Summary

• Most sectors are exhibiting strong correlation to the market, relative to their historical correlation.
• In current market leadership, XLK and XLE are firmly in pole position, followed by VEU and XLI. These four sectors encapsulate the key themes driving US and global equities over the past 12 months.
• Macroeconomic weakness or asset price declines outside the US are unlikely to materially shift the outlook. What matters is weakness in US equities or bonds, a sustained shift in inflation that forces the Fed’s hand - or some combination of all three. Until then, the slow-motion stagflationary shock remains intact.

The May 2026 edition of the US equity sector chartbook can be found here, with accompanying portfolio statistics here.

I have made quite a few changes to the chartbook since the last time I ran

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