The geopolitical calendar has been brutal. A US-Iran war erupted, oil spiked, markets sold off sharply, and the financial media did what it always does — reached for the worst-case scenario and refused to let go. Fisher Investments' Q2 2026 Macro Insights report isn't interested in that narrative. Its opening thesis is unambiguous: "Despite recent volatility and geopolitical events, the equity bull market should continue in 2026."
That conviction is data-driven, not wishful.
The Pullback Was Fast. So Was the Recovery.
From February 25 to March 30, 2026, the MSCI World fell 9.0%. It fully retraced that loss in just 12 trading days — one of the fastest recoveries in the index's modern history. Fisher's data spanning 1976 to 2026 shows that pullbacks recovering in under 15 days have posted 100% positive forward 12-month returns, with an average gain of 17.7%. The current drawdown sits in elite company.
Fisher frames this in its wider context: "Bull markets never move in a straight line. Equity volatility is normal and healthy." Since 1932, every bull market cycle on record has featured multiple pullbacks between -2% and -10%, and corrections between -10% and -20%. The current bull, which began in October 2022, has already absorbed 12 pullbacks and 2 corrections — entirely consistent with historical norms.
The lesson isn't that volatility is comfortable. It's that volatility is structural — and investors who treat it as a signal to exit consistently underperform those who treat it as noise.
Oil Spikes Are Frightening. They're Also Temporary.
The Iran conflict sent oil prices surging 70.9% in the first month — by far the most dramatic oil shock in Fisher's historical conflict dataset. For context, the Iraq-Kuwait invasion of 1990 produced a 59.3% two-month spike. The Russia-Ukraine war in 2022 added 21.1% in the first month.
Fisher's analysis of geopolitical oil shocks going back to 1980 makes a consistent point: "Oil price spikes tied to geopolitical events tend to revert to pre-conflict levels relatively quickly, limiting the impact on economies, inflation, and equities." The average spike has lasted roughly three months, with full reversal occurring around month four.
Two structural factors reinforce this view. First, the energy intensity of major developed economies has fallen sharply since the 1970s — the same oil shock that crippled the economy in 1980 carries far less punch in 2026. Second, adjusted for inflation, current oil prices remain well below prior peaks and "far short of levels likely to do huge economic harm in most parts of the world."
For advisors counseling clients rattled by energy headlines: the historical record argues firmly against treating oil spikes as durable economic disruptors.
Sentiment Is Bifurcated — and That's Constructive
Fisher notes that "investor sentiment is bifurcated between AI optimism and fears about war and oil price shocks." That bifurcation matters. Market breadth during the recovery off the March lows was the narrowest since 2002, with only 28.6% of MSCI World stocks outperforming the benchmark in the first 28 trading days. The bounce was led by sectors hardest hit in the drawdown — Financials, Industrials, and Tech.
Speculative baskets (AI, crypto, robotics, data centers) surged sharply off the conflict lows — up 14.5% in the MSCI World speculative basket and 23.5% in the Russell 2000 equivalent. Fisher expects that rally to be "short lived as fading oil concerns evolve into a broader market recovery" — a key tell for advisors watching rotation dynamics.
The Midterm Miracle Is the Structural Tailwind
The most powerful structural setup in Fisher's Q2 outlook is political. US midterm elections are scheduled for November 3, 2026. The historical record is remarkably consistent: the fourth quarter of midterm years combined with the two subsequent quarters has produced positive returns 100% of the time since 1950, with an average "Midterm Miracle" gain of 23.2%.
The mechanism is gridlock. Trump's approval ratings have tracked below every second-term predecessor in Fisher's dataset. History says the President's party rarely gains House seats at midterms — and gridlock, paradoxically, is bullish. Less legislation means less policy uncertainty. Fisher frames it plainly: "US midterm elections likely result in gridlock, ushering in the Midterm Miracle."
Meanwhile, corporate fundamentals are supportive: MSCI World earnings and revenue growth continue to trend positively through 2027 estimates, balance sheets are flush with liquid assets, and buybacks remain near record levels.
Actionable Takeaways for Advisors
1 Don't mistake volatility for deterioration. Fisher's bull market data since 1932 shows an average of 20 pullbacks and 2 corrections per cycle. The current cycle is behaving normally.
2 Oil shock fears are likely peaking. The 70.9% oil spike is dramatic but historically mean-reverting. Energy intensity in developed economies limits transmission to growth and inflation.
3 Position for broadening, not just tech. The narrow breadth recovery — 28.6% outperformance — signals early innings. As oil fears fade, expect broader market participation.
4 The Midterm Miracle is a historically reliable setup. Q4 2026 and H1 2027 have 100% positive frequency going back 75 years. Clients reducing equity exposure ahead of the election may be exiting exactly when the structural tailwind strengthens.
5 Non-US markets may lead. Fisher notes that "more cautious sentiment outside the US sets the stage for continued upside surprise" — a meaningful signal for global allocation conversations with clients.
The bull market has absorbed a war, an oil spike, a Supreme Court tariff ruling, and a Fed chair transition. It's still standing. The question for advisors isn't whether to believe in it — it's whether their clients are positioned to benefit from what comes next.
Footnote:
1 Fisher Investments. "Macro Insights Q2 2026." Fisher Investments Institutional Group, May 2026.
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