May 2026 Newsletter
May 4, 2026
Dear Valued Client:
“Today Oil Prices...”
As spring settles into the Mountains, and the trails around Durango become busy with hikers and bikers, it is an apt moment to pause, take in the view, and reflect on the financial markets. This spring has been as dramatic as any in recent memory—full of sharp turns, surprising recoveries, and important reminders that a disciplined, long-term approach remains the most reliable path forward.
Market Performance and Economic Overview
Wall Street is coming off one of its strongest months in years, with major indices posting significant gains. This advance was led by a renewed rally in technology infrastructure, supported by strong contributions from hardware and networking companies. The broader technology sector recorded its best monthly performance in over two decades, driven by robust corporate earnings that are on track for a sixth consecutive quarter of double-digit year-over-year growth.
U.S. economic growth regained momentum in the first quarter as business investment in artificial intelligence increased and government spending rebounded. Current estimates point to a strong start to the second quarter, with projected growth of 3.5 percent, up from 1.2 percent in the prior quarter. While these projections are subject to change, the trend suggests that underlying fundamentals remain firm despite ongoing volatility.
Recent data indicates that both manufacturing and services are expanding, as reflected in Purchasing Managers’ Index (PMI®) readings above 50 (see chart below). The PMI® is a widely followed measure of business activity and therefore one gauge of how the economy is doing based on surveys of purchasing managers—those closest to day-to-day operations—covering areas such as new orders, production, employment, supplier deliveries, and inventories. A reading above 50 signals that activity is generally increasing across the economy, while a reading below 50 indicates contraction. As shown in the chart, PMI® dipped below 50 late last year, indicating a slowdown, but has since rebounded into expansion territory in recent months, suggesting improving business conditions. At the same time, rising costs continue to pressure businesses, even as demand holds up. In response, we are emphasizing companies that have the ability to sustain profit growth in a higher-cost environment, positioning portfolios for what we view as a “busy but expensive” economy.
Purchasing Managers’ Index®
Energy, Geopolitics, and Inflation
Ongoing tensions involving Iran and disruptions in the Strait of Hormuz have contributed to volatility in crude oil prices. Markets have largely absorbed the initial impact, and attention has shifted back to corporate earnings and interest rates. We continue to monitor energy-sensitive sectors and maintain exposure to defensive assets while remaining positioned to capture opportunities as conditions evolve.
A notable development in global energy is a renewed interest in Venezuela. Support for a commercial corridor and investor-friendly reforms have prompted major oil companies to re-assess their reserves, underscoring broader efforts to stabilize global supply.
Federal Reserve and Monetary Policy
Following the April 29 Federal Open Market Committee meeting, Chair Jerome Powell held what is expected to be his final press conference in that role. Interest rates were held at 3.5 to 3.75 percent, with four dissenting votes—the highest level of disagreement since 1992—highlighting uncertainty around the policy outlook. Powell is expected to remain on the Federal Reserve Board through at least 2028, while Kevin Warsh’s nomination as Chair progresses. Leadership transitions at the Federal Reserve remain an important consideration for investors.
Portfolio
Our managed portfolios rose nearly 8 percent year to date through April 30, reflecting the benefits of diversification and a focus on high-quality assets. This performance, achieved during a volatile start to the year marked by geopolitical conflict, tariffs, and rising energy costs, reinforces the value of maintaining discipline and avoiding reactive decisions.
We are increasing our allocation to SRH Total Return Fund Inc. (STEW) to gain additional exposure to Berkshire Hathaway, which maintains a substantial cash position and a resilient balance sheet as it continues to hold a good outlook post the Buffett era. We believe this represents an attractive opportunity to invest in a high-quality business with strong long-term prospects.
Overall, U.S. equities continue to demonstrate resilience, supported by solid earnings, steady economic growth, and ongoing investment in technology and energy. While uncertainty remains, our approach continues to emphasize quality, diversification, and risk management.
We are also pleased to report on the successful completion of our routine state audit. In response to the audit results, three requested updates were added to our Form ADV Part 2A. We have enhanced disclosures regarding fee calculations, clarified procedures for client relationship changes, and expanded listing of investment risks. The updated document is available by clicking here. You can also request a copy by contacting our office at (970) 403-1234.
As we look ahead to the summer months, we remain confident in the foundation we have built together. Markets will continue to test patience and discipline. Our responsibility is to ensure that your portfolio is positioned to withstand those tests and to emerge stronger over time.
Thank you for your continued trust. Please feel free to reach out with any questions or to connect at any time.
Warmest Regards,
Intelligent Investment Management, LLP
