Hope Beneath the Headlines

SUMMARY

• US’ energy independence has helped mitigate negative economic effects of the oil price shock.
• Unit labor costs are growing at a slower rate, suggesting core inflation should moderate over time.
• S&P 500 earnings revisions continue to grow, suggesting the oil shock has not yet created a structural growth issue.

We are excited to release our April 2026 Chart Pack, our visual quarterly designed to walk investors through what is happening in markets and why, what may come next, and how we are positioning RiverFront portfolios. In today’s Weekly View, we picked three Chart Pack visuals to highlight.

The first quarter of 2026 will be remembered as the quarter geopolitics returned with force. The Iran conflict sent Brent crude oil prices well above $100/barrel. Markets responded with a measured but painful S&P 500 pullback, and the Fed, confronting near-term inflation uncertainty, kept rates unchanged at its March meeting.

And yet, beneath the geopolitical noise, the fundamental picture remains more constructive than the headlines suggest. Due to the US’ much greater energy independence relative to past decades (Chart 1, below), the US economy has been able to withstand the uncertainty caused by the war. Importantly, longer-term inflation expectations remain anchored. In addition, inflation risks are also mitigated by technology-driven productivity gains; unit labor costs around 2% suggest to us that core inflation trends should continue to moderate (Chart 2, below).

Critically, US corporate earnings estimates continue to be revised upwards (Chart 3, below), suggesting markets do not yet view the oil shock as a structural growth problem. We are watching events with humility, but we are not abandoning our constructive outlook — and we are already sizing up the opportunities that resolution will eventually present.

In writing and editing today’s commentary, we are grateful for the contributions of our intern, Jennifer Castro of Cristo Rey*

*Cristo Rey is a Catholic learning community that educates young people of limited economic means to become men and women of faith, purpose and service. Through a rigorous college preparatory curriculum, integrated with a relevant work study experience, students graduate ready to succeed in college and in life. Learn more here.

Risk Discussion: All investments in securities, including the strategies discussed above, include a risk of loss of principal (invested amount) and any profits that have not been realized. Markets fluctuate substantially over time, and have experienced increased volatility in recent years due to global and domestic economic events. Performance of any investment is not guaranteed. In a rising interest rate environment, the value of fixed-income securities generally declines. Diversification does not guarantee a profit or protect against a loss. Investments in international and emerging markets securities include exposure to risks such as currency fluctuations, foreign taxes and regulations, and the potential for illiquid markets and political instability. Please see the end of this publication for more disclosures.