Read this week's Major Trend. 

Read this week's Major Trend. 

May’s equity rally remained narrow and AI-led. Core gained from equities and fixed income, Select Industries benefited from AI infrastructure exposure, and Grizzly held up relatively well despite the market’s strength.

Read this week's Major Trend. 

The favorable seasonal window has ended, and higher interest rates are already tightening financial conditions for the Fed.

The biggest macro story in May was the sharp rise in G5 10-year bond yields.

A recent paper by Kritzman and Turkington addressed this timely issue and gave a refreshingly simple conclusion: Concentration may look unsettling, but historically it has not been a reliable predictor of poorer returns or higher risk.

AI infrastructure continues to hold a prominent place in the portfolio with several heavily weighted industries tied to the theme. At the sector level, Financials exposure was reduced.

In May, “Flight S&P 500” covered an amazing chunk of miles flying on just one engine: Info Tech’s tremendous 16% gain, which overshadowed pervasive losses in eight of the other ten sectors. Semiconductors and tech hardware accounted for three-quarters of the index’s upside in May. YTD, over one-tenth of the SPX gain is attributable solely to Micron (more than any other firm).

If AI is the darling of Wall Street, major packaged food brands may be the most hated theme of the day. Record-low EPS growth, record-low LTG rates, record-low P/E multiples, and record-low relative prices are priming this group for a classic contrarian opportunity.

The Dow Jones Industrial Average debuted on May 26, 1896, when Charles Dow summed the prices of a dozen industrial companies and divided by 12.

AI-infrastructure outlays stand like a Giant Sequoia in the dense forest of economic activity; the accelerated buildout is masking softer conditions across the rest of the economy. Figures for S&P 500 capex and GDP growth are being distorted by a narrow group of AI beneficiaries.

Wall Street estimates show first-quarter earnings soaring an amazing 27% over 2025’s opener. Just as striking was the extent to which estimates were revised upward as the quarter unfolded.

Q1 book value changes across most BDCs were modest, implying that the sell-off was driven more by perceived fear than actual erosion in credit quality or loan value. Yet, major BDCs still trade at levels that can be interpreted as genuine discomfort over credit concerns.

The rally in the S&P 500 continued through May, ending the month with nine consecutive weekly advances. The index has now advanced 19% since March 30th.

Read this week's Major Trend.

Whatever descriptors we might apply to first quarter earnings, the choice of words seems inadequate.

AI mania lingered in May, as semiconductors and tech hardware accounted for three-fourths of the index’s monthly gain (23 constituents in total, including 19 with less than $1T in market cap). April and May provided the worst two-month period of relative performance for the Equal-Weighted S&P 500 in our data set, which extends all the way back to 1990.

• Over the last twelve months, our Growth style boxes have seen wildly unequal performance. Since May 2025: Royal Blue Growth +22.3%; Mid Cap Growth +7.8%; Small Cap Growth +41.9%.

This is a three-year “low” for our Ratio of Ratios. There was a large disparity in May between the S&P 600 (+0.9%) and Russell 2000 (+4.3%), with the latter benefiting from the rally in money-losing firms. Those companies are excluded from this study, dampening the performance and P/E expansion of our Small Cap estimate.