VANN EQUITY MANAGEMENT

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The market rally over the past six weeks has been impressive, not only because of its size, with the S&P 500 rising nearly 20% from its recent low, but also because the rally has had fundamental support behind it.

Two key factors have helped underwrite the move higher:

1. Very strong earnings growth

2. Resilient economic data

That combination has created a constructive macroeconomic backdrop. However, a strong market is not the same thing as an invincible market. While the current setup remains positive, several meaningful risks remain on the horizon.

We normally bring our Financial Market Insight towards the middle of each month; however, because of the increased geopolitical concerns following the U.S./lsraeli conflict with Iran over the weekend, we wanted to get out our immediate thoughts.

As of writing this Monday at 5 AM Oil is up 7%, gold is up 3%, and global stocks are lower as markets price in greater geopolitical risk. However, these moves are right in line with expectations (so currently no worse than feared).

Today's trading focus will be on geopolitics, specifically whether the U.S./Iran conflict widens and expands the number of contributing countries on both sides.

The recent pullback in equity markets in February has been pinned all on AI. First showing up in software, as investors fear that AI could disrupt business models and pressure margins across parts of the industry. From there, the weakness spread in a familiar pattern, like a sector-by-sector game of Whack-a-Mole, with selling pressure rotating through several industries, including transportation, wealth management, insurance, and commercial real estate. That sequence has left many investors asking the same question: What area gets hit next?