Dear Client, Partner, Prospective Client,
After three consecutive years of double-digit gains, we finally have that pullback in the first quarter of 2026 for which we are long overdue. This is healthy for the markets as we, alongside many other investment managers, own a number of large information technology and growth companies that are overvalued or have run up a little too high. We believe market volatility will continue for a few reasons.
Iran situation/Geopolitical concerns
Tensions between the U.S. and Iran remain elevated, centered on access through the Strait of Hormuz, a critical global energy shipping route. Even partial disruptions have driven oil prices higher and contributed to broader market volatility. Recent breakdowns in diplomatic talks and increased military enforcement around Iranian ports have sharply reduced shipping traffic, keeping energy markets on edge. Until there is clear progress on reopening and stabilizing these trade routes, geopolitical headlines are likely to cause short-term market swings and continued volatility.
Layoffs/Restructurings
We have started to see some clients lose their jobs outright or get laid off due to restructurings and downsizing with their respective companies. Many companies are struggling, so cutting payrolls to tighten their belts and be more profitable is sometimes the easiest decision for a company to make.
Artificial Intelligence (AI)
This continues to be the main topic that the media likes to cover. ChatGPT, Claude by Anthropic, Gemini, Microsoft CoPilot etc., are tools that companies and people are now using in their daily lives for business reasons and personal reasons to save time and also- efficiency of use. Is it a phase? Is it here to say? Time will tell but we are really excited to use a tax planning tool that are own custodian, Altruist came out with. It’s quite innovative and a market-disrupting tool on many levels. Stay tuned.
At the writing of this letter, the market woke up on a double shot of expresso and the S&P 500 finished up 2.52% and the DJIA finished up 2.9%, after being up over 3.5% to start the day, which was a nice and much-needed bounce after a tough few weeks. Earnings will be starting for the banks next week and this may indicate what’s in store for the rest of the quarter and second half of 2026. Unemployment figures for March dropped slightly to 4.3% from 4.4% the previous month. Nonfarm payroll jobs growth came in at 178,000 jobs, which was a rebound after February’s decline. Job gains were concentrated in Health care, construction, transportation, and warehousing.
We had a rare 80 degrees in early April recently. Get out and enjoy this nice Spring weather that we are fortunate to have for the next week or so. Thank you for your continued trust in our advice and counsel.
Sincerely,
J.B. L’Esperance, ChFC
Chief Investment Officer
If you have questions about our strategies or would like to open an account with Barking Sands Capital, please give us a call at 952.500.8854 or 248.687.1400 or email us at jb@barkingsandscapital.com.