Try Fund Library Premium
For Free with a 30 day trial!
John Maynard Keynes has been credited with saying, “When the facts change, I change my mind. What do you do sir?” There’s no actual proof that he said it, but Keynes was never afraid to change his mind. In fact, there was a longstanding joke that if the British Parliament asked six economists for an opinion on any subject, they always got seven answers, two from John Maynard Keynes.
The facts for the global economy are changing. At the same time, I don’t want to give you two answers to the issues plaguing investors. The problem is that the answer to whether the conflict with Iran has me changing my optimistic view of the global economy and cyclical assets is more dependent on the thinking of the Trump administration, the Israelis, and the Iranians than I would prefer.
So, what facts have changed?
The Strait of Hormuz is effectively closed.1 Roughly 20% of the world’s oil flows through that passage.2 Production in the Gulf states has been reduced significantly,3 both due to direct attacks and because remaining oil storage is limited when barrels can no longer be shipped immediately. The availability of strategic petroleum reserves helps, but only for a limited time. That math is straightforward.
The total strategic reserve covers about 60 days of the missing supply. Compounding the challenge is that the International Energy Agency recently announced the release of 400 million barrels,7 so the more appropriate number may be 20 days.
The Trump administration is also planning to issue temporary waivers of the Jones Act, requiring American-built ships to be used to transport goods between U.S. ports as part of its effort to stop surging oil prices.8 That could potentially help on the margin, but it’s not a fix to the current issues.
Whether the conflict lasts longer than 20 to 60 days is anyone’s guess. If it does, then the facts truly change. In that scenario, our core views for 2026 that cyclical assets would outperform the broad market and that the U.S. dollar would weaken – which had been working well until the conflict began9 – would be severely challenged.
That brings me to my second answer.
It starts with the likelihood that most investors have a significantly longer-term time horizon than the probable duration of this conflict. It also acknowledges that markets have historically performed reasonably well in the year following peak geopolitical stress around conflicts, provided the economic backdrop heading into them was largely sound.10 It also requires an honest look at our preferred indicators. They’re becoming more challenged, but they aren’t flashing clear warning signs yet.
None of this is meant to sugarcoat the current situation, but to acknowledge that the market recognizes that the conflict could end on a moment’s notice. I’m inclined to manage my action bias and not do anything drastic. We’re sticking with our optimistic views, while recognizing that risks to cyclical assets have risen. Consider hedging where appropriate.
Brian Levitt is Chief Global Market Strategist and Head of Strategy & Insights at Invesco.
Notes
1. Source: CNBC, “Strait of Hormuz must remain closed as ‘tool to pressure enemy,’ Iran’s new supreme leader says,” March 12, 2026.
2. Source: International Energy Agency, Feb. 28, 2026
3. Source: The Telegraph, “Gulf states throttle oil flows as crippling shutdowns loom,” March 2026.
4. Source: International Energy Agency, Feb. 28, 2026
5. Source: International Energy Agency, Feb. 28, 2026
6. Source: International Energy Agency, Feb. 28, 2026
7. Source: The Wall Street Journal, “IEA Will Launch Largest-Ever Oil Release From Global Strategic Reserves,“ March 11, 2026.
8. Source: CBS News, “Trump weighs Jones Act waiver amid rising fuel prices, White House says,” March 12, 2026.
9. Source: Bloomberg, L.P. March 11, 2026, based on the year-to-date returns as of the start of the Iran conflict (Feb. 28, 2026) of the S&P 500 Cyclicals Sector Index (+5.83%) and the S&P 500 Index (+0.67). The US Dollar Index had fallen 0.73% from the start of the year to the start of the Iran conflict. The US Dollar Index measures the value of the US dollar versus a trade-weighted basket of currencies.
10. Source: Economic Policy Uncertainty, Dec. 31, 2024. The Caldara and Iacoviello Geopolitical Risk Index reflects automated text-search results of the electronic archives of 10 newspapers: Chicago Tribune, the Daily Telegraph, Financial Times, The Globe and Mail, The Guardian, the Los Angeles Times, The New York Times, USA Today, The Wall Street Journal, and The Washington Post. Caldara and Iacoviello calculate the index by counting the number of articles related to adverse geopolitical events in each newspaper for each month (as a share of the total number of news articles). The conflicts and the S&P 500 return 12 months after the peak in the Geopolitical Risk Index were: 1962 Cuban Missile Crisis (35.3%), 1967 Six-Day War (13.3%), 1973 Yom Kippur War (-28.8%), 1979-1989 USSR/Afghanistan (8.2%), 1982 Falkland Islands (49.1%), 1990 Iraq/Kuwait (26.9%), 1991 Persian Gulf War (22.6%), 2001 September 11 (-20.4%), 2003 US/Iraq (35.0%), 2022 Russia/Ukraine (-6.7%), 2023 Israel/Hamas (34.1). An investment cannot be made directly in an index. Past performance does not guarantee future results.
11. Source: Bloomberg, L.P., March 11, 2026, based on the option-adjusted spread of the Bloomberg US Corporate Bond Index.
12. Source: Bloomberg, L.P., Feb. 28, 2026, based on the 5-year US Treasury inflation breakeven rate. A breakeven inflation rate is a market-derived estimate of future inflation, calculated by comparing the yield on a standard government bond (nominal) to the yield on a Treasury Inflation-Protected Security (TIPS) of the same maturity.
13. Source: Bloomberg, L.P., March 11, 2026, based on the fed funds implied future rate.
14. Source: Bloomberg, L.P., March 11, 2026, based on the forward curve for US West Texas Intermediate Crude Oil.
15. Source: Bloomberg, L.P., March 11, 2026, based on the US Dollar Index, which measures the value of the US dollar versus a trade-weighted basket of currencies. The US Dollar Index had fallen 0.73% from the start of the year to the start of the Iran conflict.
Disclaimer
Contents copyright © 2026 by Invesco Canada. Reprinted with permission.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.
The opinions referenced above are those of the author as of March 13, 2026. These comments should not be construed as recommendations, but as an illustration of broader themes. This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.
Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations. Diversification does not guarantee a profit or eliminate the risk of loss. All investing involves risk, including the risk of loss.
Diversification does not guarantee a profit or eliminate the risk of loss.
All figures are in U.S. dollars.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.
All investing involves risk, including the risk of loss.
Past performance is not a guarantee of future results.
In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic and political conditions.
Commissions, trailing commissions, management fees and expenses may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the simplified prospectus before investing. Copies are available from your advisor or from Invesco Canada Ltd.
Investment funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that any fund or security will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. No guarantee of performance is made or implied. The foregoing is for general information purposes only. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.
Image: iStock.com/LittleBee80
Try Fund Library Premium
For Free with a 30 day trial!
Fund Library
