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From the desk of:
Kenneth T. Kozlowski, CFP, CLU, ChFC Chief Investment Officer
Market Insights, week of March 16, 2026
The evolving conflict in the Middle East has introduced a new layer of uncertainty for investors, driving heightened volatility across global markets. While headline risk has been elevated, we, as well as portfolio managers across the industry have focused on how these developments are translating into market signals—and how best to respond without overreacting.
Market reactions:
- Geopolitical escalation drove a broad rise in volatility. The conflict involving Iran led to sharp increases in volatility across equities, fixed income, currencies, and commodities, reflecting a wider range of potential outcomes rather than a clear directional shift in fundamentals.
- Oil prices experienced sharp, headline‑driven swings. Energy markets reacted quickly to concerns around supply disruption—particularly related to the Strait of Hormuz—with oil prices spiking to multi‑year highs as markets reassessed the likelihood of sustained supply losses.
- Risk signals became more mixed across asset classes. Equity momentum deteriorated, credit markets—especially high yield—began to show signs of strain, and international markets experienced greater realized volatility than U.S. equities, partly due to currency effects.
- Investor behavior shifted toward caution, not panic. Markets saw rotations into traditional safe havens such as the U.S. dollar and gold, while risk assets repriced modestly, suggesting a reassessment of risk rather than a breakdown in market function.
EIM’s reaction:
- As volatility increased and confidence in short‑term momentum declined, our portfolio management team has reduced tactical equity risk and, as of 3/10/26, returned certain dynamic advisory models to their strategic allocations:
- We believe this is a neutral adjustment—not a defensive one. Portfolios remain fully invested and positioned to participate if markets move higher, while avoiding strong directional bets in an uncertain environment.
- A tactical overweight to high yield relative to investment‑grade credit was removed as credit market signals became more mixed and risks increased.
- Value equity positioning was maintained. Value has continued to outperform growth year‑to‑date, supported by ongoing concerns around AI‑related capital spending, profitability questions, and pockets of credit stress—reinforcing the decision to keep the value tilt in place.
- The team demonstrated active, timely management underscoring the ability to make tactical adjustments as market conditions evolve.
- Staying the Course. By staying invested, maintaining diversification, and keeping portfolios aligned with long‑term goals, we believe investors are often better positioned to navigate short‑term volatility without sacrificing potential future opportunity.
Market observations as of the week of 3/16/2026 and subject to change. Not to be used, or interpreted, as investment advice or recommendation.
IMPORTANT INFORMATION
Definitions:
S&P 500 Index is a weighted index of common stocks of 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities. The index is capitalization weighted, thereby giving greater weight to companies with the largest market capitalizations.
Russell 1000® Growth Index measures the performance of those Russell 1000® Index companies with higher price-to-book ratios and higher forecasted growth values. It is market-capitalization weighted.
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. the MSCI Emerging Markets Index consists of the following 24 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates.
A basis point (BPS) is a unit of measure used to indicate percentage changes in financial instruments. Basis points are typically expressed with the abbreviations "bp," "bps," or "bips." One basis point is equal to 1/100th of 1%, or 0.01%. In decimal form, one basis point appears as 0.0001 (0.01/100).
Information provided in this newsletter is general in nature, is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed are those of the author(s) as of the stated date of their contribution and any such views and opinions are subject to change at any time based on market, or other conditions, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. Securities and sectors referenced should not be construed as a solicitation or recommendation, or be used as the sole basis for any investment decision.
All investments contain risk and may lose value. Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.
Past performance is not a guarantee of future results. Portfolio re-balancing and diversification do not guarantee a profit or protection against loss in a declining market.
No guarantee or representation is made that investment objectives and/or opinions stated will be achieved. The experience of each specific client or investor may vary.
Due to the subjective aspect of these analyses, the effective evolution of the economic variables and values of the financial markets could be significantly different from the projections, forecasts, anticipations and hypotheses, which are communicated in this material.
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GE-8824215.1 (03/2026) (Exp. 03/2030)
