Don't Trade the Headlines. Watch These Two Things Instead — April 13, 2026

Forward-looking analysis of the week's most important investment themes

April 12, 2026

5 minute read

Bent, Not Broken — But Is the Floor In?

The market's central tension this week is not about whether equities will eventually recover. They will. The question is whether the worst is already behind us — or still ahead. The editorial team has been watching the evidence closely and arrives at a characteristically honest answer: it is too early to tell, but the coming week will begin to supply real data. Earnings season opens. The Strait of Hormuz remains a live variable. And the debate between a market "climbing a wall of worry" and one that has not yet found its floor will be tested against actual facts.

That tension deserves to be named squarely. What follows is the team's best reading of where the evidence points — and where the risks and opportunities lie for the week ahead.

The Strait of Hormuz: Still the Fulcrum

Five weeks into the Middle East conflict, the Strait of Hormuz remains effectively closed, crude oil is trading at $115, and the forward curve has grown more backwardated — a signal that markets expect some normalization eventually, but are not pricing it imminently. Fidelity's Jurrien Timmer frames it well: the bull market is bent, not broken. Accelerating corporate earnings have kept the drawdown in the high single digits rather than triggering the 20%-plus compression in price-to-earnings ratios that a true bear market would demand.

LPL Financial's Adam Turnquist and Jeffrey Buchbinder add an important historical footnote: stocks have generally recovered quickly from geopolitical conflicts when the underlying economy remained resilient and fundamentals held firm. With S&P 500 EPS growth still expected to come in double-digit for 2026 — and energy-sector EPS estimates alone jumping 18% in the past 30 days — the fundamental case for equities has not buckled. But LPL is clear-eyed: there are no capitulation signals, no washed-out selling, and no clarity yet on when or how the Strait reopens. Patient positioning remains the correct discipline.

What to watch for the week ahead: any meaningful uptick in vessel traffic through the Strait — even from the current trickle of four ships toward something approaching normal volumes — would be a leading indicator of oil price stabilization and a material catalyst for the recovery thesis.

Has the Market Bottomed? The 1970s Remind Us to Stay Humble

Invesco's Brian Levitt argues the market has likely not yet found its floor. Cyclical indicators are trending in the wrong direction: credit spreads are widening, inflation expectations are drifting higher, and the USD has modestly strengthened. The ECB, Bank of England, and Bank of Japan are all being priced for further rate increases. The message: watch the cycle indicators, not the headlines.

Fidelity's Denise Chisholm offers the most instructive historical reference point. Markets bottomed in 1978 — before either of the back-to-back recessions that followed, and well before interest rates approached 15%. Investors who waited for clarity in 1982 had already missed the genuine bottom by four full years. The lesson is not that the bottom is definitely in now. The lesson is that it will arrive on bad news, not after it — probably before the headlines improve. The facts will tell us. Waiting for comfort has historically been a very expensive strategy.

This is the market's essential paradox at this moment: the best entry points almost never feel that way.

Where the Puck Is Going: Away from US Concentration

Meb Faber made the argument plainly this week: the era of a US-heavy 60/40 portfolio solving everything is in the rearview mirror. US equity concentration is at historic extremes. Inflation is proving stickier than expected. Geopolitical disorder is accelerating structural shifts that were already quietly underway. The case for global diversification — international equities, real assets, trend-following strategies — is no longer a contrarian call. It is an increasingly data-supported mainstream position.

Franklin Templeton's Jeffrey Schulze adds an important quantitative dimension: companies entering the top 10 of the S&P 500 have historically underperformed the benchmark by 5.8% per year over the subsequent decade. Trees don't grow to the sky. The disciplined active response is to rebalance away from mega-cap concentration and toward the broader opportunity set — both geographically and across the market-cap spectrum.

To be clear: this is not a call to abandon US equities. It is a call for proportionality. The weight of evidence now favors a more genuinely diversified posture — something advisors should be reviewing actively with clients this week.

The AI Question: Powerful, Yes. Profitable, When?

Research Affiliates' Chris Brightman raised an arithmetic discomfort that markets have not fully priced. Aggregate capex by US hyperscalers is expected to reach $650 billion in 2026 — roughly 2% of GDP. The popular comparison is to railroads and steel in the industrial era. The flaw: AI infrastructure depreciates in approximately five years. Steel mills and railroad tracks depreciated over 40 to 45 years. What looks like capital deepening may largely be capital churn — a treadmill of constant reinvestment that generates impressive compute numbers but limited durable shareholder value.

It is simply too early to tell whether AI will produce the productivity wave that justifies current valuations. But the "AI is the new railroad" thesis carries a materially weaker foundation than is commonly assumed. Investors with heavy hyperscaler exposure would benefit from understanding the depreciation math more precisely before the market does it for them.

The Week Ahead

Two questions dominate everything else for the week of April 13. First: will Q1 2026 earnings confirm the double-digit EPS growth that analysts expect, or will management teams guide the consensus lower amid a complicated geopolitical and macro backdrop? The earnings season kickoff is the most important signal the market will receive in weeks — because stocks follow earnings, and earnings have been the load-bearing beam of the "bent not broken" thesis.

Second: will the Strait of Hormuz signal any meaningful progress, or continued stalemate? Crude oil at $115 is manageable if earnings hold. A further escalation would test the resilience of every portfolio that has maintained risk-asset exposure through five weeks of geopolitical noise.

The team's positioning conclusion: a patient, diversified posture remains appropriate — tilted toward global equity, real assets, and away from the most crowded domestic mega-cap concentrations. The discipline of the active asset allocation process remains unchanged, even as the specific inputs evolve week by week.

— AdvisorAnalyst Editorial Team, Sunday, April 12, 2026