Weekly Market Commentary Archives

May 30

Mitch Zacks – Weekly Market Commentary: With Households Feeling Pressure, why is the Stock Market Booming?

By BayTrust Financial Weekly Market Commentary

According to the widely watched University of Michigan Consumer Sentiment Index, Americans are not feeling good about the economy. The index fell to 44.8 in May, down from 49.8 in April, marking the lowest reading in the survey’s history dating back to 1952. That means consumer attitudes are now weaker than they were during the 2008 financial crisis, the pandemic recession, the inflation surge of 2022, and the recessions of the 1970s.¹

And yet the stock market is trading near all-time highs, having rallied off the lows at the start of the Iran conflict. For many investors, it can be puzzling to understand how a disconnect so large can exist.²

The answer, in my view, is simple and has been consistent throughout history: how consumers feel is not always the same as what consumers do.

Even as consumers report having negative feelings about the economy and financial situations, spending has remained quite firm. Retail sales rose 0.5% in April to $757.1 billion—in line with expectations—and following a stronger 1.6% gain in March. Some of the March increase was tied to higher gasoline prices, and there were signs of cooling in categories like furniture, where sales fell 2% in April after rising 2.6% in March. The detailed read on the data does not suggest consumers are retrenching. It suggests they are becoming more selective.

There’s also the matter of the “K-shaped economy” readers may hear about a lot in the news. The premise is that higher-income households continue spending at a healthy pace, supported by wages, asset values, and stronger balance sheets, while lowerincome households are under more pressure from higher prices.

Data from the New York Fed helps illustrate the split. Since early 2023, real retail spending among households earning more than $125,000 has risen about 7.6%, compared with roughly 3% for middle-income households and just over 1% for lowerincome households. That is a meaningful gap, and it explains why some retailers and service providers continue reporting strong demand while others see consumers becoming more cautious. Even still, however, we’re observing that consumers at all income levels are not pulling back entirely. They are trading down, choosing cheaper brands, prioritizing essentials, and looking for value.

The “K-shaped” argument has some merit, but I think its actual impact can be overstated at times. Higher-income households have always represented a large share of total spending, and lower-income consumers have not disappeared from the economy. The story is less about two completely separate economies and more about different degrees of pressure.

As for consumer sentiment surveys, it’s important for investors to remember that these indicators often reflect what households have already experienced, which in this case involves higher prices from 2022-2023, market volatility, political uncertainty, and more recently, gas price spikes. Markets, by contrast, tend to focus on whether economic reality is better or worse than expectations. When expectations are very low, as they are now, the bar for a positive surprise is also very low. It’s an easy hurdle for markets to overcome.

Not only is consumer spending holding up better than the sentiment surveys suggest, we’re also seeing solid business investment activity and of course, near-record earnings growth.

With nearly all S&P 500 companies reporting first-quarter results as I write, about 83% have beaten earnings expectations, which is the highest beat rate since 2021. Earnings strength has also broadened beyond the AI-related technology complex, with Energy, Materials, Industrials, Communication Services, and Consumer Discretionary companies contributing to better-than-expected results. In this context, negative consumer sentiment may actually be a key component of the constructive setup for markets. It’s part of the wall of worry markets love to climb.

Bottom Line for Investors

To be fair, the U.S. consumer is under pressure, especially from high prices in everyday categories. But pressure has not been resulting in retrenchment, at least not to date. Spending remains positive, higher-income households continue to support aggregate demand, and lower-income consumers appear to be adjusting rather than retreating entirely.

For markets, the key question is not whether consumers feel good. It is whether spending, earnings, and investment hold up better than today’s low expectations imply. So far, they have.

1 Wall Street Journal. May 28, 2026. https://www.wsj.com/economy/q1-gross-domestic-product-revisione1a6ff93?mod=economy_lead_story

2 Fred Economic Data. May 28, 2026. https://fred.stlouisfed.org/series/CP

3 MSN. 2026. https://www.msn.com/en-us/money/savingandinvesting/us-companies-shamed-by-trump-tiptoe-into-a-tariff-refundrace/ar-AA23ThNr

4 Wall Street Journal. May 24, 2026. https://www.wsj.com/economy/teen-summer-jobs-f3ffdbfa?mod=economy_lead_pos4

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

It is not possible to invest directly in an index. Investors pursuing a strategy similar to an index may experience higher or lower returns, which will be reduced by fees and expenses.

The ICE U.S. Dollar Index measures the value of the U.S. Dollar against a basket of currencies of the top six trading partners of the United States, as measured in 1973: the Euro zone, Japan, the United Kingdom, Canada, Sweden, and Switzerland. An investor cannot directly invest in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm that acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index. The Russell 1000 Growth Index is a well-known, unmanaged index of the prices of 1000 large-company growth common stocks selected by Russell.

The Russell 1000 Growth Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Nasdaq Composite Index is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Dow Jones Industrial Average measures the daily stock market movements of 30 U.S. publicly-traded companies listed on the NASDAQ or the New York Stock Exchange (NYSE). The 30 publicly-owned companies are considered leaders in the United States economy. An investor cannot directly invest in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Bloomberg Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The ICE Exchange-Listed Fixed & Adjustable Rate Preferred Securities Index is a modified market capitalization weighted index composed of preferred stock and securities that are functionally equivalent to preferred stock including, but not limited to, depositary preferred securities, perpetual subordinated debt and certain securities issued by banks and other financial institutions that are eligible for capital treatment with respect to such instruments akin to that received for issuance of straight preferred stock. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The CBOE Volatility Index (VIX) is a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500 Index call and put options. On a global basis, it is one of the most recognized measures of volatility — widely reported by financial media and closely followed by a variety of market participants as a daily market indicator. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index. The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial companies listed on The NASDAQ Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. Index composition is reviewed on an annual basis in December. An investor cannot invest directly in an index.

May 23

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Mitch Zacks – Weekly Market Commentary: What Bank Lending Data Reveals About Risk and Opportunity in Today’s Market

By BayTrust Financial Weekly Market Commentary

Commercial and industrial lending by U.S. banks surged 12.7% in the first quarter, the fastest pace of growth since 2022. I think there are fundamental and regulatory reasons bank lending is growing, which is what I mean by “opportunity” in today’s market. I’ll explain more below.

But the “risk” piece of the equation might be the more insightful part of the story, given that bank lending is growing as private credit is pulling back.¹

Indeed, as bank lending expanded in Q1, private credit lending volumes fell 14% year-over-year. Fundraising for private credit vehicles has also fallen sharply, with new capital raised by non-listed business development companies (BDCs) down roughly 60% from a year ago. Investors also redeemed more than $15 billion from those funds during the quarter, contributing to a meaningful slowdown in new loan activity.

To give readers some background, private credit has become one of the fastest-growing corners of the financial system over the past decade. Private credit funds have filled a gap created by tighter post-financial crisis regulation, which made banks less willing to extend riskier corporate loans. In a relatively short period of time, private credit grew into a roughly $1.8 trillion market and has become an important source of financing for middle-market companies, leveraged buyouts, and private equity-backed transactions.

Yields from private credit vehicles have been attractive to investors in recent years, but these investments typically involve higher fees, less transparency, and more limited liquidity than traditional public securities—as I’ve written before. Shares may only be redeemable at certain intervals, withdrawals can be capped when demand is high, and reported values may not adjust as quickly as public market prices. Many investors who were not fully aware of these terms have been caught off guard recently.

There has been some chatter in financial media that cracks in private credit markets could potentially lead to contagion of some kind, or even a recession. But that’s not an argument I would make right now, especially given the bank lending data I cited above. Commercial banks dwarf the private credit market in size, with U.S. banks currently holding roughly $13.7 trillion in loans outstanding. That’s more than seven times the size of the private credit industry. Even modest increases in bank lending can therefore have a much larger impact on overall credit availability than declines in private lending volumes.

Which brings me to the “opportunity” in today’s market. Banks are benefiting from modest regulatory easing that is allowing them to compete more aggressively for leveraged loans and other corporate financing opportunities. Earlier this year, the Office of the Comptroller of the Currency indicated it was open to relaxing some post-crisis leveraged lending constraints in an effort to help banks regain market share from private lenders.

At the same time, banks may simply be in a stronger position to lend than they were in recent years. A steeper yield curve has improved lending economics, while deposit bases provide banks with cheaper funding than many private credit firms currently enjoy. In March, syndicated bank loans were being issued at spreads roughly 100 basis points lower than comparable private credit loans.

I would argue that this trend, if it holds, is just better for the economy and markets generally. Traditional bank lending generally operates within a more transparent and heavily regulated framework than large portions of the private credit universe. While some worry that easier lending standards could eventually encourage excessive risktaking, the broader takeaway today is that credit continues flowing through the financial system rather than contracting.

Ultimately, it’s credit that helps fund business expansion, acquisitions, capital investment, and hiring. If one corner of the lending market slows while another accelerates, the net economic impact may be far less negative than some of the recent private credit headlines imply. In that sense, what we may be witnessing is less a deterioration in credit conditions and more a shifting balance between private lenders and traditional banks.

Bottom Line for Investors

Companies borrow to expand operations, finance acquisitions, invest in equipment, and hire workers. While we’re seeing a decline in private credit coincide with a pickup in bank lending, that may ultimately be beside the point. Credit availability—not the specific source of the loan—is often the more important driver of future business investment and economic growth.

And right now, the broader lending backdrop still appears constructive. Bank lending is accelerating, corporate default rates remain relatively contained, and businesses continue to access capital despite growing caution in parts of the private credit market.

1 Bloomberg. May 18, 2026. https://finance.yahoo.com/economy/policy/articles/global-bond-yields-multiyear-highs-100607393.html

2 Fred Economic Data. May 20, 2026. https://fred.stlouisfed.org/series/DGS10

3 Goldman Sachs. May 20, 2026. https://www.goldmansachs.com/insights/articles/us-data-center-power-demand-projected-to-doubleby-2027

4 Wall Street Journal. May 20, 2026. https://www.wsj.com/economy/central-banking/fed-minutes-reveal-support-for-rate-hikes-ifinflation-proves-persistent-97e63b1c?mod=economy_lead_story

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

It is not possible to invest directly in an index. Investors pursuing a strategy similar to an index may experience higher or lower returns, which will be reduced by fees and expenses.

Zacks Investment Management is an independent Registered Investment Advisory firm that acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

May 16

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Mitch Zacks – Weekly Market Commentary: U.S. Debt Has Crossed Over 100% of GDP. Here’s Our Take on What That Means.

By BayTrust Financial Weekly Market Commentary

The chart below has made the rounds over the past week, as the U.S. national debt has officially surpassed 100% of gross domestic product (GDP). Outside of a brief spike during the pandemic, the U.S. has not ended a fiscal year above the 100% mark since the aftermath of World War II.¹

Investors are understandably concerned. Federal deficits remain historically large, while rising interest rates have increased the cost of servicing that debt. In 2026, the deficit is projected to reach nearly $2 trillion, with roughly one out of every seven taxpayer dollars going toward interest payments.

This is not an issue to be dismissive about, in my view. The long-term fiscal trajectory of the United States is an issue policymakers will eventually need to address, particularly as an aging population places additional pressure on programs like Social Security and Medicare. This comes at a time when political problems have become increasingly difficult to solve.

That all being said, I also think it is important to separate the symbolism of crossing 100% debt-to-GDP from the actual near-term implications for markets and the economy.

One reason is that debt-to-GDP, while widely cited, is an imperfect standalone measure of fiscal stress in the U.S. GDP measures one year of economic output, while federal debt is the cumulative result of borrowing built up over decades. Comparing the two can provide useful context, but it does not necessarily tell us whether a debt burden has become immediately unmanageable.

Market participants rightly focus more closely on the government’s ability to service its debt, particularly the relationship between interest payments and tax receipts. As the chart below shows, interest costs as a share of government revenues have risen meaningfully in recent years. But they also remain below peaks reached during the 1980s and early 1990s, which were periods marked by elevated interest rates and fiscal concerns.

That all being said, I also think it is important to separate the symbolism of crossing 100% debt-to-GDP from the actual near-term implications for markets and the economy.

If we look at this data another way, by comparing annual federal tax receipts (green line, chart below) to annual interest payments on government debt (blue line, chart below), you can see that the government has plenty of means to stay current on debt payments. This is also why markets are not yet treating U.S. debt as a near-term solvency issue.

U.S. equity markets have risen throughout this rapid debt accumulation period, and importantly, the 10-year Treasury yield remains below its long-term historical average. Demand for U.S. Treasurys remains strong globally, supported by the dollar’s role as the world’s reserve currency and the Treasury market’s position at the center of the global financial system. I do not think we’d see this type of reaction from markets if the 100% debt-to-GDP ratio was a meaningful metric.

Bottom Line for Investors

History offers an important perspective. The last time the debt-to-GDP ratio exceeded current levels was in 1946, when debt reached more than 106% of GDP following World War II. That burden eventually declined not because the government aggressively paid down debt, but because economic growth, inflation, and rising productivity allowed the economy to outgrow it over time.

Crossing the 100% debt-to-GDP threshold is therefore best viewed less as an immediate market signal and more as a reminder of a long-term challenge that will eventually require political and economic adjustment. The more relevant questions for investors are whether the U.S. can continue financing its obligations sustainably, whether economic growth remains resilient, and whether markets maintain confidence in the broader system. At least for now, those conditions largely remain in place.

1 Wall Street Journal. May 12, 2026. https://www.wsj.com/economy/cpi-inflation-report-april62b11096?mod=economy_trendingnow_article_pos1

2 Fred Economic Data. March 12, 2026. https://fred.stlouisfed.org/series/CPIAUCSL

3 CNN. March 9, 2026. https://www.cnn.com/2026/05/07/business/tariff-case-ten-percent-trump-courtinternational-trade

4 The NY Times. May 9, 2026. https://www.nytimes.com/2026/05/09/business/china-april-trade-exportsimports.html?unlocked_article_code=1.h1A.ABt5.kCtSBqVRv4uP&smid=url-share

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

It is not possible to invest directly in an index. Investors pursuing a strategy similar to an index may experience higher or lower returns, which will be reduced by fees and expenses.

May 09

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Mitch Zacks – Weekly Market Commentary: Fed Holds Rates Steady, but the Real Story is What Happens Next

By BayTrust Financial Weekly Market Commentary

Investors can be forgiven for missing the Federal Reserve’s most recent rate decision, which saw them holding the benchmark fed funds rate at 3.50% to 3.75%. Markets were almost universally expecting a pause, which removed any newsworthiness from the announcement.¹

But that doesn’t mean the meeting was irrelevant.

Parsing through some of the Fed governors’ framings and positionings, it was clear that the Fed’s stance had shifted. In prior months, the debate had centered more on whether inflation was gradually moving back toward target. In the April meeting, the Fed appeared to be emphasizing renewed upside risks, particularly from energy. The “wait-and-see” mindset was more prevalent than it had been in recent meetings.

This distinction is notable as the Fed approaches a leadership transition. Kevin Warsh is poised to take over as Fed Chair in June, and he appears likely to bring a different framework to how the Fed operates, particularly around communication, inflation measurement, and the size of the Fed’s balance sheet. The media swirl around Warsh’s nomination may make it seem like these changes could be disruptive, but I don’t think that’s the case at all.

For starters, the Fed is not a one-person institution. A chair can shape the debate, set the tone, and guide the committee. But monetary policy is still made by a group of governors and regional Fed presidents, many of whom appear reluctant to move quickly while inflation remains above target and energy prices are rising.

That committee structure also helps explain why the more extreme concerns about Fed independence did not come to fruition. There had been worries that the Fed’s institutional structure could be disrupted or that leadership changes could alter the balance of power inside the central bank. None of that happened. Recently, the regional Fed presidents’ terms were extended, high-profile personnel changes did not materialize, and the Fed remains a committee-driven institution. For markets, the uncertainty around these somewhat political issues has all but faded, in my view.

The Fed will probably look more like business as usual, but I do foresee a gradual shift in emphasis. One area where Warsh’s views are especially important is the Fed’s balance sheet. Warsh served as a Fed governor under Ben Bernanke during the 2008 Global Financial Crisis, when the Fed dramatically expanded its use of quantitative easing. Warsh is often associated with the view that the Fed should have emergency balancesheet powers, but that the bar for using them should be high.

The Fed’s balance sheet remains very large, at more than $6 trillion, even after several years of runoff from its pandemic-era peak. Warsh has argued in the past that the Fed’s balance sheet should be smaller, and a Warsh-led Fed may place more emphasis on reducing the central bank’s footprint in Treasury and mortgage markets. In my view, however, Warsh is likely to proceed cautiously. Balance-sheet runoff is a form of liquidity tightening. If the Fed drains reserves too quickly or reduces its holdings too abruptly, it can put upward pressure on longer-duration interest rates. That could create issues for mortgages, corporate borrowing costs, and equity valuations—none of which Warsh will want.

To offset the effects of balance sheet tightening, we may see more coordination with the U.S. Treasury and an effort to push regulatory reforms that allow banks to hold fewer reserves. Adjustments to liquidity requirements or related bank regulations could, in theory, make it easier for the Fed to operate with a smaller balance sheet. This will be the thing to watch during Warsh’s term, in my view.

To be sure, I still think Warsh will make the case for lower interest rates. His argument will likely be that the recent oil shock is a supply-side issue, not evidence of demanddriven inflation. He may also point to improving productivity as a disinflationary force, especially if artificial intelligence and other technologies allow businesses to produce more output with fewer cost pressures. In the 1990s, stronger productivity growth helped the economy grow at a healthy pace without generating the kind of inflation that might otherwise have forced the Fed into a more restrictive stance. If productivity is rising again, which it currently is (see chart below), Warsh may argue that the Fed should not focus only on backward-looking inflation data.

Warsh may be more inclined to look through supply-driven inflation, but the committee may not be ready to do the same. And in my view, that’s not necessarily a negative. If growth remains positive, earnings continue to expand, and inflation does not accelerate materially, stocks do not necessarily need Fed cuts to move higher.

Bottom Line for Investors

The Fed’s decision to pause rate cuts was expected, but the bigger story is the policy environment taking shape for the rest of 2026 and beyond. A Warsh-led Fed may bring a different framework to monetary policy, with more attention paid to productivity, supply-driven inflation, and the size of the Fed’s balance sheet. Worries about collapsing Fed independence or a Fed doing the bidding of the executive branch are overblown, in my view. The Fed remains a committee-driven institution, and many voting members will likely want clearer evidence that inflation is moving back toward target before easing policy.

For investors, the key point right now is that markets appear to have already adjusted to the possibility of no rate cuts this year. That lowers the risk that a prolonged pause becomes a major negative surprise. In my view, the next phase of Fed policy may be less about whether the Fed cuts by 25-basis points, and more about how it manages liquidity, inflation expectations, and the long end of the yield curve.

1 CNBC. April 30, 2026. https://www.cnbc.com/2026/04/30/pce-inflation-rate-march-2026.html

2 Fred Economic Data. 2026.

3 Wall Street Journal. May 4, 2026. https://www.wsj.com/articles/the-great-110-trillion-wealthtransfer-wont-happen-any-time-soon-e8b2ef31

4 Wall Street Journal. May 3, 2026. https://www.wsj.com/economy/global/global-economy-iranenergy-abd8828f?mod=economy_lead_pos4

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

It is not possible to invest directly in an index. Investors pursuing a strategy similar to an index may experience higher or lower returns, which will be reduced by fees and expenses.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm that acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

May 03

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Mitch Zacks – Weekly Market Commentary: Fixed Income Investments Now Offer More Opportunities

By BayTrust Financial Weekly Market Commentary

The first quarter of 2026 brought many interesting developments for bond investors. Renewed inflation concerns pushed yields higher, reversing early gains and leaving the Bloomberg U.S. Aggregate Bond Index slightly negative for the quarter. At the same time, expectations for Federal Reserve rate cuts shifted meaningfully, with the probability of a cut falling to roughly 37%, down from 72% at the end of 2025.

Taken together, these developments drove a notable move in Treasury yields. The 10-year yield rose as high as 4.44% before ending March at 4.32%, while the 2-year climbed to 4.00% before settling near 3.80%.1 Short-term yields rose faster than long-term yields, flattening the curve modestly, though it remains slightly upward sloping (in the chart below, data points above 0 represent an upward sloping yield curve).

While rising yields pressured bond prices, they also improved something largely missing from fixed income for much of the past decade: income. Today’s yields are meaningfully higher than in the post-2010 period, and a larger share of expected returns is now coming from income rather than price appreciation. That shift suggests bonds may once again serve a more traditional role in portfolios, not only as an instrument for reducing overall volatility but also as a source of steady cash flow. In my view, this means investors who have been content with cash (money market) returns in past years may want to give the bond market a closer look. In 2025, broad fixed income returned roughly 7.3%, compared to about 4.3% for cash, marking the first time in several years that bonds meaningfully outperformed. ³ This outperformance reflects both higher starting yields and a gradual steepening in the yield curve, where extending beyond cash is once again being rewarded.

The macro backdrop also appears to be evolving in a way that could support the income story. While headline inflation has moved higher, much of the pressure has been driven by energy prices. Beneath the surface, core inflation remains more contained (2.6% in March), and longer-term expectations have stayed relatively anchored. Meanwhile, we know the labor market is the weak link in the Fed’s inflation/labor mandate. The unemployment rate has risen to approximately 4.3% as of March 2026, up from a 3.4% low in 2023, with hiring trends becoming increasingly uneven. March payrolls rose by +178,000, but in February was revised to -133,000, underscoring volatility in the data.4 If we look more broadly at annual monthly job gains, we can see a stark and steady weakening pattern, which I have argued before likely means a bias towards more cuts in 2026.

For bond investors, this combination is important. Stable underlying inflation helps preserve the real value of income, while signs of a cooling labor market, I think, rule out the possibility of further policy tightening. In practical terms, that means less upward pressure on yields and a more supportive backdrop for bond prices.

Finally, a quick note on the municipal bond market outlook from here. Rising Treasury yields have pushed municipal yields higher as well, improving their relative attractiveness, particularly for investors in higher tax brackets. The yield curve remains slightly upward sloping, and while valuations have not changed dramatically, income levels are more compelling than they were just a few years ago. At the same time, fiscal conditions for state and local governments remain stable, supporting the overall credit backdrop. As a result, municipals continue to serve as a useful tool for tax-efficient income within a diversified fixed income allocation.

Bottom Line for Investors

After years when cash looked unusually competitive and bonds offered limited yield, investors now have more ways to be compensated for taking measured fixed income risk. For investors with cash that is not needed in the near term, but that you still want to treat conservatively, this may be an opportunity to reassess whether staying on the sidelines still offers the best risk/reward tradeoff. Because today’s fixed market offers income that can contribute meaningfully to total return while still playing a stabilizing role in portfolios.

1Wall Street Journal. 2026. https://www.wsj.com/world/middle-east/u-a-e-opec-new-middle-east32ceda56?mod=Searchresults&pos=1&page=1

2 Wall Street Journal. April 30, 2026. https://www.wsj.com/economy/central-banking/u-s-economygrew-at-2-rate-in-first-quarter-6e0c18cc?mod=economy_lead_story

3 Financial Post. April 29, 2026. https://financialpost.com/pmn/business-pmn/us-core-capital-goodsorders-jump-by-most-since-2020

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Any views or opinions expressed may not reflect those of the firm as a whole. Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

It is not possible to invest directly in an index. Investors pursuing a strategy similar to an index may experience higher or lower returns, which will be reduced by fees and expenses.

Apr 21

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Mitch Zacks – Weekly Market Commentary: Is Rising Inflation Diminishing Hope for Another Rate Cut?

By BayTrust Financial Weekly Market Commentary

At the start of the year, developed-market central banks like the Fed, the European Central Bank, and the Bank of England were almost uniformly poised to gradually ease rates.

A lot can change in a quarter.

As seen in the chart below, markets have rapidly repriced the monetary policy outlook in response to the conflict in Iran. What started as an expectation for steady rate cuts in 2026 has shifted the expectation for rate hikes.¹

The catalyst behind this repricing is clear. The closure of the Strait of Hormuz has pushed oil and natural gas prices higher, feeding directly into global inflation data. Here in the U.S., March’s Consumer Price Index (CPI) report showed headline inflation rising 3.3% year-over-year, a sharp increase from February’s 2.4% pace, with energy prices up 12.5% and gasoline alone jumping nearly 19%. As seen on the chart below, there’s a sharp divergence in inflation data when it includes energy prices (headline), versus when it’s stripped out (core).

Consumer Price Index, January 2024 – March 2026 (blue line is headline, green line is core)

The gap in the chart seen above is important. While headline inflation jumped, core CPI rose a lesser 2.6% year-over-year, which was slightly below expectations. Food prices were largely flat, and many goods categories showed limited pass-through from higher energy costs. In other words, it’s clear that inflation pressure is not broad-based at this stage.

This is an important distinction when considering monetary policy in the U.S. versus abroad. In Europe and the U.K., central banks operate under more explicitly inflation-focused mandates and economies are more exposed to energy costs. The U.S. jobs market is equally important to the Fed, and our economy is far less exposed, given we’re a net exporter of oil and gas. That’s why I think the market pricing-in Fed hikes in 2026 is premature and likely off-base.

To be sure, a prolonged period of elevated energy prices could justify keeping rates higher for longer, delaying the timing of rate cuts. But despite a meaningful shift in underlying inflation dynamics or expectations, the bar for renewed rate hikes remains high, in my view. In that sense, markets may be interpreting a change in timing as a change in direction. That would make a potential rate cut in 2026 a positive surprise, which I see as a net positive for stocks.

My conviction on this point comes from looking at market-based measures such as 5- and 10-year breakeven rates, which continue to hover in the low-to-mid 2% range. And I’d also cite money supply growth, which has returned to a much more modest pace and is broadly in line with pre-pandemic trends.

5-Year Breakeven Inflation Rate (blue) and 10-Year Breakeven Inflation Rate (green)

Investors should keep in mind that not every inflation spike carries the same policy implications. A rise in headline CPI driven by energy is very different from a broad, demand-led acceleration in prices, and central banks, and especially the Federal Reserve, know that. That is why I think the Fed is more likely to treat the latest inflation data as a reason for caution, not a reason to reverse course. Other developed-market central banks may have less room to look through the shock, but in the U.S., the more likely policy shift is a delay to easing, not the start of a new hiking cycle.

Bottom Line for Investors

Even if markets continue to debate the path of monetary policy, the bigger story for investors may be that the economy appears less dependent on near-term Fed decisions than many assume. S&P 500 earnings are expected to grow to +13.1% in Q1 on +9% higher revenues, with early reports showing +76.6% earnings growth and strong beat rates. Remember that this strength has emerged even as the Fed has taken a relatively limited role in actively supporting growth.

Looking ahead, policy expectations may continue to shift, but underlying drivers of markets like earnings, demand, and corporate fundamentals continue to look strong, regardless of what action central banks take in the near term.

¹J.P. Morgan. March 27, 2026. https://advisor.zacksim.com/e/376582/ll-central-banks-actually-hike/5vc4px/1515207807/h/WRUY0VCH93f7whKO2tPhc2Ju75rCuDaTuRb41p8x9wI

²Fred Economic Data. April 10, 2026. https://advisor.zacksim.com/e/376582/series-CPIAUCSL/5vc4q1/1515207807/h/WRUY0VCH93f7whKO2tPhc2Ju75rCuDaTuRb41p8x9wI

³Fred Economic Data. April 10, 2026. https://advisor.zacksim.com/e/376582/series-EXPINF5YR/5vc4q4/1515207807/h/WRUY0VCH93f7whKO2tPhc2Ju75rCuDaTuRb41p8x9wI

⁴Fred Economic Data. March 24, 2026. https://advisor.zacksim.com/e/376582/series-WM2NS/5vc4q7/1515207807/h/WRUY0VCH93f7whKO2tPhc2Ju75rCuDaTuRb41p8x9wI

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

The Russell 1000 Growth Index is a well-known, unmanaged index of the prices of 1000 large-company growth common stocks selected by Russell. The Russell 1000 Growth Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The MSCI ACWI ex U.S. Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries. The index covers approximately 85% of the global equity opportunity set outside the U.S. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Russell 2000 Index is a well-known, unmanaged index of the prices of 2000 small-cap company common stocks, selected by Russell. The Russell 2000 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The S&P Mid Cap 400 provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500, is designed to measure the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The S&P 500 Pure Value index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest value characteristics by using a style-attractiveness-weighting scheme. An investor cannot directly invest in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Apr 14

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Mitch Zacks – Weekly Market Commentary: What Headline-Driven Investing Is Really Costing You

By BayTrust Financial Weekly Market Commentary

The U.S. made an announcement on the global stage that sent the media into a tizzy and financial markets into heightened downside volatility. Investors were left guessing what might come next, and how long the uncertainty would last. Was this the beginning of drawn-out tensions on the global stage? Would a recession and/or bear market follow?

I’m not describing the recent escalation in the Middle East. I’m thinking back to almost exactly one year ago, when sweeping tariff announcements triggered a sharp market selloff and a wave of pessimism about global growth. Investors likely remember how sharply the equity markets initially reacted. Global equities fell roughly -11% in a matter of days.

But the reaction didn’t last long, and we didn’t see a bear market or a recession last year. One could argue that 2025 delivered the opposite. The S&P 500 rose nearly +18% in 2025, while the U.S. economy accelerated into the third quarter, finishing the year with modest but positive GDP growth.

What is critical for investors to remember, in my view, is that tariff headlines and trade tensions did not necessarily let up as the year went on. It would be hard to argue that we ever got ‘certainty’ on trade policy in 2025. We didn’t. But markets did not wait for trade deals to be finalized, for tariffs to be rolled back, or for uncertainty to disappear. Stocks adjusted expectations quickly and moved on.

Last year’s tariff case study underscores what I mean by ‘the cost of headline-driven decision making.’ With the current war in Iran, timing the announcement of a two-week cease-fire may have looked like a great trade on paper, but I think the smarter money would have avoided the short-term volatility altogether. As last year’s tariff episode reminds us, markets can remain very choppy in an hour-to-hour news cycle, and it’s easy for investors to get baited into changing course quickly—which can mean failing to fully participate in the longer-term recovery.

In my view, the same dynamic is at play today. Markets are once again being driven by a steady stream of headlines, only this time it’s centered on geopolitical risk, energy supply, and the Strait of Hormuz. Investors are left trying to assess not just what is happening, but how long it will last and what it means for markets.

Equities are responding in real time, but the price action is not as severe as it was last year. It’s also true that the U.S. has fared far better than international markets over the past several weeks. The U.S. is far less exposed to rising energy costs than many of its global peers, given its role as a major oil and natural gas producer. By contrast, regions like Europe remain heavily reliant on imported energy. Estimates suggest that oil and LNG imports account for roughly 1% to 2% of eurozone GDP, compared to a modest positive contribution from net energy exports in the U.S.²

This isn’t a call to favor U.S. over foreign stocks on this headline alone. It is simply a reminder that the economic consequences of a prolonged conflict are unlikely to fall evenly across regions, and that higher energy prices do not automatically translate into broad-based weakness in the U.S. economy.

If last year’s tariff episode taught investors anything, it is that markets do not wait for resolution. They adjust to the range of possible outcomes quickly, and they often move on well before the news flow improves or the uncertainty fully clears. The same may be true here. By the time this conflict feels more settled and the outlook appears clearer, markets may have already done much of their repricing. The two-week cease-fire may hold, and it may not. Investors would be better served looking further out on the horizon, in my view.

Bottom Line for Investors

The real risk in environments like this isn’t the market volatility itself. It’s how investors respond. Periods driven by macro headlines can create the illusion that action is required, whether that means buying into weakness or pulling back until uncertainty fades. But last year’s tariff episode showed how unreliable that instinct can be. The most significant market moves often occur before the news flow improves, not after.

That’s why trying to position around how geopolitical events unfold is rarely productive. It requires getting both the outcome and the timing right, which is simply not possible without a great deal

¹BEA. 2026. https://www.bea.gov/system/files/gdp4q25-2nd-chart-01.png

²Wall Street Journal. April 4, 2026. https://advisor.zacksim.com/e/376582/-mod-economy-feat1-global-pos2/5vbfv7/1508659551/h/9XYSbfdZsg3fDfMt7mtAz1z8jVNLpHqtRgZFJVGJpkg

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Apr 07

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Mitch Zacks – Weekly Market Commentary: A Market Reset, Not a Breakdown

By BayTrust Financial Weekly Market Commentary

Market volatility continues apace, as news headlines, and even simple statements or policy hints, have shown the ability to move markets quickly in both directions. This kind of short-term volatility can feel like it carries greater meaning in the moment. But it doesn’t always tell us much about what is happening beneath the surface. In fact, it often gives investors the wrong message.¹

My case-in-point this week: the growing gap between the market’s largest growth stocks and the broader index. As shown below, the once-heralded names in Technology and the “Magnificent Seven” have declined significantly more than the S&P 500 overall in 2026, with drawdowns approaching three times the magnitude of the broader market.

This divergence is notable not just because of the size of the move, but because of what is happening on the fundamental side at the same time.

‘Mag 7’ and Tech represent the largest growth-oriented segment of the market, and they continue to deliver the strongest earnings growth in the index. The Technology sector, broadly defined, is expected to produce earnings growth of more than 25% in the first quarter on over 20% revenue growth. By comparison, total S&P 500 earnings are expected to rise in the low double digits, and closer to mid-single digits if you exclude Technology’s contribution.

In other words, the sector doing the most to drive earnings growth is also the one experiencing the most pronounced selling pressure.

In fairness, some of this may reflect valuation concerns. Large-cap growth stocks entered the year trading at elevated multiples, and in periods of uncertainty, investors often trim exposure to the most expensive areas of the market first. There are also legitimate questions about how artificial intelligence may reshape competitive dynamics over time, particularly across software and digital platforms. But even taking those factors into account, the magnitude of the recent move appears disproportionate to what we are seeing in current earnings data. If anything, the disconnect suggests that expectations are being reset more quickly than fundamentals are deteriorating. In my experience, that’s a classic sign of a correction, not the beginning of a bear market.

The earnings revisions trend reinforces my argument. Since the start of the year, estimates for the Technology sector have continued to move higher, even as stock prices have come under pressure. The positive earnings revision trend has not been isolated to one corner of the market either, as roughly half of all sectors have seen upward estimate revisions since March, including Financials, Materials, and Industrials. This is not what we typically see in an environment where markets are pricing in a broad earnings slowdown.

Periods like this also tend to reward a disciplined, earnings-driven approach. Corrections driven by sentiment and positioning tend to feel uncomfortable in real time, particularly when leadership is involved, but they often unfold without the kind of broad-based deterioration that typically defines more severe downturns. Strategies that emphasize earnings growth, estimate revisions, and diversification get rewarded most when markets recover.

Bottom Line for Investors

The recent underperformance of large growth stocks is a notable development, but it is important to understand what I believe is driving it. While valuations and longer-term growth expectations are being reassessed, the underlying earnings picture remains relatively strong, with positive revisions across multiple sectors. That combination points more toward a shift in sentiment and positioning than a breakdown in fundamentals.

For investors, it is a reminder that short-term market moves do not always align neatly with earnings trends, and that maintaining diversification across sectors and styles remains critical when leadership changes. It is also worth remembering that when corrections run their course, the areas that were hit hardest often rebound the fastest. For strategies like Zacks Focus Growth, which can create an opportunity to participate when sentiment resets and fundamentals reassert themselves.

¹Zacks.com. March 25, 2026. https://advisor.zacksim.com/e/376582/ook-improving-despite-iran-war/5v9rbd/1502440565/h/pbQqWP-2Yk8SHW9j_XAlA4v4kFANs5-7t3qSo9oDVVk

²Zacks.com. March 25, 2026. https://advisor.zacksim.com/e/376582/ook-improving-despite-iran-war/5v9rbd/1502440565/h/pbQqWP-2Yk8SHW9j_XAlA4v4kFANs5-7t3qSo9oDVVk

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Mar 31

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Mitch Zacks – Weekly Market Commentary: Market Volatility Doesn’t Always Signal Economic Weakness

By BayTrust Financial Weekly Market Commentary

Market volatility has been on the rise. The conflict involving Iran has injected fresh uncertainty into the outlook, particularly through its potential impact on energy markets. And just as quickly as oil spiked and stocks wobbled on fears of escalation, markets reversed course early this week after reports of possible diplomatic progress—sending Brent crude sharply lower and stocks higher.¹

This kind of day-by-day price action is a useful reminder that headlines can move markets in the short run. But investors should be careful not to confuse short-term volatility with a lasting change in the underlying economic picture. The more important question is whether higher energy prices are actually beginning to damage growth. So far, the incoming data do not suggest that they are.

Start with the most visible pain point for households: gasoline. Higher prices at the pump are frustrating, and they can weigh on sentiment quickly. But gasoline represents just 1.9% of real personal consumption expenditures. That does not mean rising prices are painless, but it does mean their direct effect on overall consumer spending is more limited than headlines often imply. Consumers may shift spending at the margin, but a jump in gasoline prices alone is not usually enough to derail aggregate demand.

And demand elsewhere still looks intact. Real personal consumption expenditures rose 0.4% month over month in January, while real disposable personal income also increased. In services, which make up the largest share of the economy, activity remains firmly in expansion territory. The ISM Services PMI registered 56.1 in February, the highest reading in four years. The Atlanta Fed’s GDPNow estimate is tracking first-quarter growth at 2.7% annualized.

Business investment data tell a similar story. Manufacturers’ new orders for nondefense capital goods excluding aircraft (which is one of the cleaner indicators of business equipment demand) remain near recent highs. That is not what an economy on the verge of contraction typically looks like.

The earnings picture is also important here because corporate profits ultimately drive equity markets over time. According to our colleagues at Zacks Investment Research, total S&P 500 earnings for the first quarter of 2026 are expected to rise 12.0% from a year earlier on 8.6% higher revenues, following a 14% earnings increase on 9.1% higher revenues in the prior quarter. Even after the onset of Middle East tensions, estimates for the quarter and for full-year 2026 have remained positive, with revisions still moving in a favorable direction.

It is also worth remembering how different the market’s earnings mix is today than in past oil-shock periods. Energy now accounts for only about 4% of S&P 500 earnings, down from roughly 15% twenty years ago and nearly 30% in 1980. Technology, by contrast, is expected to grow earnings by 24.6% in the first quarter and remains the dominant growth engine for the index. Even excluding Technology, the rest of the S&P 500 is still expected to grow earnings by 5.5%.

I don’t mean to firmly imply that the economy is immune to an energy shock. If oil prices were to rise sharply and remain elevated—in my view, perhaps $130+ per barrel for several months—the impact on inflation and growth would likely become more pronounced. I’m not convinced that’s an outcome that the U.S. or other developed countries would tolerate for very long, but it’s also fair to say that these events are difficult to forecast.

Even still, the current backdrop looks materially different from the periods investors instinctively compare it to. The U.S. economy is less energy-intensive than it was in the 1970s. Domestic oil production is much higher, the labor market is largely stable, and balance sheets (household, corporate, and banking) are generally in strong shape.

Across major geopolitical events since 1950, markets have often experienced short-term volatility, but they have generally stabilized and moved higher in the months that followed as uncertainty faded and the economic damage proved more limited than feared. That does not make conflict bullish. It simply underscores that markets tend to respond more to the gap between expectations and reality than to the headlines themselves.

Bottom Line for Investors

Geopolitical events can create sharp market swings, especially when oil prices are involved. But volatility alone is not evidence of economic weakness. The latest data continue to show consumer demand, business investment, and earnings growth holding up reasonably well, even as energy markets react to the latest headlines.

If oil prices were to spike sharply from here and remain elevated for a sustained period, the risk would increase. But that is not the same as saying the economy is already rolling over. For now, the better reading is that markets are reacting to uncertainty while the underlying economic picture remains more resilient than the headlines suggest.

¹The Street. March 23, 2026. https://advisor.zacksim.com/e/376582/ence-despite-rising-oil-prices/5v91yf/1496855850/h/v9QiexteW5YTOmM9SOxAg4R8mQrjmrTvdKKCBG2jF6s

²Fred Economic Data. March 18, 2026. https://advisor.zacksim.com/e/376582/series-DGORDER/5v91yj/1496855850/h/v9QiexteW5YTOmM9SOxAg4R8mQrjmrTvdKKCBG2jF6s

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Mar 24

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Mitch Zacks – Weekly Market Commentary: What the Private Credit Boom is Revealing

By BayTrust Financial Weekly Market Commentary

For the past several weeks, investors have understandably focused on developments in the Middle East. The headlines are constant, and markets often exhibit elevated volatility with every new development.

But investors should not lose sight of other important developments taking shape across capital markets. Private credit is one area worth a closer look, in my view.

For readers who may be new to private credit, it is a segment of the market where investment funds provide loans rather than traditional banks. The industry expanded rapidly after the Global Financial Crisis, when tighter banking regulations limited how aggressively traditional lenders could finance riskier borrowers. Capital moved to nonbank lenders such as asset managers, pension funds, and private investment firms that stepped in to fill the gap.¹

Stronger rules made banks safer, but more lending activity shifted into institutions operating outside the traditional regulatory framework. The risks in the financial system did not disappear with this change, they just shifted.

One area drawing attention today is redemption pressure in funds that market themselves as semi-liquid vehicles. The $33 billion Cliffwater Corporate Lending Fund, for instance, recently reported that investors asked to withdraw roughly 14% of the fund’s assets in a single quarter. Because the fund limits withdrawals to 5%, it agreed to repurchase only about half of those requests, with the remainder pushed into future redemption windows.

Similar pressures have appeared elsewhere across the industry. Blackstone’s $82 billion credit fund recently reported net withdrawals for the first time, while firms including Blue Owl, BlackRock, and Morgan Stanley have limited investor withdrawals to preset quarterly caps. These limits are not unusual in private markets, but when investors want their money back, those limits can become far more noticeable.

Valuation practices are also drawing new scrutiny.

Private-credit portfolios can contain thousands of loans and investments that do not trade publicly, meaning their values must be estimated using models and assumptions rather than observable market prices. Cliffwater’s filings show that roughly 71% of its assets are classified as “Level 3,” meaning their valuations rely heavily on unobservable inputs. The fund also invests billions of dollars in other private-credit vehicles and relies on those managers’ reported net asset values, rather than independently determining prices. That’s a slippery slope, in my view.

The result can resemble what one observer described as a financial system of “black boxes inside black boxes,”² where investors rely on layers of valuation judgments that are difficult to independently verify. In stable periods, this structure rarely attracts much attention. But when investors begin questioning valuations, the lack of visibility can suddenly matter a great deal.

The issues I’m describing above land at a time when the industry is becoming increasingly reliant on individual investors. Until recently, private credit was historically dominated by pensions, endowments, and other institutions with long investment horizons. But in recent years, asset managers have increasingly marketed these strategies directly to individuals through interval funds, wealth platforms, and specialized vehicles. Policymakers in Washington are also considering steps that could make it easier for retirement plans to include private investments.

Large firms such as Apollo Global Management, Blackstone, BlackRock, and Blue Owl have made retail distribution central to their growth strategies. For these firms, such a strategy makes good business sense—retail savings pools, including the $12 trillion 401(k) market, represent a vast potential source of capital. The question is whether these strategies make sense for most everyday investors.

Private-market investments typically involve higher fees, less transparency, and more limited liquidity than traditional public securities. For individual investors, the main issue is that these funds often do not work like the rest of a traditional portfolio. Shares may only be redeemable at certain intervals, withdrawals can be capped when demand is high, and reported values may not adjust as quickly as public market prices. That can make these strategies appear steadier on paper, while leaving investors with less flexibility and a murkier picture of risk in real time. Which for many, is the opposite of what you’re seeking in today’s geopolitical environment.

Bottom Line for Investors

To be fair, I do not think we have an impending crisis on our hands, at least not at this stage. Many private-credit loans continue to perform, and recent stresses appear concentrated rather than systemic. But it is still a story worth watching, because moments like this reveal how these structures behave when sentiment shifts—particularly with respect to liquidity, valuation, and investor expectations.

¹Wall Street Journal. March 12, 2026. https://advisor.zacksim.com/e/376582/-private-credit-craze-d0fbb8af/5v89tw/1489468160/h/bt-JCfBLTQvvBhTkEVYLJphQywjni31WsEN892p2mHE

²Wall Street Journal. March 12, 2026. https://advisor.zacksim.com/e/376582/-private-credit-craze-d0fbb8af/5v89tw/1489468160/h/bt-JCfBLTQvvBhTkEVYLJphQywjni31WsEN892p2mHE

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Weekly Market Commentary

Mitch Zacks – Weekly Market Commentary: With Households Feeling Pressure, why is the Stock Market Booming?

Mitch Zacks – Weekly Market Commentary: What Bank Lending Data Reveals About Risk and Opportunity in Today’s Market

Mitch Zacks – Weekly Market Commentary: U.S. Debt Has Crossed Over 100% of GDP. Here’s Our Take on What That Means.

Mitch Zacks – Weekly Market Commentary: Fed Holds Rates Steady, but the Real Story is What Happens Next

Mitch Zacks – Weekly Market Commentary: Fixed Income Investments Now Offer More Opportunities

Mitch Zacks – Weekly Market Commentary: Is Rising Inflation Diminishing Hope for Another Rate Cut?

Mitch Zacks – Weekly Market Commentary: What Headline-Driven Investing Is Really Costing You

Mitch Zacks – Weekly Market Commentary: A Market Reset, Not a Breakdown

Mitch Zacks – Weekly Market Commentary: Market Volatility Doesn’t Always Signal Economic Weakness

Mitch Zacks – Weekly Market Commentary: What the Private Credit Boom is Revealing

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