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Executive Summary  Geopolitics on a knife edge. U.S.–Iran ceasefire on life support after Trump rejected Iran's response as "totally unacceptable"; talks stalled, combat resumption back on the table. WTI above $100, Hormuz heavily disrupted. Inflation is re-accelerating in the data. April headline CPI 3.8% (hottest since May '23), core 2.8%; April PPI hotter still at +1.4% MoM / +6.0% YoY, with stage-2 intermediate demand at 11.1% YoY. Energy pass-through bleeding into core. Labor market cooling, not cracking. April NFP +115K (vs +62K consensus), unemployment 4.3%, AHE +3.6% YoY. "No-hire, no-fire" environment persists. Fed pricing has shifted hawkish. Fed held at 3.50–3.75% in April. The Dot Plot was not updated and still shows one cut by YE while markets price ~50% odds of a hike by year-end, >90% by mid-2027. 10-Year near 4.5%, term premium rebuilding. Warsh confirmed as next chair. AI and cloud are carrying the index. Hyperscaler beats across the board (AWS +28%, GCP +63%, Azure +40%); 2026 capex revised to ~$820B. S&P 500 ex-AI margins fell to 11.0% since 2022 while headline hit 14.1% — the full expansion is AI-driven. Equal Weight lags cap-weighted by 340 bps YTD. Our scenario framework has evolved. Reframed from January's three-scenario view (60/30/10) to a four-quadrant rate-path × growth framework: Higher-for-Longer with Growth Holding ~40% (base), Soft Landing ~25%, Goldilocks Redux ~20%, True Stagflation ~15%. Stagflation has roughly doubled. Risks we are watching. Hormuz re-escalation has materialized; inflation re-acceleration is in the data, not a forward risk to flag; the Fed's reaction function is unsettled under new leadership; long-end rates may pressure equity multiples; equity leadership remains narrow.

Executive Summary The key takeaway of this note is to remind investors that risk management remains the core tenet of our investment philosophy. Markets are moving quickly as news headlines cross the tape, but investors can be assured that we are watching events closely, positioning portfolios appropriately from a risk management standpoint, and attempting to prudently take advantage of dislocations in the market. Market returns were positive early in the year even as volatility increased as concerns regarding AI funding, business model disruptions, the labor market, and private credit caused a change in market leadership early. Investor focus shifted quickly again at the end of February as the price of oil spiked higher with the start of Operation Epic Fury leading to higher global interest rates and lower equity index prices. Fortunately, AIQ’s strategies (particularly those with active security selection) generally performed well during both periods with most strategies outperforming their respective benchmarks thus far this year. What will happen going forward is difficult to know, but it will likely depend highly on how the next week or two go in the war with a wide range of possible investment outcomes. We have taken advantage of the recent spikes in volatility by adding high-yielding structured notes to our mid- and large-sized accounts but remain generally pleased with our positioning and are patiently awaiting additional opportunities. No matter what unfolds, we are prepared to adjust portfolio holdings as needed to adapt to whatever environment emerges.