Week ended February 27, 2026: sentiment is "risk off"

US stocks continued to struggle as the month drew to a close today, even as bonds surged in spite of higher-than-expected January PPI released Friday morning.  Foreign stocks continue to significantly outperform US stocks, with European (FTSE 100, EUR STOXX 600) and Japanese (NIKKEI 225) stocks ending the week at record highs.  Gold continues to be resilient, and Bitcoin is continuing to find it difficult to find a bid.  Long duration investments in USTs are yielding results, with the yield on the 10y UST finally falling below 4% for the first time since mid-October.  Corporate bonds also wobbled a bit due to concerns with supply (driven by A.I. needs) and likely contagion from some noise coming from private credit.  The sentiment driver overall continues to revolve around ROI on A.I. investment, which has most adversely affected the stocks of hyperscalers, but is splattering tech stocks more broadly.  In this update, I will cover:

• Performance of key indices and asset prices through the end of February

• NVDA earnings and the performance of the Mag 7 and other A.I. / tech giants since this round of earnings

• PPI release Friday morning, which is running hot

• My trades in February

Performance of indices and select assets through the end of February

The tables below summarise the YtD performance of US and global stock indices (excluding dividends), bonds including USTs and corporate bonds (all total return), and select other assets (gold, oil, the US Dollar and Bitcoin).  

Needless to say, global diversification has been a good portfolio recommendation that has been suggested by many global asset managers for several months running.  The reason is that US stocks are (and remain) more expensive and are heavily skewed towards tech/A.I. narrative plays.  Moreover, the sliding US Dollar has also worked against foreign investors in US stocks.. 

As far as fixed income, longer duration trades have suddenly become fashionable, and long-dated Treasuries have been the outstanding performer in fixed-income YtD. Corporate bonds remain under pressure due to a combination of supply concerns (A.I. driven) and contagion from a growing number of problems in the private credit arena. This is pushing corporate credit spreads higher, most notably in high yield / non-investment grade.

Gold (and silver) are unlikely to continue on this run forever, but clearly geopolitical concerns have been the key drivers, including an unpredictable US administration, a desire by foreign central banks to diversify from the US Dollar, and diversification reasons (in which gold should be a small component of any diversifed portfolio).  I don’t really have anything positive to say to the crypto bros except that  Bitcoin and its brethren are totally unpredictable and move based solely on sentiment.

The key message to investors is to remain diversified and ensure you are comfortable with your risk tolerance, as this is shaping up to be a choppy year and is likely to get worse (for risk assets) before it gets better.

NVDA earnings and performance of tech shares

With a dearth of important economic news, investors last week were mostly focused on Nvidia’s (NVDA) 4Q26 earnings, released Wednesday after the close.  NVDA beat convincingly on the top- and bottom-lines, and revised upward its forward guidance.  The stock gained in post-market trading and opened the following day higher, but the gains turned to losses as the day wore on.  The stock ended Thursday 5% lower, which seemed harsh given the results the company delivered.  After all, It’s hard not to like the stock of a company that doubles earnings YoY and provides such favourable forward guidance, especially one that is not valued like a meme stock (e.g. TSLA or PLTR).  Nonetheless, the share volatility reflects the fragile sentiment characterising A.I.-narrative stocks and tech more broadly.   NVDA is the last of the Mag 7 companies to report earnings, and its weak share price splattered the share prices of other of the hyperscalers and A.I. narrative names.  The tables below provide updates for the performance and valuations of Mag 7 shares at Friday’s close.

PPI data for January

PPI for January was released on Friday and came in much hotter than anticipated.  This seemed to have limited (negative) effect on bond yields, as inflation concerns seem to have given away to a combination of weaker sentiment regarding the US economy and migration to safe haven assets like US Treasuries.  Keep in mind that PPI tends to be more of a leading indicator than CPI.  For those folks (like me) that believe tariffs are being paid by US businesses and consumers, this is a potential indicator that will not be favourable for future inflation reads.  The reaction in the US Treasury market was muted, with bonds rallying all week across the curve.  The hot PPI data also did not seem to materially alter investor expectations for Fed Funds cuts this year, with two 25bps cuts still on the cards.

My trades in February

You can find information on my portfolio at year-end in my blog here (for context).  In February, I did only a few clean-up trades although I did (as I mentioned I would) start to rebuild a position in CRWD when the price fell below $400/share.

• Added scrap to MSFT (at $395/sh)

• Started to rebuild position in CRWD (one tranche at $396/sh and two tranches at $351-$352/sh)

• Added scrap to LDOS ($176)

• Sold scrap in V to make room for trades above (at $306/sh)

• Increased and extended maturity of hedges all via QQQ puts (out to Dec 2026)

• Wrote short-dated covered calls late in the month on MCD and AAPL

MARKET DATA AND TABLES

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