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In the spirit of this week’s “State of The Union” address by the president, i thought it would be timely to share with you my view of the financial markets now. As the President addressed a Joint Session of Congress Tuesday night, he spoke to a nation navigating a complex intersection of prosperity and policy shifts. For our part, we believe the State of our Market is characterized by a “Great Rotation”—a transition from the narrow leadership of a few tech titans to a broader, more diversified economic base. Here’s my “State of The Market” address to you.
Dear Clients, prospective clients, and my fellow market participants.
As the nation pauses this week to hear the President’s assessment of our country, we find ourselves at a similar crossroads in the financial markets. The “Union” of our economy is currently a tale of two realities: a resilient consumer base that continues to defy gravity, and a structural slowdown that suggests the “easy money” era has officially left the building.
I. The Economic Union: Resilience vs. Reality
The headline figures are a study in contrast. While we celebrate the Dow Jones Industrial Average climbing above 50,000 for the first time and the S&P 500’s recent conquest of the 7,000 level, the underlying economic engine is cooling. The advance estimate for Q4 GDP growth came in at a modest 1.4%—a sharp deceleration from the blistering pace we saw last summer.
Much of this friction can be traced back to the six-week federal government shutdown that stalled the gears of commerce. Yet, like any resilient union, the American consumer has kept the lights on. Consumer Confidence ticked up to 91.2 this month, proving that while the “State” may pause, the “Market” of individual choice does not.
II. The Price of Progress
We must be honest about the cost of living. Inflation remains the primary “insurrectionist” against our domestic prosperity. With the Fed’s preferred gauge hovering stubbornly around 2.7%, the path to lower interest rates is not a straight line; it is a marathon.
The nomination of Kevin Warsh as the next Fed Chair signals a potential shift in monetary policy—a “changing of the guard” that the markets are still trying to price in. We are moving from an era of reactive policy to one that must prioritize long-term fiscal stability over short-term stimulus.
III. The Market Breadth: A More Perfect Union
For years, a handful of mega-cap “titans” carried the weight of the entire market. These are the mega-cap, heavy weight tech stocks. Today, however, we see the early stages of a broadening union.
In early 2026, we are witnessing a quiet rotation. The equal-weighted S&P 500 is beginning to challenge the dominance of the market-cap-weighted giants. This is healthy. A market that relies on a few names is a fragile one; a market that gains strength from Industrials, Energy, and Materials—the “real economy”—is a market built to last. We are hearing a new stock investment acronym – “HALO”: Heavy Assets Low Obsolescence.
The Outlook
The State of our Market is cautiously robust. We face high interest rates, trade policy uncertainty (following the recent Supreme Court rulings on tariffs), and a cooling global backdrop. But the foundation—innovation in AI and a “low hire, low fire” labor market—remains intact.
We remain positioned to capture the upside of this “Freedom 250” rally, while keeping a disciplined eye on the inflationary risks that these new tariffs may introduce by mid-summer. We do not fear the volatility; we manage it. We do not chase the headlines; we read the data.
Good day to all and successful investing,
John
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