Highlights: Prolonged Strait of Hormuz closure restricts energy and commodities, depleting inventories and raising stagflation and recession risks for energy-scarce regions. These risks are not yet reflected in 2026 forecasts. Concentrated AI investment drives growth but creates narrow market focus, leaving markets vulnerable to volatility if confidence in AI returns or tech IPOs wavers. 18-24 months of narrow markets driven by isolated outperformance pockets have caused investors to overlook fundamentals, creating a disconnect between volatility sources and valuations. In the absence of a strong macroeconomic consensus, remaining invested in diversified portfolios that capture long-term value creation is key to mitigating volatility and geopolitical risks.