Investing Outlook: Discipline Over Emotion

by Larry Adam of Raymond James, 3/27/26

Rapid advances in artificial intelligence, persistent geopolitical tensions – particularly the conflict in Iran – and ongoing trade uncertainty have kept headlines loud and emotions elevated, ultimately demanding investors remain adaptive and disciplined. In this kind of environment, the biggest mistakes come from reacting to noise rather than fundamentals. Instead, investors who stay focused on long‑term objectives and respond thoughtfully instead of emotionally are best positioned to succeed over time.

Oil market

In the near term, developments in Iran will shape the economic outlook. Energy prices have reached multi-year highs, pressuring consumers. While the situation remains fluid, our base case is that the conflict will likely end shortly. Limited public support, rising gasoline prices and shifting political momentum ahead of the midterm elections are likely to constrain its duration. Importantly, the impact on oil has been more about shipping disruptions than a significant loss of production. As conditions normalize, we expect oil prices to retreat toward $60 per barrel, reducing spillovers to economic growth, monetary policy and asset markets.

Historically, oil shocks have been most damaging to weaker, energy-dependent economies. Today, however, the US is on firmer footing: more energy efficient, less energy intensive and a net exporter of oil, providing a stronger defensive line against supply disruptions. Given our expectation of a brief conflict in Iran, higher oil prices appear to be a temporary headwind rather than a lasting disruption.

Consumer spending

Consumer spending should remain supported by healthy tax refunds this season and improving hiring conditions. Meanwhile, business investment continues to benefit from record AI‑related capital expenditures that are delivering the strongest productivity gains in two decades. While a prolonged rise in energy prices would likely raise recession risk, we see no reason to abandon our broader optimistic outlook at this time.

The Federal Reserve

The Federal Reserve (Fed) is navigating this stretch with potential new leadership on the horizon, as Kevin Warsh sits a Senate confirmation vote away from becoming the next Fed chair. He brings a rare blend of experience, combining firsthand knowledge from his time as a Fed governor (2006 to 2011) and a clear understanding of financial markets from his years on Wall Street. Still, the policy direction is shaped by the full Federal Open Market Committee. As with any new leader, markets and fellow policymakers will quickly test his discipline, credibility and consistency.

At present, the Fed faces a delicate tactical dilemma. Inflation remains stubbornly above the 2% target, constraining the Fed’s ability to ease, even as a softening labor market increasingly argues for eventual support. Geopolitical tensions and higher oil prices add near‑term complexity and reinforce that restraint. However, as those pressures fade later in the year, we expect the Fed to place greater weight on labor market conditions and deliver one rate cut before year‑end.