A growing economy is the foundation for long run returns
The Sandbox Daily (5.5.2026)
Welcome, Sandbox friends.
Today’s Daily discusses:
a growing economy is the foundation for long run returns
Let’s dig in.
Blake
Markets in review
EQUITIES: Russell 2000 +1.75% | Nasdaq 100 +1.31% | S&P 500 +0.81% | Dow +0.73%
FIXED INCOME: Barclays Agg Bond +0.18% | High Yield +0.15% | 2yr UST 3.941% | 10yr UST 4.424%
COMMODITIES: Brent Crude -3.71% to $110.21/barrel. Gold +0.76% to $4,567.7/oz.
BITCOIN: +1.94% to $81,682
US DOLLAR INDEX: +0.11% to 98.48
CBOE TOTAL PUT/CALL RATIO: 0.87
VIX: -4.97 to 17.38
Quote of the day
“There is nothing noble in being superior to your fellow man. True nobility is being superior to your former self.”
- Ernest Hemingway
A growing economy is the foundation for long run returns
While the stock market and the economy are not the same thing, they are forever connected.
Over time, the market correlates to the direction of corporate earnings, and earnings (EPS for short) is driven by the path of economic activity.
This is why it is important to keep an eye on the broader economic cycle, even as markets move on a day-to-day basis for many other reasons.
The current business cycle has technically been running two-and-a-half years longer than the market cycle.
The last official recession, as determined by the National Bureau of Economic Research (NBER), was brief, but it was a sharp response to the global pandemic in 2020.
Since then, there have been quarters of slower growth and occasional predictions about recessions, none of which have taken shape.
Today, the economy is healthy by many measures despite three key areas that investors are watching carefully.
1st: oil prices above $100 per barrel, if sustained, could weigh on consumer spending and add to inflationary pressures.
2nd: the job market has slowed significantly, especially in areas such as technology. This raises questions about consumer spending, which has been robust over the past several years.
3rd: the size and scale of AI investments have raised questions about ROI and whether there is a “bubble.” This is understandable since many of today’s investors have lived through both the dot-com bust and the housing crisis.
Bubbles are notoriously difficult to identify in real time, and history shows that not every period of high valuations ends in a dramatic collapse.
So far in this cycle, unlike in past periods, earnings growth has supported valuations and many companies are making outsized investments from their profits.
For longer-term oriented investors, the key consideration is staying balanced across different parts of the market to benefit from growth while managing risk.
Sources: Exhibit A, Clearnomics
That’s all for today.
Blake
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Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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