Inflation will continue to trend lower over the next 12 months and the economy will be challenged in the back half of the year, which will ultimately drive interest rates lower. Investors should increase exposure to the fixed-income market, both corporate and government, to lock in currently attractive yields.
Base case expects Middle East de-escalation and a deal over the next month, pushing energy prices down to ~$75/barrel by year-end. Increased non-OPEC production (US, Canada, Venezuela, Norway) and SPR draws are helping to contain oil prices. Lower oil is good for consumers, reduces inflation pressure, and simplifies the Fed's job.
Oil is a sideshow; the fundamental driver of equities is the technology sector. Technology and communication services together are 50% of the S&P 500. The tech sector just entered a correction (down >10%), but in this bull market it has had six such corrections and still doubled the S&P 500's return. Investors should stay committed and not make decisions during non-earnings seasons; corrections have rewarded patience.