Market Insights Recap — Week of March 2, 2026

 Hello. I'm Steve Orr, Chief Investment Officer for Texas Capital's Private Bank. 

Three big points this week. War certainty does add market volatility, February flat, here comes March Madness and second gear ready to shift up. All argue for staying the course and being ready for opportunities in our portfolios. 

So the wait is finally over for the Iranian warlords. Oddsmakers are giving the good guys about a week to disarm Iran. We'll take the under. From a markets perspective, we usually see two big moves in volatility: the price of oil jumps, and stays up for the duration, and Treasury yields fall. So Sunday we're treated to headlines blurring the oil prices of the highest in four years. The Strait of Hormuz is closed and shipping is snarled. How bad is it? Brent crude oil is up between 6 and 8%, depending on the delivery harbor.

Now, how are markets taking an 8% crude jump? Not really a problem. Look back: 2022 Russia invasion of Ukraine? 40% jump. 1990 Kuwait invasion? 100% jump. 1979 Iranian Revolution? Prices nearly tripled. So look, an 8% jump is nothing to sneeze at. But markets are telling you this isn't going to last long or be too severe. Again, we'll take the under for now. 

The flight to safety in U.S. treasuries, history teaches us that yields drop at the start of a conflict, and they're usually reversed within weeks. So we just finished February. Bonds did better than U.S. stocks for the first month in the last several. Remember coming into this year that roughly 35% of the S&P 500 was tech or tech-related. And what did we hear? Artificial intelligence is going to destroy the world. Artificial intelligence is creating a boom that will be the next Industrial Revolution. I like the words of Henry Ellenbogan from Durable Capital: "Artificial intelligence will lower the marginal cost of human intelligence to zero." Pretty fancy, but maybe true. We'll find out. 

Regardless of where you think this wave of innovation is going, the stock market has had its fill for that moment and has moved on to industrials, materials and other real stocks. Already we've had four days this year when the Nasdaq was down 1% and the broad Russell was up 1% or more. And the broader market strength shows up in breadth measures; like the percentage of stocks and uptrends they continue to rise. So there's good things for this long-term bull happening under the surface of the headlines. 

This is March, so madness happens in markets. Recall Silicon Valley Bank a few years back and last year's runup to Liberation Day. Our outlook, still bullish over the next year. The economy has shifted up to second gear. Third gear or GDP growth above 3% is on the horizon. The administration and Congress are implementing pro-growth policies through the One Big Beautiful Bill and deficit spending. Near term, markets are going to remain bouncy and directionless. 

Inflation, Personal Consumption Expenditures near 3% and Consumer Prices, CPI, has stopped going down. The M2, that's the money supply that leads consumer prices by about 23 months. It's running at 4.6% a year. That's your telescope on inflation. Producer prices lead CPI by about 12 months, and they're starting to rise again. So think of PPI as your inflation binoculars. So inflation is a mild headwind because we can see what's coming. Credit, monetary and fiscal policy? They're all stimulative and they're going to stay that way this year. This Friday is jobs day again. Another 40,000 net new jobs. Unemployment will stay steady at 4.3%. 

Our indicator dashboard remains green, keeping us fully invested; 'til next time.