 2026 global growth to 3.1% and raised inflation to 4.4%, with energy importers in Europe and Asia (net imports of roughly 2.5% of GDP) most exposed. Portfolio considerations address the failure of traditional hedges, with gold falling 1.1% and Treasury yields rising 8-10bps, and the Fed leadership transition as Kevin Warsh awaited confirmation with markets pricing in no rate cuts through year-end.
From the original report
Selected passages from the original publication. Historical observations reflect the report's publication date, not current market advice.
1) Rise of the Machines – The AI trade stormed back in April, with the SOX Semiconductor index posting its second-best monthly performance on record. A wave of long-term chip and cloud partnerships underpinned the move as Google and Intel expanded their data- center collaboration, and Broadcom locked in chip deals with Google and Anthropic. There have also been reports of a significant amount of systematic stock purchases this past month which can feed on themselves, but risk reversing should trends change.
2) The Strait Remains Narrow – The Iran conflict defied resolution. Talks in Islamabad failed, a second round collapsed, and the US announced its own blockade of the Strait of Hormuz. WTI jumped above $105, Brent hit $114, and futures priced in more disruption. Thus far the damage has been felt more in oil, bonds, and insurance than in equities.
3) Losing Energy – The IMF cut 2026 global growth to 3.1% (from 3.4%) and raised inflation to 4.4%. The damage falls hardest on energy importers, such as Europe, where optimism from Germany’s defense spending now faces input costs that threaten those tailwinds. Asia is even more exposed as net energy imports run ~2.5% of GDP across the region.
Losing Luster – Traditional portfolio hedges have not worked during this period of volatility. Gold fell 1.1% in April even as geopolitical risk intensified. Treasuries fared worse as yields rose 8–10bps across the curve with the 30Y briefly touching 5.03%. The chart below shows trailing correlations for bonds and gold. For hedging purposes, we would ideally want these to be negative, though both have been positive of late. They can also work differently, as bonds helped protect during the 2024/25 growth scare, while gold was a hedge during the Liberation Day volatility.
Two-Headed Monster? – Kevin Warsh cleared the Senate Banking Committee and is expected to be confirmed before Powell’s term ends May 15. Powell will stay on as Governor – the last parallel was Marriner Eccles in 1948. The April FOMC featured 4 dissents, the most since 1992, and markets price in no cuts through year-end. Markets will be eager to learn if we will have a functional Fed going forward.
For educational purposes only; not individualized investment, tax, or legal advice. Investing involves risk, including loss of principal.
The original PDF is available as an optional companion to this public article. Use the download form below to access the document.