March 2026
Join Chief Investment Officer Meghan Pinchuk and Managing Director of Investments Sasan Faiz as they break down how recent global events are influencing markets and what they could mean for the economy and portfolios.
Tune in if you’re interested in…
Watch previous episodes:
Ep. 176 Why Generational Diversity Matters in Financial Advice
Ep. 175 Weaving Resiliency with Gold in a Volatile World with VanEck
It’s the morning of March 10th. The reason I’m starting with that is that there’s been a lot of volatility and a lot of news out there in the markets, as well as in the world. So, just for some context to start the conversation, things could change a lot before people see this.
But we’re dealing with a lot of volatility, also in terms of world order and what’s happening in Iran. I know you wanted to start with a comment on that.
Yeah. Thank you, Meghan. As an Iranian American, I wanted to take a moment and express my gratitude to both the American and Israeli service members involved in the operation to free Iran. We really appreciate everything they’re doing.
Also, beyond the military action, when we’re looking at the people of Iran, it’s a large country with a huge population of younger, well-educated, and mainly pro-Western youth who are ready to take the lead and be in charge of their future. Our hope is that they will become champions of freedom themselves in a region that needs it the most right now.
Thank you. I appreciate that.
There’s a lot going on. We’re going to focus a little more today on the economic side of it, the market impact, and how we see that affecting our clients and portfolios. I think we have to start with energy. With all the volatility we’ve seen in stocks and bonds, I think a lot of it, from our perspective, comes down to what’s happening in energy prices.
Absolutely. Energy and oil prices are up over sixty percent year to date, so that’s already a huge number. Sunday night, oil prices actually hit over one hundred twenty dollars.
And where are they today?
Today, WTI, which is West Texas Intermediate, is in the low eighties.
So there are different measures of the price of oil.
Exactly. West Texas is more of a US benchmark. Then there is Brent crude, which is usually about five or six dollars higher than WTI, and that’s in the low nineties right now. But regardless, oil prices are up a lot.
One thing causing the price of oil to go up is the Strait of Hormuz, which is pretty much blocked to shipping traffic right now. It’s starting to open up a little bit, but it’s still the major hotspot. Twenty percent of global oil goes through the Strait of Hormuz, and about twenty-five percent of the liquefied natural gas that goes to Europe also goes through the Strait of Hormuz. So that’s a very important pathway, and if ships are not flowing, that would cause a huge spike in the price of energy.
Structurally, I didn’t realize this because I’m bad at geography, among other things, but at its narrowest point the strait is only twenty-one miles across. So when you think about these huge tankers going through there, it’s easy to see how any kind of safety concern or disruption in that area can completely stop all flow through there.
Absolutely. I think that’s the major concern of financial markets right now.
On top of that, given the volatility in the region, you’ve seen other Gulf states in the area, who are normally oil producers, shut down in fear for their infrastructure as well.
Exactly. If they cannot ship oil or liquefied natural gas, then there’s no reason to continue production, so they’re cutting down output. That’s also playing a role in oil prices spiking.
Obviously, here in the US, we’ll talk more about this, but we’ll be impacted as well by energy prices. I think, in particular, countries that are not energy independent and that have to get a lot of their oil from this region are going to be scrambling to figure out where they’re going to find their energy.
Yeah. As you mentioned, the US is obviously energy sufficient, so it’s not going to affect the US as much. But some of the Asian countries, like Japan and South Korea, for example, are going to get affected the most, and also some European countries, because they get most of their liquefied natural gas from this region.
We saw exactly what happened again with the Russia-Ukraine war. That also affected their imports of natural gas from Russia.
It’s just a very broad impact on a lot of different countries in different ways, so it’s something we’re watching closely. When we think about the key risks to this, in terms of economically going forward, one of the things we talk a lot about is inflation.
Yeah. Inflation is obviously a huge risk. I would say maybe the first risk is stagflation, the concept of a stagnant economy, maybe growing one to two percent, while at the same time having higher inflation. That’s really not a good scenario for risk assets.
So the worst of all worlds.
Exactly. For stocks and bonds, that’s really usually not a good scenario. I think that would also have an impact on monetary policy in the US. Markets were expecting at least two more interest rate cuts this year. If inflation goes back up over three percent again, then I think that would really tie the Federal Reserve’s hands in lowering interest rates. So that could definitely be a risk going forward.
We have this discussion a lot. The market wants to look and say that interest rates are going down this year, like that’s what’s happening. But then there are all kinds of events in the world that could impact that, especially inflation being high. I think that would at least make the Fed pause and ask whether it ties their hands.
The flip side is that there’s also a very reasonable argument that the lower-interest-rate train has left the station, and they are going to find an excuse to lower rates. They may say inflation is high, but it’s only oil-related, so it’s a one-time spike. They may bring back the word transitory. Because again, if they’re dealing with a weak economy and inflation, they might prioritize the weak economy and say, “Sorry if inflation is a little bit higher.”
That’s a great point. It’s very possible.
I think the second risk we see is a kind of supply-chain contagion, similar to what we saw during Covid. Higher energy prices can have a secondary effect on shipping, and everything can start costing more. Insurance can cost more, transportation of food and other supplies can cost more, and that could lead to higher inflation in food prices and other products as well.
Other industries are particularly vulnerable too. We were talking about airlines. Anything consumer-related, when the consumer now has very high gas prices, can put a damper on spending. So there are a lot of different industries that could be highly impacted by higher energy prices.
Yeah. I think maybe the third risk to mention here is the duration of the conflict in the Middle East. It’s still very unknown. We’re hopeful for a positive resolution there, but again, that’s still a very fluid situation, and nobody really knows what’s going to happen eventually.
Obviously, the longer it goes, the larger the economic impact and destruction in some of these areas.
When we look now at asset classes, how do some of these risks affect them? I think the one that’s most obvious, from just a pure math standpoint, is inflation being bad for bonds.
Absolutely. Bonds are usually thought of as a safe haven, and they haven’t really been that way because of long duration. If you have higher interest rates and inflation, that’s not going to be positive for bonds as a risk asset.
So in theory, people want to rush to the US Treasury as an example of a flight to safety, but the flip side is they know they’re going to lose to inflation if they buy those long-term bonds. You could get a scenario where inflation is up, that affects stocks negatively, and it affects bonds negatively as well.
That’s something we’ve talked about for a long time in terms of how you diversify portfolios. The idea of just mixing stocks and bonds together really doesn’t work in a variety of scenarios.
Yeah. Also, just looking at stocks, for example, leadership in the US stock market has been very narrow, focused on the mega-cap seven, usually the large technology companies. We had seen a little bit of a broadening of the market coming into the year, with a little more focus on value-oriented stocks and dividend-paying stocks doing better year to date.
But again, if inflation is higher and that affects consumers, and the economy slows down, that’s not going to be positive for the equity markets either.
One thing we hit on a lot internally is that we expect uncertainty. That doesn’t just mean markets going down. It could go the other direction. There could be a faster resolution than the market expects, energy prices could normalize, and suddenly the market could be off to the races again.
So the idea is that we don’t know which direction this is going to go, and you have to be positioned in advance. We talk a lot too about the valid risk that the world order could get into a political quagmire, where we’re stuck. We’ve all lived through that in our lifetimes. We’ve seen it a number of times where it becomes a really challenging situation with no clear resolution.
That’s definitely a risk here, and a risk that energy prices could stay up for longer. But as you alluded to in the beginning, there’s also a scenario where, if there can be a resolution and some type of regime change, there may be a world where the Middle East is safer and better off, and where you’re unlocking a lot of potential in an otherwise conflict-ridden area. Could that have a positive global economic impact?
Definitely long term, I think, and we’re hopeful for that type of outcome.
I think the market very much is positioned where it wants to rally. It’s almost like, if it were a living, breathing thing, it would say, “Let’s go, we’ve got this.” So there’s a lot of fear and uncertainty, and high valuations make it more susceptible to surprises. But the flip side is that any good news can lead to a quick bounce right back.
Gold is one other thing that obviously we talk a lot about, and we’re positioned that way. We’ve seen some volatility there too.
Yeah. We’ve seen some volatility, but year to date, as of yesterday, gold was up almost nineteen percent.
Just wait for tomorrow. By the time this is out, who knows.
But it had a great year last year too. Again, I think it’s a perfect hedge. We don’t necessarily look at it only that way. We’ve had a position in gold for a long time as a hard reserve currency and a hedge against paper-currency depreciation, which we’ve seen over the past several years.
A lot of people think of gold as just a safe-haven trade, like when there’s market uncertainty or volatility it will do well. That’s not always the case, especially in the short term. There are a lot of different forces. This year, where there has been some volatility, I think it’s actually more related to the dollar.
To your point, it’s an alternative currency, so the fact that the dollar has had some volatility has affected the price of gold. But again, from a long-term standpoint, our thesis is more about it being an alternative currency to the dollar in a world where they’re printing a lot of dollars. So yes, there may be safe-haven elements, and in theory it could perform differently, but there might be days where stocks and bonds are down and gold is down too. So in the short term, it’s not a perfect hedge.
Exactly.
I think with all of this, the reason it comes back is that there’s uncertainty. We accept that instead of trying to avoid it, and that’s why you diversify. You diversify because you don’t know which direction it might go, and so you need to be positioned for that volatility in advance with other asset classes.
Some of the other things we do, it’s not that there’s never any impact from this, but a loan on an apartment building where people live is just something different. Participating in the revenues of a healthy, life-saving healthcare product is also different. It’s not that there’s no risk to those, but it is different risk than what we’re seeing day to day in the broader economy.
Yeah. I think that comes back to what we always talk about: true diversification versus traditional diversification, which is just stocks and bonds. You need that element of non-correlated alternative investments in clients’ portfolios.
Absolutely. All right. Thank you so much. I appreciate that.
