Review the latest Weekly Headings by CIO Larry Adam.

Key takeaways:

• Lower oil prices will bring timely relief for consumers as summer travel begins
• The Fed’s hawkish tilt suggests it’s focused on more than just elevated energy prices
• Lower oil prices point to a peak in energy-driven inflation

The US-Iran conflict – and its impact on oil prices – has dominated headlines over the past three months. Higher oil prices have pushed inflation to a three‑year high, reshaping the Federal Reserve’s rate outlook. While policymakers typically look through temporary, geopolitically driven shocks, this episode comes at a challenging time. Repeated supply disruptions have kept inflation above the Fed’s 2.0% target for more than five years, drawing the attention of new Fed Chair Warsh. Below, we outline how a US‑Iran deal – and a potential decline in oil prices – could influence the US economy, the rate outlook and financial markets in the months ahead.

Oil prices will continue to cool down, but it may take time

West Texas Intermediate (WTI) crude has fallen sharply from April’s peak near $113 per barrel to below $80 this week, a nearly 30% drop that signals a meaningful unwind of geopolitical risk. Markets are beginning to anticipate a reopening of the Strait of Hormuz and are taking comfort that the region’s oil infrastructure has emerged largely intact. But the harder phase now begins: restoring supply.

Three key hurdles must be cleared before Persian Gulf exports – currently around six million barrels per day – can move back toward pre‑war levels that were three times higher at ~20 million barrels per day. First, Iranian naval mines need to be removed. Second, shipping crews must return. And third, shuttered oilfields need to restart production. Our base case is that full normalization may not occur until late July at the earliest. As supply gradually recovers and global inventories begin to stabilize, that should put additional downward pressure on prices, potentially driving WTI toward our year‑end target of ~$70 per barrel.

Falling oil prices will provide consumer relief

Despite higher gasoline prices and broader inflation pressures, the US consumer has remained remarkably robust this year. Retail sales rose at their fastest pace since January 2023 in May, while real‑time activity metrics, such as restaurant bookings and department store spending, have steadily moved higher versus last year. That said, early cracks are beginning to emerge.

With inflation still elevated and the boost from large tax refunds fading, sentiment has fallen to a record low, real wage growth has turned negative for two consecutive months, and the personal savings rate has dropped to its lowest level since 2022. Lower gasoline prices should provide timely relief – particularly for lower‑income consumers – as the summer travel season begins. With consumption driving ~70% of GDP, a still‑resilient consumer should continue to support economic growth and underpin our positive view on the consumer discretionary sector.

Fed delivers rate outlook

New Fed Chair Kevin Warsh put his stamp on his first Federal Open Market Committee (FOMC) meeting, sharply slimming the statement to just 130 words, offering no forward guidance, and delivering a more hawkish than expected message focused squarely on inflation. While Warsh announced the creation of five task forces – including one focused on the Fed’s inflation framework – he emphasized that the current 2% target is unlikely to change.

In addition, the median 2026 dot shifted to 3.8%, signaling a rate hike by year‑end versus the cut expected in March. Nine members now project at least one hike this year, up from none previously. In a break from tradition, the chair did not submit a forecast. This hawkish pivot suggests policymakers are focused on more than just elevated energy prices. It reflects a strong labor market and resilient growth, supported in part by fiscal tailwinds and a global AI‑driven capex cycle. Lower oil prices should ease inflation pressures on the margin, giving the Fed breathing room as it assesses whether disinflation resumes – whether from falling energy prices or AI‑driven productivity gains – in the months ahead. That makes upcoming inflation prints more important than ever.

Lower oil prices will keep a lid on yields

Treasury yields moved sharply higher following the onset of the US‑Iran conflict, largely tracking the surge in oil prices and the repricing of the Fed’s higher rate outlook. Since then, the pullback in oil has led to only a modest retracement in rates, with the 10‑year still hovering near a one‑month low around 4.46% after peaking at 4.67% on May 19.

Yields also reacted sharply to the Fed’s hawkish dot plot, with the policy‑sensitive 2‑year jumping more than 15 basis points, its largest Fed‑day move since March 2008. While lower oil prices point to a peak in energy‑driven inflation, the bond market will need clearer evidence of broader disinflation before yields can move meaningfully lower, especially given healthy growth and a firm labor market. For now, that keeps rates anchored at elevated levels. But with the new Fed chair re‑establishing inflation‑fighting credibility, we see limited upside for yields. That’s constructive for equities, as the S&P 500 has historically faced resistance when the 10‑year yield pushes into the 4.50% to 4.75% range.

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*MAGMAN represents a composite of Microsoft, Apple, Google, Meta, Amazon, Nvidia.

All expressions of opinion reflect the judgment of the author(s) and the Investment Strategy Committee and are subject to change. This information should not be construed as a recommendation. The foregoing content is subject to change at any time without notice. Content provided herein is for informational purposes only. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices and peer groups are not available for direct investment. Any investor who attempts to mimic the performance of an index or peer group would incur fees and expenses that would reduce returns. No investment strategy can guarantee success.

Economic and market conditions are subject to change. Investing involves risks including the possible loss of capital.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Diversification and asset allocation do not ensure a profit or protect against a loss.

The S&P 500 Total Return Index: The index is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 7.8 trillion benchmarked to the index, with index assets comprising approximately USD 2.2 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

Sector investments are companies focused on a specific economic sector and are presented here for illustrative purposes only. Sectors, including technology, are subject to varying levels of competition, economic sensitivity, and political and regulatory risks. Investing in any individual sector involves limited diversification.

Technology and trends have made individual investors an important part of the private market.

As a symbol of economic vibrancy and opportunity, it’s hard to beat the public market. Its storied venues, where everything from butter to trillion-dollar tech companies are bought and sold, are a foundation of the modern world.

But consider this: In 2023, there were 2,802 publicly traded companies earning annual revenues over $100 million in the US. These public companies represented just 13% of those making over $100 million, according to Blue Owl Capital. The other 87% – 19,260 companies – were privately held. And like their public brethren, private companies also seek capital to fuel their ideas. When they do, they become part of the private market.

The private market is similar in many ways to the public market, dealing in the ownership of companies, corporate debt, preferred securities – assets that shares similarities to both stocks and bonds – and real assets, but its landscape of information, complexity, risk and regulation can be quite different. As a result, the potential reward can be quite different too.

Once considered rarefied air in the investing world, shifting tastes and economics have worked hand in hand with marketing innovations to make it easier for individual investors to tap into these powerful currents. And as individual investors have been looking for opportunities outside the mainstream, private companies have concurrently sought the partnership of non-institutional investors.

Why investors turn to the private market

No. 1: Potential for greater returns

One criticism of the public market is that it incentivizes companies to move toward an unremarkable middle ground, punishing CEOs who attempt novel approaches to business problems and valuing short-term growth over long-term goals.

While investors can be a powerful moderating voice in a private company, as well, the elevated risk of investing in private companies tends to self-select for those who trust a company’s leadership or believe in the product.

Today, companies are staying private for longer than in the past – or eschewing a public offering entirely – to stay out of the public chatter and keep closer control of the company’s trajectory. Private market investors expect this clarity of purpose (and greater risk) to produce greater value over time through appreciation, yields or dividends.

No. 2: Diversification

As participants in a market economy, we’re all captive to the macroeconomic news of the day to some degree. At certain social events, you can utter “2008,” “dot-com bubble” or “Black Monday” and ruin someone’s evening.

Private markets can offer some distance from those trends since trading volumes are lower, the market is less liquid, prices aren’t updated every second and small changes in governance don’t spark hours of commentary on slow news days. While private market investments can be volatile, the total market tends to experience much less of the whipsawing seen in the public markets, where algorithmic trading, technical analysis and fashion can drown out business fundamentals.

No. 3: Intentionality

Tax-advantaged retirement accounts made stocks and bonds a kitchen table topic and the traditional portfolio has enabled millions to retire in comfort. But it can all seem a little abstract – funds made up of ticker symbols representing established companies years after their initial public offerings.

Comparatively, private market investing can feel more intentional and meaningful. Investors may feel a closer attachment to the companies they co-own or lend money to, helping give it the lift it needs. Also, who wouldn’t want to be an early investor in a company that is very successful?

Relationship to alternative investments

Alternative investments and private markets are often spoken of in the same breath, and for good reason.

Private market investing is considered alternative investing, but not all alternative investing is private market investing. Some alternative investments use publicly traded stocks and bonds in non-typical ways, such as by locking in investors for a period of time.

Risk factors

Information

At any given moment, you can turn to finance news and get timely information about a major public company, its earnings, operations, palace intrigues and stock performance. Some of this openness is demanded by government regulation, but the news hounds in the financial press do their part, too. This smorgasbord of information promotes fairness and good governance. Alternatively, there is less coverage of private companies and thinner regulations, so problems may fester for longer in the dark.

Liquidity

Even with the ongoing democratization of private market investing, there is a smaller population of investors to buy what you’re offering.

Size

Many private companies are small. Small companies are less resilient to setbacks, like the failure of a key product line or a change in macroeconomic conditions.

Fees

Investment fees tend to be higher for private market investing, reflecting complexity, deal sourcing, management skill, demand and the higher cost of performing due diligence.

Getting started

Unless you are already enmeshed in the world of private markets, you’ll likely need the services of a professional to find and present offerings suitable to your goals – your financial advisor. As a private market investor, you can invest directly in a company selling shares or issuing debt, or you can invest in funds. Private equity funds, for example, may own a portfolio of private company equity and debt or own and manage private companies outright.

While private market investing is less regulated, it’s not the Wild West, so financial advisors and their partner broker/dealers will vet offerings as part of their due diligence practices.

And as with other alternative investing, there can be barriers to entry. Investors may need to be “accredited investors,” “qualified clients” or “qualified purchasers,” meaning they meet certain net worth minimums or other requirements. These regulatory guardrails are meant to prevent inexperienced investors from engaging in higher risk investing they don’t understand. Brokerages may set additional qualifications, to limit their liabilities.

That said, private market investments have been democratizing, structured in such a way to allow lower minimum investments, lower investor qualifications and simpler tax reporting. As a result, private market assets are now found in even some otherwise very traditional portfolios.

This article is for informational purposes only and is not a recommendation. Alternative investments involve specific risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum net worth tests. You should consider the special risks with alternative investments including limited liquidity, tax considerations, incentive fee structures, potentially speculative investment strategies, and different regulatory and reporting requirements. You should only invest in alternative investments if you do not require a liquid investment and can bear the risk of substantial losses. There can be no assurance that any investment will meet its performance objectives or that substantial losses will be avoided. Asset allocation and diversification do not guarantee a profit nor protect against loss. Dividends are not guaranteed and will fluctuate. Investors should consult their financial advisor prior to making an investment decision.

Review the latest Weekly Headings by CIO Larry Adam.

Key takeaways:

• Despite headwinds from higher oil prices, economic growth remains strong
• The labor market has stabilized after last year’s slowdown
• Inflation is heading in the wrong direction after five years above the Fed’s 2% target

Geopolitical risks are still lingering in the background, but the story lately has been all about earnings. A strong 1Q26 season, paired with a steady drumbeat of upbeat management commentary, has helped push the S&P 500 to 21 record highs this year. But as earnings calls wind down, the market’s focus is shifting back to the bigger picture: the macro backdrop. And there’s no shortage of catalysts ahead.

In the coming weeks, investors will be navigating several key developments that could reintroduce volatility, including the prospect of a deal to end the war in Iran, fresh reads on inflation and the labor market, and the June 16-17 Federal Reserve (Fed) meeting, where Kevin Warsh will debut as chair alongside a rate decision and updated Summary of Economic Projections.

Below, we highlight where the economy stands, the key data points shaping the narrative, and the biggest risks markets may face in the weeks and months ahead.

Growth remains resilient

Despite headwinds from rising fuel costs and softer consumer sentiment, the economy is expanding at a solid pace. Growth is on track to reach 2.4% in 2026, modestly above potential, supported by strong AI-driven business investment and resilient consumer spending. On the business side, investment is emerging as a powerful driver of growth. Hyperscaler capex is projected to reach $720 billion in 2026 and surpass $1 trillion in the years ahead as companies build out artificial intelligence (AI) infrastructure. This surge in spending is already having a meaningful impact, contributing more than a full percentage point to Q1 gross domestic product (GDP). On the consumer side, near-term spending remains supported by higher tax refunds, helping to cushion the drag from weaker sentiment and elevated fuel costs.

• Key data points: Next week’s ISM Manufacturing and Service Surveys that are solidly expanding, pointing to continued resilience.
• Biggest risk: With the consumer accounting for roughly 70% of the economy, its health remains a key focus. So far, households have largely absorbed higher energy prices and cost-of-living pressures. But as the boost from tax refunds fades and disposable personal income declines (currently the lowest since 2022), spending could begin to moderate in the months ahead. That said, strong equity market gains should continue to support upper-income households, with the top 10% still driving roughly 50% of total consumer spending.

Labor market has stabilized

While the job market remains stuck in a low-hire, low-fire environment, labor conditions appear to have found their footing after last year’s slowdown. Despite high-profile layoff announcements (including Meta, UPS, and Amazon) and ongoing concerns around AI-driven disruption, initial jobless claims remain near historically low levels. At the same time, payroll growth continues to show resilience, with gains above 100,000 in each of the past two months – well above the average monthly increase of only 10,000 in 2025. The unemployment rate has held steady at 4.3%, while wage growth is running at 3.6% year over year – just above its longer-run historical average.

• Key data points: Ahead of the Fed’s June meeting, the ISM employment sub-indices and another labor market release on June 5 will provide further clarity. Consensus estimates point to a modest stepdown from the prior two months to roughly 93,000. However, with labor force growth essentially flat – driven by an aging population and low net migration – this pace is broadly consistent with a stable labor market.
• Biggest risk: Concerns that AI will displace some jobs and slow hiring are real. But while AI efficiency gains will reshape certain roles – and eliminate some – most workers are likely to become more productive, which ultimately supports growth via more output per worker. At the same time, new roles tied to AI – such as prompt engineers, quality control and compliance – are already emerging. And importantly, there’s still strong demand across healthcare, hospitality and the skilled trades (think HVAC, plumbing, and electrical). That should help keep overall job growth healthy, with an average of roughly 70,000 per month through the rest of the year.

Inflation is heading in the wrong direction

With inflation running hotter than expected, it has become a central concern in 2026. While tariff effects should fade, the war in Iran has introduced a new source of pressure. Surging energy prices have pushed headline inflation to 3.8% – the highest since 2023 – and driven the fastest two-month acceleration in nearly four years. Price pressures are broadening, with ISM price sub-indices at a four-year high and consumer inflation expectations moving higher. After five years above the Fed’s 2% target, policymakers’ tolerance for another overshoot is wearing thin, and markets are pricing in a rate hike this year (we still expect one rate cut).

• Key data points: The market will receive several key updates on inflation in the weeks ahead, including the ISM price indices – key leading indicators of pipeline inflation pressures – on June 1 (manufacturing) and June 3 (services), and the CPI and PPI reports on June 10 and 11.
• Biggest risk: Oil near $100/barrel could pose a risk if the Iran conflict extends beyond the summer. However, our base case is that a deal, hopefully by July or earlier, will lead to a relatively swift move back below $80. A combination of improving supply dynamics should support that decline, including the reopening of the Strait of Hormuz, expanded export capacity (such as the Saudi East-West pipeline), increased output from the United Arab Emirates following its exit from OPEC, and stronger production from non-OPEC producers, like the US and Canada.

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*MAGMAN represents a composite of Microsoft, Apple, Google, Meta, Amazon, Nvidia.

All expressions of opinion reflect the judgment of the author(s) and the Investment Strategy Committee and are subject to change. This information should not be construed as a recommendation. The foregoing content is subject to change at any time without notice. Content provided herein is for informational purposes only. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices and peer groups are not available for direct investment. Any investor who attempts to mimic the performance of an index or peer group would incur fees and expenses that would reduce returns. No investment strategy can guarantee success.

Economic and market conditions are subject to change. Investing involves risks including the possible loss of capital.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Diversification and asset allocation do not ensure a profit or protect against a loss.

The S&P 500 Total Return Index: The index is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 7.8 trillion benchmarked to the index, with index assets comprising approximately USD 2.2 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

Sector investments are companies focused on a specific economic sector and are presented here for illustrative purposes only. Sectors, including technology, are subject to varying levels of competition, economic sensitivity, and political and regulatory risks. Investing in any individual sector involves limited diversification.

Review the latest Weekly Headings by CIO Larry Adam.

Key takeaways:

• Tech earnings are the primary driver of the upward revision to our S&P EPS estimate
• S&P 500 companies continue to operate near record profitability
• A resolution of the US-Iran conflict will help ease inflation concerns

Despite headwinds from rising oil prices, fundamentals have remained strong. The S&P 500 has notched 18 record highs year to date and, more importantly, surpassed our prior target of 7,250. Following a standout 1Q earnings season, we are raising our 2026 earnings per share (EPS) estimate to $326 from $300. With limited scope for multiple expansion, earnings should be the primary driver of further upside, supporting our revised year-end target of 7,650. Here are three factors behind this upgrade:

Robust tech earnings

S&P 500 1Q26 earnings have been exceptionally strong, with EPS delivering 27% year-over-year growth, well above the 12% expected at the start of earnings season. Companies have also beaten EPS estimates by ~18%, the strongest in five years. Technology continues to do the heavy lifting. For example, MAGMAN* – a composite of mega-cap tech – delivered 61% EPS growth year over year in 1Q as companies linked to AI (e.g., semis and cloud) have driven the bulk of upside surprises. Notably, tech accounts for roughly 80%, or $21, of the upward revision to our 2026 EPS estimate, reinforcing its position as one of our favored sectors.

Strong margins

Despite headwinds from tariffs, higher energy costs and supply chain pressures, S&P 500 companies continue to operate near record profitability. Case in point: Net margins rose for a fifth straight quarter in 1Q, reaching a record 15.3%. Looking ahead, several tailwinds should help support margins, including easing energy prices if the US–Iran conflict is resolved by July as we expect, some tariff relief following the Supreme Court IEEPA ruling, and continued AI-driven productivity gains.

Resilient economy

The US economy remains on solid footing, with GDP expected at ~2.4% this year. Consumer spending continues to hold up, supported by indicators like credit card activity, restaurant bookings and department store sales. The labor market remains firm, with jobless claims near 50-year lows. At the same time, tailwinds from the One Big Beautiful Bill are supporting businesses and consumers through tax incentives and higher tax refunds, respectively. This backdrop should continue to support earnings beyond tech.

Yields have moved sharply higher since the start of the Middle East conflict, with the 10-year Treasury up over 60 bps to 4.55% and the 30-year pushing above the key 5% level. The story is fairly straightforward: Higher energy prices are adding to inflation pressures, prompting a meaningful repricing in the Federal Reserve (Fed) outlook, with markets now factoring in the potential of a rate hike rather than rate cut this year. Below, we highlight three factors that could help bring yields back down.

Resolution of US-Iran conflict

A diplomatic resolution and reopening of the Strait of Hormuz would ease supply constraints and push oil prices lower (Raymond James year-end estimate: ~$70 per barrel). Markets have already begun to reflect this dynamic as headlines signaling any progress have consistently driven both oil prices and yields lower. A durable agreement could extend that trend, easing inflation concerns and prompting a reassessment of the Fed rate path, driving yields lower particularly at the front end.

Growth and inflation are not overheating

Growth has remained resilient despite a series of shocks, but markets are increasingly concerned the latest oil spike could unanchor inflation expectations, especially with inflation above the Fed’s 2.0% target for five straight years. The recent uptick, driven by energy prices and Bureau of Labor Statistics (BLS) distortions, is testing patience, particularly as new Fed Chair Warsh is sworn in today. That said, the fixed income market is acting as if the economy is overheating. We disagree. There are signs consumers are pushing back on higher prices, pointing to emerging pockets of stress that should help contain inflation and ease the upward pressure on yields.

Yields have become sufficiently attractive

With the Middle East conflict dragging on, G10 sovereign yields have climbed to multi-year highs. While higher rates have yet to restrain economic activity, front-end US rates now sit over 40 bps above the mid-point of fed funds target range, pricing in potential hikes, and long-term yields above 4.5% – a level that has historically started to weigh on equities – additional upside should prove increasingly self-limiting. With the 10-year Treasury’s 14-day Relative Strength Index near 70, suggesting the move is getting stretched, yields are becoming more attractive and are at levels where demand starts to pick up.

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*MAGMAN represents a composite of Microsoft, Apple, Google, Meta, Amazon, Nvidia.

All expressions of opinion reflect the judgment of the author(s) and the Investment Strategy Committee and are subject to change. This information should not be construed as a recommendation. The foregoing content is subject to change at any time without notice. Content provided herein is for informational purposes only. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices and peer groups are not available for direct investment. Any investor who attempts to mimic the performance of an index or peer group would incur fees and expenses that would reduce returns. No investment strategy can guarantee success.

Economic and market conditions are subject to change. Investing involves risks including the possible loss of capital.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Diversification and asset allocation do not ensure a profit or protect against a loss.

The S&P 500 Total Return Index: The index is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 7.8 trillion benchmarked to the index, with index assets comprising approximately USD 2.2 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

Sector investments are companies focused on a specific economic sector and are presented here for illustrative purposes only. Sectors, including technology, are subject to varying levels of competition, economic sensitivity, and political and regulatory risks. Investing in any individual sector involves limited diversification.