Equities finished higher for the 2nd consecutive week, which is the first back-to-back week of positive returns since December of 2025. On Tuesday 
of last week, the U.S. and Iran agreed to a 2-week ceasefire in order to reach some sort of permanent ceasefire solution and to help reopen the Strait of Hormuz. Even though negotiations have hit a rough patch over the weekend, the daily swings on a change in conflict headlines is easing somewhat. In fact, the 8-month futures contracts on Crude Oil show a consistently declining expectation on the price of oil, totaling a 23% decline by year-end. This will pave the way for risk-on sentiment 
to return to markets. Just over 1 week ago, the VIX was trading at a level of 25 and is now back down to its historical average of 19.5. Equity market breadth is rapidly improving along with the decline in volatility. Similar to the April-May period last year, the number of stocks in the S&P 500 Index moving above their respective 20-day, 50-day, and 200-day averages is dramatic. By Thursday of last week, the market had been up 7 consecutive days. When the S&P 500 is up at least 6 consecutive days and returns more than 6%, equities are higher 
1 year later with a 100% positivity rate. This has occurred only 9 times since 1962 and in each instance, a recession did not occur within the 12 month window and most of the instances did not see a recession for at least 4 years on average after the occurrence. Since the conflict in the Middle East began just over a month ago, we've been warning of a temporary shock to inflation. The March release of the Consumer Price Index last week did not disappoint. The month-over-month increase of +0.9% caused the year-over-year number to rise from 2.4% in February to 
3.3% in March. As expected, the primary culprit was the price of oil rising, which cost consumers more at the gas pump. However, this increase will likely be temporary if the ceasefire in the Middle East becomes more permanent. The Cleveland Federal Reserve is expecting a much lower CPI number of +0.4% in April, which will cause the year-over-year number to increase again, but the rise should ease by May's release if the decline in oil futures suggests. Investors flocked to money markets and cash-like ETFs in March, in a panic move reminiscent of prior market corrections. If the equity lows in March prove to be the final bottom of the year, the build-up in cash will prove to be a missed opportunity. Consumers are primed to spend as tax refunds are higher this year versus the previous two years. Redbook Sales continue to come in well above average, moving to +7.6% this week on a year-over-year period and higher than the 4.4% historical average. The labor market is holding up, as Continuing Jobless Claims fell below 1,800k for the first time since June of 2024. Adding some dry powder to equities isn't a bad decision here even if the ultimate lows on equities have already been reached. Expect more shifts in sentiment as headlines change.
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