Global markets are closely watching U.S.-Iran peace talks in Pakistan, just days after a fragile ceasefire took hold in the Middle East. Investors are weighing whether recent volatility could give way to a broader rebound.
BNN Bloomberg spoke with Glen Smith, chief investment officer at GDS Wealth Management, who highlighted opportunities in energy, AI infrastructure and financials, while cautioning that inflation and oil prices remain key risks.
Key Takeaways
- Markets have largely recovered recent losses, reflecting a pattern of temporary pullbacks tied to geopolitical shocks.
- Elevated oil prices are pushing inflation above three per cent, reducing the likelihood of near-term interest rate cuts.
- Higher interest rates are supporting financial stocks through stronger net interest income and increased deal activity.
- Energy and power producers are positioned to benefit from both high oil prices and rising electricity demand from AI.
- Consumer discretionary sectors face pressure as higher energy costs and inflation weigh on spending.
Read the full transcript below:
ANDREW: As the U.S. and Iran get set for more talks in Pakistan, our guest says he sees the potential for a swift rebound in the stock market. We’re joined by Glen Smith, chief investment officer at GDS Wealth Management. Thanks very much for giving us the time.
GLEN: My pleasure.
ANDREW: Let’s put up a three-month chart of the S&P 500. The market is essentially back to where it was before Feb. 28, when the fighting started. What does that tell you?
GLEN: Exactly. It tells us that this always happens. Not necessarily a war, but there’s always a different catalyst, a different Black Swan event for the markets to come down a bit. It’s completely normal to have a five to 10 per cent drop every year, sometimes several of them. So I think savvy investors were looking at dislocations in the market. Certain tech stocks were underpriced. Even some energy stocks got underpriced during this time. So I think people were looking at how to be positioned when the market recovers. When the war ends, how do you want to be positioned to take advantage of that?
ANDREW: There is going to be ongoing pain, though, or it’s going to last for a while from this jump in energy prices, economically.
GLEN: Exactly. We saw today inflation numbers come up. Now inflation is over three per cent. The main driver for inflation, obviously, is going to be energy, with oil over $100 a barrel. We don’t think that’s going to be great for the market in general. Earlier in the year, we thought we were going to have two rate cuts in 2026, each about 25 basis points. Now, with inflation over three per cent and the mandate of having inflation around two per cent, we don’t see it as very likely for the remainder of the year to get a rate cut. Our base case right now is no rate cut and no rate hike. That being said, even with higher rates, there are advantages in the market, whether it’s financials or certain sectors that benefit from higher interest rates.
ANDREW: It’s interesting. I’m looking at a chart on the Wall Street Journal website of U.S. inflation. At one point, of course, it spiked to almost 10 per cent, but as you say, March was the hottest consumer price increase in two years.
GLEN: Exactly, since COVID-19. And it’s no surprise why — it’s energy prices. So I think energy prices and inflation will go hand in hand. As soon as we see energy come down, I think inflation will come down. That being said, there are opportunities with higher inflation or lower inflation. There are a lot of winners in the market. With oil prices north of $100 a barrel, some companies are doing even better at this level. So the key, as an investor, is not to look at the market overall, but to look at specific pockets and individual stocks, and see how they’re going to react if oil stays above $100 a barrel or quickly comes down.
ANDREW: You’re in the camp that says electricity producers such as Constellation Energy will be big AI winners.
GLEN: Exactly. Constellation Energy — a lot of people aren’t familiar with it — has 21 nuclear reactors. What makes it unique is that it’s one of the largest producers of carbon-free energy in the United States. Not only does it do nuclear, it also has natural gas, hydro, wind, solar and geothermal. When people think of AI, they think of chips — Nvidia and Broadcom — but at the end of the day, you need energy to fuel this AI boom. One of the biggest beneficiaries, we think, will be Constellation Energy. It’s come down a bit this year because it lowered its guidance, but we think this is an opportunity going forward.
ANDREW: Is local pushback against data centres going to be a serious problem? It could slow rollout in some places, with concerns about noise, power usage and water.
GLEN: One hundred per cent. Nobody wants these in their backyard. But at the end of the day, there will be some type of agreement on where these can be located, because you can’t have carbon-free energy without nuclear. Coal doesn’t do it, oil doesn’t do it. So you have to decide — do you want carbon-free energy and go the nuclear route, or something less environmentally friendly? We think this will get resolved because this is the way forward. Mini nuclear reactors are something a lot of AI companies want to build themselves. Five years from now, that could be the path.
ANDREW: Actually, I meant data centres — some local residents don’t like those.
GLEN: Yes, one hundred per cent. I wouldn’t want one in my backyard either. But communities will have to work with companies and decide whether they want the economic benefits or push them elsewhere, like remote areas, so companies can continue operating.
ANDREW: Another idea you have is Diamondback Energy, right in the sweet spot of the Permian Basin.
GLEN: Exactly. This is another energy company, but very different from Constellation. It’s a traditional oil and gas producer based in Midland, Texas, in the Permian Basin. It was a cash cow when oil was at $60 a barrel, and now with oil over $100, we think it will continue to perform well. It returns about 50 per cent of its cash flow to investors through dividends and share buybacks. While some competitors are focused on slow growth, Diamondback is growing both organically and through acquisitions, including deals like Double Eagle and Endeavor Energy. Even after a strong run — up about 50 per cent — it trades at roughly 12 times forward earnings.
ANDREW: And finally, Hewlett Packard Enterprise — you see this as a way to get AI exposure without chasing expensive stocks. Why?
GLEN: Exactly. It was spun off from Hewlett-Packard a few years ago and partnered with Nvidia in 2024. Nvidia handles the chips, but you still need someone to integrate everything. Hewlett Packard Enterprise helps deploy AI — managing data, applications, storage and cloud environments. It trades at about nine times forward earnings and pays a dividend, which is rare among AI-related stocks. It has already doubled over the past 12 months, but we think it can continue to perform well.
ANDREW: Glen Smith, chief investment officer at GDS Wealth Management, thank you very much.
GLEN: Thank you.
---
This BNN Bloomberg summary and transcript of the April 10, 2026 interview with Glen Smith are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
