Sterling Capital presenter warns of rising market volatility after Middle East conflict

Blake Mighton, presenting quarterly reports for Sterling Capital, told the meeting that recent geopolitical developments have raised market risk and altered the firm's outlook.

"One of the reasons ... I got into this business a long time ago was because no two quarters are ever the same," Mighton said, summarizing why the portfolio team had trimmed some equity exposure earlier in the year after strong returns in 2023–25. He said the firm entered the year slightly underweight equities versus target allocations.

Mighton said expectations about Federal Reserve policy have changed: "there's a better chance of a rate increase this year than the Fed cutting rates at all." He linked that shift to investor caution for both fixed-income positioning and equity valuations.

Mighton identified the conflict in the Middle East as "the big wild card," saying the "subsequent spike in oil prices has led to a lot of rhetoric about inflation" and warning that sustained higher oil would operate like "a tax on everything" for consumers and businesses. He said the price shock triggered a broad sell-off that followed a period when market gains had been concentrated in a handful of technology names tied to artificial intelligence.

"We started to see that broadening in the market ... then as soon as the conflict started ... what we saw was a sell-off in everything," Mighton said, adding that, in the recent move, value stocks performed somewhat better than growth.

Mighton framed the quarter as one in which prior portfolio adjustments (trimming equity overweight) and active positioning were responses to an evolving macro picture; he did not present specific fund-level performance numbers or allocation percentages during his remarks.

The presentation concluded without a board vote; the meeting then moved on to other agenda items.