HPWG April 2026 Market Update Podcast

Todd Hoffman:
Today we're talking about what's driving the markets and how investors should be thinking about it. Hello and welcome to the April edition of the Hoffman Private Wealth Group Podcast. I'm Todd Hoffman, Certified Portfolio Manager and CFP, Founder and Managing Director at Hoffman Private Wealth Group at Steward Partners. Thanks for joining us.

Jenna:
Welcome to our April update. I'm Jenna Makras, Wealth Advisor at Hoffman Private Wealth Group. Today, I'll be asking Todd about the geopolitical factors driving the markets, the energy situation and its impact on inflation, interest rates, and portfolio positioning.

Jenna:
Before we get into the Podcast I would like to congratulate Todd on another recognition from Barron's magazine, being named on the prestigious Barron's 2026 top 1,500 advisor list. This list is for the best of the best across the country and it's an even bigger honor to be named on both the Barron's and the Forbes in the same year. We are all hugely proud of you.

Todd:
Thanks Jenna, I really appreciate it. But as we all know the credit goes to the entire team. I am so proud of everyone on the team, and how hard everyone works to help our clients. As they say it takes a village to make things run smoothly, especially in these crazy markets.

Jenna:
So let's get started. Why should investors care about the current conflict in the Middle East with Iran?

Todd:
Because this isn't just geopolitical noise — it's directly impacting the markets and everyone's investments, both stocks and fixed income. The key issue in focus now is the global energy supply. According to the International Energy Agency, the Strait of Hormuz, which handles roughly 20% of the world's oil flow, is effectively closed right now, and this has created skyrocketing oil and gas prices.

Jenna:
So you're saying the instability of oil supply has driven energy prices higher, and this is impacting both equity and fixed income markets?

Todd:
Exactly. Energy is one of the few inputs that touches nearly every part of the economy. When oil prices move, it feeds into inflation, central bank policy, and equity valuations. According to FactSet, crude has moved into the $100 to $115+ range, with gains of 50 to 60% in just the last month. That's an extreme move.

Todd:
And according to S&P Dow Jones Indices sector data, if you look at our first chart, you can see this relationship clearly — as Brent surged approximately 60% from late February, the Technology sector fell about 18%, Financials dropped 14%, and Consumer Discretionary declined 16%. The only sector in the green is Energy, up more than 40%. That inverse correlation is the key story right now.

Jenna:
I understand it impacting equities. Can you explain how this has impacted interest rate expectations in the U.S.?

Todd:
Yes, prior to the war with Iran we had been expecting the Fed to cut rates this year. But with oil prices rising sharply, the narrative has shifted — from falling inflation to rising inflation driven by energy. As a result, the Fed is now unlikely to cut rates, and according to CME FedWatch data, many analysts are predicting potential rate hikes. Higher interest rates increase the cost of capital and slow economic growth and reduce corporate earnings — this has a negative impact on the price of bonds and leads to lower stock prices. This is exactly what we've seen over the past five weeks.

Jenna:
Do you think markets will continue to decline and what could stabilize them, and how long might this take?

Todd:
It all comes back to the Strait of Hormuz. The longer it remains closed, the higher oil prices are likely to go — and the more pressure on global economies and markets, which is exactly why Iran wants it closed, to put pressure on Trump to back off. The timeline is uncertain. Depending on the news flow, and who you listen to, it could be resolved quickly, or it could escalate with boots on the ground. My view is that this will likely play out over the month, possibly even stretch into two months. It really just depends on how committed Trump is to a regime change.

Todd:
But here's where it gets interesting and more positive. According to the U.S. Energy Information Administration's March Short-Term Energy Outlook, Brent crude is forecast to fall below $80 per barrel by the third quarter and back to around $70 by year-end. And according to J.P. Morgan Global Research, their base case is even more aggressive at $60. You can see both forecasts laid out on this chart. The data is telling us this oil spike is temporary, and once it resolves, the pressure comes off across the board.

Todd:
In the near term, we may get a positive offset from the soon-to-be-here earnings season. First-quarter earnings reports are starting in the next 3 weeks, and according to FactSet consensus estimates, analysts are projecting S&P 500 earnings growth of over 12% for Q1 2026. I expect strong results in many areas, including the companies in our portfolios.

Todd:
Interestingly, some of the strongest earnings may come from the areas currently getting beaten down the most, particularly Technology — where valuations are already at multi-year lows relative to earnings. This is typically how a bottoming process begins. It doesn't mean the markets will surge immediately, especially if geopolitical tensions persist, but it can create a floor and start to restore investor confidence.

Todd:
The following chart shows our projected V-shape recovery scenario, based on EIA price forecasts and FactSet consensus earnings estimates. Once energy markets stabilize and assuming earnings remain strong, I believe we could see a sharp rebound led by the same sectors currently under the most pressure. The earnings catalyst in April could be the turning point.

Jenna:
So you still see a bullish scenario for markets in 2026, even with near-term volatility?

Todd:
Yes, that's exactly right.

Jenna:
What's the bear case if things don't improve?

Todd:
The bear case is an escalation of the conflict — potentially involving our military suffering losses of equipment or life, causing us to go after more significant infrastructure damage in Iran, and prolonging disruptions in the Strait of Hormuz. That would likely trigger another major spike in oil prices from already high levels, driving higher inflation and further slowing global growth — essentially a stagflation scenario. You can see the bear case illustrated on Chart 4 as well — the dashed red line — showing a more extended drawdown if the conflict escalates.

Jenna:
That sounds concerning. Why don't you think that outcome is likely?

Todd:
First, I believe the U.S. and Israel have the capability to manage the situation militarily. Also, if conditions deteriorate, countries like India and China who are friendlier to Iran and who are most heavily dependent on Middle Eastern energy could step in and apply pressure on Iran to de-escalate the situation and push them toward negotiations.

Jenna:
You mentioned the current market declines and volatility in Technology. What else are you seeing in equities right now?

Todd:
According to FactSet and S&P Dow Jones Indices, if you look at the chart, the sector year-to-date performance breakdown, it tells the whole story. Energy has been the only sector performing well over the past five weeks, up more than 40%. The weakest sectors have been Technology, Consumer Discretionary, and Financials.

Todd:
And here's what I want to emphasize — historically, according to S&P sector data going back decades, the sectors that decline most during oil shocks tend to lead the recovery once energy prices normalize. That's where we see the opportunity.

Jenna:
What about international markets?

Todd:
According to FactSet data, all markets are now down for the year except the international markets ex-U.S. which are still up between 1 and 3%. This is simply because they were up more than the U.S. prior to this most recent pullback.

Jenna:
Have we made allocation changes in portfolios during this period?

Todd:
Yes, we've been very proactive. We've reduced international exposure by roughly 60%, reallocating much of that into U.S. oil and natural gas companies which continue to move higher. We've also rotated out of interest-sensitive Financials and higher-valuation Technology and Industrial names, and into areas within Technology where we have the highest conviction in earnings strength and have the ability for a quick rebound.

Jenna:
What are you telling clients right now?

Todd:
First, we've taken meaningful steps to reduce risk and are prepared to do more, if necessary. Second, the portfolios are positioned with companies that should recover quickly once conditions improve. And importantly, this is a buyer's market. For investors with the ability to add, this is an opportunity. Finally, if anyone is feeling uncomfortable, we encourage them to reach out so we can talk about their situation.

Jenna:
You're closing with no jokes today?

Todd:
I will leave you with a kind of trivia riddle. If you know the answers, email me and I will tell you if you're right. Don't use Google. Name 4 colleges that have an actual color as the name. An example would be the "red" college, not the mascot like the Red Devils — the color is in the name of the college. I will give you a hint: the hardest one to guess is a small school in the northeast who was just in the college basketball tournaments, and all the colors are in the Crayola crayon box of 64. Good luck!

Jenna:
Thank you for listening to the April edition of the Hoffman Private Wealth Group Podcast. If you find this helpful, please share it with someone who may benefit from a thoughtful perspective on today's markets.