The war between the US and Israel against Iran is taking centre stage: the US President says that it is ‘very complete, pretty much’. Oil shoots to $120 a barrel, before declining. Fear of added inflation reprice risk in credit and change the outlook for 2026 of many Central Banks. US earnings continue to be good: Oracle’s report on Tuesday, after close, is a major focus for tech and AI. Watch out the US CPI on Wednesday and the update on US GDP and Core PCE Price Index on Friday. The biggest tail risks are the US Economy falling into a recession (20% chance in 2026), resurging inflation, revenues/earnings not matching forecasts, the Fed not delivering on its easing cycle, a surge in long bond yields coupled with a USD crash, followed by damages done by tariffs/government policies, adverse geopolitical outcomes, and valuations (very high multiples).

Major market events 9th – 13th March 2026

Economic data highlights of the week

Mon: CN CPI (2/26), CN PPI (2/26), DE factory Orders (1/26), DE Industrial Production (1/26), JP GDP (4Q25)

Tue: DE Trade Balance (1/26), CN Trade Balance (2/26), US ADP Employment Change Weekly, JP PPI (2/26) 

Wed: DE CPI (2/26), US CPI (2/26), US Federal Budget Balance (2/26)

Thu: UK BOE Governor Bailey Speaks, IN CPI (2/26), US Initial Jobless Claims, US Atlanta Fed GDPNow (1Q26)

Fri: UK GDP (1/26), FR CPI (2/26), SP CPI (2/26), EU Industrial Production (1/26), US GDP (3Q25), US Core PCE Price Index (1/26), US JOLTS Job Openings (1/26)

Performance Review

Source: Google

InflectionPoint reports:

* Dear readers, the report from the previous week, pretty much done, was wiped out by a disastrous PC reset while it was unsaved on WordPress. My apologies, I’ll always remember to save it beforehand. Writing this piece on a Tuesday instead of the usual Monday, I can note what a difference a day makes, as President Trump late last night said that the war was ‘very complete, pretty much’. As a result, oil is falling and stock markets are back up again, led so far by Europe, which has been hit very hard by the economic outcome of the conflict. It remains to be seen which agreement can be made to make the Strait of Hormuz viable again, although the President said that if the Iranians try to block it, they will be hit 20 times harder than they have been so far. The President has also said that he ‘has no message’ for the new Iranian Supreme Guide Mojtaba Khamenei, which has not been seen in public, or spoke, perhaps wounded and recovering. Market pundits are speculating that his appointment, backed by the Iranian Pasdaran, means the country will continue to be defiant in war. Shifting to the markets, I thought that last week would have triggered the stop loss on the Standard & Poor’s 500 – instead, it declined only by 2%, without causing a change of recommendation. In the disaster that the last two weeks were, I started to see some value emerging in some technology stocks which have been hit hard by the results – I am thinking of Microsoft, but there are others. It was far more worrisome on the economic side, as a spike in oil almost of a 100% magnitude threatened to increase inflation dramatically, and seriously change the easing plans of some Central Banks (US, UK). In turn, the market high valuations, put additional pressure on the stocks which can be only saved by continued growth of revenue and earnings. It was a tricky situation, but the markets’ very dramatic approach made me think that the end of the decline would be sooner rather than later. I remember very well the bear market of 2000-2003: and the losses were relentless, not with a great magnitude, but almost never ending. When markets have a very dramatic period, usually the problem is resolved relatively quickly. The VIX almost reached levels last seen at the start of the war in Ukraine – and by the way, that war is unfortunately still going on. It had also made Europe re-think its approach to how it buys and provides gas to its citizens. As 20% of the world’s oil passes daily through the Straight of Hormuz, and some producers, notably Saudi Arabia, Kuwait, and the UAE have said that they are cutting oil production, this war has the potential to be truly a global disruptor. Getting back to economics, a 4Q25 GDP reading of 1.4% was a shocker, as it was just half of consensus and completely unexpected after a 3Q25 reading of 4.4%, even though the well-known government shutdown certainly has a role in that; on top of that, the Core PCE Price Index, the Fed’s favourite measure of inflation, was at 3.0%, not offering any room to the US Central Bank to reduce rates any time soon. We will get an update this week on Friday. At the moment, markets will be focused on geopolitical news, with one big exception: Oracle’s report on Tuesday, after close. It has the potential to settle questions about capex, or to prop them up again. The more you spend, the more the market punishes you, particularly if the rate of growth of your cloud business is inferior to the rate of growth of your spending. It is now crystal clear now that the AI capex trend won’t go bust in 2026, and is looking increasingly likely that it will continue to last for 3-5 more years. Investors want companies which are spending to build their AI features to show a clear path to significant returns from their lofty investments. All companies that are seen as spending without immediate returns (obviously Oracle, but joined by a range of AI and cybersecurity plays) are punished. I have been saying that the market, near term, cannot count on more support from the Fed, and therefore earnings and guidance are of paramount importance. It is widely expected that the US Central Bank will continue to be on hold until the July meeting, which will be the second headed by Warsh. The economic forecasts continue to be good, but now raising an eyebrow because of slowing growth and job declines, and if there is no recession, rate cuts are equities’ best friend. The overall feeling is that earnings throughout the year were much, much better than investors thought, and the fear of the slowdown didn’t quite materialise – so far. I believe it is impossible for the market to go materially higher without counting on a strong support from its largest sector, and I can’t quite fathom what is needed for investors to change their minds. I am still bullish, but on high alert. Hence, I’m still keeping equities to buy (with the famous 3% weekly stop), keeping US bonds to hold, and European bonds to buy (with the notable exception of France). Valuations matter: Japan has really impressed with its performance under new PM Sanae Takaichi, and it would be well worth considering to include the Asian country in portfolios, but I still recommend hedging the JPY. Due to the beforementioned landslide win, I expect the Japanese Equity Markets to continue its powerful run this year, the JPY to weaken, and bonds to react to policy announcements. How the Japanese PM approaches fiscal discipline will make the difference on whether she is going to be the new Margaret Thatcher, or rather the new Liz Truss (an opinion voiced by Bloomberg columnists at the time of Takaichi’s election as leader of the LDP). Any case it goes, it’s a ‘brave new world’ for Japan, as the last 30 years of policy and deflation/low inflation are completely wiped out.

* GDP forecasts for 1Q26 are good, with the Atlanta and New York Fed finally in agreement on a positive direction. The current P/E ratio of 21.2x is above the average P/E ratio of the last 5 years at 20.0x and the 10-year average at 18.8x. As the multiple held throughout 2025, I believe that it should hold over the next 12 months, if the economy performs similarly and there are no major geopolitical displacements; it is the same assumption I had back in 1999, when the multiple was 24x. That multiple level lasted for the good part of almost two years, and despite the fall in 1H00, technology stayed strong through the summer, until the Intel preannouncement in September sealed their demise and gave way to 2 years of bear market. One of the major differences of the current cycles relative to the dot.com boom is that then many companies were thriving on expectations of future sales and no earnings, now companies, even start-ups (Palantir did raise to the challenge with a 19% quarter on quarter growth, which reminds me of the now defunct Exodus, the late queen of 40% quarter on quarter revenue growth) do have tangible revenues and earnings, so the market is on a much sounder footing now than then. Furthermore, then the Fed was hiking rates, and had reached the peak by the end of 2000, with the famous out-of-meeting jumbo cut on January 3, 2001, in response to the rapid deterioration of the economy due to the dot.com crash. Were AI to crash, we could probably expect more of the same. 

*  The Federal Reserve was on hold in January, with two dissenters, and kept the rate to 3.50-3.75%. Chairman Powell did say that the US Central Bank was now in a ‘wait and see’ mode. The positive CPI so far has not changed meaningfully future expectations of rate cuts, and it is widely expected to be on hold throughout the remaining tenure of the current Chair. Obviously the war in Iran has completely changed the near term outlook for oil, and it will take some time for that to settle. This obviously has completely rewritten the dot plot when it comes to the Fed. March sees a 97.3% possibility of a hold, while April 87.3%. These will be the last two meetings chaired by Jerome Powell. It was long expected that Kewin Warsh could cut rates at the June meeting, but the chances are no more than 50/50 at best, with 61% possibilities of another hold. The end of July could see the first cut, but once again 50/50, albeit on the right side, with 61% chances of a cut. Looking at December, the 2 cut forecast still holds, but is again 50/50. A lot of dust has to settle before then, and so we’d better look more closely at June or July for some further relief in rates. Be cautious of aggressive Fed cuts, as they may signal an impending recession; non-recessionary interest rate cuts are generally welcomed by the equities market. We need (lower) yields and (higher) earnings to support some of the highest multiples since my heyday (the fated 1999-2000), but it is increasingly difficult to get these in the US. You can look forward to these in Europe, even though the European Central Bank might have finished its easing cycle in 2025. 

* Yields on US 10-year Treasuries have reached 4.13%, and were slightly up  last week, in line with European government bond yields. Some of these witnessed a spike last week, particularly in synch with the price of oil. While in 1999 they were even higher, and the Fed was hiking, not easing, we definitely need yields to return below 4% to have a more constructive scenario, albeit gradually and not through a crash. We seem to be getting there, although I cannot yet recommend the US Debt on their public spending plans. Regarding earnings, I remain optimistic, particularly on technology (the main driver for the S&P 500). Ben Snider, who has taken up his post as Chief US Equity Strategist from legend David Kostin, has a bullish forecast of $305 per share for the S&P 500 by the end of the year, with a target price of 7,600.  At the moment, the bottom-up forecasts for 2026 are slightly ahead of his bullish target, with the consensus based around $295. Earnings for 2026 are continuing to rise to a level of $314.58 per share, while for 2027 they are seen at $365.51. In both cases, the earnings’ progression puts both of them on a higher level than just one year ago.

Source: FactSet

* The US GDP for 4Q25 started at 1.4% according to the first reading, and it was a big surprise as just half of consensus. The Atlanta Fed GDPNow model starts its forecast for 1Q26 in positive territory, with a current forecast of 2.1%, below of the Blue Chips consensus, which are presently at 2.5% and rising. This is unusual; I guess the spike in oil really pushed their forecast down. The New York Fed’s Nowcast model has also seen a decline, albeit more modest: its current forecast to 2.23%, from 2.38% last week. I believe it is prudent to make an average of those two forecasts to get to the real number; it is particularly good that these are now converging. Introducing a forecast for 1Q26, with earnings expected to climb by 11.5%, compared with a forecast of 12.7% as of December 31st, and with revenues growing by 9.2% vs 8.2% as of December 31st. For 2026, earnings growth is forecasted at 15.0% vs 14.9% as of December 31st, with revenues coming in at 7.5% vs 7.2% as of December 31st. Introducing a new forecast for 2027, earnings growth is forecasted at 13.0% vs 12.3% as of December 31st, with revenues coming in at 7.9% vs 7.2% as of December 31st. Finally, it’s worth noting that the chance of a recession in the next 12 months, as calculated from the yield curve, according to the Federal Reserve Bank of Cleveland, is presently (January 2027) 16.06%. The peak was 68.76% in April 2024, and it was the only time since 1960 in which a recession did not materialise, given such a forecast. The current level is not too far from what economists are currently predicting: a 25% chance of a recession in the next 12 months. Goldman Sachs recently lowered its forecast to just 20%. 

Source: Blue Chip Economic Indicators and Blue Chip Financial Forecasts; Federal Reserve Bank of Atlanta

Source: Federal Reserve Bank of New York, New York Fed Staff Nowcast

Source: Federal Reserve Board, Federal Reserve Bank of Cleveland, Haver Analytics

Earnings, What’s Next?

The reporting season for 4Q24 is now over. Here’s a list of companies reporting this week. Highlights include Oracle (Tuesday, After Close), and Adobe (Thursday, After Close). 

Source: Earnings Whispers

Market Considerations

Source: Bloomberg Finance LP, Deutsche Bank Asset Allocation, ISABELNET.com

Source: Goldman Sachs Global Investment Research, ISABELNET.com

Source: FactSet, Goldman Sachs Global Investment Research, ISABELNET.com

Revenue growth estimates for 2026 are forecasted to grow by 7.9% (7.2% on December 31st), and earnings growth estimates for 2026 are predicted to grow by 15.0% (14.9% on December 31st), so the future looks bright. Introducing forecasts for 2027, which sound again very positive, with revenue to grow by 7.7% (7.3% on December 31st) and earnings to grow by 15.0% (13.6% on December 31st). As mentioned, the Fed has cut its rates by 100bp in 2024, 75bp in 2025, and should continue easing. Apart from the cut from quite high levels, which will probably help make these lofty multiples seem more bearable than offering a real stimulus to the economy, it will be important to see the extent to which central banks are willing to cut rates and their timeframe.  

Three highlights this week. First, we have a chart from Deutsche Bank which plots inflation in the face of an oil shock. If this is for a brief period of time, inflation will not rise by as much as feared. Which brings us to the question: how long will the war last? The shorter it is, the better for the markets. The second chart from Goldman Sachs focuses on geopolitical risk, obviously on the rise. We can see that the present conflict has almost matched the start of the war in Ukraine, four years ago. The third chart, again from Goldman Sachs, plots still rosy expectations for earnings of the major US Indexes. If anything, I can note that earnings, so far, continue to climb, and remain unaffected by the war at present. Once again, it is crucial to establish how long the disruption will last. 

For equities, be careful not to fall into ‘Buffett’s trap’. He famously said that there were moments when Berkshire Hathaway’s stock was down more than 50%, and nothing was wrong with the company at the same time. Timing and risk management are key. I remain optimistic in the long term; I have faith in the new CEO, but to follow the Oracle means filling very, very big shoes. The late Angelo Abbondio, a legendary Italian investor, used to say that you can rely on fundamental analysis and on technical analysis, but the most difficult thing was to decide when to prioritise the first and when the second. In general, no stock can outperform all the time; some volatility has to be expected. Those who performed better earlier may not perform so well later.

Due to the persistent stickiness of inflation, monetary policy is again taking centre stage. Obviously, we should not overlook geopolitical scenarios in Ukraine and the Middle East: this will dominate the news for a while. Any escalation would be negative for the markets.  

I now recommend a long position in equities and a neutral position on US bonds. For EU Bonds, I advise going long (with the notable exception of France), while I still suggest putting together a portfolio that focuses on the safety of German Bunds, which are to be preferred in my view, given increased yields and reduced spreads. Are 60bps more worth swapping an AAA security for a BBB+?  

There are five main headline risks to what is otherwise a constructive view for 2026: i) revenue/earnings not matching forecasts, particularly in technology; ii) any damage to the economy and trade done from Trumponomics, tariffs, and resurging inflation; iii) any negative geopolitical outcome (which could see an expansion of the current conflicts); iv) a negative Fed shock if it does not meet the market’s expectations on easing; and v) valuations, which are nearing levels only seen once before (at least during my lifetime!). 

Japan continues to be very strong, with another leg up after the surprising results of the February, 8 elections in which PM Sanae Takaichi and her LDP conquered more than 2/3 of the seats in parliament, giving her an ample mandate to govern. She favours fiscal and monetary expansion for the economy, whose 4Q25 GDP reading came well short of expectations. The Bank of Japan is also in a very tricky position, like the Fed was not so long ago. It would need to raise rates to counter inflation, but the weak growth may prevent it to do so. That might turn in a further weakening of the JPY. Watch out the long bond yields, particularly the 30y and 40y, as they react to increased government spending. I am now very positive on the country, although I would definitely hedge the JPY. 

Portfolios

Finally, I want to introduce four portfolios that Tom and I published on Wikifolio. Tom’s a multi-asset portfolio, whereas the one I manage (with substantial input from Tom) is a global income and growth with a heavy US tilt. The third one is on Italian Equities. The fourth and latest one is on Japanese Equities. Check them out!

https://www.wikifolio.com/en/int/w/wf00inf8ig

Tom’s Multi-Asset Portfolio is up 26.7% in 2 years, with a Sharpe Ratio of 1.1.

https://www.wikifolio.com/en/int/w/wf000ipggi

Our Global Income and Growth Portfolio is up 22.3% in 2 years, with a Sharpe Ratio of 0.5. Obviously, the devaluation of the USD had a big impact as all stocks are priced in EUR.

https://www.wikifolio.com/en/int/w/wf00ipiteq

My Italian Equities Portfolio is up 56.2% in 2 years and has outperformed the FTSE MIB Index by 2100+ bp in this timeframe, with a Sharpe Ratio of 1.4.

https://www.wikifolio.com/en/int/w/wf00ipjpeq 

My Japanese Equities Portfolio is up 7.1% in about 3 months, and has outperformed the Topix Core 30 by 225+bp in this timeframe.

Consulting

Finally, I have officially become an Italian Independent Financial Consultant (Consulente Finanziario Autonomo), registered with the Italian OCF since 19 March 2024 (protocol 2425). If you are interested in my financial advice or simply for more information, please contact me at giorgio.vintani@inflectionpoint.blog

Consulting accounts usually start from EUR 100,000. Please note that you should be based in Italy to avail yourself of this service. If you are interested, please feel free to drop me an email. I am happy to send you my presentation and track record upon request.

Happy trading, and I look forward to seeing you next week!

InflectionPoint

Disclaimer

All views expressed on this site are my own and do not represent the opinions of any entity with which I have been, am now, or will be affiliated. I assume no responsibility for any errors or omissions in the content of this site, and there is no guarantee for completeness or accuracy. The content is food for thought, and it is not meant to be a solicitation to trade or invest. Readers should perform their own investment analysis and research and/or seek the advice of a licensed professional with direct knowledge of the reader’s specific risk profile characteristics.