This Week in Review | Middle East Conflict, US Primary Elections, US Jobs

Transcript

Rachel Green:

Hello, and welcome to This Week in Review. This weekly segment is designed to highlight a few important developments you may have missed this week, what they may mean for markets, and most importantly, the potential impact for investors. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com. Now, let's review what happened this week.

First, an update on the Middle East conflict.

On Saturday, US and Israeli forces launched strikes on military and political targets in Iran, resulting in the death of Iran's supreme leader and other senior officials. In response, Iran carried out strikes on military bases, energy infrastructure and airports, as well as other key sites across several neighbouring countries. War is always a terrible tragedy and our hearts go out to those affected. But here we focus on how geopolitical events impact the ability of companies to be profitable. So, what does this escalation mean for markets? The short answer: less than you might think. Let's start with oil. Brent crude has risen from around $60 per barrel at the beginning of the year to over $90 per barrel, with a sharp spike this week. But oil remains far below the March 2022 high of around $133 per barrel that followed Russia's full-scale invasion of Ukraine.

But remember that even in these extreme cases, businesses were quick to adapt and oil prices fell nearly as quickly as they rose. We see no reason why today should be any different. Natural gas markets have also seen volatility. Qatar suspended production after attacks on its infrastructure, causing European benchmark gas prices to spike nearly 40% on Monday. But even with that jump, prices are still a fraction of their 2022 peak. Plus, Europe is heading out of winter, giving it more flexibility to manage temporary disruptions. Most importantly, prior to 2022, Russia was one of Europe's largest suppliers of natural gas. Cutting ties with Russia in response to the war meant permanently looking for alternative suppliers. This time, analysts expect Qatar to resume production later this month. But what about stocks? The unfortunate truth is that stocks have seen war in the Middle East before, from the Gulf War, the Iraq War, Israel's war with Hamas, and many more. But six and twelve months after the outbreak of a conflict, stocks tend to be nicely positive.

Even in the case of Russia's war in Ukraine, yes, it contributed to the 2022 bear market, but it wasn't the sole driver. Rate hikes, excessive money supply growth during the pandemic and post Covid supply chain disruptions played a big role. And the bear market was historically short and shallow, even though the conflict tragically continues. Here's the takeaway: don't let fear drive your decisions. Volatility is uncomfortable, but it's also normal. Markets are already doing what they do best—assessing the scope of the conflict, weighing the economic implications and pricing in continued global growth. If history is any guide, this bull market is likely to keep moving forward.

Next, primary election season heats up.

On Tuesday, Texas, North Carolina and Arkansas kicked off the 2026 midterm cycle with the first major primary contests. Primaries often bring heated rhetoric and bold policy proposals as candidates compete for their party's nomination. But here's the thing: while primaries grab headlines, it's the November midterm elections that matter most for markets. Midterms tend to set the stage for what we call the "Midterm Miracle". Historically, US stocks rise around 90% of the time in the three quarters following a midterm election. Why? Markets thrive on stability, and midterms often lead to a divided government. When Congress and the white House are split, Sweeping policy changes become harder to pass. While legislative gridlock can frustrate voters, it reduces the risk of disruptive policy swings, and markets tend to reward that predictability. The bottom line for long-term investors: don't let the noise of a contentious primary season drive short-term investment decisions. Political uncertainty is a normal part of markets, not a reason to retreat. As history shows, staying invested through election cycles, rather than trying to time them, is the best course of action.

Finally, February US labor market data.

Today, the US Bureau of Labor Statistics reported that unemployment unexpectedly rose to 4.4% in February, as non-farm payrolls contracted by 92,000 jobs. This follows a stronger than expected report in January, which was revised down slightly. This comes on the heels of last week's viral report from a prominent equity research firm, which claimed AI could dramatically disrupt the job market. For some investors, today's labor market numbers may seem to confirm these fears. Yes, technological advancements like AI may eliminate certain jobs, especially those requiring less creativity or complexity. But history shows us that innovation also creates new jobs and opportunities, often in ways we can't predict. Capitalism has a long track record of driving progress, creating industries and tools that improve lives, even if the specifics are hard to foresee. Importantly for investors, February's employment data doesn't tell us much about where markets are heading or how AI might shape future job growth. Job numbers are lagging indicators, reflecting what has already happened in the economy. Stocks, on the other hand, are forward looking, pricing in expectations for the future. With that in mind, we urge investors not to put too much weight on any single jobs report. Instead, focus on forward-looking indicators and broader economic trends.

That's it for this week.

Thanks for tuning in to This Week in Review. If you're looking for more insights, then don't miss our other series, 3 Things You Need to Know This Week, released every Monday. You can also visit FisherInvestments.com anytime for our latest thoughts on markets. Thanks again for joining us, and don't forget to hit "Like" and "Subscribe!"