Must Read Research
March 15, 2026
Candace Browning, Head of BofA Global Research
News of tanker traffic grinding to a halt in the Strait of Hormuz made waves in the Atlantic, as impacts were a big topic at our Miami Consumer & Retail Conference. This week we examine how long the disruption could last, where consumer companies may face calm seas or choppier waters, and S&P performance following extreme policy uncertainty. Elsewhere, we highlight how Argentina appears to be sailing into clearer horizons.
Claudio Irigoyen and the Global Economics team outline the macro playbook for the Iran conflict, focusing on the Strait of Hormuz, where ~20% of global LNG (liquefied natural gas) and oil supplies transit.
We analyze four scenarios based on hostilities' duration, considering effects on energy prices, inflation, and asset prices. The base case assumes a quick resolution, but we assign equal chances of disruptions extending into 2Q26. A prolonged Strait closure could raise the price of refined products (especially gasoil) and gas and increase food inflation via higher diesel and fertilizer costs (Gulf states account for ~34% urea/23% ammonia exports). Europe and Asia face the greatest stagflation risk, while the U.S. remains relatively insulated. Energy screens as a beneficiary, while Consumer Discretionary likely underperforms on a lag, and recession risks appear underpriced in rates and FX.
The BofA Consumer & Retail Conference took place last week in Miami Beach.
Managements suggested it's too early to see the impact of the oil price spike, and some suggested that changes could come after consumers fill their fuel tanks. Generally, though, companies were constructive, and a theme was the ongoing consumer interest in value and innovation. Our GLP-1 panel featured a Cornell professor who found that grocery and restaurant spend falls about 8% in the 6 months after usage begins, more for high-income consumers, but eventually reverts to prior levels. Indeed, the U.S. Economics team points out that some benefits will come in the form of lower tax payments, resulting in a later payoff. Softline retailers have not baked the IEEPA (International Emergency Economic Powers Act) tariff ruling into estimates, but the possibility of lower tariffs remains, plus tariff refunds could lead to positive surprises.
History says geopolitical crises can become recessions (1990 Gulf War) but our economists say only persistent oil spikes matter.
Technical strategy believes that $120 oil was the peak, so Jared Woodard and the Research Investment Committee suggest that risk now looks two-way and a March resolution could spur flows back into the new industrial cycle. Policy uncertainty is now the highest since 2025's "Liberation Day”. As for sectors, defensives like consumer staples, utilities, and healthcare all rank in the top decile of their 20-year valuations while real estate, tech and financials all look somewhat less expensive. Latin America screens more favorably versus Europe. Research's top real-economy "satellite" trades are commodities, international small value, small- and mid- industrials, master limited partnerships, emerging markets yield.
Our second investor guide to Argentina highlights ongoing pro-market reforms and a stabilization plan of almost 5% of gross domestic product, which has led to a fiscal surplus and a collapse in inflation from 211% to 31%.
The FX policy is shifting from a crawling peg to a band, with reserves building. The energy trade balance hit a record surplus of $8.6 billion in 2025, up from a $4.4 billion deficit in 2022. Argentina is home to the world's second-largest unconventional oil and the fourth-largest unconventional gas reserves. BofA Economist Sebastian Rondeau highlights the Regime of Large Investments (RIGI), a key driver of growth, offering incentives for investing in sectors like Mining, Oil and Gas, Power, and Forestry. In 2025, markets were mixed: equities and FX lagged emerging markets, while corporate debt outperformed. But Sebastian remains constructive on Argentine assets in 2026 amid ongoing macro recovery and regulatory de-risking.
Featuring Commentary from Global Economics Weekly
Claudio Irigoyen, Head of Global Economics, BofA Global Research
FOMC Statement to acknowledge Iran risks
The Fed will almost certainly keep policy rates on hold at 3.5-3.75% at its March meeting. We expect an 8-2 vote, with Governors Miran and Waller dissenting in favor of a 25 basis point cut.
The March FOMC (Federal Open Market Committee) statement is likely to include some commentary on the Iran war. We think the uncertainty language in the second paragraph will be edited to say something like “Uncertainty about the economic outlook has increased due to the conflict in Iran.” The committee might also choose to repeat some of its language from 2022, after Russia invaded Ukraine. For example, it could add: “A persistent increase in oil prices would create upward pressure on inflation and weigh on economic activity.”
Markets may be underpricing a more protracted war
Since the onset of the Iran war, oil prices have stoked concerns around global inflation pressures and growth dynamics. While a quick resolution to the conflict is certainly a possibility, we view the conflict extending into 2Q as an equally likely outcome, and a more protracted war cannot be ruled out. However, markets seem to be pricing a largely transitory shock. The U.S. dollar is stronger, but the S&P 500 is just 4% below its peak, and rates markets have priced out about 35 basis points of Fed cuts by year-end due to inflation concerns. In our view, the more disruptive scenarios for global growth are underpriced.
