This Week in Review | Middle East Update, New Fed Chair Hearing, Resilient Markets

Transcript

Alexander Leiken:

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 might 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 fisherIinvestments.com. Now, let's review what happened this week.

First, an update on the Middle East. Earlier this week, President Trump extended the two-week ceasefire with Iran beyond its original Wednesday deadline. The ceasefire is now set to remain in effect indefinitely while Pakistan and other countries seek to help restart talks between the United States and Iran. For the time being, the closure of the Strait of Hormuz and the US blockade of Iranian ports continues— with both sides seeking more leverage for negotiations. Whether or not this ceasefire holds or we see further flare ups in fighting, we believe the broader economic and political conditions are likely to remain supportive of the ongoing bull market. Despite ongoing concerns surrounding the Strait of Hormuz and the conflict, markets have largely moved on, having already priced in the war and its likely effects. Investors too narrowly focused on negative headlines can sometimes miss the more important positives. For example, a steep global yield curve continues to support bank lending, a catalyst for economic growth, while varying forms of political gridlock across many developed markets help keep legislative risk low. To us, it's these longer-term drivers— not fleeting headlines or short-term disruptions—that matter the most for stocks. In times of global uncertainty, discipline and patience are essential. Volatility is simply part of the journey. Stay focused, stay disciplined and let your long-term strategy guide you.

Next, the Fed chair nominee Senate hearing. On Tuesday, the Senate Banking Committee held a confirmation hearing for Kevin Warsh, President Trump's nominee for Federal Reserve chair. Warsh will need Senate approval before he can replace Jerome Powell, whose term as Fed chair ends on May 15th. Notably, Republican Senator Thom Tillis, a member of the Senate Banking committee, had been opposing Warsh's appointment until a Department of Justice investigation into Powell was resolved. Just today, the DOJ closed its investigation into Powell, but it remains to be seen what this will mean for Warsh's Senate confirmation hearing. Notably, Powell has stated he will stay on as Fed chair until a successor is confirmed. When it comes to stocks, we think the Fed chair is typically less impactful than headlines suggest. Monetary policy doesn't hinge on one individual— rather, the 12-member Federal Open Market Committee collectively sets policy, likely limiting the immediate impact of any leadership change. Additionally, history shows that new Fed chairs' actions and positions often deviate from what they say during their nomination process. Right now, we think the continued focus on the Fed chair nominee, worries about Fed independence, and the timing of potential future rate cuts overshadows the healthy fundamentals that we believe still underpin this bull market.

Finally, the resilient stock market.

2026 has certainly been noteworthy for global stocks, as volatility related to the Middle East conflict and energy market disruptions fueled a nearly 9% pullback. While this decline came close to correction territory, defined as a decline between 10 and 20%, markets have since resumed their upward march despite the uncertainty. Even now as global stocks set new all-time highs in recent weeks, we still don't have clarity. But that hasn't stopped the market. To us, this highlights an important truth: markets are forward-looking; they quickly price in widely-known information, and often rebound quickly as reality proves less dire than feared. During turbulent periods, we often see temporary shifts in market leadership. For example, as noted in our recent MarketMinder article, Energy stocks surged as oil prices spiked amid the fighting. But investors who attempt to chase these short-lived trends often find themselves "whipsawed", buying into a rally just before it reverses. While further volatility is always possible, there are a few key takeaways for investors. First, markets are resilient, often quickly recovering from sentiment-driven declines. Second, volatility can strike without warning and for any- or no-reason at all. When markets move quickly, patience becomes your greatest asset. We think attempting to time corrections or chase fleeting counter trends rarely leads to long-term investment success. 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!