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RESEARCH | 3 POINT PERSPECTIVE | MACRO SHIFTS
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Lead contributor: Ajay Rajadhyaksha
26 Mar 2026
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CHAPTERS
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The oil shock and the economy
The conflict in the Middle East, along with the closure of the Strait of Hormuz, a crucial passageway for tankers, has pushed oil prices above $100/barrel. Elevated energy costs weigh on real incomes, lifting headline inflation and complicating the job of central banks. However, today’s global economy is far less energy-intensive than in the past decades. With Brent crude tracking current forwards, our Research analysts forecast 3% global growth.
If a month from now the conflict remains unresolved, it would surpass our analysts’ working assumption. In that case, their economic forecasts may prove too optimistic.
An acyclic capex cycle
Continued growth in capital spending could help offset higher energy prices, according to our Research analysts. AI investment continues to be revised up, with top technology firms on track to spend almost $700 billion on capital expenditure in 2026 alone, up 36% from last year. The AI effect is also showing up in earnings. Our Equity Research strategists expect aggregate earnings per share for the S&P 500 to rise 16% this year, which would be the strongest year of growth since the post-pandemic rebound.
This spending is not limited to AI; Western companies and governments are also investing more in energy infrastructure and defence. Global defence spending hit $2.7 trillion in 2025 and is heading toward $3 trillion by year-end. Global energy investment reached $3.3 trillion in 20251, driven by the energy transition and grid investment. Combined, these figures indicate a large global investment impulse. As much of this investment is acyclic, it should continue even if markets fluctuate.
Private credit concerns
After years of rapid growth, easy refinancing and covenant-lite underwriting, private credit markets are coming under scrutiny for high lending to software companies as AI threatens to disrupt the industry. This is further strained by the opacity of private markets. While our Research analysts expect some private credit funds to suffer losses, these are unlikely to be large enough to disrupt the US economy.
Even with the most bearish assumptions—that software loans are one third of the US private credit universe and that one-third of these loans default, an unheard-of rate for this sector—the total losses would amount to $150 billion, spread over several years. Such losses should not move the needle in a $31trn economy, according to our analysts. It is another crack that should not turn into a crater.
AI gets physical: Innovation meets opportunity
With AI-powered humanoid robots poised to redefine the workforce, our Research analysts explore the investment themes shaping AI’s next era, where automation turns physical and innovation creates opportunity.
Our analysts favour US stocks
Our analysts remain constructive on risk, leaning into US equities. They do not believe investors should avoid fixed income, currencies and commodities (FICC), instead seeing selective opportunities across rates, credit, FX and commodities. Private credit stresses are viewed as a slow burn and non-systemic. Overall, equities are seen as better positioned to outperform, supported by resilient earnings and a continuing investment cycle this year.
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About the experts

Ajay Rajadhyaksha
Global Chairman of Research

Christian Keller
Head of Economics Research

Dominique Toublan
Head of US Credit Strategy Research

Michael McLean
Public Policy Senior Analyst

Amarpreet Singh
Global Oil Research Analyst

Corry Short
Credit Strategy Analyst
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