Favorite Fifteen – April 2026

By Vigilant Wealth Management on April 24, 2026

The Investment Policy Committee has finalized the quarterly Favorite Fifteen chart pack. Below please find the link to the slides for April 2026.

As we move further into 2026, the broad macro backdrop remains constructive, though not without several important challenges. Our base case continues to anticipate a “Goldilocks-like” environment, characterized by decelerating but still positive growth, gradually easing monetary conditions, and a modest fiscal tailwind. That said, uncertainty is unlikely to fade. Rising geopolitical risk, especially the war in Iran, along with changes in Federal Reserve leadership, the lagged effects of tariffs, and persistent inflation pressures, are all likely to shape the macro narrative. Offsetting these headwinds, businesses appear poised to continue investing heavily in AI and related infrastructure, while household balance sheets remain relatively healthy, supporting continued, though moderating, consumer spending.

At the same time, the war in Iran has increased the downside risk in the near term. The longer the conflict persists, the greater the likelihood that higher energy prices begin to weigh on global demand and tighten financial conditions after a period of gradual easing. A sustained rise in oil prices (Bonus Chart) would pressure consumers, raise input costs for businesses, and complicate the inflation outlook just as central banks were hoping for further disinflation. In that environment, the macro backdrop would shift away from Goldilocks and toward a more stagflationary mix of slower growth and firmer inflation. If oil remains above $100 as we approach June 1st, the risk of recession rises meaningfully.

Global Economic Activity: Global economic activity (Chart #2) remains in expansion, though the pace of expansion slowed materially in March. The slowdown was driven by a sharp pullback in services activity, while manufacturing remained modestly in expansion and finished the month above services. The Economic Surprise Index (Chart #1) also reflects a more mixed backdrop, with developed markets falling below expectations while emerging markets continue to surprise to the upside. Taken together, the data suggest global growth remains intact, but momentum has softened.

U.S. Growth: The Weekly Economic Index (Chart #3) continues to point to steady growth in the U.S., with the latest reading holding at 2.7 in March. The Atlanta Fed GDPNow estimate (Chart #4) has moved down meaningfully in recent weeks and now points to slower near-term growth, with the latest estimate at roughly 1.2% compared with 0.5% realized in the prior quarter. Taken together, the charts suggest the U.S. economy is still expanding, but at a more moderate pace than before.

U.S. Consumer: Consumer spending (Chart #6) remains resilient. Retail sales are still growing at a solid year-over-year pace, with total retail and food services up 4.0% and sales excluding motor vehicles and parts up 5.5%. The latest monthly reading was also strong at 1.9%, suggesting the consumer remains an important support for growth even as the broader backdrop becomes more uncertain. Consumer confidence (Chart #7) remains subdued. The headline University of Michigan sentiment index stands at 53.3 in April, with current conditions at 57.8 and expectations at 54.1. Confidence has improved modestly from its recent lows, but the level remains weak relative to the last two years, reinforcing the gap between softer sentiment and still-resilient spending behavior.

Labor Market: The labor market (Chart #8) continues to expand, but hiring has become more uneven. Total nonfarm payrolls reached 158.6 million in March and private payrolls rose to 135.3 million, while the latest monthly payroll gain came in at 178 thousand. Job growth over the last three months has become increasingly concentrated in health care, social assistance, construction, and a few service categories, while information, financials, and federal government are contracting. That is consistent with a labor market that is still expanding, but with less breadth and more industry-level dispersion than the headline payroll number alone would imply.

Inflation: Inflation (Chart #9) has eased meaningfully from its peak, but the path back to the fed’s target remains uneven. More recently, the rise in oil prices (Bonus Chart) caused by the war in Iran has become the key driver of headline inflation. In the latest CPI report, the energy index rose sharply, led by a 21% surge in gasoline prices, while core inflation remained much more contained. If energy prices remain elevated, inflation will likely remain elevated, and the macro backdrop could shift toward stagflation.

Bond Market: The Treasury yield curve (Chart #10) remains upward sloping but short-term yields have begun to price in fewer Federal Reserve rate cuts, while longer-term yields remain more anchored amid ongoing inflation and deficit concerns. Credit spreads (Chart #11) remain historically tight, reflecting solid corporate fundamentals, healthy balance sheets, and limited near-term default risk. While spreads widened briefly in recent weeks, they remain well below the stress levels seen during prior growth scares, indicating that credit markets are still pricing in a relatively constructive macro backdrop.

Corporate Profits: Corporate earnings expectations (Chart #13) remain constructive. S&P 500 earnings rose to $270 in 2025, and consensus estimates for 2026 and 2027 stand at $321 and $373, respectively, implying earnings growth of 19% in 2026 and 16% in 2027. Continued investment in AI and related infrastructure remains an important support for profit growth, particularly across the largest companies driving index-level earnings. Stocks tend to follow profits over time, and that earnings backdrop remains a key support for equities.

Stock Market: Equities remain near all-time highs, but valuations are elevated. The S&P 500 is trading at roughly 21.1 times next twelve months earnings (Chart #14), well above its 20-year average of 16.6 and above the plus one standard deviation level of 20.0. In other words, the market continues to reflect a fairly optimistic outlook. Additional upside will likely require continued earnings follow-through, as valuations leave less room for disappointment if growth slows or inflation proves more persistent.