| Inflation Protection Model Portfolio |
|
| Monthly Portfolio Review: April 2026Publication date: May 4, 2026 |
|
| | | Current portfolio holdings |
|
|
| | FOR SUBSCRIBER USE ONLY. DO NOT FORWARD OR SHARE. |
|
| | | Major stock indexes advanced sharply in April on enthusiasm over AI-driven earnings growth, while Iran-related concerns dissipated. Technology was the standout sector, rising 20%. Energy stocks were modestly negative, following last month’s strong performance. The Inflation Protection portfolio gained 3.1%, versus a 10.5% return for the S&P 500. On a year to date basis, the Inflation Protection portfolio has generated a total return of 14.5%, versus 5.7% for the S&P 500. Portfolio returns were led by WESCO International (WCC), which gained 28% after a positive earnings surprise, fueled by AI demand. Portfolio detractors included gold-streaming stocks, which declined modestly in response to softness in the gold price. Weakness in Circle (CRCL) also hurt April performance results, but the share price has advanced sharply as May begins (up 32%) with an improved outlook for passage of the CLARITY Act. As the energy crisis gives way to positive sentiment around the AI investment boom, we see a favorable backdrop for stocks across multiple sectors.
|
|
| | | The Inflation Protection portfolio returned 3.1% in April, trailing the S&P 500 Index return of 10.5%. On a year to date basis through the end of the month, the portfolio has generated a total return of 14.5%, substantially outpacing the 5.7% return of the S&P 500.
The portfolio’s top performing stocks this month were WESCO International (WCC), which returned 28%; Vulcan Materials (VMC), which returned 11%; and Visa (V), which returned 9%.
The largest portfolio detractors were Royal Gold (RGLD), which returned -8%; Franco-Nevada (FNV), which returned -7%; and Circle Internet Group (CRCL), which returned -5%. |
|
|
Stocks come back
We concluded last month’s portfolio review with the view that investors would ultimately be rewarded for pushing through the March volatility—and that the sell-off had created an opportunity to build positions at more attractive levels.
That view was quickly validated. Stocks rallied sharply in April as the U.S. demonstrated progress in Iran, even as the situation in the Strait of Hormuz remained unresolved.
Oil prices stayed elevated, but markets began to look through the disruption, increasingly focused on the likelihood that the worst-case outcomes would be avoided.
At the same time, strong economic data and a solid earnings season helped shift attention back to the fundamentals underpinning the market.
Tech leads the way
The rebound was led decisively by technology.
The S&P 500 rose 10.5% in April, while the tech-heavy NASDAQ Composite surged 15.3%. Beneath the surface, the leadership was even more concentrated, with the Technology sector advancing roughly 20% for the month.
Investor sentiment pivoted quickly—from concern over energy disruptions to renewed enthusiasm around corporate earnings, particularly those tied to AI spending.
Semiconductors were a clear standout. The PHLX Semiconductor Index (SOX) climbed 38% in April, as a wave of strong first quarter results and optimistic outlooks drove the group higher.
The move capped an already powerful start to the year, with the index now up nearly 50%—far outpacing the broader market. |
|
|
|
SOX vs. S&P 500, NASDAQ(Total Return - Year to Date) |
|
|
Insatiable demand
Semiconductors are benefiting from a surge in demand for AI compute that continues to exceed expectations.
What once looked like a speculative buildout is now translating into real, measurable revenue growth across nearly every company tied to the ecosystem.
AI data centers sit at the center of this shift. They rely on a wide range of chips to generate the massive volumes of “tokens”—the fundamental units of AI output—that businesses and consumers increasingly rely on.
Not long ago, investors questioned whether AI had the makings of a bubble. As hyperscalers poured capital into infrastructure, there were real concerns about who would ultimately consume the output and whether meaningful use cases would materialize.
Those questions are now being answered.
Companies like Alphabet (GOOGL), Microsoft (MSFT), and Amazon (AMZN) are reporting AI-related growth in the 30%–60% range, providing clear evidence that demand is not only real, but accelerating.
The nature of that demand is also evolving.
In the early stages, most AI compute was dedicated to training models—feeding them vast datasets so they could learn patterns and improve performance. Increasingly, however, demand is shifting toward inference, where those models are deployed to solve real-world problems at scale.
One of the most important drivers has been AI-assisted coding. Software development is being transformed, with engineers now leveraging AI tools to write and refine code—unlocking significant productivity gains.
That shift is beginning to ripple across the broader economy.
Enterprises are investing heavily in AI services because they are seeing tangible returns, using these tools to amplify the output of their workforce. Despite persistent concerns about job displacement, initial jobless claims recently fell to multi-decade lows—suggesting that the near-term impact of AI may be more additive than disruptive.
At a more granular level, demand for software talent remains strong. Job postings for developers continue to grow even as AI automates portions of the work, reinforcing the idea that productivity-enhancing technologies can expand, rather than contract, opportunity. |
|
|
|
Software Development Job Postings(Last 12 Months) |
|
|
An AI-powered economy
Technology stocks dominated performance in April, to the point that the sector was the primary driver of gains in the broader market. But strength was not limited to tech alone.
As markets increasingly looked through Iran-related risks, several other sectors also moved higher. Part of this reflected a reversal of March’s risk aversion, but it was also supported by improving earnings trends across the economy.
Across industries, companies with exposure to AI—whether through adoption, infrastructure, or productivity gains—tended to outperform their peers. What began as a technology story is increasingly becoming an economy-wide driver of growth. |
|
|
|
Energy holds
After leading the market in March with a 10% gain, the Energy sector lagged in April. The sector was the only one to post a negative return, declining roughly 3%.
The pullback came as investor perceptions of the Iran crisis improved. While oil prices remained elevated—at times exceeding $120 per barrel amid supply disruptions—markets became less focused on worst-case scenarios involving prolonged shortages or sustained price spikes.
Even so, energy equities held up relatively well given the move in sentiment.
Looking ahead, we expect oil markets to gradually normalize as supply from the Persian Gulf recovers, though that process may take time. Historically, supply shocks tend to catalyze new investment and capacity expansion, often leading to structural shifts in the market.
Recent developments reinforce that dynamic. The UAE’s decision to exit OPEC, as we recently discussed (Did Trump Break OPEC?), raises the possibility of further fragmentation within the cartel. Venezuela could be next.
Despite near-term volatility, the outlook for many energy companies remains constructive. Global inventories have been drawn down, and governments are likely to use any pullback in prices to rebuild reserves.
At the same time, we expect increased investment in energy infrastructure—both in the United States and globally—as policymakers prioritize resilience and supply security.
From a portfolio perspective, recent months have underscored the value of energy exposure as a geopolitical hedge.
Sentiment toward the sector was subdued entering 2026, but the Iran conflict has served as a reminder of its strategic importance. With spot prices still elevated, producers are likely to benefit from a period of strong cash flow generation in the near term. |
|
|
|
Brent Crude Oil($/barrel - Last 12 Months) |
|
|
A divided Fed
April also brought increased focus on the future leadership of the Federal Reserve.
Following the apparent resolution of the investigation into Jerome Powell, the path now appears clearer for Kevin Warsh to assume the role of Chair after his confirmation process moves forward.
For now, however, Powell has stated that he has no immediate intention of stepping down from the Board of Governors—a stance that departs from typical precedent and adds uncertainty to the policy outlook.
At the same time, divisions within the Fed are becoming more visible.
A number of policymakers have signaled reluctance to move toward further rate cuts, pitting themselves against Warsh, Stephen Miran, and others who have argued that easier policy is needed to support investment, particularly as the economy enters what could be an AI-driven productivity cycle.
Markets began to reflect this tension in April. Both short- and long-term interest rates drifted higher, as expectations for near-term rate cuts diminished.
Elevated oil prices, combined with resilient economic data—including the stronger-than-expected jobs report—reinforced the view that the Fed may be less inclined to ease policy in the near term. |
|
|
|
1-Year Treasury Yields—Last 12 Months(Source: FactSet) |
|
|
|
10-Year Treasury Yields—Last 12 Months(Source: FactSet) |
|
|
But with Warsh likely to assume the Chair role in mid-May, and with oil markets expected to normalize in the months ahead—easing inflation pressures—we could begin to see a gradual decline in interest rates, which would provide a supportive backdrop for equities.
Back on track
The Iran “excursion,” as Trump described it, is beginning to fade from the forefront as investor attention shifts back to the AI growth narrative.
While some investors remain uneasy about the valuation implications of aggressive capital spending by the hyperscalers, the impact of that spending—now widely expected to exceed $1 trillion by 2027—is increasingly visible across the economy.
Those investments are flowing through the system, benefiting downstream technology segments like semiconductors and extending into a broad range of industries tied to the buildout of AI infrastructure.
There are still crosscurrents. Kevin Warsh may face resistance within the Fed, and policy uncertainty remains a factor.
But with the Iran crisis receding, energy markets likely to stabilize, and AI beginning to deliver tangible economic gains, the broader picture is becoming clearer.
The stock market is moving back onto a stronger foundation. |
|
| | |
The top performing stocks in the Inflation Protection portfolio this month were WESCO International (WCC), which returned 28%; Vulcan Materials (VMC), which returned 11%; and Visa (V), which returned 9%.
The worst performing stocks in the portfolio in April were Royal Gold (RGLD), which returned -8%; Franco-Nevada (FNV), which returned -7%; and Circle Internet Group (CRCL), which returned -5%. |
|
| | WCC is among the industrial sector beneficiaries of the AI investment boom discussed above.
The company operates as a distributor and solutions provider for electrical equipment, power systems, and network infrastructure—placing it directly in the supply chain for data center construction. As AI spending accelerates, demand for these components is rising sharply.
Shares surged following the company’s first quarter earnings report in April, which significantly exceeded expectations.
Data center sales reached approximately $1.4 billion in the first quarter, up about 70% year over year, and now represent roughly 24% of total revenue. This has quickly become the company’s largest end market.
WCC is also expanding its role. Rather than simply supplying components, it is increasingly acting as an end-to-end partner—supporting customers across power, connectivity, and ongoing operations. This allows it to capture a larger share of the overall data center spend.
Growth is broad-based across the buildout, spanning both electrical infrastructure and networking systems, with some segments growing at exceptionally strong rates.
WCC sits at the intersection of power and connectivity—two of the biggest constraints in scaling AI—and is well positioned to benefit as investment in data center infrastructure continues to accelerate. |
|
| |
VMC is a more indirect—but increasingly important—beneficiary of the AI investment cycle.
As the largest U.S. producer of construction aggregates, the company supplies the essential materials used in roads, housing, and large-scale infrastructure. With AI driving a surge in construction related to data centers as well as energy infrastructure, demand for these materials continues to build.
VMC delivered a solid first quarter, with results underscoring the strength of its pricing power and improving demand backdrop.
Aggregates prices increased roughly 4% year over year, reflecting disciplined execution and the company’s ability to push through increases in supply-constrained, localized markets. Management also indicated that pricing momentum should build further into the second half of the year.
Public infrastructure continues to act as the primary growth engine, while private non-residential activity is improving. Data center construction is an increasingly important contributor, with large-scale projects driving incremental demand for aggregates. |
|
| |
Shares of V advanced following a strong earnings report that reinforced the durability of its growth model.
The company delivered approximately 15% organic revenue growth, along with operating margins of roughly 68%, both well ahead of expectations. The strength was broad-based, driven by resilient consumer spending, solid cross-border activity, and continued demand for higher-value services.
U.S. payment volumes accelerated to around 9% growth. Management also noted no deterioration in lower-income consumer spending, suggesting that demand remains intact across cohorts.
Value-added services grew approximately 27%, now accounting for nearly 30% of total revenue. This highlights the company’s shift beyond traditional payment processing into a broader platform offering analytics, fraud prevention, and marketing tools.
Stablecoin-linked payment volumes are growing rapidly. V is beginning to position itself as a key bridge between traditional finance and digital assets—an area that we expect will become increasingly important over time. |
|
| | The portfolio’s gold-streaming plays, including RGLD and FNV, underperformed in April as the gold price declined modestly, likely in response to upward pressure on interest rates, and as investors prioritized other sectors.
Shares of CRCL also underperformed in April as investors grew more cautious around the outlook for the CLARITY Act—key legislation expected to shape the long-term trajectory of the crypto industry.
CRCL, alongside Tether, is one of the two dominant stablecoin issuers. As we discussed last month, a central concern was that the banking lobby would push to restrict stablecoin issuers from offering yield, viewing it as a competitive threat to traditional deposit products.
As May begins, however, there are strong indications that a legislative compromise may be emerging—one that would allow stablecoins to continue offering rewards to holders on crypto platforms, broadly in line with current practices.
If confirmed, this would remove a key overhang for CRCL and, more importantly, increase the likelihood that the legislation ultimately passes—an outcome that would serve as a major catalyst for the broader crypto ecosystem.
With sentiment improving around the legislation, CRCL shares have rebounded sharply, rising approximately 32% in just the first two trading days of May.
We continue to view CRCL as a highly promising long-term opportunity, given the vast addressable market of stablecoins and, more generally, the tokenization of financial products. |
|
| | |
| | |
| | |
| | | |
|
| | |
|
| | Mid-America Apartment (MAA) |
|
|
|
| | |
|
| | |
|
| | |
|
| | Circle Internet Group (CRCL) |
|
|
|
| | Diamondback Energy (FANG) |
|
|
|
| | Floor & Decor Holdings (FND) |
|
|
|
| | |
|
| | |
|
| | |
|
| | WESCO International (WCC) |
|
|
|
| | Wheaton Precious Metals (WPM) |
|
|
|
| | The 76research Inflation Protection Model Portfolio emphasizes business models that benefit from inflationary pressure. Holdings are typically selected from industries based on supply constrained real assets, including commodity and energy businesses, or companies that otherwise demonstrate superior pricing power. Drawing from an investable universe of expected inflation beneficiaries, specific holdings are chosen based on valuation and general business quality, growth and risk considerations. |
|
| | FOR SUBSCRIBER USE ONLY. DO NOT FORWARD OR SHARE. |
|
| | | |
|
|
|
|
|
