Weekly Mosaic Update

Top of Mind – Week of May 11, 2026

• President Trump travels to China this week for a two-day summit with President Xi Jinping. This week’s summit is the rescheduled meeting between the two leaders, as the original summit was postponed due to the conflict in the Middle East.
• There is a range of topics that both sides will seek to gain clarity on. Chinese officials will want continued and broader access to the US semiconductor industry to fuel their AI ambitions. The US will seek broader trade concessions beyond semiconductors, including agriculture, finance, and aerospace.
• But above all is the reason why the summit was postponed in the first place, the conflict in the Middle East. China is an energy importer, and the longer the Strait of Hormuz is closed, the greater the threat an energy price shock or supply shortage poses to its fragile economy, which has been dealing with the deflationary pressures brought on by the collapse of its real estate market.
• It is in the best interests of both countries and the world to see the Strait reopen; however, with the summit taking place this week, any meaningful steps towards a reopening seem unlikely unless, perhaps, a commitment from China to purchase US energy is reached.

Top of Mind – Week of May 4, 2026

• In a pattern nearly identical to last year, April proved to be a strong month for investors as uncertainty surrounding oil prices subsided, much like tariff uncertainty did last April.
• It’s worth noting that tariffs remained in the headlines throughout last year, while the market, a forward-looking discounting machine, looked through the headlines and continued higher as perceived uncertainty dissipated.
• In April, the S&P 500 posted its strongest month since April of 2020, up over 10%, while small cap stocks outpaced large cap stocks, advancing over 12%, as measured by the Russell 2000.
• Investors also benefited from owning international equities, with emerging market stocks (MSCI Emerging Markets Index) gaining nearly 15%, while developed market stocks (MSCI EAFE Index) lagged on a relative basis, returning over 7% in April.
• Outside of the price recovery from the March lows, fundamentals, as measured by the S&P 500’s next twelve-month earnings estimates, also continued to improve, rising from $333.27 to $346.82 (per Factset) by the end of the month, as companies provided generally constructive outlooks.

Top of Mind – Week of April 27, 2026

• On Friday, the Department of Justice dropped the investigation against current Federal Reserve Chairman Jerome Powell.
• Powell’s term as chairman officially ends on May 15^th; however, he will remain a Fed governor and on the board until January of 2028. While it is common for a Fed Chair to step down as governor concurrent with their term as Chair ending, it is not required.
• The last Fed chair who stayed on after the conclusion of their chairmanship was Marriner Eccles in the late 1940s. Should Powell leave the board, the Trump administration will get another appointment to the Fed; however, if he stays, the administration would not receive an additional appointment during this term.
• Kevin Warsh, the Trump administration’s nominee to lead the Fed after Chair Powell, had his confirmation hearing earlier last week; however, the investigation threatened his confirmation, as many members of the Senate Banking Committee and the full Senate signaled they would withhold their votes until the investigation was resolved.  
• Now that it has been dropped, Kevin Warsh is widely expected to be confirmed by the Senate. The question remains whether Powell will stay on as governor or leave the Fed.

Top of Mind – Week of April 20, 2026

• Equity markets surged to new all-time highs last week as uncertainty surrounding the conflict in the Middle East eased, with the cease-fire holding and the United States and Iran preparing to enter a second round of negotiations.
• The S&P 500 wasn’t the only index logging a new high last week, as the S&P Mid Cap 400 and S&P Small Cap 600 also pushed to record highs.
• This is an encouraging sign for investors as it continues to signal improving market breadth that had been notably absent for much of 2025, during which relative returns were dominated by a small handful of large-cap stocks.
• Furthermore, these indices are making new all-time highs while their fundamentals, as measured by next-twelve-month earnings estimates, are also reaching new peaks. While these are estimates, and subject to revision, they have historically been directionally accurate.
• Markets are also poised to continue benefiting from accommodative fiscal policy, while a definitive resolution of the conflict in the Middle East could provide additional latitude for the Federal Reserve to further ease monetary policy as inflationary pressures recede.

Top of Mind – Week of April 13, 2026

• The direct peace talks between the United States and Iran concluded this weekend without an agreement.
• Last week brought an easing of pressures that had been stalking asset prices over the past 5 weeks, as oil, interest rates, and the US dollar all softened. As a result, US and International equity markets rallied in anticipation of reduced tensions ahead of this past weekend’s “Islamabad Talks”.
• With the negotiations failing, it is likely that the current cease-fire won’t hold, and there are early indications that the US may try to enforce a blockade of ships connected with Iran that are transiting the Strait of Hormuz.
• The failed talks and threat of a blockade could throw markets back into the familiar state of a singular focus on the seemingly binary outcome that the conflict in the Middle East poses.
• If negotiations restart and an end to the conflict comes into sight, markets would likely breathe another sigh of relief as uncertainty would fade. However, should the conflict persist and the blockade take effect, the compounding risks from sustained elevated oil prices cannot be ignored.

Top of Mind – Week of April 6, 2026

• The first quarter can be defined by two distinct periods – an almost Goldilocks-type environment through the end of February, with the start of the conflict in the Middle East decisively indicating the start of the second.
• In January and February, market breadth in the US was strong as a large number of stocks in the S&P 500 performed well; this breadth faded in March, reviving memories of the index’s recent narrow leadership, and the index ended the quarter down 4.3%. 
• The dispersion of returns within the US equity markets was nearly opposite of what many investors had become accustomed to. Large cap growth stocks were the worst-performing equity asset class in the first quarter, down nearly 10%, while small cap value stocks were up nearly 5%.
• International stocks outperformed their US counterparts, with developed markets falling just over 1% and, despite the volatility, emerging markets posted nearly a flat quarter, falling by just 0.2%.
• Bonds were essentially flat in the first quarter, as increases in both interest rates and credit spreads were offset by coupon income. The securitized sector was the best-performing fixed income asset class, with Agency Mortgage-Backed Securities posting a strong quarter.