North American Equities: What Happened in March—and What It Means for Investors

Transcript

PETER HOFSTRA: Good day everyone. It is April 6th, 2026. Pete Hofstra here with an update on North American Equities. First off, hope everyone had a great long weekend, able to spend time with loved ones and that sort of good stuff. Here we are Monday, back at it. Tough month, March. I think we all know why. But with the say geopolitical uncertainty and manifest in oil prices creates all kinds of other uncertainty inflationary risk, consumer spending risk and all those sorts of things. So I think we know why the market had a tough run through March. Even gold did, which is maybe the interesting one. That's sort of a safety trade role didn’t really play out in March. Now probably—maybe it was a bit over bought through last year because typically if things do continue to get worse, gold and the U.S. dollar would be the places to go. But maybe we start there. Let's start high level. And probability map, different scenarios. Because we could dig into the conflict itself and try to speculate in conjunction why they're doing this and what the off road might be. And that's probably a worthwhile conversation. We have those conversations internally to try to know what to look for to try to see which path we're on, but not to try to anchor to one particular outcome. And look at, no one's in complete control of this. Trump isn't. The Israelis aren't. The Iranians aren’t. So that just creates—as soon as you have a three-body problem, you have infinite permutations of where this thing could go. And maybe the Israelis want regime change where the U.S. is happy just to diminish Iran's military capability and their nuclear capability. And regime change is tough. We know that from other wars. We know that from other invading forces. And while it's probably a majority of Iranians that would love to see regime change and the ayatollah no longer being the ones in control, they have all the weapons. And we've seen that with the demonstrations in the past, that the revolutionary guard is actually willing to murder their own citizens to protect the regime. And so I think that balance of power is probably there. And it would take an invasion force to bring about regime change. So I think if that's the goal that can certainly create a lot of prolonged uncertainty. On the other hand, if the U.S. is just there to work with their Middle Eastern allies and weaken the Iranian military complex, they can probably claim victory and move on pretty quickly. Anyway, all of that to say a lot of uncertainty associated with this. Again, look at the extremes of how it plays through. If it is bad for long and oil stays high, inflationary pressures are there; we can look to 2022 and see what that looks like. It's not good for any asset class. Not good for equities. Not good for bonds. Certainly not good for real estate. Can be okay for gold and the U.S. dollar, but it's certainly one where you want to maintain that balanced portfolio where you have that exposure. You don’t sell into an environment like that because it will come back. The worst thing you can do is miss the first days of a return because they tend to be the most substantive. And that's the other scenario that any minute now a ceasefire could be announced and a path to peace. And it doesn’t have to mean that oil starts flowing the next day. We know it's going to take a while. We know there's a lot of tankers sitting at anchor on each sides of the Strait of Hormuz. And we know there's a lot of infrastructure that has been damaged. But it won't matter. The market will look through that, right. The equity market is particular forward-looking. So if it looks like there's a path to peace, we know that Donald Trump would love nothing more than to have low oil prices and a strong economy going into the midterms. And so that's the other side is you do see a strong rally. Again, all of that to say don’t over guess at this. We're doing a lot internal two portfolios to try to manage this, mitigate those different risks. You can buy puts to take care of the long tail, add some energy exposure, add some gold exposure where maybe even a portfolio that's quality biased that may be worth having some of that exposure just to protect against some of those different risks. But we want to cease the opportunities. We talked about software before, but as we know, that's got its own wrapper and AI uncertainty associated with it. But now you're seeing the AI infrastructure. That just seems like the easy trade. We know that spend is robust, with the capital raise that OpenAI was just able to complete. And those stocks have traded down substantially in this uncertainty. So here you've got fundamentals with high probability of being substantively higher. And these companies trading at, in some cases, all-time low multiples. So there's opportunities in the market. So we want to look through this. We want to take the opportunity, meaning AI application in this conflict. And not taking a moral stance here, but it's incredible what's being done by AI. Humans are still making the key decisions. But I read some good articles on how the targeting is developed and two days ahead of time that AI can take anything from an individual's social media post on seeing movement of Iranian guards through to obviously satellite images, all being aggregated to identify whether it's hardware, whether it's troop movements, whatever it is. And so this is why when Trump is saying if we don’t open the Straits we're going after this, this and this, he's seen the list of potential targets that are being generated. And so all of that to say the AI use cases, this is obviously not a pretty one in terms of its impact on humanity and infrastructure. But the use case is pretty substantive. So that thematic remains intact, creating some real opportunities within the market. So all of that to say is the uncertainty is real. We're doing what we can to balance that probability mix in making sure we're not leaving the portfolios too exposed. And whether that's things getting worse or things getting better, there are ways to make sure you're bar-belled and both protected and exposed to things in a constructive way. And that's what we're working hard to do. Maybe we'll leave it there at this point. It's always dynamic. So we'll look forward to keeping in touch and checking in with you next month. Be well.