A third up week brought the US Indexes to new all-time records, fuelled by speculation that the Strait of Hormuz could soon be open. But it is not to be, with Iran also likely deserting the second round of talks in Islamabad. Oil is on the rise, but still under $100. The earnings report for 1Q26 continues amid strong expectations: guidance will be key. 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. The biggest tail risks are the US Economy falling into a recession (30% 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 20th – 24th April 2026

Economic data highlights of the week

Mon: CN PBoC Loan Prime Rate (4/26), DE PPI (3/26), CA CPI (3/26), EU ECB President Lagarde Speaks

Tue: BR – Holiday, UK Unemployment Rate (2/26), DE ZEW Economic Sentiment (4/26), EU ZEW Economic Sentiment (4/26), US ADP Employment Change Weekly, US Retail Sales (3/26), US Atlanta Fed GDPNOW (1Q26)

Wed: UK CPI (3/26), EU ECB President Lagarde Speaks

Thu: SG CPI (3/26), FR Manufacturing PMI (4/26), DE Manufacturing PMI (4/26), DE Services PMI (4/26), EU Manufacturing PMI (4/26), EU Services PMI (4/26), UK Services PMI (4/26), US Initial Jobless Claims, US Manufacturing PMI (4/26), US Services PMI (4/26), US Fed’s Balance Sheet

Fri: UK Retail Sales (3/26)

Performance Review

Source: Google

InflectionPoint reports:

* And then there was a third (breakout week). Markets were optimistic about the conflict heading into the weekend, but news at the beginning of the week seem less rosy. Iran remains defiant on the face of US demands, and in all likelihood won’t attend the next peace talks scheduled for today in Islamabad. The incident where the US took control of an Iranian cargo ship also soured moods, and Teheran has vowed to retaliate. I think that the most delicate point in the discussions will be regarding the Middle-Eastern country’s entitlement to nuclear enriching. While the current situation is not optimal for anyone, the emboldened regime might well bear being at war for months, a decision that could prove costly for President Trump. Oil was down on Friday on the news that the Strait of Hormuz was partially reopened, and is back up today as tensions flare. And now Iran is demanding that the US abandons its own blockade before having more talks and considering reopening the Strait of Hormuz. Meanwhile, inflation stays relatively benign: in Europe a reading of 2.6% was only marginally higher from the prior month, and the US benefitted of a PPI below consensus which boosted expectations. All the potential is still there for bond yields to come down and for US markets to climb even higher, but there must be some sort of compromise between the warring parties. Once again, observing geopolitics is essential to understand where the markets might be heading; at the moment of writing the ceasefire is respected, but I suspect that the US and Israel will continue to hit Iran after it is over, or possibly even before. The stated goal of the US President is to make sure that Teheran never gets to build a nuclear weapon; the free passage in the Strait is also important, because additional costs (the tolls that the Iranians want, paid in Bitcoin no less) will increase inflation on a permanent basis. In a moment in which the Fed is watching world events uneasily, it is time to focus on earnings once again. So far they have seemed to grow relentlessly for this year and next (the bottom-up calculation published below), and it is time to get an update when the S&P 500’s multiple is no longer below its 5-year average. but I am quite confident that earnings will beat the new forecasts once again. The question is, of course, what happens next, and to which extent the World’s CEOs have paused making future plans because of the war. 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, with several countries offering to mediate. Europe’s inflation, at 2.6%, 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, threatening 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 upcoming reporting season will be watched very closely. 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), but I acknowledge that geopolitics has to be at least neutral to give markets a change. 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. Meanwhile, the JPY continues its slide against all major currencies. 

* 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 20.9x is above the average P/E ratio of the last 5 years at 19.9x, 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. 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 rising inflation. Apparently Space X and OpenAI are 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 41.8% 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 4.26%, and were down last week, in line with European government bond yields. 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. The potential opening of a sovereign crisis is something that must absolutely avoided. Higher borrowing costs will be felt across the balance sheets of most states, potentially further reducing growth. It is something to be watched very closely. 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 $322.29 per share, while for 2027 they are seen at $375.32. 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 0.5% according to the second estimate, obviously influenced by the long government shutdown. The Atlanta Fed GDPNow model forecast for 1Q26 is in positive territory, with a current reading of 1.3%, stable from 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 is more positive: its current forecast is 2.31%, stable from last week. I believe it is prudent to make an average of those two forecasts to get to the real number. Introducing a forecast for 1Q26, with earnings expected to climb by 13.1%, compared with a forecast of 13.2% as of March 31st, and with revenues growing by 9.9% vs 9.8% as of March 31st. For 2026, earnings growth is forecasted at 18.0% vs 17.3% as of March 31st, with revenues coming in at 9.2% vs 8.7% as of March 31st. Introducing a new forecast for 2027, earnings growth is forecasted at 16.4% vs 16.5% as of March 31st, with revenues coming in at 7.3% vs 7.5% as of March 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 (March 2027) 14.45%. 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 increased in late March its forecast to 30%. 

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 1Q26 will now begin in earnest. Here’s a list of companies reporting this week.  Highlights include: Tesla, and IBM (Wednesday, After Close), Intel (Thursday, After Close), and P&G (Friday, Before Open).

Source: Earnings Whispers

Market Considerations

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

Source: Carson Investment Research, FactSet, ISABELNET.com

Revenue growth estimates for 2026 are forecasted to grow by 9.2% (8.7% on March 31st), and earnings growth estimates for 2026 are predicted to grow by 18.0% (17.3% on March 31st), so the future looks bright. Introducing forecasts for 2027, which sound again very positive, with revenue to grow by 7.3% (7.5% on March 31st) and earnings to grow by 16.4% (16.5% on March 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 continues to remain fluid at the moment, and anything can still happen. 

Two highlights this week. First, we have a chart from Deutsche Bank, which shows how the markets fared during major geopolitical events. The recovery from the bottom might well be the quickest in history; at this point past events suggest that the S&P 500 might be flat in the next month or so. The third chart from Carson Investment Research focuses on past returns, and says that when the Nasdaq has a winning streak of at least 12 days, on a 12-months basis the index is up with a 100% probability. Still, this is the biggest energy crisis that the world has seen since 1973, this time dominated by politics and nuclear capabilities. Let’s see what happens. 

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 best major market 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 28.3% in 2 1/2 years, with a Sharpe Ratio of 1.1.

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

Our Global Income and Growth Portfolio is up 26.8% in 2 years, with a Sharpe Ratio of 0.6. 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 64.7% in 2 years and has outperformed the FTSE MIB Index by 1650+ bp in this timeframe, with a Sharpe Ratio of 1.6.

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

My Japanese Equities Portfolio is up 7.20% in about 3 months, and has underperformed the Topix Core 30 by 200+bp in this timeframe. Obviously, the devaluation of the JPY had a big impact as all stocks are priced in EUR.

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.