Market broadening theme will become relevant again, says Neuberger Berman's Joe Amato

Summary

• Market indices have bounced 5% last week and are down less than 5% from pre-conflict levels, masking severe underlying damage: 40-50% of stocks are 20% below their one-year highs.
• Current pricing reflects an expectation that the geopolitical conflict will be resolved sooner rather than later.
• The situation is compared to past market shocks (e.g., 2025's ~20% drawdown post-tariffs, 2022's oil spike and rate rises), but each event is viewed as unique.
• Underlying fundamental trend lines for real growth remain positive, and the focus will return to this optimism once the immediate conflict fog clears.
• The "broadening out" theme—non-U.S. equities, a broader market, and value over growth—is a key theme for the year and is expected to regain relevance.
• In a higher nominal growth environment, more cyclical economies (e.g., Japan, China) and more cyclical small/mid-cap stocks are positioned to benefit.
• U.S. large-cap and Mag-7 stocks have seen a revaluation and are becoming more interesting as valuations rationalize.
• Sustained high oil prices pose a greater risk to non-U.S. growth, as those economies are more cyclical and dependent on imported oil.
• Oil-driven demand destruction can occur through extended high prices affecting consumer spending or through physical shortages (e.g., jet fuel).
• Institutional clients are largely in a wait-and-see mode, advised to stick to their strategic asset allocations.