For the past decade-plus, the performance record has favored growth stocks over value. Yet the tide may be changing. In 2025, value stocks and growth stocks had similar returns, with growth advancing 13.8% and value returning 13.6%. More than halfway through 2026, value stocks have climbed 16.8% while growth stocks have returned 5.7%. The post COVID-19 economy gave a lift to some of the cyclical companies (energy and regional banks), and value stocks outpaced growth stocks that year. While growth stocks led for a few years after that, history has shown other instances where value stocks have outperformed. Value stocks tend to be more resilient in times of market uncertainty and higher volatility as they are less likely to overreact to economic news. Another factor, in our view, has been the level of interest rates. If interest rates are high, discount rates will be high, and future profits will be worth less, creating an unfavorable environment for growth stocks. In any event, the value sector is the place to achieve income.

The price of a barrel of the crude oil benchmark grade West Texas Intermediate, which had declined steadily for the past four years as new energy sources emerged, soared to triple-digit-territory a few months ago due to the impact on supply from the war in Iran. Iran is not necessarily a major producer of oil (3% of the global total), but the country has responded to the attack by effectively closing the Strait of Hormuz, through which tankers moving about 20% of the world's oil supply travel. As a consequence, the U.S. Energy Information Administration (EIA) says the global supply of oil is expected to decline about 5% in 2026 compared to 2025, while global demand declines about 1%. Thus, it is little surprise that oil prices at $80 per barrel remain about 40% above their lows for the year. And they will likely stay elevated for a while, as attacks have damaged gas fields and refineries in Saudi Arabia and Qatar. For 2026, our oil price forecast now calls for $80 per barrel, and our forecast trading range for 2H26 is $70-$120. This forecast implies a 22% jump in gas prices in 2026 compared to an average price of $65 in 2025. Looking further ahead, the EIA outlook for 2027 calls for a recovery in supply and ultimately a surplus. If that's the case, oil prices likely will resume their secular downward trend. Our preliminary outlook for WTI next year is $70. Yet that forecast is subject to change, depending on the trajectory of the conflict in the Middle East.

Exxon Mobil is the world's largest non-government-owned energy company. It is also one of the world's largest publicly traded companies in terms of market capitalization. It operates globally along the entire hydrocarbon value chain, from energy exploration to end-user product sales and marketing. The company is the biggest refiner and marketer of refined products and has one of the largest chemicals businesses in the world. The company is the result of the 1999 merger of Exxon and Mobil. The shares are a component of the S&P 500 index, and the company employs approximately 57,900 people.

Stocks are trending lower at midday, though not meaningfully so. Traders are parsing the latest earnings reports but also are mindful of the deadlock in place for the Strait of Hormuz.