Well, let's get to the big story.
Breakdown after a robust 2025 where global equity markets expectations.
2026 has opened with plenty of volatility.
Now the leaders of the market have changed.
US large cap stocks posted solid gains last year in international equities and emerging markets are materially outperforming.
But do investors need to look overseas for better risk?
Just returns and how is the opportunity that shifting while joining me on this Friday morning following that US jobs report is Steven Schoenfeld, CEO of MarketVector Indexes.
Steven, good morning.
Thank you so much for joining me.
My pleasure.
Well, it has been quite the week across all asset classes.
We continue to look at US stock futures in the red, but this does come on the heels of that.
Jobs report.
So we got that surprise pullback in on-farm payrolls and unemployment rate ticking higher to 4.4%.
So what does that mean for the economy and the Fed?
So it was definitely a negative surprise.
Most analysts expected a positive number, at least.
To me it gives us a little bit of a fear of stagflation.
We have oil up.
And economy down, it is not being reacted well by the market right now.
The futures pre-open are indicating over 1.5% drop.
S&P has been in a range for almost 3 months.
It's sort of absorbed everything that has hit it, but this could be the straw that breaks the camel's back.
Big tech has been hurt even more.
And even though there were hopes for a strong start.
To 26, it seems like those are diminished and that's why I believe there's more opportunity abroad.
Yes, and of course we're keeping a close eye on energy prices.
So we've seen both WTI and rent prices skyrocket this week as the escalating tensions in the Middle East remain top of mind for all of us.
But what does that really mean for inflation?
So the first economies that are going to be hit. are those who are fully dependent on Mideast oil.
So that's more China, more Europe, more India.
The US is a net oil exporter, but oil is a global market, and we feel it at the pump.
We see it in the headlines.
It's not just gasoline, it's also heating oil.
Winter is not over, although hopefully it is soon, and we go to daylight savings time this weekend.
So I do think it's one of those headline numbers that spark.
Not just economists fears, but actual average citizens feel it and I do want to get your take on what we're seeing in global equity markets and as you mentioned, depending on the economy, depending on the nation state and the region and the world, each nation is affected differently by the conflict that is unfolding in the Middle East.
So what does this mean for the equity indexes, especially.
We saw that outperformance in 2025, but this year, can we continue that?
So the shift to international equities or non-US outperforming in 2025 was very significant, more than double the return of the US Already this year going into March, it was repeating, so you had international equities, including emerging markets, outperforming.
Of course.
With the U.S.Israeli attack on Iran and what is happening in the Gulf and how Iran is lashing out at the Gulf oil producing, it's creating turmoil across markets, especially oil and energy importing, but you still have standout markets that are more independent.
Brazil is very promising.
It's energy independent, and the economy is more in an upswing.
Surprisingly this year.
Israel has actually rallied in this last week because people are seeing a diminishment of political risk and existential risk, so investors need to be selective, but I still believe strongly that non-US will be a place for diversification for US investors.
Yes, and expanding on what you just said.
We have been seeing sharp pullbacks in certain equity markets while rallying to new record highs in other markets, but I do want to ask you about the role of the US currency in all of this, especially given what we're seeing across all asset classes.
Yes, so the US dollar was on a weakening trend all the way through late February, but as this crisis unfolded, to the surprise of many, the dollar has strengthened.
I think people see the geopolitical strength of the US and the dollar is still a safe haven currency.
I don't think we're going to have a full turn in a bullish dollar environment, but when you have headlines in both Barron's and The Economist of the dollar being dead, that's usually a good.
Contrarian sign to consider holding some dollars.
Yes, and that also leads me to my next question.
Focus on precious metals.
So we've seen a gold rally above that 5000 level in 2026, and that ascent has been quite rapid.
But what do you make of the outlook for gold?
So gold had a surge in the beginning of the year and then had a very sharp correction along with silver.
It found some support and then as the crisis started being serious early this week, you saw both gold and silver rally very sharply but not make new highs.
I believe they're in a consolidation phase.
I think gold will hold around 5000, and we have not seen the highs of this cycle for those who want to be.
More conservative, they should consider gold mining stocks.
Yes, and now that we're talking about different sectors as well as asset classes, before this week we were focused on Sapocalypse as well as the private credit market, so we can't forget about that.
So first of all, when it comes to sectors in the S&P 500, not surprisingly we've seen energy outperform all the other sectors.
But where do you stand in this debate?
AI disruption.
So I think we're nearing a bottom on the Sapocalypse.
We saw actually software starting to bottom last week.
I think the period of Mag 7 underperformance is still going to continue, and I think investors need to be broadly allocated.
Aside from energy which, even though it's gone up a lot this week, it is just beginning an outperformance.
I would also recommend hard assets, commodity producer.
More defensive industries.
I think investors have gotten overweight.
The high flying tech, there's still an opportunity to diversify.
And if we do have stagflation, then consumer discretionary is a very good place.
Sorry, consumer nondiscretionary is a very good place to hide out as well.
And finally, before I let you go, I do want to get your take on what we're seeing in the 10 year yields as well as bond markets across the globe.
So what are the signals that you're gathering from all the noise?
So today's move is a decisive move toward lower yields.
There's been a lot of range-based trading.
If you look at the longer term for the 10 year and the 30 year, I believe yields are going lower.
The shorter term is, of course, more controlled by Fed policy.
The Fed now is going to have a very significant dilemma if the job market is weakening, but inflation is growing.
They may just hold. for longer, and Stephen, last but not least before I let you go, you mentioned the US central bank, so there are a lot of moving parts when it comes to the Federal Reserve, especially in 2026.
We can't forget the fact that it is midterm election year as well, and we are expecting, anticipating a changing of the guard at the Federal Reserve.
So what does all this mean?
So you know, the incoming, assuming he's approved by the Senate.
Kevin Warsh is not as much of a dove of the various choices that the president had.
He is going to have pressure from the president to lower rates, but he's going to look at the economic reality and not necessarily see a clear picture.
So I think there will be political wins, but I have a lot of confidence in.
Future Fed Chairman Warsh to just do the right thing economically.
Yes, and finally, before I let you go, you mentioned stagflation, and that is a word that we'll most likely hear more of today, especially on the heels of that US jobs report.
But what are you actually paying attention to for other indicators?
So I tweeted the word stagflation for the first time in many years this morning.
It is something to be concerned about obviously after jobs, if jobs are weak, but we start seeing other prices, right, prices paid, especially PPI, go up, then I think we have a real concern.
Also there's still uncertainty about the tariffs.
The White House is Committed to trying to reestablish, there should be a real reconsideration of increasing tariffs if we're in a potential stagflation environment.
Well, Stephen, we will have to leave it there for today, but a lot of moving parts for Americans to digest on this Friday morning.
So thank you so much for joining us.
Thank you.
Thank you.
Great to be here.
