Quick Thoughts: Are markets complacent?

High oil prices have emerged as the market’s clearest near-term risk, with supply disruptions keeping energy costs elevated and threatening growth in Europe and Asia. Even so, markets have recovered because corporate earnings remain strong, US productivity is improving, and fiscal support is helping offset some of the pressure.

The US economy also appears more resilient than many peers thanks to lower energy intensity and continued investment in AI and infrastructure. Central banks are likely to stay cautious rather than react aggressively to one-time price shocks, which helps limit broader financial stress.

For investors, the message is balanced but constructive. Opportunities still look attractive in US equities, emerging markets, energy infrastructure, defense-related spending, high yield income strategies, municipal bonds for tax-aware investors, and local-currency emerging market debt. The main risk is complacency if supply conditions worsen or if a lasting resolution fails to emerge soon.