Still on Defense: Why This Isn't the Time to Chase the Rally
4 min read
The market is having a moment these last few weeks. Tech earnings came in strong, Google being a prime example (monster day ~10% 📈), and the headlines make it easy to feel like the worst is behind us. It's not.
My approach has always mirrored the company logo: the loggerhead turtle. Slow, deliberate, built for the long haul. Calculated risks, not reactive ones. And right now, the signals we're watching tell us to stay on defense.
Here's why.
Oil Is Telling Us Something
Brent crude touched $126 this week before pulling back. WTI is sitting above $107 today. The Strait of Hormuz remains effectively closed, the UAE has announced its exit from OPEC, and negotiations between the U.S. and Iran remain stalled. Goldman has floated the possibility of $140–$150 if disruptions persist. That's not a scenario you can dismiss. Energy at these levels is a tax on everything: consumers, margins, and sentiment.
The Fed Isn't Coming to Save Us
We've all been watching this story build for a while. Back in October, I wrote about the bear steepener, how long-end yields were rising even as the Fed was cutting, because capital was migrating away from public bonds into private markets and alternatives. (See: Risk Repricing Ahead?) The dynamic we flagged then has only hardened. Rate cuts are now effectively off the table for 2026. Current market pricing reflects little to no further easing this year as inflation concerns have reemerged, leaving the Fed balancing growth that is slowing but still resilient against inflation that remains above target. When the policy safety net gets pulled, volatility doesn't disappear, it just has fewer places to hide.
Tokyo Is Watching Too
It's not just the Fed. This week the Bank of Japan held rates at 0.75%, but the vote was a notable 6-3 split, with three board members pushing for an immediate hike to 1%. The BOJ raised its core inflation forecast to 2.8% from 1.9%, citing higher crude oil prices driven by the Middle East conflict, while trimming its growth outlook for FY2026 to 0.5%. The yen has been strengthening against the dollar on the back of the hawkish dissent and Japan's Finance Minister reiterating readiness to intervene in currency markets. Why does this matter to U.S. investors? A stronger yen unwinds the carry trade, money that was borrowed cheap in Japan and deployed into risk assets globally. When that trade reverses, it creates selling pressure in unexpected places. We saw a version of this in 2024. It's worth keeping an eye on.
Strong Earnings Don't Mean Cheap Prices
Yes, earnings are growing. S&P 500 earnings are projected to grow approximately 16% in 2026. But valuations were stretched going in, and a good earnings week from a handful of tech names doesn't change the broader picture. When a sector is overbought, adding to it because it moved higher isn't discipline, it's chasing. The Mag 7 was down roughly 12% in March, and although it's now about flat, one strong month doesn't reset that setup.
What Quiet Stocks Are Actually Doing
Here's what doesn't make the front page. While everyone is watching high-beta names swing on AI momentum, the low-volatility names in the portfolio have been doing exactly what they're supposed to do. This morning, both $BMY (Bristol-Myers Squibb) and $MO (Altria) reported Q1 2026 earnings, and both beat their estimated EPS. BMY reported $1.58 vs. an estimate of $1.42. MO beat its estimated $1.25 by $0.07. No fireworks. No viral headline. Just consistency. That's the point.
Pharma and tobacco aren't glamorous. But in an environment where the Fed is frozen, oil is above $100, and the carry trade is starting to wobble out of Tokyo, boring and profitable is exactly the right place to be. Low beta isn't a consolation prize, it's a strategy.
I like reading and listening to the veteran managers, those who have been around the block. Paul Tudor Jones, (who I’ve mentioned too many time in this blog) just sat down with Patrick O'Shaughnessy on Invest Like the Best this week. He built his career on capital preservation first, deployment second. In the interview he talks about macro debt bubble risk, the lessons of 1987, and why riding the trend matters more than predicting the top. That discipline doesn't make headlines. It builds wealth.
What You Can Actually Do Right Now
You don't need to overhaul your portfolio. But if this environment has you feeling like something needs to change, here are three things worth doing before your next move:
One — check your beta. If your portfolio is heavily weighted in high-growth tech or the Mag 7, run the numbers. Know what your actual exposure looks like before the next drawdown, not during it.
Two — raise a cash buffer intentionally. Not out of fear, out of strategy. Having dry powder at 5–7% gives you the ability to buy at the 50 or 200-day moving average when sectors reprice, rather than reacting to volatility emotionally.
Three — look at what's actually working quietly. BMY and MO beat estimates this morning. Neither was on anyone's radar this week. Low-beta, dividend-paying positions in healthcare, energy, utilities, and some consumer staples are holding up. That's not an accident.
The Bottom Line
Chasing a rally in a market pricing in geopolitical escalation, persistent inflation, a Fed on hold, and a BOJ quietly signaling it's not done tightening, that's how long-term plans get derailed by short-term noise. Tom our loggerhead doesn't sprint. It reads the current, conserves energy, and moves when the conditions are right.
That moment may be coming. It's just not today.
Have questions about how this environment fits your financial picture? Reach out here.
