Hall Capital “Market Views” Newsletter April 2026

This is the 64th edition of Market Views from HALL CAPITAL. Our aim is to provide concise views of where we see risk and opportunity for investors.

Concerns Du Jour
- usually pass

Long-term concerns, such as the Federal deficit and our relationship with China will be with us for, well, the long term – a decade or more. Investors today, however, are focused on shorter term issues that may impact returns this year. Four come to mind.

Private Credit
Levered private credit funds grew too fast and may face credit issues. However, with less than $2 trillion outstanding compared to over $100 trillion of loans made by banks, private credit is unlikely to cause a systemic problem for the economy. I’m not saying that private credit funds couldn’t be a canary in the coal mine signaling systemic credit issues, but the canary didn’t create them.

AI Impact on Software Firms
AI will likely eliminate many white-collar jobs reducing the number of “seats” requiring software licenses. For many software companies this will pressure their growth and/or margins. But AI will not be existential for the entire software sector. For every SaaS company facing meaningful risk from AI, there may be another whose growth is enhanced by it. After all, many software companies control the data that is necessary for AI to manipulate.

AI Impact on Jobs and the Economy
AI is already threatening jobs, and it’s only going to get worse. This will likely create social challenges that government policy will need to address. Polls show more people view AI more negatively than positively, likely due to employment concerns. Anxiety among young graduates is understandable. However, from an economic and investment perspective, the outlook is more constructive. It is possible that we could see a rising GDP alongside rising unemployment – very unusual.

The War in Iran
In our last letter we noted that with robust corporate profits, massive tax refunds, continued AI infrastructure spend, rising productivity, a strong positive wealth effect, and a friendly Fed, it would take more than tariffs to derail the US economy. Tariffs strained relations with allies, added to inflation, and inhibited growth. The oil shock due to the Iran war is doing the same. While most of the factors mentioned at the beginning of the year are still positive, the Fed is put in an awkward position with inflation edging back up due to energy prices. The duration of the blockage of the Strait of Hormuz is the key near- term concern, not only for the US economy, but for the world economy.

Impact of This War on Economy
- short-term and long-term

While the short term uncertainty is high, we don’t expect serious shortages of oil in the US. Some may remember gas lines in the late 70s and the Iranian hostages. Economic implications today versus then are impacted by:

Reduced Energy Intensity: In 1980 we consumed 17 million barrels of oil per day. Last year we consumed 19 million barrels -- only a 12% increase -- while our GDP has grown from $3 trillion to over $31 trillion, which is a 10x increase.
U.S. is Now a Net Energy Exporter: The US exports light crude oil and gas, though it still imports heavy crude. While the price of oil is set on a global basis, being a net producer reduces the risks of domestic shortages -- unlike Europe, Japan and Korea.
Proven Reserves and Alternatives: With our own energy developed reserves and advances in alternative energy, high oil prices today are expected to be a temporary “shock” rather than a long-term structural crisis seen in the 1970's.

That said, this is the largest price shock in history and will certainly not help with the near-term inflation outlook. Trump’s assertions that the Iranians are “begging for a deal” is not backed up by their rhetoric nor actions. Clearly, Trump is eager to deal but it takes two to tango. If Iran's nuclear ambitions were neutralized, then our attack on the country would likely prove beneficial in the long run. But meanwhile, we need to be prepared for a longer conflict than anyone had planned.

The outlook seems to change daily, but here are our current working assumptions:

Regardless of Trump’s threats, Iran will continue to harass the Strait of Hormuz
Oil prices remain elevated
Intermediaries will work aggresively to negotiate a settlement with Iran
Agreement is reached within a month or two
Markets will be volatile until there is a ceasefire

As the president often says, “We’ll see what happens.”

Focus List

The list and performance can be obtained only by contacting our office.

Follow Up – from our letter one year ago

"The only certainly is more uncertainty - Tariff uncertainty and the impacts may be with us for some time, but there are scenarios with the US market bouncing back in the short term. The economy revs back up which turns around confidence. And, yes, the opportunity in the long run driven by lower corporate taxes, greater efficiencies of deregulation and AI productivity is still there even if the economy suffers from a self-inflicted wound."
- Liberation Day only increased uncertainty. Though draconian tariffs were reduced, the uncertainty of the impact of tariffs remained. The other factors more than offset the impact of tariffs and investors bid up stocks for the rest of the year.

"Bitcoin may someday become "digital gold", but bitcoin so far fails to be a productive hedge against stock market volatility and uncertainty generally. Gold IS a store of value and has been for millenia."
- Not only did bitcoin not hold its value in the face of uncertainty, it DECLINED -18% while stocks rose. Gold showed its sheen, climbing 50% over the last year.

NOTE: Now in addition to ALL our quarterly letters, on our website is a tab with just the Follow Ups.

About HALL CAPITAL

HALL CAPITAL, LLC is a registered investment advisor and was formed by Principals from Arcturus Capital in 2010.
For more information, contact Donald Hall 626 578 5700 x101 dhall@hallcapitalmanagement.com

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