The market has a remarkably short memory when it comes to geopolitical chaos. While rising oil prices and Middle East tensions dominate the headlines, the math suggests a rapid normalization. Kim Inglis of Raymond James notes that financial markets typically absorb the initial volatility within three months and return to their baseline trajectory. The current energy spike is driven by shipping disruptions, not a fundamental loss of supply, meaning the economic impact will likely remain muted.

The real driver of the market is an unexpected surge in productivity. Kim Inglis of Raymond James points out that AI implementation has pushed productivity to a two-decade high, allowing businesses to maintain robust earnings growth of around 10% despite global friction. The US economy is still on track for a solid 2.4% growth rate this year. The biggest risk is not a geopolitical meltdown, but investor complacency. After years of strong equity performance, portfolios are dangerously overweight in risk assets. Trimming winners feels counterintuitive, but a failure to rebalance will expose investors to brutal downside volatility when the momentum inevitably breaks.

Source: Video - Navigating Markets, Geopolitics, and Tax Strategy