Headline Indices Are Masking Market Stress | Liz Ann Sonders on the Case For Quality Stocks During An Oil Shock

This episode is sponsored by Pictet Asset Management and its AI-enhanced equity ETFs. Pictet AI Enhanced US Equity ETF (PQUS): https://etf.am.pictet.com/pqus/?utm_campaign=usetf&cid=2826077237&utm_source=jfmv&utm_content=pquslp&utm_medium=podcast_02&utm_term=noterm Pictet AI Enhanced International Equity ETF (PQNT): https://etf.am.pictet.com/pqnt/?utm_campaign=usetf&cid=2715538577&utm_source=jfmv&utm_content=pqnt&utm_medium=podcast_02&utm_term=noterm In this episode of Monetary Matters, Liz Ann Sonders, Charles Schwab’s Chief Investment Strategist, explains how 2026 presents an "analytically rich" environment where headline indices are currently masking significant underlying market stress. She notes that while the S&P 500 shows a modest drawdown, the average stock is seeing much steeper declines, reflecting a period of intense "rotation and churn" triggered by the war in Iran and a spike in oil prices. Sonders highlights a critical shift in investor behavior, where the previous year's preference for non-profitable speculative stocks has flip-flopped in favor of a "quality" factor centered on stable profitability and strong balance sheets. She draws parallels to the 1990 period, warning that the lack of alternate routes for oil through the Strait of Hormuz could lead to sustained economic demand destruction. Despite these geopolitical shocks, Sonders observes that forward earnings estimates for the tech and energy sectors remain surprisingly resilient, though she anticipates downward revisions as reporting season approaches. Ultimately, she reminds investors that in such a volatile cycle, "better or worse" as a leading indicator often matters more to the market than whether the data is objectively "good or bad". Recorded March 24, 2026. Pieces referenced: “Dire Strait: War's Impact on Stocks”: https://www.schwab.com/learn/story/dire-strait-wars-impact-on-stocks “Schwab Market Perspective”: https://www.schwab.com/learn/story/stock-market-outlook “Smoke on the Water…Fire Under the Surface”: https://www.schwab.com/learn/story/smoke-on-waterfire-under-surface Follow Liz Ann Sonders on X https://x.com/LizAnnSondersFollow Liz Ann Sonders on LinkedIn https://www.linkedin.com/in/lizannsonders/ Follow Jack Farley on X https://x.com/jackfarley96 Follow Monetary Matters on: Apple Podcasts https://rb.gy/s5qfyh Spotify https://rb.gy/x56dx5 YouTube https://rb.gy/dpwxez Investing involves risks, including the possible loss of principal. Because these ETFs rely on an AI-driven model, the strategy may not perform as intended. International and U.S investments may involve additional risks such as currency, political, or regulatory developments. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Funds before investing. The prospectus contains this and other important information and may be obtained by visiting www.pictet.com/etf. Read it carefully before investing. Distributed by Foreside Fund Services.