Week in the Charts (3/3/26)

Look video of this post here.

---

This week’s post is sponsored by Y Chart

Private equity, private credit and real assets now represent a large portion of the portfolio, but evaluating them alongside public markets is not easy.

YCharts now supports the Hamilton Lane private market benchmarkallows advisors to analyze alternatives within the same framework as equities, ETFs, mutual funds and fixed income. Rather than relying on public evidence or static reports, advisors can now measure private investments with tailored data and place performance in the right context.

Learn more and earn 20% discount. your initial subscription to YCharts Professional (new subscribers only).

---

The most important charts and themes in markets and investing…

1) Amazing Rotation

The rotation of sectors throughout the year is truly amazing.

Energy is up more than 27% and Materials is up 17% while Technology (-3%), Consumer Discretionary (-3%), and Financials (-6%) are all down on the year.

Driving the moves in the Energy sector were gains in Crude Oil (+24% YTD) and Gasoline (+38% YTD), which were rising well before the US attack on Iran.

This sector spread is driving a shift from Growth to Value this year as Growth places more emphasis on Technology and value places more emphasis on Energy, Materials and Staples.

In growth, weaknesses among former leaders are particularly pronounced. The seven members of the Magnificent Seven are currently in a slump and underperforming the S&P 500.

2) The World Strikes Back

International stocks have outperformed US stocks by 27% over the past 14 months, the largest 14-month gap we’ve seen since 1993-94.

Here’s a picture of global equity returns since the start of 2025…

3) Credit Problems

Leveraged Loans ($BKLN ETF) ended February down more than 3% from its January high. While not a huge drop, a weakness like this usually coincides with a much larger stock market correction (the S&P 500 ended February down just 1% from its high).

The $BKLN ETF is overweight software names (18% of the fund) that have seen credit spreads widen in recent weeks, coinciding with a massive selloff in software stocks (see the $IGV ETF which is down more than 30% from its peak).

A number of publicly traded companies that are large investors in the private credit space have seen significant drawdowns, with Blue Owl (-59%) the most impacted following news that it was limiting redemptions of some of its funds.

4) The Long Road Back to Even

The US Bond Market has now experienced a 67-month downturn, which is the longest downturn in history.

But the long journey to break even is nearly over, with the Bloomberg Agg Index just 0.3% below its 2020 high.

With current yields around 4%, this should be the baseline expectation for long-term (7 year) bond yields. Although the short term is determined entirely by changes in interest rates, initial returns are what matter most in the long term.

5) A Divided Fed

The January FOMC meeting minutes revealed the Fed’s divisions, with some members saying that further rate cuts might be necessary, others saying that holding rates steady was appropriate, and still others arguing that rate hikes should be considered if inflation remains “above target levels.”

What is the Fed’s inflation target? 2%.

And has the Fed achieved that target?

By any objective measure, the answer is a resounding no.

• Consumer Prices in the US have increased 4.5% per year over the last 5 years and have increased more than 24% in total.

• Producer Prices in the US have increased 4.6% per year over the last 5 years and have increased more than 25% in total.

• The Fed’s preferred inflation measure (Core PCE) rose to 3.0% in December. The reading was the 58th consecutive reading above the 2% target level set by the Fed.

When the Fed meets again in two weeks (March 18), the divisions will be more pronounced than ever. But for now, those who argue for keeping rates steady (at 3.50-3.75%) appear to be the majority, and the market is pricing in almost no chance of a rate cut (<3% probability).

6) More Rate Confusion

In a 6-3 decision, the US Supreme Court ruled that most of President Trump’s global tariffs were unlawful because he lacked authority under the International Emergency Economic Powers Act (IEEPA).

The justices emphasized that the authority to impose taxes, including tariffs, rests entirely with Congress, and IEEPA does not give the president authority to levy broad duties.

While the decision strengthens constitutional limits on executive power in trade policy, we still have more questions than answers about what happens next, including:

• What will happen to the rates money collected over the past year?

Most of those funds may have to be returned because at least 2,000 companies have sued the federal government.

• What will happen to the effective tariff level in the future?

In general, the tariffs may not change much in the short term as President Trump quickly announced global tariffs of 10% under a different law (Section 122 of the Trade Act of 1974), with plans to increase those tariffs to the maximum allowable limit of 15%.

• Will Article 122 tariffs be challenged in court?

It seems that might happen. The agreement would automatically expire after 150 days, unless Congress takes action, and opponents would likely oppose continuing or extending the law beyond that time.

• What impact will all this have on the trade deficit?

That’s still unclear.

The goods trade deficit reached a record high again in 2025, widening by 2% compared to the 2024 record.

There are several reasons for this:

a) Massive import spending in January-March 2025 before higher tariffs are implemented.

b) The US still has a large federal budget deficit = higher government spending = more consumption/investment = more imports.

c) Substitution: imports are diverted from countries with higher tariffs such as China to Vietnam/Mexico/India because it is still cheaper to buy from these countries than moving manufacturing capabilities to America. Additionally, high uncertainty regarding future tariff rates makes it difficult for companies to plan years in advance and make large investments in US manufacturing.

d) Inelastic demand for many goods: there are no domestic substitutes for many goods, so tariffs will only increase the price of those goods rather than reduce the volume.

e) Inflation: trade deficit is measured in dollars. If tariffs increase the price of imported goods, the nominal value of imports will increase, even if the volume does not increase. Higher import prices = bigger deficit.

• What impact does it have on economic growth and inflation?

That’s also unclear.

US Real GDP at the end of 2025 rose by 2.2%, well below the bold prediction that we would see growth of 5%.

Due to the large tariffs that will be implemented in 2025 and the high level of uncertainty regarding future tariffs, it will likely take more time for higher prices to continue to trickle down to end consumers.

7) Some Interesting Statistics…

a) The personal savings rate in the US will average 4.5% in 2025. History since 1959…

b) As much as 32% of household wealth is now held by Americans aged 70 and over.

c) Driverless taxi company Waymo now takes more than 1.2 million trips per month in California, a 22x increase over the past two years.

d) In the first 4 months of Fiscal Year 2026 the Federal Government received $1.8 trillion and spent $2.5 trillion. Don’t try it at home.

e) 12.7% of credit card balances in the US are now more than 90 days past due, the highest since 2011. 5.2% of auto loan balances are now more than 90 days past due, the highest since 2010.

---

And that’s all for this week. Thanks for reading!

Every week I create a video detailing the most important charts and themes in markets and investing. Subscribe to our YouTube channel HERE for the latest content.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosure here.