March Market Recap: Fragility Returns, Complacency Remains

Key Takeaways:

• Global fragility has resurfaced: The Iran conflict highlights how quickly supply chains can be disrupted.
• Volatility is back and it’s actionable: Dislocations across energy and commodities are creating opportunities for tactical positioning.
• Market complacency is rising: As risks build, our portfolios are positioned for multiple outcomes, not just the most optimistic ones.

Cracks in the Foundation

Globalization powered decades of prosperity. It was efficient, scalable, and deflationary.

Until it wasn’t.

The first crack came during COVID, when the complexity behind that system broke under pressure. Supply chains froze. The world was reminded that efficiency and resilience are not the same thing.

The system healed. Trade resumed. Markets moved on.

Now we’re getting the second reminder.

The Second Shock: Fragility Returns

The Iran conflict has exposed the same vulnerability, this time through a different channel. When stronger powers face asymmetry, the response is rarely conventional.

This time, the focus is the Strait of Hormuz.

This is not just another shipping lane.

It is a critical artery.

Source: IMF Portwatch.

When it tightened, the system strained.
If it closes, the system breaks.

We recently hosted a webinar on this exact issue. Listen to it. It’s worth your time.
Antonio de Pinho, Senior Analyst specializing in energy research, breaks down why this is not a quick fix.

Energy markets are reacting accordingly.

Historically, when energy prices surge, equity markets struggle. Higher energy costs act as a tax on the global economy.

Energy Shocks and Market Selloffs Coincide

Source: Bloomberg; as of April 2026. Past performance is no guarantee of future results. Index performance is not illustrative of strategy performance. It is not possible to invest directly in an index.

And yet today, equities are hovering near all-time highs.

That is not a coincidence. It is a statement.

Markets are betting this disruption is temporary. That the Strait will reopen quickly. That the system will once again prove resilient.

That may be right.

We are not willing to assume it is.

We have reduced equity exposure across our Wealth Builder models by about 1%. This was based on recognition that risks have shifted, and that taking profits into strength is prudent.

Inflation is Back in the Conversation

At the same time, inflation is no longer theoretical.

CPI has moved to 3.3% year-over-year, with a sharp monthly acceleration. ISM price indices are rising across both services and manufacturing. Survey data shows inflation expectations are moving higher globally.

Could this fade next month? Possibly.

But the direction of travel has changed, and markets are still positioned for the opposite.

Inflation Takes a Turn in the Wrong Direction

Source: BLS, as of April 2026.

Technology is the Real Driver

For those still unsure how technology will reshape the world over the next five years, look no further than this conflict. Iran is clearly on the wrong side of technology.

This is not just a geopolitical event. It is a case study in disruption.

Technology is compressing time. It is lowering costs. It is changing how power is projected and how systems are challenged.

The gap between those who adapt and those who do not is widening in real time.

That is the real lesson. This is about using technology as force multiplication.

This dynamic does not stop at the battlefield.

It applies to every sector, every industry, every company, and every individual.

The next five years may present challenges for those who are slow to adapt.

Volatility Creates Opportunity

Volatility creates opportunity, and we’ve been active.

This is especially true for the VanEck Commodity Strategy ETF (PIT), a holding within our models. PIT’s strategy is designed to ride momentum and take advantage of overbought and oversold conditions.

Last year, our models viewed gold and other metals as overbought and energy as oversold.

So, we did something about it.

We spent the second half of 2025 working down our gold position and buying energy. We purchased diversified baskets of highly correlated energy holdings, such as WTI, Brent, and heating oil. The chart below tracks our energy trades within PIT — green marks our buys, red marks our sells — illustrated against WTI prices at the time of our transactions. The light blue line shows our total energy weight.

PIT Energy Trades

Source: VanEck, Bloomberg; as of April 2026. Past performance is no guarantee of future results.

These purchases were funded primarily from sales of metals. We sold diversified baskets of precious and industrial metals, such as gold, silver, and copper. The chart below tracks our metals trades within PIT, shown against gold prices. The dark blue line shows our total metals weight.

PIT Metals Trades

Source: VanEck, Bloomberg; as of April 2026. Past performance is no guarantee of future results.

Recently, we have been going the other way.

To us, energy prices look overbought and precious and base metals look oversold.

But the opportunity is not simply directional. It is structural.

Commodity markets, like equities, are expressing a degree of complacency. The backwardated shape of the futures curve for WTI reflects a market that expects energy prices to fall, with near-term contract prices significantly above those that settle further out. It is even more extreme in Heating Oil/Diesel and European Gas Oil.

PIT's Oil Exposure is Front Heavy

Source: VanEck; as of April 2026.

We are not convinced.

We have shifted a significant portion of our energy exposure in PIT from the front-month to contracts that expire in late summer.

This positioning is intentional.

If higher energy prices prove to be sticky, this positioning benefits. If there is a quick resolution and energy prices fall, the front-month contracts we reduced would be expected to decline more sharply.

Position for Both Outcomes

Markets remain overly complacent.

Equities are near all-time highs. Credit spreads are tight. Energy futures curves are deeply backwardated, suggesting markets expect this to pass quickly.

We are less convinced.

Our job is not to predict outcomes with certainty. It is to define risks and build portfolios that can perform across a range of scenarios.