2Q26 AFS Quarterly Playbook Preview:
QUARTERLY PLAYBOOK - 2nd QUARTER 2026
“Temporary Disruption? Likely, But Time will Tell…”
Since Operation Epic Fury began in Iran on February 28th, 2026, the oil markets have been disrupting the positive momentum that both the markets and the economy had just prior. Now the question is whether this disruption will turn into a longer-term change in calculus. For now, we think the situation will be temporary, but the clock is ticking. Our estimate is that the oil markets have until mid-May to normalize before causing more lasting effects. We believe that a longer-term disruption is unlikely, however we recognize it is a non-zero probability. The desire for oil to stabilize is felt by nearly all oil producing and oil consuming countries with two exceptions – Iran and Russia. Therefore, we expect there to be a lot of pressure to open the straight of Hormuz for normal traffic, one way or another. However, if oil remains elevated, then that could have prolonged effects on inflation and consumption. That, in turn, could lower the probability of Fed rate cuts and cause both the stock and bond markets to flatten out performance. That said, even now the futures markets currently have oil prices below $90 for July and we’ve seen how quickly oil markets can adjust when the Secretary of Energy mistakenly posted (and later deleted) that the US Navy escorted a tanker ship and caused oil prices to fall 15% in a matter of minutes...
“Nothing gives one person so much advantage over another as to remain always cool and unruffled under all circumstances.” – Thomas Jefferson
1Q26 AFS Quarterly Playbook Preview:
QUARTERLY PLAYBOOK - 1st QUARTER 2026
“Keeping the party going...?”
As we turn into 2026, many of the key ingredients to “keep the party going” remain in place. A high level of economic growth, lower rates and strong profit forecasts provide a robust backdrop that has re-filled the punchbowl for the markets to party on. However, the longer we stay in “party mode”, we acknowledge that the risk of the music stopping or the punchbowl getting taken away somewhat increases. But that doesn’t look like it will be anytime soon! We would likely need to see an economic slowdown, earnings recession, and a more hawkish Fed before the lights start to get turned off for the markets, and that is the opposite of the current situation. Nonetheless, like with everything in life, moderation is key and it is important not to overindulge…
“The stock market is a wonderfully efficient mechanism for transferring wealth from the impatient to the patient.” – Warren Buffett
4Q25 AFS Quarterly Playbook Preview:
QUARTERLY PLAYBOOK - 4th QUARTER 2025
“Party like it’s 1999…?”
I was dreamin' when I wrote this; forgive me if it goes astray….With the pace of the markets, the references to 1999 are numerous. The “everything rally” has taken certain asset levels to new heights with valuations “stretched” in some areas. While, skepticism in the economy remains prevalent, unlike 1999, we see an economic environment that should remain supportive. Unfortunately, this permits some sectors to remain drastically extended. Still, policy and market tailwinds should provide a cushion for fundamentals to catch up. In these unusual times, it’s important to remain disciplined through eccentric phases and position for a myriad of situations…
“Always remember that hindsight is the best insight to foresight” – Old Irish Saying
3Q25 AFS Quarterly Playbook Preview:
QUARTERLY PLAYBOOK - 3rd QUARTER 2025
“The dog days of summer”
As the summer sizzles, we are trying to see our way through the haze. Although visibility has improved, it is still not perfect. Going into the second half of the year, we see a lot of positive momentum that is carrying us through the moments of uncertainty and are optimistic that policy will turn into a tailwind vs. the headwind it’s been so far. Moreover, markets look poised to keep humming along with a supportive backdrop and resilient investors. We’ve been reminded that the components of growth can evolve over time and that it’s important to remain optimistic as the seasons change…
“Summer reminds us that growth takes time – and that even under the heat, strong roots keep reaching for light.” -Anonymous