Knowledge Center
Market Currents – 3/6/26
- Geopolitics Takes the Wheel. Just as the dust was beginning to settle around the January intervention in Venezuela, the global spotlight shifted abruptly back to the Middle East. A series of coordinated military strikes against Iranian targets introduced a sudden risk-off pulse to global markets. While history suggests that markets often look through geopolitical shocks once the initial uncertainty passes, the immediate reaction was a spike in energy prices and a flight toward safety. We view this not as a reason to panic, but as a reminder that unexpected events are a permanent feature of investing. Part of our work is ensuring our strategies hold exposure across a wide range of industries, including areas such as energy and defense that can provide a natural offset when the unexpected happens.
- The Two Lenses of Conflict. When conflict erupts in the Middle East, markets quickly narrow their focus to two questions. The first is contagion: whether the situation stays contained or begins pulling neighboring nations deeper into the fight. Iran’s retaliatory strikes on Gulf neighbors have kept that concern alive, though the country appears largely isolated. With no major allied government coming to its aid, the risk of a broader regional war is diminished. The second concern is oil supply: the Strait of Hormuz, a narrow waterway off Iran’s southern coast, is the passage point for roughly one-fifth of the world’s daily oil supply. Tanker traffic has largely stalled, and oil prices have responded accordingly. Most analysts expect any disruption to prove temporary, but a prolonged closure would build pressure on energy prices, inflation, and ultimately the Federal Reserve’s ability to cut rates.
- A Calibration in Software. February brought a challenging stretch for enterprise software stocks as the sector underwent a notable valuation reset. The shift reflects a reassessment of how artificial intelligence interacts with traditional software platforms. For years, AI was seen primarily as a tailwind for these companies. Investors are now confronting a more complicated reality. As AI agents become increasingly capable of handling tasks that once required layers of software subscriptions and dedicated teams, corporate technology budgets are coming under closer scrutiny. The deeper question investors are now wrestling with is not which software companies survive, but how many will need to fundamentally reinvent what they sell.
- Earnings Season Nears the Finish Line. With the fourth quarter earnings season largely in the rearview mirror, the overall picture has been steady if unspectacular. The majority of companies exceeded expectations, and corporate profits delivered another quarter of meaningful growth, extending one of the most sustained stretches of fundamental strength in recent memory. Markets have grown more demanding in how they reward results, and companies that merely met the bar saw little celebration. But the underlying message is constructive: American businesses are in reasonably good health, and that matters more than any single week of headlines.
- Keeping Perspective. The start of 2026 has delivered no shortage of headlines, from geopolitical conflicts to rapid technological disruption. Yet beneath the noise, the broader picture remains reasonably intact. Businesses are growing, innovation is reshaping industries, and markets are adjusting in real time to new information. Our role is not to predict every twist in that process, but to let facts guide our decisions, position strategies across a range of opportunities, and stay disciplined about risk. That discipline is rarely more valuable than in periods that feel uncertain, and we believe this is how durable portfolios are built. We thank you for your continued trust.