Access to Alpha

Ian Venzon, AVP at Pence Capital Management explores the economic implications of recent developments in Iran and offers his expectations for the U.S. markets.  

• Escalating geopolitical tensions involving Iran have contributed to upward pressure on global oil prices. Despite this, the US economy has become less sensitive to oil shocks over time.
• Consumer spending on gasoline has steadily declined, which is muting traditional fuel demand despite periods of price volatility.
• The dominant driver behind strong earnings expectations and overall equity market resilience remains artificial intelligence, with major players viewing this as the strategic arms race.

Geopolitical shocks, AI skepticism, and shifting rate expectations pulled the S&P 500 lower in Q1, even as market leadership broadened beneath the surface. Portfolio Manager, Anthony Brooks, walks through a quarter that felt like an endless bedtime story - full of twists, false endings, and an ever-growing cast of macro surprises reshaping the market narrative.

With markets reacting to the onset of the Iran war, we invited Gene Peroni of Peroni Portfolio Advisors to the Access to Alpha podcast series where he put today’s volatility in perspective and offered his thoughts on what may lie ahead.

3 Key Takeaways:

1. Investors ought to focus on longer-term trends, as opposed to often short-lived, event-triggered corrections.
2. Since October 2025, many traditional cyclicals began leading while Technology corrected … until recently. 
3. Gene views the recent pullback as constructive (and arguably overdue) as it reined in price and sentiment excesses and positions the market to build support at incrementally higher levels. 

We invite you to listen to Erin Spalsbury, Head of Investment Grade at Insight Investment, as she shares her expectations for 2026 and select areas worth watching. In short, Insight is focused on managing risk while seeking consistent income and long-term value. 

Liridon Gila, CFA, Portfolio Manager, discusses the S&P 500's decline of -0.8% in February as the market broadening and sector rotation continued, and defensive stocks generally rallied on perceived "safety" from the AI disruption risks. He highlighted three near-term potential catalysts including 1) ongoing concerns over AI-driven disruption, 2) an escalation of geopolitical tensions, and 3) uncertainty over monetary policy and persistent inflationary trends. He expects quality to outperform in 2026 as markets continue to digest the disruptive impact of AI, the Fed continues to ease rates, and the valuation gap between mega-cap growth and the rest of the market remains elevated.

Marc Davis, CFA, Co-Portfolio Manager, discusses the strong start to 2026 and continued market broadening as the AI theme draws greater scrutiny from investors. He sees a challenging path forward with stocks vulnerable to selling pressure on the heels of a tremendous 3-year run. Looking ahead, Sawgrass expects equity returns to be more muted with increased market volatility, however greater variation in universe returns and a better stock picking environment could be supportive of active managers' ability to outperform their benchmarks and peers.

Anthony Brooks, Portfolio Manager, discusses the market's resilience in 2025, with stock prices supported by optimism around potential rate cuts and steady earnings, despite uncertainties around circular AI deals, geopolitical tensions, and political shifts. By year-end, more than 80% of S&P 500 companies beat earnings expectations, as real earnings growth rather than expanding valuations supported the majority of the year's gain. We expect investors' renewed focus on fundamentals to continue into 2026, creating significant potential for high quality stocks trading at below average valuations.

Liridon GIla, CFA, Portfolio Manager, discusses November's market broadening as defensive and value-oriented sectors outperformed the market's YTD leaders. Investor sentiment was tested by the government shutdown and mixed economic signals, however a strong start to the holiday shopping season solidified confidence that household spending power was intact. Looking toward 2026, Sawgrass expects quality companies could continue to outperform as the market broadens further, the Fed stays the course on easing, investors digest AI spending and near-term return expectations, and extreme relative valuations moderate.

In this episode, Erin Spalsbury, Head of Investment Grade at Insight Investment provided a brief overview of the fixed income markets and detailed areas of potential opportunity.  

Marc Davis, CFA, Co-Portfolio Manager, discusses how investors' fascination with Artificial Intelligence (AI) combined with continued hopes for further Federal Reserve easing has pushed equity markets to new all-time highs. However, valuations in many of these mega-cap companies appear stretched and with markets pricing in lots of good news, there is little room for error in both earnings and economic growth projections, thus increasing the potential for volatility at any time. Overall, despite these stretched valuations and uncertain fiscal and monetary policy, markets have continued to heed momentum, and we expect the continued chase by investors will likely lead equities higher and could keep a bid on any significant pull backs through year end.