Broadcom’s miss and a much higher than expected nonfarm payroll rock the markets. Sovereign yields rise once more; Fed forecasted to hike by 25bp in December. ECB to hike 25bp on Thursday, while the BOE might continue to be on hold while the political paralysis is resolved. No breakthrough in the Middle East yet; oil still below $95. The positive economic outlook extends to 2Q26; revenue and earnings growth will be key. The biggest tail risks are the US Economy falling into a recession (25% chance in 2026), resurging inflation, revenues/earnings/guidance 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 8th – 12th June 2026

Economic data highlights of the week

Mon: AU – Holiday, JP GDP (1Q26), DE Factory Orders (4/26)

Tue: DE Trade Balance (4/26), DE Industrial Production (4/26), US ADP Employment Change Weekly, CN Trade Balance (5/26), US Atlanta Fed GDPNow (2Q26), EU ECB President Lagarde Speaks

Wed: JP PPI (5/26), CN CPI (5/26), CN PPI (5/26), US CPI (5/26), CA BoC Interest Rate Decision

Thu: EU ECB Interest Rate Decision, US PPI (5/26), US Initial Jobless Claims

Fri: JP Industrial Production (4/26), UK GDP (4/26), UK Trade Balance (4/26), DE CPI (5/26), FR CPI (5/26), SP CPI (5/26), IN CPI (5/26), BR CPI (5/26)

Performance Review

Source: Google

InflectionPoint reports:

* Last week, the market got a double whammy, courtesy of Broadcom on Thursday, and of the nonfarm payrolls on Friday. Unappealing results from the technology company turned into a -14% slump during the week, and a stronger than expected US economy got traders to price a 25bp hike by the Fed in December. With the semiconductor sector clearly quite extended, the Nasdaq paid its price, while the S&P 500 was just shy of triggering my 3% weekly stop. AI growth is more important than geopolitics? This is one element of the market’s climb, fuelled by sky-high expectations, while Bitcoin’s pivot towards $60,000 has to be noted, even though it managed to recover some ground over the weekend. On Wednesday, we will get another update, as Oracle is reporting, and we can get a feel for how business was in April and May, before the ‘official’ 2Q26 reporting season starts in about a month from now. It’s never a dull moment in technology, with Google raising $80Bn to fund its AI Investments, with $10Bn already subscribed by Berkshire Hathaway, and Anthropic confidentially filed for an IPO, setting up a race with rival Open AI. In a week in which there were no major news on the geopolitical front, save for Israel’s deep advance into South Lebanon, and Hezbollah’s refusal to sign a truce which could lead to a wider peace agreement, global bonds were, once again, under pressure. At the moment equity markets are definitely looking more at strong fundamentals than at the war or at an ever rising inflation; while fixed income markets are taking the opposite course. Much of it will depend on whether (and when) global trade will be restored, and on the status of Hormuz (free, as it was before, or chargeable). I think it will still take some time (a few weeks) before the agreement is ironed out, as both sides have their own red lines: for the US is the handover of enriched uranium, and for Iran (which does not want to surrender) the insistence that the agreement includes a cease fire in Lebanon, to protect Hezbollah. In a week in which the ECB is forecasted to raise rates by 25bp, we will get important updates on inflation in China (Wednesday), in the US (CPI on Wednesday, and PPI on Thursday), and in Europe (Germany, France, and Spain on Friday). 2026 targets have been raised once again: Ben Snider of Goldman Sachs has a new target of 8,000, underpinned by a 24% growth in earnings to $340 for 2026, a massive upgrade from $309 previously, and more in line with FactSet bottom line calculations. He’s not even the most bullish strategist on the street, as usual bears Morgan Stanley and Yardeni Research have a target of 8,300. The forecast for 2027  EPS is $385, and the FactSet bottom up forecast is already ahead at $391, making another upgrade likely at some point if the positive trend continues. 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 chance. 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. The spotlight has been on North Asian countries, namely Japan and South Korea, because of their semiconductor companies. Goldman Sachs also noted that portfolio managers are increasingly preferring semis to software. So far, the Japanese PM Sanae Takaichi hasn’t announced a major fiscal expansion, but still bond yields have been creeping up, on expectations of a move of the BoJ to bring interest rates to 1%. 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, save for a possible Japan-US intervention which made the Yen rebound a little. Finally, a word on Italy, whose FTSE MIB Index managed to grow above 50,000 points, a target set in the fateful 2000. While overall growth remains slow, companies are faring much better, thanks to markets diversification, and are bringing the Italian know-how to the world. I am expecting this positive trend to continue, and certainly to outperform the broader Euro Stoxx 50 index. It’s been a good couple of years, but the party’s not over (yet).

* After a 1Q26 growth of 1.6%, GDP forecasts for 2Q26 are good, with the Atlanta and New York in agreement on a positive direction. The current P/E ratio of 21.1x is above the average P/E ratio of the last 5 years at 19.9x, and the 10-year average at 19.0x. 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. Bear in mind this level, as simple math tells us that the real end 2026 multiple is 23.5x, if the S&P reaches 8,000 and earnings grow at the new projected level of $340. 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 16% 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. A very influential voice, such as that of Goldman Sachs’ CEO David Solomon, said that AI will lead to opportunities, as well as inevitable job losses, and was painting a rosier picture of this new technology. Space X, OpenAI, and now Anthropic are in a pre-IPO phase, and a success of three of the most hyped companies ever is important to lead the markets higher.  

*  The Federal Reserve was once again in April, albeit with four dissenters, and kept the rate to 3.50-3.75%. This was the last meeting with Jerome Powell as Chair; that said, and unlike usual arrangements, he decided to stay on ad Governor until 2028 after he hands the Chair to Kevin Warsh. It is now expected that the new Governor will raise rates in December, with a 78.5% chance, which is understandable given the strength of the US economy and the threat of inflation. I wonder if all this growth we are seeing in 2026 so far has been the result of the Fed’s decision to lower rates by 175bp in the last two years. In any case, it it worth paying particular attention to the next Fed meeting on June 17, as this will be the first headed by the new Chair, who might use the opportunity to talk about his vision for the US Central Bank, after Governor Daly said that she’s using all the AI models she can get. 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, albeit because the economy’s growth path is much more shallow than across the pond. 

* Yields on US 10-year Treasuries have reached 4.53%, and were up 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 on a struggle to get there; and on top of this I cannot yet recommend the US Debt on their public spending plans. Legendary investor Jeffrey Gundlach said that there might even be a haircut on US Treasuries, which never happened before. 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. Regarding earnings, I continue to 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 $340 per share for the S&P 500 by the end of the year, with a target price of 8,000, and $375 for 2027. At the moment, the bottom-up forecasts for 2026 are slightly below of his target, while they are already ahead for 2027. Earnings for 2026 are continuing to rise to a level of $338.16 per share, while for 2027 they are seen at $391.00 (ahead of GS’ own forecast at $385). In both cases, the earnings’ progression puts both of them on a significantly 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 consistently checked. 

Source: FactSet

* The US GDP for 1Q25 came in at 1.6% according to the latest estimate. The Atlanta Fed GDPNow model forecast for 2Q26 is in positive territory, with a current reading of 3.0%, lower from 3.8% last week, but still a very significant level, and well above of the Blue Chips consensus, which are presently at 2.0% and raising. The New York Fed’s Nowcast model is positive as well: its current forecast is 2.67%, up from 2.50% 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 2Q26, with earnings expected to climb by 21.7%, compared with a forecast of 18.7% as of March 31st, with revenue growing by 12.0% vs 9.4% as of March 31st. It is very important to note that analysts have been increasing numbers for 2Q26, even after the impact of the war. For 2026, earnings growth is forecasted at 22.8% vs 17.0% as of March 31st, with revenue coming in at 10.8% vs 8.7% as of March 31st. Introducing a new forecast for 2027, earnings growth is forecasted at 15.8% vs 16.6% as of March 31st, with revenues coming in at 7.6% 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 (April 2027) 12.53%. 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 below economists’ current forecasts: a 25% chance of a recession in the next 12 months.  

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 is now ending. Here’s a list of companies reporting this week. Highlights include Oracle (Wednesday, After Close) 

Source: Earnings Whispers

Market Considerations

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

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

Source: Carson Investment Research, FactSet, ISABELNET.com

Revenue growth estimates for 2026 are forecasted to grow by 10.8% (8.7% on March 31st), and earnings growth estimates for 2026 are predicted to grow by 22.8% (17.0% on March 31st), so the future looks bright. Introducing forecasts for 2027, which sound again very positive, with revenue to grow by 7.6% (7.5% on March 31st) and earnings to grow by 15.6% (16.6% 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, until there are more certainties about Hormuz and the price of oil. 

Four highlights this week. First, we have a chart from Deutsche Bank, which shows that the rally in April and May was closely tied to superior earnings, with possibly the best growth in the last two decades. In an environment in which the Fed might hike instead of cutting rates, superior top line and bottom line growth is of paramount importance. The second chart, from Goldman Sachs, shows that new listings have slowed this year due to the geopolitical uncertainty, among others. The leading investment bank still expects 100 companies (the average) to become public in 2026, with the new listings market to catch up later in the year. The third chart, from Carson Investment Research, tells us that never before stocks peaked up in June, which is a bullish call for the rest of the year. 

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 around 3%. 

There are four main headline risks to what is otherwise a constructive view for 2026: i) revenue/earnings/guidance not matching forecasts, particularly in technology; ii) any damage to the economy and trade done from Trumponomics, tariffs, increasing sovereign yields, 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 not to raise rates in 2026, with a possible hike to 1% in June, after 3 dissenters voted in the last meeting against holding rates firm at 0.75%. After a staggering performance, I am starting to wonder if the market is ahead of itself – so more hold than buy at the moment, and let’s look for the results as usual.

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 32.1% in 2 1/2 years, with a Sharpe Ratio of 1.2.

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

Our Global Income and Growth Portfolio is up 32.9% in 2 1/2 years, with a Sharpe Ratio of 0.7. 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 71.6% in 2 years+ and has outperformed the FTSE MIB Index by 1825+ 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 6.7% in about 6 months. 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.