Last minute ceasefire for 2 weeks agreed between the US and Iran shortly before the President’s deadline; Hormuz reopened. Oil falls below $100. The March labour report was solid, with earnings forecast for 2026 upgraded once again to $320 (bottom up). The outlook for inflation and the path for many Central Banks is strictly tied to geopolitical improvements and to the price of oil; anything can still happen. USD weakening this morning against all major currencies. The biggest tail risks are the US Economy falling into a recession (20% chance in 2026), resurging inflation caused by high energy prices, revenues/earnings not matching forecasts, a surge in long bond yields coupled with a USD crash, followed by damages done by tariffs/government policies, adverse geopolitical outcomes, and valuations (high multiples).

Major market events 6th – 10th April 2026

Economic data highlights of the week

Mon: UK, SW, IT, CH, DE, FR, AU, SP, IR, BE, CN, PT, HK, NZ, GR, NO, FI, ZA – Holiday, US ISM Non-Manufacturing PMI (3/26)

Tue: HK – Easter, JP Household Spending (2/26), EU Services PMI (3/26), UK Services PMI (3/26), US ADP Employment Change Weekly, US Durable Goods Orders (2/26), US Atlanta Fed GDPNow (1Q26)

Wed: NZ RBNZ Interest Rate Decision, IN RBI Interest Rate Decision, DE Factory Orders (2/26), UK Construction PMI (3/26), EU PPI (2/26), US Fed FOMC Meeting Minutes

Thu: DE Trade Balance (2/26), DE Industrial Production (2/26), US Core PCE Price Index (2/26), US GDP (4Q25), US Initial Jobless Claims, US Fed’s Balance Sheet

Fri: GR – Holiday, CN CPI (3/26), CN PPI (3/26), DE CPI (3/26), US CPI (3/26)

Performance Review

Source: Google

InflectionPoint reports:

* After a break last week, due to a personal engagement, I’m back. There was a respite from still fluid geopolitics as the markets caught a bid in three out of four sessions. At the moment, the play is still on when will the war end, but as we are getting closer to earnings, with reduced multiples due to the correction and earnings power still intact (I admit this is a big assumption I am making), it may make sense to revisit some of the stories that have been neglected so far. As we speak, the President’s deadline for freeing Hormuz looms and will end soon, at 8pm EST tonight, while new Iranian Supreme Leader Mojtaba Khamenei is reported to be unconscious. The call I am making is that geopolitics will continue to rule until the war ends, or until oil comes down from current triple digits level. And yet, FactSet is reporting so far that most companies are issuing a positive guidance for 1Q26 than the five years average. Of course, as the war started in late February, the upcoming reporting season will testify to how companies have fared with roughly 5 weeks of a higher oil price. The optimistic in me is reassured by the latest labour report, issued last Friday, which actually saw employment above forecasts, and is a way to show that the US economy is continuing to grow, notwithstanding the war. Still, geopolitics rules – and if there is a truce, or a significant and sustainable reduction in the price of oil, a meaningful relief rally will certainly follow. Even though the US does not need to buy oil, and even less so use the Strait of Hormuz, it is absolutely affected by the skyrocketing energy prices – as costs will increase, stoking inflation, and further limiting the purchasing power of the American consumer. The other reason why I’m leaning towards a relatively quick resolution of the war, is political: a large part of US voters, not to mention the press, wishes that it had never started, and the President must contend with the uphill midterm elections in November. On top of that, pretty much all allies, with Europe in the lead, are begging for the war to stop. Will it? It’s usually very difficult when you have two players as strongly determined at the US and Iran, and the President himself said that the Washington is going to hit Teheran very hard in the next two or three weeks. Were the war to stop after that, it would be simply amazing. Meanwhile the UK’s Foreign Minister says that the country refuses to pay a toll that Iran now demands to let ships safely cross the Strait of Hormuz. It will also important to see if the clients of Teheran’s oil wish to oblige, and how much of their production has been hit by the current attacks. Europe’s inflation, at 2.5%, was directly impacted by the shock in oil prices, and the ECB might be considering a hike as soon as in June, putting additional pressure on a feeble economy. At the moment, in the US, the base case is that rates will stay unchanged throughout the year, but the scenario could change quickly, and time is not on our side: the longer the war, the higher inflation will be. 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. 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. Near term, no more support from the Fed or central banks can be expected, and therefore earnings and guidance are of paramount importance. The upcoming reporting season will be watched very closely. 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 ok, with the Atlanta and New York Fed finally in agreement on a positive direction. The current P/E ratio of 19.8x is just below the average P/E ratio of the last 5 years at 20.0x, but above 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. That said, the global energy crisis does have the potential to get companies to cut costs, slow investments, and freeze new hires, and the Fed won’t be able to help as it fights against rising inflation. Apparently OpenAI is preparing a pre-IPO prospectus, and a success of one of the most hyped companies ever is important to lead the markets higher.  

*  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 too early to tell what the consequences of oil’s rise is for inflation, but also mentioned that it is more likely that we will see a hike than a cut. While he still guided for a cut during 2026, the market gives it a possibility of 11.8% and in December; at the moment most of the expectations see rates unchanged for the rest of the year. 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 to some extent, but watch out for a potential hike of the European Central Bank in 2026. 

* Yields on US 10-year Treasuries have reached 4.32%, and were stable last week, while European government bond yields were down. 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 $320.36 per share, while for 2027 they are seen at $372.76. 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: 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, and we will get a new update on Thursday. The Atlanta Fed GDPNow model forecast for 1Q26 is in positive territory, with a current reading of 1.6%, revised downwards from 2.0% last week, and now below of the Blue Chips consensus, which are presently at 2.3% and falling. The New York Fed’s Nowcast model has again seen a somewhat surprising upgrade: its current forecast is 2.41%, up from 2.09% 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 13.2%, compared with a forecast of 12.8% as of December 31st, and with revenues growing by 9.7% vs 8.2% as of December 31st. For 2026, earnings growth is forecasted at 17.4% vs 15.2% as of December 31st, with revenues coming in at 8.8% vs 7.3% as of December 31st. Introducing a new forecast for 2027, earnings growth is forecasted at 16.8% 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 4Q25 is now over. The reporting season for 1Q26 will begin in earnest next week. Here’s a list of companies reporting this week.  

Source: Earnings Whispers

Market Considerations

Source: JP Morgan, ISABELNET.com

Source: FactSet, 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 8.8% (7.3% on December 31st), and earnings growth estimates for 2026 are predicted to grow by 17.4% (15.2% 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 16.8% (15.3% on December 31st). As mentioned, the Fed has cut its rates by 100bp in 2024 and 75bp in 2025. It should have continued to ease were it not for the spike in inflation generated by the war in Iran. The situation remains fluid at the moment, while we will have some important updates this week with the Core PCE Price Index on Thursday and the US CPI on Friday, to see if inflation in the US has been affected so much as in Europe.  

Three highlights this week. First, we have a chart from JP Morgan, which shows that downward volatility is often the price for success. While in the last 50 years there has been an annual paper loss of -14.2%, the S&P 500 was up at the end of the year in 35 of 46 years. Stay invested, and never, never, never sell under pressure. The second chart, from Goldman Sachs, shows the importance that AI Infrastructure is having on S&P 500’s earnings, likely in a way far exceeding that of optical networking in the noughties. It is supposed to account for 40% of earnings this year. On one hand, it is beneficial to have a sector which has so much earnings power, and whose growth is forecasted to last for many years. On the other, the market, like it or not, is increasingly tied to it. The third chart, from Deutsche Bank, is showing that buybacks are alive and well: a lot of executives, particularly in the US, create value for their shareholders by repurchasing their stock – and increasingly so.

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. While the spreads in Europe have widened as a result of the war and consequential flight to quality, I can still find value in 10-year German bunds with a yield greater than 3%. 

There are four 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); and iv) 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 26.0% in 2 years, with a Sharpe Ratio of 1.0.

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

Our Global Income and Growth Portfolio is up 22.0% in 2 years, with a Sharpe Ratio of 0.4. 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 55.3% in 2 years and has outperformed the FTSE MIB Index by 1525+ 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 7.99% in about 3 months, and has outperformed the Topix Core 30 by 300+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 see 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.