The war enters the third week, with no side relenting in its attacks against the other. Next week all major Central Banks will offer an assessment of the impact of high energy prices on inflation. Oil is hovering above $100 a barrel. Fear of added inflation reprice risk in credit and can change the outlook for 2026 of many Central Banks. US earnings continue to be good, with technology continuing on its great stride. 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 16th – 20th March 2026

Economic data highlights of the week

Mon: CN Industrial Production (2/26), CN Unemployment Rate (2/26), CA CPI (2/26), US Industrial Production (2/26), US President Trump Speaks

Tue: AU RBA Interest Rate Decision, CH PPI (2/26), US ADP Employment Change Weekly, EU ECB President Lagarde Speaks, JP Trade Balance (2/26)

Wed: EU CPI (2/26), US PPI (2/26), CA BoC Interest Rate Decision, US Factory Orders, US Fed Interest Rate Decision, US FOMC Economic Projections

Thu: JP BoJ Interest Rate Decision, JP Industrial Production (1/26), CH SNB Interest Rate Decision, UK BOE Interest Rate Decision, US Philly Fed Manufacturing Index (3/26), US Initial Jobless Claims, EU ECB Interest Rate Decision, US Atlanta Fed GDPNow (1Q26)

Fri: JP – Holiday, CN PBoC Loan Prime Rate (3/26), DE PPI (2/26)

Sat: US Fed Chair Powell Speaks

Performance Review

Source: Google

InflectionPoint reports:

* Well, the war wasn’t quite complete, wasn’t it? One more week – this is the third since attacks have started – and geopolitics is taking centre stage. The dominant factor is the swinging price of oil, which responds to how the current issues might be close to be done – or not. This is the week when most of the major central banks have interest rate decisions. It will be very interesting to see how the spike in energy prices changes their inflation forecasts, and hence their interest rates expectations. The Fed, in particular, will release (still under the guidance of current Chair Jerome Powell), their new economic estimates and update the ‘dot plot’. So far, all central banks – the Fed, the ECB, the SNB, the BoE, and the BoJ, are supposed to stay put, but it is quite possible that for some of them the next move will be a hike instead than a cut. Back to the war, it is now clear that Iran is waging a war of attrition: unable to compete with the might of the US and of the IDF, it is continuing to block the Strait of Hormuz and attacking GCC states, trying to drive up the price of oil and threaten the world’s economy. In my opinion, in a situation when one party wants ‘unconditional surrender’ and the other party responds with ‘never’, it will be a question of who is running out of ammunitions first. One one hand, Israel and the US are pushing forward with their attacks – today’s news is that security chief Ali Larijani might be dead – and on the other Iran is responding attacking mainly oil resources and civilian targets. This is a test of their mettle: will the US or Iran blink first? Meanwhile oil hovers above $100 a barrel at the time of writing. Getting back to technology, Oracle’s report was solid and encouraging, with the company finally showing an increased guidance for 2027 – there is growth after all this spending. Last week the markets declined once again, leaving only Japan up on a year to date basis. And yet there is hope: in the disaster that the last three weeks were, I started to see some value emerging in some technology stocks which have been hit hard by the results – Microsoft, Oracle, and others. High valuations put additional pressure on the stocks which can be only saved by continued growth of revenue and earnings. 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 oil and 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. At the moment, markets will be still focused on geopolitical news, with the next session of earnings reports coming up in about a month from now. 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 September meeting, which will be the third 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. I am still bullish, but still on high alert. I’m 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 20.9x is above the average P/E ratio of the last 5 years at 20.0x and the 10-year average at 18.9x. 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 – we’ll get a new update on Wednesday, even though the market has completely adjusted to the current scenario dominated by the war. March sees a 99.1% possibility of a hold, while April 97.0%. These will be the last two meetings chaired by Jerome Powell. It was long expected that Kevin Warsh could cut rates at the June meeting, but it is no longer so, with 77% possibilities of another hold. The end of July could see the first cut, but once again 50/50, with 39.5% chances of a cut. Looking at December, there is a marked change of only 1 cut in 2026. A lot of dust has to settle before then, and so we’d better look more closely at the (late) summer 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 4.20%, and were 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 $314.95 per share, while for 2027 they are seen at $366.18. In both cases, the earnings’ progression puts both of them on a higher level than just one year ago. That said, corporates might have to face an increased energy bill and so these estimates have to be checked on a quarter-by-quarter basis. On top of that, as long as geopolitics takes centre stage, it is difficult for the market to focus on economic growth and earnings. In order to reach this positive scenarios the war has to end in 2026: the sooner, the better. Otherwise, it will be tough for the indexes to get back in the black, let alone to set new all-time records.

Source: FactSet

* The US GDP for 4Q25 came in at 0.7% according to the second estimate, obviously influenced by the long government shutdown. The Atlanta Fed GDPNow model starts its forecast for 1Q26 in positive territory, with a current forecast of 2.7%, revised upwards from 2.1% last week, and now ahead of the Blue Chips consensus, which are presently at 2.4% and falling. The New York Fed’s Nowcast model has again seen a decline: its current forecast is 2.09%, down from 2.23% 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 11.6%, compared with a forecast of 12.7% as of December 31st, and with revenues growing by 9.4% vs 8.2% as of December 31st. For 2026, earnings growth is forecasted at 15.3% vs 14.9% as of December 31st, with revenues coming in at 8.0% vs 7.2% as of December 31st. Introducing a new forecast for 2027, earnings growth is forecasted at 16.5% vs 15.3% as of December 31st, with revenues coming in at 7.6% vs 7.3% 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 (February 2027) 17.79%. 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.  

Source: Earnings Whispers

Market Considerations

Source: Goldman Sachs Global Investment Research, ISABELNET.com

Source: S&P Global Commodities on Water, Kpler, Goldman Sachs Global Investment Research, ISABELNET.com

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

Revenue growth estimates for 2026 are forecasted to grow by 8.0% (7.2% on December 31st), and earnings growth estimates for 2026 are predicted to grow by 15.3% (14.9% on December 31st), so the future looks bright. Introducing forecasts for 2027, which sound again very positive, with revenue to grow by 7.6% (7.3% on December 31st) and earnings to grow by 16.5% (15.3% 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 Goldman Sachs which shows the returns of the Standard & Poor’s 500 at a time of major geopolitical events. The index is positive just three months after the event happened, but this time it may be different given the widespread disruption the closure of the Hormuz strait is making. Anyway, the shorter is the war, the better it is for the markets. The second chart, again from Goldman Sachs, plots a new scenario for the above mentioned strait, counting 21 days of very low activity, plus a month to recover to normal. Personally, and based on what I can see at present, this seems to me an optimistic scenario which counts on a quick end to hostilities. The third chart from Deutsche Bank tells us of the very high inverse correlation that the S&P 500 has with the price of oil. I am curious if this will change after this week, when the forecast of the world’s leading central banks will become known.  

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 further 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. Obviously the market was hit by the increase in the price of oil, although it is the only major market up on a YTD basis. If the current conditions persist, it will be difficult for the BOJ to raise rates in 2026.

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 26.3% 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 21.5% 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 51.8% in 2 years and has outperformed the FTSE MIB Index by 1475 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 6.7% in about 3 months, and has outperformed the Topix Core 30 by 250+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.