The Energy sector jumped to the top of the GS Scores’ composite rankings this month. Analysts are revising earnings higher, signaling the Iran conflict may translate into real fundamental strength. 

The Iran conflict upended factor returns during March, with companies from the Energy sector driving the volatility—particularly within value and profitability.

For Q1, the Equal Weighted S&P 500 eked out a small gain (+1%). Much more impressive was its performance relative to the index’s Top 10 (-11%). This is the widest quarterly gap in favor of the average stock since Q4-22.

Value style boxes outperformed Growth by 8-10% across the capitalization spectrum.

March’s downdraft shaved a point off of our median Small Cap P/E multiple and about a point-and-a-half off the Large Cap measure. The Ratio of Ratios thus moved a tick closer to its long-term average but remains in the tight range of contemporary results.

The Up/Down ratio for the final month of Q4 reporting is 1.65. As with the “final” readings of the two previous quarters, this is the best figure recorded in four years. The level and trajectory of the vignette strongly suggests that no economic recession is on the near-term horizon.

For much of the last year, we’ve noted markets have persistently underpriced geopolitical risk, treating it like background noise versus a real threat. Recent events have forced a correction to that stance. Oil, in turn, has reclaimed its function as a geopolitical risk hedge—a role it had abandoned for a long time.

Stocks in the Energy sector have massively outperformed since the Iran war onset; yet prior to that, the fundamentals in this space had already strengthened and the oil price surge is an extra bonus. Expectations have remained low while positive surprises have been delivered, making for a favorable setup.

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The index had its worst month since the tariff tantrum one year ago. Yet, a sharp rally on the last trading day took some of the sting out of the March loss; downside estimates narrowed by a similar amount.

There’s been a major return benefit for selling AAPL when it hits a 7% SPX weight and repurchasing after reverting back to a 6% weight. We tracked three options to switch into after a 7% “sell” trigger, holding till a new buy is flagged, and each crushed the approach of holding AAPL through the rotation.

Walmart’s performance and expanding P/E ratio contradicts the Staples sector’s less dynamic results, so either Walmart is commanding a growth premium, or investors are applying different valuation standards across the sector. Either way, count us as skeptical.

The evolution of BDC asset values may shed new light on how much of the bear market in alternative asset management stocks is due to genuine economic risk and how much is fueled by an over-reaction to the software and redemption scare.

Private credit has dominated headlines for all the wrong reasons, devastating alternative asset managers linked to that space. When we see a group of stocks with 30%+ losses in a matter of months, our contrarian “Spidey-Sense” starts to tingle, and we begin to wonder if a bargain is in the making.

Sentiment is generally a contrarian indicator, i.e., extreme optimism foretells lower future returns and vice versa. Yet, there are backdrops in which enthusiastic sentiment coexists with ongoing equity gains.

Read this week's Major Trend

Read this week's Major Trend. 

The Major Trend Index has shifted to Neutral as technical and cyclical conditions soften, while geopolitical risks and rising cross-asset correlations add new uncertainty to the outlook. In this webcast, the team discusses how conflicts, liquidity trends, and evolving risks across AI, private credit, and crypto are shaping today’s investment landscape. They also review current portfolio positioning, sector themes, and the disciplined approach guiding allocation decisions in an increasingly volatile market.

The launch of Operation Epic Fury on February 28th triggered a 51% surge in WTI crude in just three weeks, reigniting investor fears of economic disruption reminiscent of the 1973 OPEC embargo. As tactical investors, we were curious to see what the historical impact of sharp oil price spikes has been on the stock market and on important macro indicators. This analysis evaluates 15 distinct oil price shock episodes since 1985, each characterized by a greater than 20% price increase within 30 days, to assess the historical impact on equity markets, GDP, inflation, and interest rates.

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