I sent a piece earlier tonight explaining why annual is the better deal - $320 versus $468 if you stay on monthly. That math holds for everyone.

But for this group - existing paid subscribers and complimentary subscribers who I have given access to over the last year or two - I am going one step further this weekend.

Use code WELCOMEBACK30 at c…

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1) URGENT - Doors Close at Noon ET: 1 CFP CE Credit on the 351 ExchangeIf you care about positioning, flows, and how macro narratives get priced, this is a useful one to revisit.Read: https://www.leadlagreport.com/p/urgent-doors-close-at-noon-et-1-cfp-b4b

2) LIVE TODAY at 2:30 PM ET - Income Investing with Nasdaq Exposure (1 CFP CE Credit)A timely framework for income plus growth exposure, and why the positioning backdrop matters.Read: https://www.leadlagreport.com/p/live-today-at-230-pm-et-income-investing

3) Two cities, two nights, last seats - Boston tomorrow, NYC ThursdayIf you want the full setup behind recent market moves, this is worth a quick re-read.Read: https://www.leadlagreport.com/p/two-cities-two-nights-last-seats

WELCOMEBACK30 ends Sunday. 30 percent off annual: https://www.leadlagreport.com/WELCOMEBACK30

Wednesday, May 20, 2026 · 2:30 PM ET · 60 minutes · Last-minute registration still open

Today at 2:30 PM ET I’m hosting Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors, for a live conversation on monetizing Nasdaq volatility for income — and the macro positioning behind his current call.

If you’ve been on the fence, this is the last call. Registration closes at start.

Register now — webinar starts at 2:30 PM ET →

Why this matters today

The Nasdaq has been driving equity returns and equity volatility in equal measure. For income-focused investors, that volatility is usually a problem to manage. For an active option-writing strategy, it’s the raw material.

That’s the premise behind the Infrastructure Capital Nasdaq Option Income ETF (QVOL) — and what Jay is going to walk through live.

What Jay will cover

• High monthly income as the primary objective — how an active covered call program on Nasdaq 100 single names is designed to monetize elevated tech-sector implied volatility

• The GARP lens Infrastructure Capital applies, with emphasis on lower PEG ratio names inside the option-writing universe

• The role of modest leverage in enhancing yield and total return profile

• The macro view — Jay’s S&P 500 target of 8,700, his 2.5% GDP resilience forecast, and what a flat monetary base means for risk assets and income strategies

• Active vs. mechanical option writing — why single-name selection and strike management matter for advisors evaluating option-income exposure

This is a working session for advisors, allocators, and serious income investors who want the mechanics, not the marketing.

1 CFP CE Credit — Live Attendance Only

This webinar is approved by the CFP Board for 1 CE hour in Investment Planning (Program ID 349801). Credit is only available to live attendees who meet the CFP Board’s attendance requirements. Please register with the email address tied to your CFP ID.

Last call

Register here — starts at 2:30 PM ET today →

Zoom link is delivered immediately on registration. The session will be recorded, but CE credit is live-only.

About the speaker

Jay D. Hatfield is the Founder, CEO, and Chief Investment Officer of Infrastructure Capital Advisors and the portfolio manager of the firm’s ETF lineup. Jay is a frequent contributor to CNBC, Bloomberg, and Fox Business, and one of the most-quoted voices in financial media on income strategies, monetary policy, and equity market structure.

—

QVOL is distributed by Quasar Distributors, LLC.

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. To obtain a prospectus or summary prospectus, which contains this and other information, please contact Craig Starr at 212-763-8336 or Craig.Starr@icmllc.com. Please read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. The Fund’s use of derivatives, including options, involves risks different from, and possibly greater than, the risks associated with investing directly in securities. The use of leverage may magnify gains and losses. There is no guarantee the Fund will achieve its investment objective.

This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security. Past performance is not indicative of future results.

Live Webinar | Today, Wednesday, May 20 | 11:00 AM ET
1 CFP CE Credit | 1 CIMA CE Credit | Approved
Cost: Free

[REGISTER NOW]

The AI conversation has been dominated by software.

Models. Apps. Productivity tools. Agents.

But the next bottleneck may be much more physical.

Power. Memory. Advanced packaging. Optical communications. Edge compute. Inference capacity.

That is the hardware wall.

Today at 11:00 AM ET, I’ll be hosting a live Lead-Lag webinar with Derek Yan, CFA, Senior Investment Strategist at KraneShares, and Max Chen, Partner at Etna Capital Management, to discuss how the AI opportunity is shifting from pure software enthusiasm to the industrial infrastructure required to make AI scale.

We will also look at how the KraneShares Artificial Intelligence & Technology ETF, AGIX, is positioned across public and private AI opportunities, including exposure to companies such as Anthropic, SpaceX/xAI, and Nuro, alongside hardware and edge-compute names.

Why This Matters Today

Most AI exposure in portfolios still looks very similar.

Nvidia. Microsoft. Alphabet. Meta. The Magnificent Seven.

That may not be enough if the next stage of AI is defined by the companies solving the physical constraints behind the trade.

In today’s webinar, we’ll cover:

• The four major hardware constraints shaping AI scale

• Why power, packaging, memory, and optical communications matter

• How AGIX differs from traditional mega-cap tech exposure

• The role of private AI holdings inside the ETF structure

• Hardware and edge-compute opportunities beyond the usual AI names

• How advisors can think about concentration risk in AI allocations

• The ETF liquidity framework around private positions

Who Should Attend

This session is designed for:

Financial advisors and wealth managers looking to earn CE credit.

Allocators evaluating AI exposure beyond the Magnificent Seven.

Investors trying to understand where the next leg of AI infrastructure spending may show up.

Anyone interested in how public and private AI exposure can fit inside an ETF wrapper.

Event Details

Date: Today, Wednesday, May 20, 2026
Time: 11:00 AM ET
Duration: 60 minutes
Format: Live Zoom webinar with Q&A
CE Credit: 1 CFP CE + 1 CIMA CE approved
Cost: Free

[SAVE YOUR SEAT]

The AI story is no longer just about software.

It is about the physical infrastructure required to support the next wave of compute.

See you at 11.

Michael A. Gayed, CFA
Publisher, The Lead-Lag Report

This webinar is sponsored content paid for by KraneShares. CE credit is offered through approved providers. Past performance does not guarantee future results. Please review the AGIX prospectus before investing.

Live CE-Credit Webinar | Wednesday, May 20, 2026 | 11:00 AM ET

1 CFP CE Credit | 1 CIMA CE Credit | Approved

Register Now

The conversation around AI has been dominated by software. The bottleneck is hardware.

Cerebras and OpenAI just contracted 750 megawatts of inference capacity with a scale option to 2 gigawatts by 2030. That is not a software deal. That is a power, packaging, memory, and optical-comm deal. The companies that solve the physical wall are the companies that get paid.

On Wednesday, May 20 at 11:00 AM ET, Derek Yan, CFA (Senior Investment Strategist at KraneShares) and Max Chen (Partner at Etna Capital Management, the AGIX sub-advisor) will walk through how the KraneShares AGIX ETF is positioned for the industrial build-out story that comes next.

What You Will Learn

· The Physical Wall: the four constraints capping AI scale, HBM capacity, advanced wafers and packaging, power and power electronics, optical comm and protocol.

· Why AGIX is not another mega-cap tech fund: 55 percent of holdings sit outside the Nasdaq 100, mega-cap tech allocation cut from 24.9 percent to 21.9 percent.

· The private sleeve: Anthropic at 2.76 percent (revenue running roughly 30 billion annualized per Sacra), SpaceX/xAI at 3.56 percent, Nuro at 0.97 percent. Most public AI ETFs cannot hold these names. AGIX does.

· Hardware sleeve names: Teradyne, Nittobo, Texas Instruments, Tower Semiconductor.

· Edge sleeve names: Renesas, Nuro, Cloudflare.

· Performance year to date: AGIX plus 28.88 percent versus the public equity index at plus 17.73 percent (as of 5/7/2026). The private sleeve added roughly 10 points of that gap.

· How SEC Rule 22e-4 shapes the 15 percent illiquid cap and why that matters for an ETF holding private positions.

Who Should Attend

· Financial advisors and wealth managers earning CFP or CIMA CE credit.

· Allocators evaluating AI exposure beyond the Magnificent Seven.

· Anyone trying to figure out how to own Anthropic, SpaceX, and xAI inside a 1940 Act ETF wrapper.

Details

· Date: Wednesday, May 20, 2026

· Time: 11:00 AM ET

· Duration: 60 minutes

· Format: Live Zoom webinar with Q and A

· CE Credit: 1 CFP CE + 1 CIMA CE (approved)

· Cost: Free

Save Your Seat

Why This Episode Matters Now

Most AI exposure in advisor portfolios looks the same. Nvidia, Microsoft, Alphabet, Meta. Concentration risk inside concentration risk.

AGIX is built for the next leg of the trade. 57 holdings as of 3/31/2026, up from 52. Top-ten concentration sits at 34.8 percent. The portfolio reaches into hardware, edge compute, and the private AI names that drive the actual revenue, Anthropic running roughly 30 billion in annualized revenue, SpaceX and xAI, Nuro on the autonomous side.

If the physical wall is the bottleneck, you want to own the companies removing it.

Register For The Webinar

See you Wednesday.

Michael A. Gayed, CFA

Publisher, The Lead-Lag Report

This webinar is sponsored content paid for by KraneShares. CE credit is offered through approved CFP Board. Past performance does not guarantee future results. Please review the AGIX prospectus before investing.

Wednesday, May 20, 2026 · 2:30 PM ET · 60 minutes

The Nasdaq has been the engine of equity returns — and the source of most of the volatility. For income-focused investors, that volatility is usually a problem to manage. But it can also be a raw material to monetize.

That’s the premise behind the recently launched Infrastructure Capital Nasdaq Option Income ETF (QVOL) — and the focus of a live conversation I’m hosting tomorrow with Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors.

Register here →

What we’ll cover

Jay will walk through the framework behind QVOL and the macro backdrop driving his current positioning:

• High monthly income as the primary objective, with secondary capital appreciation — and how an active covered call program on Nasdaq 100 single names is designed to monetize elevated tech-sector implied volatility

• The GARP (Growth at a Reasonable Price) lens Infrastructure Capital applies, with an emphasis on lower PEG ratio names inside the option-writing universe

• The role of modest leverage in enhancing yield and total return profile

• The macro view from Infrastructure Capital, including Jay’s S&P 500 target of 8,700, his 2.5% GDP resilience forecast, and what a flat monetary base means for risk assets and income strategies

• Active vs. mechanical option writing — why single-name selection and strike management matter for advisors evaluating option-income exposure

This is a working session for advisors, allocators, and serious income investors who want to understand the mechanics, not the marketing.

CFP CE Credit

This webinar is approved by the CFP Board for 1 CE hour in Investment Planning (Program ID 349801). Attendees who join live and meet the CFP Board’s attendance requirements will be eligible for credit. Please register with the email address tied to your CFP ID.

How to join

Click here to register for the live webinar →

A Zoom link and calendar invite will be sent to you immediately after registration. The session will be recorded — but CE credit is only available to live attendees.

About the speaker

Jay D. Hatfield is the Founder, CEO, and Chief Investment Officer of Infrastructure Capital Advisors and the portfolio manager of the firm’s ETF lineup. Jay is a frequent contributor to CNBC, Bloomberg, and Fox Business, and is one of the most-quoted voices in financial media on income strategies, monetary policy, and equity market structure.

—

QVOL is distributed by Quasar Distributors, LLC.

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. To obtain a prospectus or summary prospectus, which contains this and other information, please contact Craig Starr at 212-763-8336 or Craig.Starr@icmllc.com. Please read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. The Fund’s use of derivatives, including options, involves risks different from, and possibly greater than, the risks associated with investing directly in securities. The use of leverage may magnify gains and losses. There is no guarantee the Fund will achieve its investment objective.

This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security. Past performance is not indicative of future results.

Key Takeaways:

• Signal 1 (Beta Rotation) remains Risk-On for a third consecutive week, with the XLU/SPY 4-week RoC at -8.69%. The S&P 500 continues to outperform Utilities by a wide margin as risk appetite strengthens. The negative RoC widening week over week confirms money is moving decisively out of defensive equity sectors and into the broad market.

• Signal 2 (Treasury Rotation) is now Risk-On on the fresh April month-end reading. TLT returned -1.23% in April versus IEF at -0.48%. Long-duration bonds underperformed intermediate maturities once again — a classic risk-appetite indicator. The signal will hold this reading through the end of May.

• Signal 3 (Lumber/Gold) has flipped back to Risk-On as lumber stabilized while gold consolidated. Lumber’s 13-week return of -1.59% now exceeds gold’s -9.96% decline, with all 7 sub-strategies rotated back to offensive positioning. Gold’s record run above $4,600/oz has paused, while lumber’s bounce off the $570 level reflects firming demand expectations.

• The S&P 500 at 7,408.49 sits +9.8% above its 200-day SMA of 6,744.98, firmly in Risk-On territory. The index closed at a new all-time high, with breadth, volatility, and trend all aligned. Signal 4 remains Risk-On, maintaining the allocation to SSO (2x leveraged S&P 500).

MARKET COMMENTARY

The framework reads 4-0 Risk-On this week, a clean sweep across all four intermarket indicators for the second straight week. Beta Rotation, Treasury Rotation, Lumber/Gold, and the 200-Day Moving Average all favor offensive positioning. The S&P 500 closed at 7,408.49 on May 15, with the index sitting +9.8% above its 200-day moving average of 6,744.98. The unanimous offensive posture persists as Lumber/Gold widens further in favor of cyclical risk and the broad-market bid continues to crowd out defensive rotation.

The week of April 27 to May 1 saw the equity rally extend to fresh highs as the macro backdrop turned increasingly supportive. The S&P 500 added approximately 1% on the week to close at 7,408.49, with breadth strong across most sectors. The April employment report on Friday came in roughly in line with expectations, neither too hot to revive inflation fears nor weak enough to signal recession. Treasury yields drifted modestly lower across the curve as the soft-landing narrative regained traction. The 10-year yield finished the week below 4.20%, a multi-week low, while the 2-year held near 3.75%. The dollar weakened slightly, supporting risk assets globally. Earnings season has continued to deliver positive surprises, with the bulk of S&P 500 reporters beating estimates and forward guidance broadly stable.

At 7,408.49, the index sits +9.8% above its 200-day SMA of 6,744.98, a comfortable margin that solidifies the bullish trend signal. The April monthly close at $7,209 confirmed the breakout from the early-year consolidation range, and price action through the first trading day of May has carried that momentum higher. Volatility remains contained, with the VIX hovering near multi-month lows. Small caps and high-beta segments participated in the advance, indicating that risk appetite is not concentrated in a narrow leadership group. The technical setup — price above a rising 200-day MA, breadth confirming the move, volatility subdued — is the textbook definition of a healthy bull trend.

The Beta Rotation signal remains firmly Risk-On with the XLU/SPY 4-week Rate of Change at -8.69%. Utilities continue to be sold relative to the broad market, with the negative RoC widening week over week. This is one of the strongest offensive readings of the year, and the signal is firmly allocating to SPY. Defensive equity rotation — typically a tell that institutional money is bracing for trouble — is conspicuously absent. The persistence of this signal across multiple weeks is more meaningful than any single reading: trend in the rotation series itself confirms the broad equity bid.

The Treasury Rotation signal has been refreshed with April month-end data and is now Risk-On. TLT returned -1.23% in April versus IEF at -0.48%, with the long bond underperforming the intermediate — a classic risk-appetite signature. The yield curve’s message is consistent with the equity tape: investors are not stampeding into duration as they would if recession concerns were rising. The signal will hold this April reading through the end of May before it can update again, providing a stable foundation for the framework’s offensive tilt over the next four weeks.

The Lumber/Gold signal has flipped back to Risk-On as lumber’s stabilization caught up to gold’s pause. Lumber’s 13-week return of -1.59% now exceeds gold’s -9.96% return. Gold’s relentless rally above $4,800/oz earlier this month has consolidated into a sideways pattern around $4,600, while lumber bounced off the $570 level on firming housing demand expectations. All seven Lumber/Gold sub-strategies have rotated back to offensive positioning. The signal is not declaring that the gold story is over — the metal remains in a structural uptrend — but the relative dynamic has flipped, and the framework treats relative performance as the operative variable.

The 4-0 reading is significant because it represents the rarer end of the framework’s distribution. Historically, clean-sweep Risk-On readings tend to cluster during the strongest phases of bull markets. They are not signals to chase higher, but they are clear instructions to lean into existing offensive allocations rather than fade strength. The current setup — trend confirmed, rotation supportive, commodities cooperating, yield curve constructive — is the configuration the framework is designed to identify and exploit. Risk management still applies, and traditional risks (geopolitical shock, inflation re-acceleration, earnings disappointment in a heavyweight name) can disturb the picture quickly. But absent those, the path of least resistance remains higher.

SIGNAL 1: BETA ROTATION

Based on: “Opposing Behavioral Forces: Beta Rotation” (SSRN 2417974)

Target Investor: Self-directed investors who want to capture relative strength between equity market segments. This signal uses the 4-week rate of change of the Utilities-to-S&P 500 price ratio to determine whether the market favors offense (broad equity) or defense (Utilities).

CURRENT INDICATOR: RISK-ON

XLU/SPY 4-Week Rate of Change: -8.69%

Current Allocation: 100% SPY (S&P 500)

Growth of $100,000 | YTD from January 3, 2025 | Data: Lead-Lag Publishing, LLC

SIGNAL 2: TACTICAL RISK ROTATION

Based on: “A Quantitative Approach to Tactical Asset Allocation” (SSRN 2431022)

Target Investor: Conservative to moderate investors seeking a tactical overlay between equities and long-duration Treasuries. This signal compares the prior month total return of 10-year versus 30-year Treasury bonds to identify shifts in the yield curve’s risk appetite signal.

CURRENT INDICATOR: RISK-ON

30yr Treasury (TLT) March Return: -1.23%

10yr Treasury (IEF) March Return: -0.48%

Current Allocation: 100% S&P 500 (SPY)

Growth of $100,000 | Monthly Data from January 2025 | Data: Lead-Lag Publishing, LLC

SIGNAL 3: LUMBER/GOLD RATIO

Based on: “Lumber: Worth Its Weight in Gold” (SSRN 2604248)

Target Investor: Active investors seeking to rotate between offensive and defensive exposures across multiple asset class pairings. This signal uses the 13-week relative performance of Lumber futures versus Gold spot to determine the market’s risk appetite. When Lumber outperforms Gold, the economy is likely strengthening (Risk-On). When Gold outperforms, investors should favor defensive positioning (Risk-Off).

CURRENT INDICATOR: RISK-ON

Lumber 13-Week Return: -1.59%

Gold 13-Week Return: +-9.96%

Lumber now outperforming Gold over 13 weeks. All 7 sub-strategies have rotated to offensive positioning.

Lumber/Gold Bond Rotation (SPY vs GOVT)

Growth of $100,000 | YTD from January 3, 2025 | Data: Lead-Lag Publishing, LLC

Lumber/Gold Buy-Write (SPY vs PBP)

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• The 10Y-2Y curve sits at +0.47% after the longest inversion since 1929. Every major un-inversion since 1980 was followed by recession within 5 to 18 months.

• Investment-grade credit spreads hit 71 basis points in January 2026, the tightest level since 1998. High-yield OAS sits in the 16th historical percentile.

• April CPI re-accelerated to 3.81% year-over-year, the highest since May 2023, with energy contributing 40% of the monthly increase.

• The Fed held rates at 3.50-3.75% on April 29 via an 8-4 vote. The last time four members dissented was October 1992.

• The VIX collapsed from 31 in late March to 18 in early May. Sub-19 readings into reaccelerating inflation have preceded every major drawdown of the past three decades.

The Un-Inversion Nobody Wants to Talk About

The 2-year and 10-year Treasury yield curve un-inverted in late 2024 after spending more than 700 trading days underwater¹. That was the longest inversion since 1929. As of May 14, 2026, the spread sits at positive 47 basis points, well below the long-term average of 85 basis points but firmly in normalized territory².

Wall Street has turned this into a victory lap. The curve normalized without a recession. The soft landing is real. Risk-on, full throttle. The S&P 500 traded at 7,399 on May 11, almost 10% above its 200-day moving average, with technology leading the charge³.

But here is what they are not telling you. The curve has never been a recession signal at the moment of inversion. It has always been the signal at the moment of normalization. The inversion is the diagnostic. The un-inversion is the trigger.

Pull the historical record. May 2007: the curve normalized, 18 months later Lehman fell⁴. November 2000: normalized 3 months before the recession started. October 1989: normalized 12 months before the 1990 recession. October 2019: normalized 5 months before COVID hit, though the underlying credit fragility was already in place. The FRED Blog notes the average lag from un-inversion to recession sits at 13 months, with a range of 8 to 19 months⁵.

Late 2024 plus 13 months puts us in early 2026. We are inside the window right now. And nobody is positioned for it.

Credit Spreads at 1998 Lows. With Inflation Coming Back.

If the curve is the recession diagnostic, credit spreads are the early warning system. And the warning system is broken.

Investment-grade option-adjusted spreads briefly touched 71 basis points in late January 2026, the tightest level since 1998⁶. They have since drifted to 77 basis points, still in the 6th historical percentile. The long-term median sits at roughly 140 basis points. BBB spreads, the lowest rung of investment grade, trade at 98 basis points against a median of 175. High-yield OAS sits at 282 basis points, the 16th percentile, levels last seen in 2007⁷.

PIMCO put it plainly: spreads near 25-year tights “leave little risk premium to absorb shocks”⁸. The January 2026 FOMC minutes flagged the same concern, warning of “high asset valuations and historically low credit spreads” that could amplify downside if conditions reversed⁹.

Meanwhile, inflation is not behaving. April CPI printed 3.81% year-over-year, the highest reading since May 2023, up from 3.26% in March¹⁰. Core CPI accelerated to 2.78% from 2.60%. Energy prices were the lead culprit, up 17.87% year-over-year, contributing roughly 40% of the monthly increase¹¹. The 21-percentage-point energy swing from April 2025 is not a base effect. It is a regime change.

Tight credit spreads make sense when inflation is contained and the Fed is cutting. Tight credit spreads with re-accelerating inflation and a Fed that cannot cut are a mispricing. Mispricings get corrected violently when the catalyst arrives.

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The Senate confirmed Kevin Warsh as the 17th Federal Reserve Chair on May 13 by a vote of 54–45. One Democratic senator crossed the aisle. Jerome Powell’s term as Chair expired May 15. He is staying on the Board of Governors — the first former Fed Chair to do so in roughly 75 years — because his governor term runs to January 2028 and because, apparently, the institution needs continuity in a way that the Trump administration is not providing. What this means in practice: Powell has a vote at the June 16–17 FOMC meeting, on a committee he no longer chairs, presided over by a man who was not his choice, facing the first hot inflation print of the new regime. The market priced all of this correctly in the initial days of the week. The S&P 500 set a new all-time high of 7,501.24 on Thursday. The Dow reclaimed 50,000 for the first time since the Iran war began in late February, closing at 50,063.46. The Nasdaq reached 26,635 intraday. Cisco had just reported $15.8 billion in revenue, record AI orders raised to $9 billion for the year, and the stock surged 15% after-hours. Applied Materials followed with $7.91 billion in quarterly revenue and a gross margin of 50% — its highest in 25 years. The AI capex supercycle narrative was alive and validated and priced into equities at new record levels.

Then the bond market voted. The 10-year Treasury yield rose roughly 12 basis points on Friday alone to close at 4.60%, its highest level since the spring of 2025. The 2-year added 9 basis points to 4.09%. The curve steepened to +51 basis points — not because growth is accelerating, but because the market is pricing out any 2026 cuts and beginning to take seriously the possibility that the next Fed move might not be a cut at all. The S&P 500 fell 1.24%. The Dow gave back 537 points. The Nasdaq shed 1.54%. The Russell 2000 — rate-sensitive, energy-cost-exposed, the canary in the macro coal mine — dropped 2.4%, the week’s worst performer. The proximate cause was oil. Brent crude moved above $111 a barrel on Friday. The Strait of Hormuz entered its 76th day closed to commercial traffic. Iran called U.S. demands “Unreasonable.” Trump called Iran’s counter-proposal “a piece of garbage.” The Pentagon said mine-clearing could take up to six months. The IEA has characterized this as the largest oil supply disruption in modern history. None of that was new information on Friday. What was new was the April CPI: +3.8% year-over-year, the hottest print since May 2023. And the April PPI: +6.0% year-over-year, the largest gain since December 2022. And the April NFP: +115,000 — well above the 48,000–55,000 consensus. That combination — accelerating inflation, resilient labor market, oil above $111, and a brand-new Fed Chair inheriting an FOMC whose forward rate expectations have already collapsed from 80 basis points of 2026 cuts to fewer than 20 — is the definition of stagflation risk re-entering the narrative. The record close on Thursday was real. The Friday reversal was also real. The question Warsh now owns: which of those two days describes 2026?

Nvidia reports on May 20. The consensus expects $78.8 billion in revenue — 78% year-over-year growth. The stock went into the week at all-time highs. JPMorgan noted that Mag-7 earnings growth is running more than 40 percentage points above the rest of the index. Cisco’s AI order trajectory and AMAT’s record margins say the infrastructure buildout is intact. The bull case says the AI capex cycle is large enough to sustain earnings growth even if the cost of capital rises. The bear case says 4.60% on the 10-year, CPI at 3.8%, a new Fed Chair with unknown reaction functions, and oil at $111 is not a backdrop for record P/E multiples. Both cases were represented in the same week. The ATH happened Thursday. The bond market answered Friday.

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ARDC Fund Snapshot — As of May 2026 | Source: CEFConnect, Ares Public Funds

────────────────────────────────────────────────────────────

The credit markets in May 2026 are a study in contradictions. Tariff uncertainty, recession whispers, and a Fed that has cut rates cautiously but not boldly enough to reassure anyone — and yet spreads are still relatively contained, corporate defaults remain manageable, and floating-rate income is still paying well. In this environment, the question for income investors is not whether to own credit. It is which credit manager to trust with your money.

That question has a compelling answer: Ares Management. With over $622 billion in AUM globally and a credit investment team of 560+ professionals covering roughly 4,000 portfolio companies, Ares is not just a large credit manager — they are one of the architects of the modern leveraged credit market. When they run a closed-end fund, they do it with information and access that a typical retail credit investor simply cannot replicate.

The fund in question this week is the Ares Dynamic Credit Allocation Fund (NYSE: ARDC), currently trading at a -5.2% discount to NAV and yielding approximately 10.5% at market price. The setup is interesting: a wide discount, a strong management platform, and a portfolio actively rotating across senior secured loans, high yield bonds, and CLO securities to navigate exactly the kind of uncertain credit cycle we are in right now.

────────────────────────────────────────────────────────────

Fund Background

ARDC launched in November 2012 with a mandate to “seek an attractive risk-adjusted level of total return, primarily through current income, and secondarily through capital appreciation.” What makes this fund different from a static credit CEF is in its name: dynamic allocation. Ares rotates the portfolio actively across four credit buckets — senior secured loans, corporate bonds, CLO debt, and CLO equity — based on where the risk/return tradeoff is most favorable at any given time.

As of January 2026, the portfolio breakdown was: loans (41.8%), corporate bonds (33.3%), CLO debt (18.1%), and CLO equity (10.5%). The short effective duration of 1.24 years is striking — this is not a fund taking big duration risk. The floating-rate component (63.2% of the portfolio) means the fund benefits from elevated short-term rates and is insulated from rate volatility in ways a traditional high-yield bond fund is not.

NAV per Share: $13.58

Market Price: $12.88

Discount to NAV: approximately -5.2%

Monthly Distribution: $0.1125 per share

Annualized Distribution Yield (market): approximately 10.5%

Annualized Distribution Yield (NAV): approximately 9.94%

Effective Leverage: 40.64%

Total Managed Assets: $548 million

Number of Holdings: 297+

Average Portfolio Coupon: 8.44%

Effective Duration: 1.24 years

Total Expense Ratio (including leverage costs): 5.26%

Inception Date: November 27, 2012

Portfolio managers: Seth Brufsky (35 years experience), Samantha Milner (25 years), Charles Arduini (25 years), Kristofer Pritchett (17 years).

— PAYWALL —

Why This Fund, Why Now

The credit cycle is at an inflection point. We have had two years of strong credit performance — ARDC posted +19.44% NAV return in 2023 and +11.80% in 2024 — riding the tailwind of elevated rates and tight spreads. But 2025 told a different story: NAV returned +6.79% while the price fell -3.07%. YTD 2026 through March, both are negative (-4.54% NAV, -6.14% price). The credit market has repriced risk, and ARDC’s discount has blown out from a 52-week high of +1.64% premium to the current -5.2% discount.

This is where it gets interesting. A -5.2% discount on a fund managed by the Ares credit platform — one of the most respected credit organizations in the world — is not a sign of a broken fund. It is a sign of a market that is pricing fear into everything with credit exposure.

The case for ARDC right now is not momentum. It is mean reversion and income. The 52-week average discount is -4.57%, and the widest it has traded is -11.18%. At current prices, you are buying below the 52-week average and collecting $0.1125 every month while you wait.

ARDC Premium/Discount to NAV 2025-2026 | Source: CEFConnect

Portfolio Composition

The portfolio is built around diversification across credit instruments and issuers, with an average position size of just 0.31%. The top holdings as of January 2026 include Freeport LNG Investments (1.87%), Ensemble Health (1.77%), Charter Communications (1.04%), Ford Motor Credit (0.94%), and Sunoco LP (0.98%) — a mix of energy infrastructure, healthcare, telecom, and financial issuers.

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LEADERS: TECH DOMINATES, ENERGY HOLDS 6-MONTH LEAD, GOLD REBOUNDS

Technology (XLK) – The Single Cleanest Leader, Now Accelerating

Technology is the only sector doing meaningful work right now. XLK/SPY is +14.6% one-month, +20.0% three-month, +8.6% six-month, and +24.1% one-year — every horizon positive and accelerating. XLK closed Mon May 11 at $177.88, up 9.8% on the week. The Nasdaq gained 4.0% last week to a fresh record; six of eleven sectors finished the week LOWER, which is the cleanest possible signal that the rally is one sector deep. The April jobs print on Friday (+115K vs 55K consensus, unemployment steady at 4.3%) gave the market a soft-landing read that bid duration-sensitive growth. Trump’s China trade deal commitments holding from November mean rare earth exports keep flowing into the AI capex cycle. As long as XLK leads, the index makes records. The moment XLK rolls over, the rally is over.

Energy (XLE) – 1-Month Unwind Continues, 6-Month Lead Intact

Energy’s three-month ratio vs SPY is now barely positive at +0.75% and the one-month has collapsed to -7.7%, but the six-month at +21.3% and one-year at +8.1% keep XLE in leader territory. XLE closed Mon May 11 at $57.17, down 3.7% on the week as WTI fell from $94.40 to $94.87 Friday on Iran deal hopes. Then Monday Trump said the ceasefire is on “life support” and oil reversed back higher. Brent settled $100.51 Friday but is whipping around. KPMG now forecasts two Fed RATE HIKES this year based on sticky inflation plus the ongoing Strait of Hormuz closure — a regime change from the broader market’s soft-landing pricing. This ratio is the binary one to watch: if Iran deal progresses, XLE rolls to laggard within two weeks; if Hormuz closes again, the 6-month lead reasserts hard.

Emerging Markets (EEM) – The Most Consistent Leader of 2026

EEM/SPY is +3.0% one-month, +6.0% three-month, +13.6% six-month, and +16.8% one-year — the only ratio with green signals across every meaningful lookback. EEM closed Mon May 11 at $65.94. The November US-China trade deal continues to flow through as China removes rare earth export controls and resumes US ag purchases. India and Southeast Asia keep absorbing the energy-importer discount. The DXY weakness adds the currency tailwind. Six consecutive weeks of S&P gains have not stopped EEM from outperforming — that’s the tell that this isn’t a risk-on-vs-EM trade but a structural macro shift. This remains the highest-conviction relative-strength signal entering May CPI on Wednesday.

Russell 2000 / Small Caps (IWM) – Breadth Holding Despite Narrow Leadership

IWM/SPY is +0.4% one-month, +2.1% three-month, +7.1% six-month, and +8.4% one-year. IWM closed Mon May 11 at $285.33, with the Russell 2000 itself setting a new high on Wednesday last week. The fact that small caps are still leading on every horizon despite six of eleven sectors finishing the week red tells you the rally has actually broadened beyond just Mag 7 even though the headline numbers look narrow. Lower oil from the early-May spike reduced input costs for small caps; a steady 4.38% 10-year keeps the discount rate stable; and the better-than-expected April jobs read keeps recession fears at bay. If the rotation extends, small caps will keep the breadth-confirmation signal alive.

European Banks vs U.S. Banks (EUFN/XLF) – Transatlantic Divergence Re-Extends

EUFN/XLF re-established leadership: +0.8% one-month, +5.1% three-month, +14.6% six-month, and +23.2% one-year. The one-year reading is the strongest durable cross-asset signal in this report for the fourth consecutive week. European banks continue to benefit from ECB easing, the lower euro-energy import bill from oil’s recent decline, and equity multiples that started from a lower base. U.S. banks remain pinned by the flat curve (10Y at 4.38%, hawkish Fed dissent against dovish forward guidance) and Basel III endgame uncertainty. EUFN closed Mon May 11 at $38.42. The European Central Bank meets later this month — watch for any signal that ECB easing pauses, which would test this ratio.

High-Yield Credit vs Treasuries (JNK/GOVT) – Credit Beats Duration Continues

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This one is going out short and direct, because the clock matters. If you are a financial advisor in or near Boston or New York and you can move your schedule, read this now.

I am hosting two private events in two cities over the next 36 hours, and a small number of seats are still open at each one. The reason I am writing this publicly is that I would rather you hear it from me directly than miss it because an email got buried.

WHAT THIS IS

Senior portfolio leadership from a major Asia-Pacific quantitative manager is in the United States for two nights only. They are sitting down with a small group of US advisors at each event — roughly ten at a table — for a candid conversation about emerging market equity, China A-shares, and factor work that most US advisors never get to discuss face-to-face with the team actually running the money.

This is not a webinar. This is not a sales pitch. It is a real conversation over a real meal, with the kind of access that is hard to engineer twice.

WHERE AND WHEN

Boston — Wednesday, May 13

Lunch at 12:30 PM at Davio’s Northern Italian Steakhouse, 447 Boylston Street.

Dinner at 6:30 PM at The Oceanaire Seafood Room, 40 Court Street.

New York — Thursday, May 14

Dinner at 6:30 PM at Sparks Steak House, 210 East 46th Street.

WHY YOU SHOULD COME

I will be there at every event. The room is small on purpose. The portfolio leadership flying in does not normally do US advisor sit-downs, and the next opportunity to have this conversation at this level is not on the calendar. If you have clients with EM exposure, or you have been quietly trying to figure out how to think about China A-shares without the noise, this is the conversation worth showing up for.

If you cannot make it but you know an advisor in your network who should be there, forward this to them. Genuinely — that helps me as much as you coming yourself.

HOW TO RSVP

Reply directly to me at michaelgayed@leadlagmedia.com with which event you want — Boston lunch, Boston dinner, or NYC dinner. I will send you the confirmation and venue logistics within the hour.

The last seats are going tonight. I would rather you be at the table than read the recap.

— Michael

Not investment advice. Private event for financial advisors only. No solicitation of securities. The content of this post and the discussion at any of these events is for educational and networking purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security.

I want to put something on your radar that I have been quietly building for months and that is now 48 hours away from happening. If you are an advisor who has been waiting for a real conversation about Asia exposure — one that does not start with a VIE disclaimer, a wholesaler script, or another regional ETF that secretly tracks the same handful of US-listed names — keep reading.

This week I am hosting three private, off-the-record gatherings with Lawrence Lo and Jason Hsu of Rayliant Global Advisors, in from Hong Kong, alongside the senior team from a major Asia-Pacific institutional partner. Two of those rooms are in Boston on Wednesday. The third is in New York on Thursday. Each one is intentionally small. Each one is invitation-only. And there are a handful of seats still open at each.

Why this room, why this week

Most of the cross-border conversations US advisors have access to are either marketing theater or stale. Either a wholesaler walks you through a deck, or you read a sell-side note that is six weeks behind the actual flows. What is sitting in front of you Wednesday and Thursday is different — the people in the room are the ones building the institutional vehicles, not selling you the retail wrapper after the fact.

Rayliant runs serious quantitative work across Asia for institutional clients — sovereign wealth, pension, large family office. Their public-facing launch this season is CNQQ, a China internet ETF that is structurally not VIE — which alone is a conversation most advisors have not been able to have honestly with clients for years. But the larger story is what they do behind the scenes for institutions, and what their Asia-Pacific partner — one of the most consequential allocators in the region — is currently thinking about US RIA distribution.

If you have a $20M, $50M, $200M practice and you have been trying to figure out where Asia fits without resorting to the same tired three or four ETFs, this is the room. If you do not need that conversation, this is not the email for you and that is completely fine — but please pass it along to someone in your network who does.

The three rooms

Boston · Wednesday May 13 · Lunch

Davio’s Northern Italian Steakhouse, 447 Boylston Street in Back Bay, 12:30pm start. Lighter format — roughly two hours over a plated lunch. This is the right room if your Wednesday evening is already locked but you can grab a midday window. Smaller table, more direct back-and-forth with Lawrence and Jason. No presentation, no deck — just the conversation.

Boston · Wednesday May 13 · Dinner

Davio’s Back Bay, 6:30pm. Same room, longer-form version of the lunch — same principals, same Asia-Pacific partner, more time for the deeper conversation about institutional positioning, regime divergence, and what Rayliant is seeing in flows that has not made the headlines yet. Cap is ten advisors.

New York · Thursday May 14 · Dinner

Sparks Steak House, 210 East 46th Street between 2nd and 3rd, 6:30pm. This is the night that has been the most heavily requested — if you are in or near the city, or you can come down from Westchester, Connecticut, or in from New Jersey for an evening, reply quickly. Cap is twelve advisors.

Who I am trying to put in these rooms

I am being deliberate about the guest list. The people I want at the table are advisors who are honest about how the last three years actually went, not the version where everything worked out. Specifically:

• Independent RIAs and breakaway advisors who custody at Fidelity or Schwab — these are the platforms Rayliant is structurally built around

• Advisors actively questioning whether 60/40 still hedges anything in a regime where stocks and bonds correlate positively

• Anyone who has been sidelined on China by VIE-structure concerns and wants a serious, non-marketing-deck alternative

• Allocators looking for actual international exposure — not another vehicle that closet-tracks the same US-listed mega-caps

• Advisors who are quietly tired of the standard wholesaler script and are looking for substance instead of a steak knife

How to claim a seat

Reply directly to this email, or write me at michaelgayed@leadlagreport.com, with which event works — Boston lunch, Boston dinner, or NYC dinner. RSVPs close at end of day Tuesday. Seats go in the order they come in. If you have a peer, partner, or colleague who belongs in one of these rooms more than you do, forward this freely — I would rather have the right person in the seat than the first person to reply.

And if you are reading this and a Wednesday/Thursday in May is impossible — that is fine. There will be more of these. Reply anyway and tell me what city, what format, and what topic would get you in the room next time. That is how I build the next one.

Looking forward to filling the last few seats over the next twenty-four hours.

— Michael

Michael A. Gayed, CFA is the Publisher of The Lead-Lag Report and Founder of Lead-Lag Media. The Lead-Lag Report is a market intelligence publication followed by tens of thousands of advisors, allocators, and institutional investors. This is not solicitation. Nothing in this post is investment advice.

Key Takeaways:

• Signal 1 (Beta Rotation) remains Risk-On for a third consecutive week, with the XLU/SPY 4-week RoC at -12.28%. The S&P 500 continues to outperform Utilities by a wide margin as risk appetite strengthens. The negative RoC widening week over week confirms money is moving decisively out of defensive equity sectors and into the broad market.

• Signal 2 (Treasury Rotation) is now Risk-On on the fresh April month-end reading. TLT returned -1.23% in April versus IEF at -0.48%. Long-duration bonds underperformed intermediate maturities once again — a classic risk-appetite indicator. The signal will hold this reading through the end of May.

• Signal 3 (Lumber/Gold) has flipped back to Risk-On as lumber stabilized while gold consolidated. Lumber’s 13-week return of -0.94% now exceeds gold’s -5.01% decline, with all 7 sub-strategies rotated back to offensive positioning. Gold’s record run above $4,600/oz has paused, while lumber’s bounce off the $570 level reflects firming demand expectations.

• The S&P 500 at 7,399.23 sits +9.8% above its 200-day SMA of 6,739.47, firmly in Risk-On territory. The index closed at a new all-time high, with breadth, volatility, and trend all aligned. Signal 4 remains Risk-On, maintaining the allocation to SSO (2x leveraged S&P 500).

MARKET COMMENTARY

The framework reads 4-0 Risk-On this week, a clean sweep across all four intermarket indicators. Beta Rotation, Treasury Rotation, Lumber/Gold, and the 200-Day Moving Average all favor offensive positioning. The S&P 500 closed at 7,399.23 on May 1, a fresh all-time high, with the index sitting +9.8% above its 200-day moving average of 6,739.47. Lumber/Gold has flipped back to Risk-On as lumber stabilized while gold’s record run paused, restoring the unanimous offensive posture last seen in mid-April.

The week of April 27 to May 1 saw the equity rally extend to fresh highs as the macro backdrop turned increasingly supportive. The S&P 500 added approximately 1% on the week to close at 7,399.23, with breadth strong across most sectors. The April employment report on Friday came in roughly in line with expectations, neither too hot to revive inflation fears nor weak enough to signal recession. Treasury yields drifted modestly lower across the curve as the soft-landing narrative regained traction. The 10-year yield finished the week below 4.20%, a multi-week low, while the 2-year held near 3.75%. The dollar weakened slightly, supporting risk assets globally. Earnings season has continued to deliver positive surprises, with the bulk of S&P 500 reporters beating estimates and forward guidance broadly stable.

At 7,399.23, the index sits +9.8% above its 200-day SMA of 6,739.47, a comfortable margin that solidifies the bullish trend signal. The April monthly close at $7,209 confirmed the breakout from the early-year consolidation range, and price action through the first trading day of May has carried that momentum higher. Volatility remains contained, with the VIX hovering near multi-month lows. Small caps and high-beta segments participated in the advance, indicating that risk appetite is not concentrated in a narrow leadership group. The technical setup — price above a rising 200-day MA, breadth confirming the move, volatility subdued — is the textbook definition of a healthy bull trend.

The Beta Rotation signal remains firmly Risk-On with the XLU/SPY 4-week Rate of Change at -12.28%. Utilities continue to be sold relative to the broad market, with the negative RoC widening week over week. This is one of the strongest offensive readings of the year, and the signal is firmly allocating to SPY. Defensive equity rotation — typically a tell that institutional money is bracing for trouble — is conspicuously absent. The persistence of this signal across multiple weeks is more meaningful than any single reading: trend in the rotation series itself confirms the broad equity bid.

The Treasury Rotation signal has been refreshed with April month-end data and is now Risk-On. TLT returned -1.23% in April versus IEF at -0.48%, with the long bond underperforming the intermediate — a classic risk-appetite signature. The yield curve’s message is consistent with the equity tape: investors are not stampeding into duration as they would if recession concerns were rising. The signal will hold this April reading through the end of May before it can update again, providing a stable foundation for the framework’s offensive tilt over the next four weeks.

The Lumber/Gold signal has flipped back to Risk-On as lumber’s stabilization caught up to gold’s pause. Lumber’s 13-week return of -0.94% now exceeds gold’s -5.01% return. Gold’s relentless rally above $4,800/oz earlier this month has consolidated into a sideways pattern around $4,600, while lumber bounced off the $570 level on firming housing demand expectations. All seven Lumber/Gold sub-strategies have rotated back to offensive positioning. The signal is not declaring that the gold story is over — the metal remains in a structural uptrend — but the relative dynamic has flipped, and the framework treats relative performance as the operative variable.

The 4-0 reading is significant because it represents the rarer end of the framework’s distribution. Historically, clean-sweep Risk-On readings tend to cluster during the strongest phases of bull markets. They are not signals to chase higher, but they are clear instructions to lean into existing offensive allocations rather than fade strength. The current setup — trend confirmed, rotation supportive, commodities cooperating, yield curve constructive — is the configuration the framework is designed to identify and exploit. Risk management still applies, and traditional risks (geopolitical shock, inflation re-acceleration, earnings disappointment in a heavyweight name) can disturb the picture quickly. But absent those, the path of least resistance remains higher.

SIGNAL 1: BETA ROTATION

Based on: “Opposing Behavioral Forces: Beta Rotation” (SSRN 2417974)

Target Investor: Self-directed investors who want to capture relative strength between equity market segments. This signal uses the 4-week rate of change of the Utilities-to-S&P 500 price ratio to determine whether the market favors offense (broad equity) or defense (Utilities).

CURRENT INDICATOR: RISK-ON

XLU/SPY 4-Week Rate of Change: -12.28%

Current Allocation: 100% SPY (S&P 500)

Growth of $100,000 | YTD from January 3, 2025 | Data: Lead-Lag Publishing, LLC

SIGNAL 2: TACTICAL RISK ROTATION

Based on: “A Quantitative Approach to Tactical Asset Allocation” (SSRN 2431022)

Target Investor: Conservative to moderate investors seeking a tactical overlay between equities and long-duration Treasuries. This signal compares the prior month total return of 10-year versus 30-year Treasury bonds to identify shifts in the yield curve’s risk appetite signal.

CURRENT INDICATOR: RISK-ON

30yr Treasury (TLT) March Return: -1.23%

10yr Treasury (IEF) March Return: -0.48%

Current Allocation: 100% S&P 500 (SPY)

Growth of $100,000 | Monthly Data from January 2025 | Data: Lead-Lag Publishing, LLC

SIGNAL 3: LUMBER/GOLD RATIO

Based on: “Lumber: Worth Its Weight in Gold” (SSRN 2604248)

Target Investor: Active investors seeking to rotate between offensive and defensive exposures across multiple asset class pairings. This signal uses the 13-week relative performance of Lumber futures versus Gold spot to determine the market’s risk appetite. When Lumber outperforms Gold, the economy is likely strengthening (Risk-On). When Gold outperforms, investors should favor defensive positioning (Risk-Off).

CURRENT INDICATOR: RISK-ON

Lumber 13-Week Return: -0.94%

Gold 13-Week Return: +-5.01%

Lumber now outperforming Gold over 13 weeks. All 7 sub-strategies have rotated to offensive positioning.

Lumber/Gold Bond Rotation (SPY vs GOVT)

Growth of $100,000 | YTD from January 3, 2025 | Data: Lead-Lag Publishing, LLC

Lumber/Gold Buy-Write (SPY vs PBP)

Growth of $100,000 | YTD from January 3, 2025 | Data: Lead-Lag Publishing, LLC

Lumber/Gold Low Volatility (SPY vs SPLV)

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The market keeps trying to rerun a playbook that stopped working in 2022 — long-duration US growth as the only trade, a 60/40 that no longer hedges itself, and “international” exposure that is really just a different flavor of the same tech complex. Most advisors I talk to already feel this in their books. The question is what to do about it without leaning on VIE-structured China wrappers, regional ETFs that closet-hug MSCI, or a wholesaler script.

I am hosting three private gatherings this week — two in Boston on Wednesday (a midday lunch and an evening dinner) and one in New York on Thursday — built around exactly that conversation. The guests of honor are Lawrence Lo and Jason Hsu of Rayliant Global Advisors, in from Hong Kong, joined by the team from a major Asia-Pacific institutional partner. They are launching CNQQ, a China internet ETF that is not VIE-structured, and they run institutional Asia-quant strategies that most US RIAs have never had real access to.

Each event is intimate by design — roughly ten to twelve advisors, real conversation, no podium, no deck. If you have been looking for a way to talk about Asia exposure with clients without defaulting to either “just buy more S&P” or “here is an EM ETF and good luck,” this is the room for it.

Wednesday, May 13 — Boston lunch at Davio’s

Davio’s Northern Italian Steakhouse, Back Bay, 12:30pm. Roughly ten advisors, two-hour lighter format over lunch. Ideal if your Wednesday evening is locked but you can carve out a midday block. Venue is confirmed and locked.

Wednesday, May 13 — Boston dinner

Back Bay, Boston, 6:30pm. Ten advisor seats, full dinner format. Same Rayliant principals, same Asia-Pacific institutional partner — different room, more time for the deeper conversation. Venue confirmed on RSVP.

Thursday, May 14 — NYC dinner

Midtown Manhattan, 6:30pm. Twelve advisor seats, full dinner format. The NYC night is the most heavily requested — if you are in or near the city, reply early. Venue confirmed on RSVP.

Who I would love at the table

● Independent RIAs and advisors custodied at Fidelity or Schwab — these are the platforms Rayliant is built around

● Advisors actively questioning whether 60/40 still hedges anything in a regime of positive stock-bond correlation

● Anyone who has been sidelined on China by VIE structure concerns and wants a serious alternative

● Advisors who want real international exposure — not just a different vehicle for the same handful of US-listed mega-caps

● Anyone allergic to the standard wholesaler script and tired of pretending the last three years did not happen

How to RSVP

Reply to this email or write me directly at michaelgayed@leadlagreport.com with which event works — Boston lunch, Boston dinner, or NYC dinner. RSVPs close end of day Tuesday. Seats are first-come and capped intentionally low. Forward freely to anyone in your network you think should be in the room.

Michael A. Gayed, CFA is the Publisher of The Lead-Lag Report and Founder of Lead-Lag Media.

· **High yield credit spreads remain compressed**: the ICE BofA US High Yield OAS was **2.78% on 2026-05-04**.[2]

· **The Treasury curve is positive again**: the 10-year minus 2-year Treasury spread was **+0.50% on 2026-05-05**.[4]

· **Inflation is not “gone,” it is shifting**: CPI-U was **+3.3% YoY** and core CPI was **+2.6% YoY** in March 2026.[1]

· **Volatility is not flashing panic, but it is not asleep either**: VIX was **18.29 on 2026-05-04**.[5]

· Tight spreads + a normalizing curve can be the most dangerous combination: it often invites leverage and duration mistakes right before credit “reprices.”

When spreads are quiet and the curve is re-steepening, the market loves to declare victory. I think that’s a mistake. Quiet is not the same thing as safe. In credit, the real stress often shows up after positioning becomes one-sided — and the signals that matter most are rarely the ones investors are staring at.

WHY “CALM” CREDIT CAN BE A WARNING

Credit investors tend to anchor on one variable: the level of spreads. When the spread between high yield and Treasuries is tight, the default assumption is that the economy is fine and the cycle is stable. Right now, the ICE BofA US High Yield index option-adjusted spread (OAS) sits at **2.78% (2026-05-04)**, and BB spreads are **1.70% (2026-05-04)**.[2] [3]

Those numbers are not screaming distress. They are signaling confidence.

But confidence in credit often peaks when three things happen at the same time:

1) investors are paid very little to take risk,

2) the curve begins to re-steepen (so carry looks attractive again), and

3) macro uncertainty becomes “background noise” rather than headline risk.

The irony is that this combination can be precisely when the next repricing risk is highest.

Macro “quiet” encourages investors to extend out the risk spectrum — lower quality, longer duration, more leverage. And because credit tends to lag equities in the early part of a volatility regime shift, spreads can remain deceptively tight even as the probability distribution of outcomes is widening.

THE CURVE IS POSITIVE AGAIN — THAT CHANGES BEHAVIOR

After years of inversion, the curve being positive again is psychologically powerful. The 10-year minus 2-year spread is **+0.50% (2026-05-05)**.[4] That is not just a macro talking point — it changes how portfolios are constructed.

A positive curve encourages:

- duration extension (because long Treasuries offer “more yield”),

- carry trades (because borrowing short and investing long looks sensible again), and

- the belief that the policy cycle has “turned.”

But in a world where inflation is still running above target, a positive curve does not automatically mean the risk-free asset is “safe.” In March 2026, CPI-U rose **3.3% year-over-year**, while core CPI rose **2.6% year-over-year**.[1] The direction of inflation matters less than the reality that it is not yet comfortably anchored at 2%.

This matters for credit because the biggest credit mistakes tend to be made when investors think they can own both spread risk and duration risk at the same time without consequence.

If rates volatility rises, long-duration Treasuries can rally — but credit can simultaneously widen. If inflation surprises, long-duration Treasuries can sell off — and credit can widen. In other words: the “wrong” environment can show up from two different directions.

VOLATILITY IS QUIET — BUT NOT LOW ENOUGH TO BE COMPLACENT

Volatility is not flashing crisis. But it is also not at levels consistent with an easy, stable, low-risk regime. The VIX was **18.29 on 2026-05-04**.[5]

In my experience, what matters is not whether the VIX is “high” or “low” in absolute terms. What matters is whether it is beginning to behave differently — making higher lows, spiking more frequently, and refusing to stay suppressed.

When volatility stops being suppressed, credit eventually responds. Not always immediately, but it responds.

This is where investors often misread cause and effect:

- They wait for spreads to widen before de-risking.

- But spreads often widen after the leading indicators shift — utilities relative strength, equity volatility behavior, and cross-asset correlations.

By the time spreads are wide, the opportunity set has changed.

THE SIGNAL MOST PEOPLE IGNORE: UTILITIES RELATIVE TO THE S&P 500

One of the more reliable “tells” in markets is when defensive equity leadership emerges underneath the surface.

Utilities are a classic example because they tend to act like a hybrid between equity beta and bond duration. When utilities begin to outperform the broader market, it is often a subtle sign that investors are moving toward stability and away from cyclicality — sometimes before headlines reflect that shift.

That matters because there is a long history of credit spreads widening after defensive leadership takes hold. The mechanism is intuitive:

- utilities leadership often coincides with slowing growth expectations,

- slowing growth expectations raise default risk probabilities (even if defaults don’t immediately rise), and

- the market begins to demand more compensation for taking credit risk.

I can’t stress this enough: credit is often late to acknowledge regime changes.

And this is precisely why rotation matters.

WHAT JOJO IS DESIGNED TO DO IN THIS ENVIRONMENT

This is the premise behind **ATAC Credit Rotation ETF (Ticker: JOJO)**.

JOJO is built around a simple, rule-driven idea: rotate exposure based on a leading intermarket signal. Historically, when utilities outperform the S&P 500, volatility in risk assets tends to rise afterward — and credit spreads tend to follow.[1]

Rather than trying to forecast earnings, default rates, or the next Fed meeting, the strategy focuses on what markets are already implying.

In practice, JOJO rotates between:

- high yield exposure (when the signal is risk-on), and

- long-duration Treasuries (when the signal is risk-off).

Why those two assets? Because they are often on opposite sides of a volatility regime shift.

If you are wrong about the cycle, owning “static” credit exposure can be unforgiving. If you are wrong about the cycle, a rotation framework at least gives you the chance to respond as the market’s internal leadership changes.

WHEN TIGHT SPREADS BECOME AN OPPORTUNITY (NOT A COMFORT BLANKET)

Tight spreads are not inherently bearish. They can stay tight for long periods. The risk is not that spreads are tight — the risk is what investors do because spreads are tight.

Compressed spreads encourage:

- reach-for-yield behavior,

- lower underwriting standards,

- crowded positioning,

- a false sense of diversification.

When the curve is positive and carry looks attractive, those behaviors intensify.

But from a tactical perspective, tight spreads can actually improve the “signal value” of rotation. Why?

Because if spreads are already wide, the market has already priced in stress. The tactical edge often comes from recognizing stress before it is priced in — not after.

A rotation strategy is not about predicting the future. It is about respecting the cycle.

THE BOTTOM LINE

The bond market is sending a mixed message. Inflation is still present.[1] The curve has re-steepened.[4] Credit spreads are calm.[2] [3] Volatility is not panicked, but it is not asleep.[5]

That combination can lull investors into believing the “hard part” is over.

I disagree.

When spreads are tight, the cost of being wrong rises. When the curve is positive, the temptation to take the wrong kind of risk rises. And when volatility begins to behave differently, the repricing in credit rarely stays contained.

In that environment, I believe a systematic rotation approach — one that shifts between credit risk and duration defensiveness — is not just reasonable. It is prudent.

Michael A. Gayed, CFA

ENDNOTES

1. U.S. Bureau of Labor Statistics, “Consumer Price Index Summary — March 2026,” news release, April 10, 2026, https://www.bls.gov/news.release/cpi.nr0.htm

2. Federal Reserve Bank of St. Louis, “ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2),” FRED, accessed May 6, 2026, https://fred.stlouisfed.org/series/BAMLH0A0HYM2

3. Federal Reserve Bank of St. Louis, “ICE BofA BB US High Yield Index Option-Adjusted Spread (BAMLH0A1HYBB),” FRED, accessed May 6, 2026, https://fred.stlouisfed.org/series/BAMLH0A1HYBB

4. Federal Reserve Bank of St. Louis, “10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y),” FRED, accessed May 6, 2026, https://fred.stlouisfed.org/series/T10Y2Y

5. Federal Reserve Bank of St. Louis, “CBOE Volatility Index: VIX (VIXCLS),” FRED, accessed May 6, 2026, https://fred.stlouisfed.org/series/VIXCLS

Michael A. Gayed, CFA

DISCLOSURES

Junk debt, also known as high-yield bonds or speculative-grade debt, refers to fixed-income securities issued by companies or governments with lower credit ratings, offering higher interest rates to compensate investors for the elevated risk of default.

The VIX index, often called the “fear gauge” of Wall Street, is a real-time market index that measures the market’s expectation of 30-day forward-looking volatility derived from S&P 500 index options prices, serving as a key barometer of investor sentiment and market risk.

The ICE BofA BB US High Yield Index Option-Adjusted Spread measures the yield differential between BB-rated corporate bonds and a spot Treasury curve, quantifying the risk premium for below-investment-grade debt with a BB rating in the US market.

As with all ETFs, Fund shares may be bought and sold in the secondary market at market prices. The market price normally should approximate the Fund’s net asset value per share (NAV), but the market price sometimes may be higher or lower than the NAV. The Fund is new with a limited operating history. There are a limited number of financial institutions authorized to buy and sell shares directly with the Fund, and there may be a limited number of other liquidity providers in the marketplace. There is no assurance that Fund shares will trade at any volume, or at all, on any stock exchange. Low trading activity may result in shares trading at a material discount to NAV.

Because the Fund invests in Underlying ETFs an investor will indirectly bear the principal risks of the Underlying ETFs, including but not limited to, risks associated with investments in ETFs, equity securities, growth stocks, large and small capitalization companies, non-diversification, fixed income investments, derivatives and leverage. The prices of fixed income securities may be affected by changes in interest rates, the creditworthiness and financial strength of the issuer and other factors. An increase in prevailing interest rates typically causes the value of existing fixed income securities to fall and often has a greater impact on longer duration and/or higher quality fixed income securities. The Fund will bear its share of the fees and expenses of the underlying funds. Shareholders will pay higher expenses than would be the case if making direct investments in the underlying funds.

Because the Fund expects to change its exposure as frequently as each week based on short-term price performance information, (i) the Fund’s exposure may be affected by significant market movements at or near the end of such short-term periods that are not predictive of such asset’s performance for subsequent periods and (ii) changes to the Fund’s exposure may lag a significant change in an asset’s direction (up or down) if such changes first take effect at or near a weekend. Such lags between an asset’s performance and changes to the Fund’s exposure may result in significant underperformance relative to the broader equity or fixed income market. Because the Adviser determines the exposure for the Fund based on the price movements of gold and lumber, the Fund is exposed to the risk that such assets or their relative price movements fail to accurately predict future performance.

Past performance is no guarantee of future results.

The Fund’s investment objectives, risks, charges, expenses and other information are described in the statutory or summary prospectus, which must be read and considered carefully before investing. You may download the statutory or summary prospectus or obtain a hard copy by calling 855-ATACFUND or visiting www.atacfunds.com. Please read the Prospectuses carefully before you invest.

Investing involves risk including the possible loss of principal.

JOJO is distributed by Foreside Fund Services, LLC.

Learn more about $JOJO at https://atacfunds.com/jojo/ Lead-Lag Publishing, LLC is not an affiliate of Tidal/Toroso or ACA/Foreside.

UTG — Reaves Utility Income Fund | Fund Snapshot as of May 2026

There is a phrase I keep coming back to lately: the grid is the new gold. Every AI model that gets trained, every data center that hums through the night, every electric vehicle charging up at midnight — all of it runs on electrons. And someone has to build, own, and operate the infrastructure that delivers those electrons. That someone is the utility sector. And one of the most compelling ways to own that story — while getting paid $0.20 every single month — is the Reaves Utility Income Fund (NYSE American: UTG).

I want to walk through why UTG has become one of my favorite ways to think about the intersection of income and infrastructure, and why the current setup — a mild discount, a recent distribution raise, and a portfolio aligned to the biggest secular theme of our time — is worth your attention.

Fund Background

UTG is a closed-end fund managed by Reaves Asset Management (W.H. Reaves & Co.), a firm that has focused almost exclusively on utilities and essential infrastructure since the 1960s. That specialization matters. Reaves isn’t a generalist manager dabbling in utilities when the trade looks interesting — they are utilities, full stop.

The fund launched in 2004 and trades on the NYSE American exchange. As of early May 2026, total common assets stand at approximately $3.98 billion, with total investment exposure (including leverage) reaching $4.86 billion. The fund holds 67 positions and turns over roughly 37% of the portfolio annually — an active but not frenetic approach.

The portfolio managers are Timothy O. Porter, John P. Bartlett, and Joseph (Jay) Rhame. The mandate is to generate “a high level of after-tax income and total return” by investing at least 80% of total assets in dividend-paying stocks and debt instruments of utility-industry companies.

The NAV per share currently sits at $43.91, while the market price is $43.10, reflecting a -1.84% discount to NAV. The 52-week average was essentially flat to NAV at -0.22%, so today’s mild discount is slightly below the norm — and if you believe the utility cycle is still early-innings, that’s a reasonable entry point.

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I sent a piece earlier tonight explaining why annual is the better deal - $320 versus $468 if you stay on monthly. That math holds for everyone.

But for this group - existing paid subscribers and complimentary subscribers who I have given access to over the last year or two - I am going one step further this weekend.

Use code WELCOMEBACK30 at c…

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I’m hosting Greg Babij, Founder & CIO of Sundial, for a live conversation built for a very specific audience — investors with $5M+ portfolios who already know the traditional 60/40 isn’t going to do what it did the last forty years.

This isn’t a financial planning webinar. It isn’t retirement allocation math. It’s a working session on how money is actually moving in 2026 — and where it’s going next.

WHY THIS WEBINAR, WHY NOW

Stock-bond correlations broke. Treasury volatility is structural. Zero-day options have changed how the equity tape behaves intraday. The Fed reaction function is no longer the same one most allocators built portfolios around.

Greg’s view — and the reason Sundial’s average client sits at 60%+ alternatives, 20-30% traditional equities, and effectively zero traditional fixed income — is that the regime changed and most portfolios didn’t.

WHAT WE’LL COVER

• Probability-based investing vs prediction-based investing — and why the distinction matters more in faster cycles

• How regime-adaptive portfolios are constructed across growth, recession, inflation, and deflation paths

• Where tactical and non-correlated strategies fit when traditional fixed income stops doing its job

• The case for stability-seeking allocations in a market that increasingly rewards instability

• What’s actually happening inside MFOs right now — what’s getting bought, what’s getting sold

WHO THIS IS FOR

Investors and advisors with serious money in motion. If you’re managing $5M+ and the standard playbook is starting to feel stale, this hour is for you.

REGISTER

https://us06web.zoom.us/j/82366523745?pwd=uhukgcxT05N4AC5uXfCEUwRjnzQjaq.1

Starts at noon ET sharp. Live Q&A in the back half. Bring questions.

https://us06web.zoom.us/j/82366523745?pwd=uhukgcxT05N4AC5uXfCEUwRjnzQjaq.1

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