When I was a kid, I used to watch The Beverly Hillbillies — a show about a poor family that strikes it rich when oil is discovered on their land. One day they’re in the Ozarks, the next they’re in Beverly Hills, navigating a world they never expected to enter.
That old sitcom might feel worlds away from today’s market headlines, but in many ways, investors are facing a similar kind of whiplash. Oil prices, geopolitical tensions, Federal Reserve policy — each headline seems to point in a different direction. What feels like a sure thing one day can look very different the next.
Right now, two stories are shaping the market’s mood: energy prices following Middle East tensions, and the Federal Reserve’s shifting stance on interest rates. Let’s take a closer look at both — and what investors might learn from Jed Clampett’s unexpected journey.
Energy: Risks Linger, But Upside May Be Limited
Energy often serves as a hedge during global unrest, but recent developments suggest a more cautious approach. Historically, oil prices have declined after U.S. military action, dropping an average of 5% over the two months following past conflicts — including the Gulf War, Iraq invasion, and Libya crisis. Full price recoveries typically take about six months.
Today, with a ceasefire between Israel and Iran, the risk of oil disruption through the Strait of Hormuz has diminished. Add in a slowing global economy and ample supply, and the outlook for energy stocks this summer looks muted. Technical indicators reinforce that view.
That said, valuations remain reasonable, and surprise geopolitical shocks could still stir volatility. But barring major escalation, investors may want to temper expectations for the sector in the near term.
The Fed: Data Dependent — or Not?
Fed Chair Jerome Powell reiterated this week that rate cuts aren’t imminent, leaning on inflation forecasts tied to tariffs — even as actual data suggests cooling prices. This marks a shift for a Fed that’s declared itself “data dependent” dozens of times since 2022.
Inflation has declined four straight months. The Bloomberg Economic Surprise Index is at its lowest point since last September — when the Fed began easing. And market-based expectations (via TIPS and swaps) aren’t flashing concern over rising prices.
Markets currently expect two cuts this year, but that could increase if inflation remains soft or labor data weakens. If the Fed remains stuck on forecasts rather than data, its credibility — already tested in 2022 — may once again be in question.
Looking Ahead
Much like Jed Clampett’s rise from a front-porch rocker to a Beverly Hills mansion, markets can shift quickly — often in surprising ways. One day you strike oil, the next you’re trying to make sense of cocktail parties and interest rate forecasts.
For investors, it’s important not to react to every headline or short-term move. Whether it’s oil prices easing after conflict or a Fed hesitant to act on the data, the best course is to stay disciplined and grounded. Not every boom leads to Beverly Hills. But a well-informed plan? That’s something even Jed would call a smart investment.
Have a blessed week!
Joe Shearrer
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Opinions voiced above are for general information only & not intended as specific advice or recommendations for any person. All performance cited is historical & is no guarantee of future results. All indices are unmanaged and may not be invested directly.
The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.
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