Muhlenkamp Quarterly Market Commentary – April 2026

Why It Matters

The war‑driven energy shock reshapes inflation expectations and asset‑class performance, forcing investors to reassess currency and commodity exposure.

Key Takeaways

• Iran‑Israel conflict pushed oil to $102/barrel
• Dollar index rose to 100; Treasury yields climbed
• S&P 500 fell ~4%; gold dropped 13.5%
• Manufacturing PMI entered expansion; GDP growth slowed
• Portfolio shifted to overseas assets anticipating dollar weakness

Pulse Analysis

The renewed hostilities between the United States, Israel, and Iran have reignited geopolitical risk premiums across global markets. By sealing the Strait of Hormuz and targeting Gulf energy facilities, Iran forced crude prices to surge from the mid‑$60s to just over $100 a barrel, a move that simultaneously strengthened the U.S. dollar and lifted Treasury yields. Such a shock reverberates through inflation calculations, tightening the cost environment for both producers and consumers while compressing equity valuations and eroding gold’s safe‑haven appeal.

On the domestic front, the United States entered the quarter with mixed signals. Real GDP growth decelerated to 0.7% in Q4 2025, reflecting a government shutdown’s statistical distortion, while the Atlanta Fed’s GDPNow now projects 2.0% annualized growth for Q1 2026. Labor market softness eased, with the U‑3 unemployment rate holding steady at 4.3%, prompting the Federal Reserve to keep policy rates unchanged. Notably, the Manufacturing PMI crossed the 50‑point threshold, suggesting the sector’s long‑standing contraction may be ending, which could provide a modest boost to industrial demand if broader macro conditions stabilize.

For investors, the commentary underscores a strategic pivot toward diversification. Muhlenkamp & Co. trimmed equity exposure, bolstered cash reserves, and increased allocations to overseas equities, anticipating a longer‑term weakening of the dollar once oil‑driven price pressures subside. This approach aligns with a broader market narrative that favors currency‑hedged assets and emerging‑market opportunities amid heightened commodity volatility. While the AI boom’s timeline remains uncertain and regulatory turbulence lingers, the immediate priority for portfolio managers is to manage inflation risk, monitor oil price trajectories, and position for a post‑conflict environment where the dollar’s dominance may recede.