A Brutal Whipsaw Start to 2026 | S3 E134 | 04-01-26

The first quarter of 2026 was a difficult one for investors.

In this episode of Markets with Megan, Megan Horneman recaps a volatile start to the year as markets reacted to war in the Middle East, surging energy prices, private credit fears, rising inflation expectations, and hawkish central bank rhetoric. She also explains why stocks rebounded at the very end of the quarter—and why caution may still be warranted from here.

In this episode:
- Why global markets struggled in Q1
- What drove the correction in U.S. equities
- How energy prices and inflation expectations moved higher
- Why credit markets came under pressure
- What sparked the late-quarter rebound
- Why investors may still want to stay cautious

For more episodes, visit: https://marketswithmegan.fm

#MarketsWithMegan #MarketUpdate #QuarterlyRecap #Q12026 #Volatility #StockMarket #Investing #Inflation #EnergyMarkets #FederalReserve #MarketCommentary #EconomicOutlook

https://youtu.be/x28kXiHe3Ck

Disclaimer:  material was prepared by Verdence Capital Advisors, LLC (“VCA”). VCA believes the information and data in this document were obtained from sources considered reliable and correct and cannot guarantee either their accuracy or completeness. VCA has not independently verified third-party sourced information and data. Any projections, outlooks 
or assumptions should not be construed to be indicative of the actual events which will occur. These projections, market outlooks or estimates are subject to change without notice. This material is being provided for informational purposes only and is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice. Past performance is not a guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance 
that the future performance of any specific investment, investment strategy, or product or anynon-investment related content, made reference to directly or indirectly in these materials will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any 
discussion or information contained in this report serves as the receipt of, or as a substitute for, personalized investment advice from VCA. Due to various factors, including changing market conditions and/or applicable laws, the c...

Transcript

Q1 Market Whiplash Opens

Megan Horneman 0:00

Investors have really been whipsawed in the beginning of 2026. It is Wednesday, April the 1st, and this is Markets with Megan. If you like this podcast, you can subscribe, hit the alarm bell, share with your friends, family, or colleagues.

Why The Quarter Turned Ugly

Megan Horneman 0:15

Typically, we come to you to discuss economic data and what it's doing to the markets, but today we want to give a brief recap of the first quarter of 2026 because it was a very interesting quarter and in fact pretty disappointing for investors across many different asset classes. Now, investors had to deal with the tensions in the Middle East, the war with Iran, surging energy prices. We had private credit fears that spilled into the public corporate debt markets. And then we had quite a bit of hawkish central bank rhetoric, which really investors had to reprice expectations for interest rate cuts

Global Stocks Slide Into Corrections

Megan Horneman 0:54

this year. Now let's start with just looking at the equity markets. The MSCI All-Country World Index that had its is is off to its worst start to a new year since 2022. It was primarily led by the large cap US market because we did see a rally in the Latin American emerging markets. Again, very commodity focused, and we'll talk about that in a minute. But when you look at the SP 500 and the Nasdaq, these were the big laggards here in the U.S. We did see volatility measured by the VIX index. It jumped to the highest level that we've seen since Liberation Day of last year. We saw not only the Dal Jones industrial average, but the Nasdaq and the Russell 1000 growth index, they all entered correction territory during the quarter. That's a drop of 10% or

Rates Credit And Metals Get Hit

Megan Horneman 1:43

more. Within fixed income, we saw the 10-year jump to an eight-month high. And that's primarily because of the surge we had in energy prices because of the war with Iran. That caused an increase in inflation expectations. We saw one-year inflation expectations jump to the highest since 2022. Basically, a complete pricing out of any Fed rate cuts this year, even a small chance of potentially a rate hike. We saw that merge during the first quarter. Credit was weaker. That's because of those fears in the private credit market. We had many different publicly traded asset managers halt redemptions of some of their funds. That led to high yield spreads or that extra yield you get over treasuries. That widened to the most we've seen since Liberation Day as well. Even some of those safe havens like gold and silver, they struggled. We saw gold drop about 19% during the quarter, almost entering bear market territory. We saw silver drop 40%. So was fully in bear market territory in the first quarter. And that's primarily because when you do have some indiscriminate selling, investors come in and sell the winners. And we do know that the precious metals were quite a bit up, had seen such a significant rally over the past year. We saw the dollar rise, which was also rare. Energy was really the big story. We saw that surge in crude oil prices, not only in WTI, but also in Brent. WTI traded firmly above $100 a barrel. That filtered over into gasoline prices, touching over $4 a gallon. That's the highest since 2022 as well. So a very, very volatile quarter for investors.

Oil Shock Drives The Narrative

Megan Horneman 3:26

Now, when we look at the past couple trading days, though, we saw a really nice rebound specifically to close out the quarter yesterday. We saw a rebound in the SP 500 of about 3%. We saw both the NASDAQ and the Russell 1000 growth index jump about 4%. We did see the biggest drop in the VIX that we've seen in here since in over a month. So this was a pretty big kind of risk back on sentiment that we saw. The reasons behind this were we did get some media news about the optimism about the war ending, possibly the Strait of Hormoose opening up. And then we also saw some bargain hunting here. Remember that in the when you look at the, we mentioned the NASDAQ that was down in correction territory. But when you look at some of the bigger magnificent seven names, Microsoft, Meta, Google, these names were all down from their recent peak of over 20%. Microsoft was down 34% from its recent peak. So when you do tend to see some risk sentiment come back on, you will see these bargain hunters come back in. And we did see that yesterday, a big close on the equity market to close out the quarter. It didn't help to end the quarter in positive territory, but it did take some of that, um, some of the blow out of what we've seen from the from the rest of the quarter.

The Rebound And Bargain Hunting

Megan Horneman 4:47

Now, what do we think going forward? Yes, there are some signs that maybe we are winding down the war with Iran. We are just very cautious about that because we've been here before. Um, we don't have any real legitimate root answers out of Iran yet. We will get the president speaking tonight, the Wednesday evening, about where we are with the war with Iran. And even if the war with Iran ends today, let's keep in mind we can't just turn back on that straight of hormous immediately. We have to get those tankers moving. We should have some supply chain disruptions here in the near term. This can be inflationary. We talked about it and some of the indicators in the ISM manufacturing index that are showing some that inflation is a concern. So even though we may have the action that may end, and we're not significantly sure that that's there yet, um, we don't know what those impacts will be on economic growth in the coming months. We haven't seen any of the economic data until really today with that ISM

Cautious Outlook On War Inflation Data

Megan Horneman 5:47

manufacturing index. So it was a nice and welcome close to the end of the quarter yesterday. We're cautiously optimistic that there is some bargain hunters in here, but we also um or would be very cautious about jumping all in with the with the market up a little bit here. We still do see a lot of headwinds in the market in the coming months as we get the data of what this this war has done from an economic standpoint.

Closing And Where To Follow

Megan Horneman 6:11

That's all we have today. If you want a history of our podcast, you go to Markets with Megan.fm. Thank you.