The Morning Filter Q2 Market Outlook: Why a Stock Barbell Strategy Is Ideal for Today’s Market
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Apr 15, 2026 
Preston Caldwell, Morningstar chief US economist who forecasts GDP, inflation, and Fed timing. Dave Sekera, Morningstar chief US market strategist who outlines sector valuations and a barbell stock approach. They discuss a value-growth barbell strategy, which sectors look most undervalued, volatility persisting in 2026, and updated macro and bond-market outlooks.
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Let A Value-Growth Barbell Work And Rebalance
- Do let a value-growth barbell portfolio run and take profits selectively; energy/value served as a hedge while tech/AI now offer upside after recent sell-offs.
- Dave Sekera recommended locking some gains in energy and redeploying into undervalued technology and AI names.
Market Discount Driven By Stock-Level Intrinsic Values
- The market traded about a 12% discount to Morningstar fair value after the sell-off, with small caps most undervalued at ~17% discount.
- Morningstar's price-to-value composite (700+ U.S. stocks) drives their valuation, not simple forward PE forecasts.
Reallocate Profits Toward Growth Starting With Large Caps
- Do consider reallocating from energy/value profits into large-cap growth first, then small caps later; large caps likely rally first followed by small-cap catch-up.
- Dave suggests taking partial profits, not full exits, when rebalancing.