A possible breakthrough in the war with Iran sends the Brent below $84. Strong earnings in the US, lifting the average to 25.9%, with the potential to reach 30% in 2Q26 (w/o Alphabet). This week will be very important: watch for 4 of the Mag 7 to report (Meta, Microsoft, Amazon, and Apple), and 3 of the world’s most important Central Banks (US, UK, and Japan) as they give essential insights on rates. The biggest tail risks are the US Economy falling into a recession (15% chance in the next 12 months), 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 27th – 31st July 2026

Economic data highlights of the week

Mon: DE Ifo Business Climate Index (7/26), US Durable Goods Orders (6/26), US Atlanta Fed GDPNow (2Q26), US President Trump Speaks

Tue: JP BoJ Core CPI, US ADP Employment Change Weekly, US CB Consumer Confidence (7/26)

Wed: AU CPI (2Q26), US Fed Interest Rate Decision

Thu: FR GDP (2Q26), SP GDP (2Q26), SP CPI (7/26), DE GDP (2Q26), EU GDP (2Q26), EU Unemployment Rate (6/26), UK BoE Interest Rate Decision, DE CPI (7/26), US Core PCE Price Index (6/26), US GDP (2Q26), US Initial Jobless Claims, UK BoE Governor Bailey Speaks, US Fed’s Balance Sheet 

Fri: JP CPI (7/26), JP Industrial Production (6/26), AU PPI (2Q26), CN Manufacturing PMI (7/26), JP BoJ Interest Rate Decision, FR CPI (7/26), DE Unemployment Rate (7/26), EU CPI (7/26), CA GDP (5/26)

Performance Review

Source: Google

InflectionPoint reports:

* Another hectic week in which investors had to contend with: an oil shock, again; increasing inflation, putting pressure on Central Banks to rein it in; rising bond yields, in part as a consequence of what we just discussed, and in part a reflection of lesser fiscal discipline and greater indebtment; and trade wars, with President Trump keen to relaunch his key policy. Obviously, the hit on semiconductors and memory stocks pulled down in synch pretty much the whole of technology, with the Nasdaq bearing the brunt, and with the Dow Jones outperforming the S&P 500 on a YTD basis; which is rare to see, and is usually fuelled by a defensive rotation. Meanwhile, earnings continue to surprise positively, but in the midst of a revival of the US-Iran war, the threat that the Fed might act sooner than later (with some market pundits starting to consider a hike as soon as tomorrow; as usual, language will be key), and the semiconductor conundrum, they failed to shine so far. Earnings growth for 2Q26 has already been upgraded to 25.9% (not counting Alphabet’s outsized gain), and there is a forecast by veteran investor Louis Navellier, based on FactSet data, that sees them climbing to as much as 30% by the end of the quarter. We should listen very carefully to the message coming from Washington, as there are now 79.4% chances that the Fed will hike in September, sooner than forecasted, and without taking into account the renewed stress on the price of energy and commodities. Unfortunately, the US-Iran war will continue to be on-again, off-again, and the price of oil continue to be well bid because you never know where the next missile could come from. will have updates from the next FOMC in just 10 days, and that will probably clear the way for an eventual 25bp hike in September, which I personally think won’t happen. If it does, the market won’t like it at all, despite the strong momentum. Next week is full of very relevant economic data: we have three of the world’s most important Central Banks (US, UK, and Japan) making interest rate decisions; ironically, all three are supposed to hold, but with bold changes very much possible in the near future. On top we will get an update on EU Inflation, which could well pave the way for one more hike in September, and US GDP. Other than from a fall out of favour from chipmakers, the Nasdaq last week was troubled by the news that efficient AI maker MoonShot could soon become public in China, with a reported valuation of $50 Bn. All the major technology companies are investing heavily – sometimes even more than their operational cashflow (as it happened to Alphabet in 2Q26, signalling that the company is taking on debt to fund its massive AI spending – in a move to secure a front space in what is probably the future of technology, AI. The lesson from the dot.com boom (and crash) is: watch the profits. With capex ever rising even for the largest companies, investors keep checking whether there are sound returns on their investments, with virtuous companies rewarded and those less so sidelined. I continue to remain optimistic on earnings and on the continued climb of the leading US Indexes, barring major shocks from policy, inflation, and geopolitics. The present 2026 target for the S&P 500 is 8,000 for Ben Snider of Goldman Sachs, 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 foresees the leading US Index rising to 8,800 by the end of 2027, and 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 by the end of the current year. The forecast for 2027 EPS is $385, and the FactSet bottom up forecast is already ahead at $398, 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). 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. So far, the Japanese PM 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 beyond 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, maybe around 163-165. 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 2.1%, GDP forecasts for 2Q26 are good, with the Atlanta and New York in agreement on a positive direction. The current P/E ratio of 20.1x 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. 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. 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. After Space X listing, OpenAI, and Anthropic are in a pre-IPO phase, and a success of two of the most hyped companies ever is important to lead the markets higher.  

*  The Federal Reserve was on hold in June, and kept the rate to 3.50-3.75%. It is now expected that the FOMC, under the guidance of new Chairman Kevin Warsh, will raise rates in December, with a 90.6% chance, which is understandable given the strength of the US economy and the threat of inflation. Based on the outcome of the meeting tomorrow, it may well be that they decide to raise rates in September. Even though Goldman Sachs calls for no rate hikes this year, I still think that a hike wouldn’t necessarily derail the positive trend so far. 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. 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 4.61%, and were essentially stable last week, while some 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 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. The US Deficit is currently about 6% of GDP and neither the Republicans nor the Democrats want to reduce it. 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, with a target price of 8,800. At the moment, the bottom-up forecasts for 2026 match his target, while they are already ahead for 2027. Earnings for 2026 are continuing to rise to a level of $342.52 per share, while for 2027 they are seen at $400.97 (significantly 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. These could be revised even higher should 2Q26 earnings impress and beat forecasts once again.

Source: FactSet

* The US GDP for 1Q25 came in at 2.1% according to the latest estimate. The Atlanta Fed GDPNow model forecast for 2Q26 is in positive territory, with a current reading of 1.6, up from 1.3% last week%. This forecast crashed over the course of the quarter, being unusually below that of the Blue Chips consensus, which are presently at 2.0% and raising. The New York Fed’s Nowcast model, which is less volatile,  paints an entirely different picture: its current forecast is 2.82%, up from 2.80% 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 37.9% (including Alphabet’s outsized gain), compared with a forecast of 23.2% as of June 3oth, with revenue growing by 13.2% vs 12.3% as of June 30th. 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 27.3% vs 24.0% as of June 30th, with revenue coming in at 11.0% vs 10.8% as of June 30th. Introducing a new forecast for 2027, earnings growth is forecasted at 15.3% vs 17.4% as of June 30th, with revenues coming in at 8.3% vs 8.1% as of June 30th. I wouldn’t worry about the deterioration in earnings at the moment: it’s such a long time away and it can be revised upwards as US corporates continue to deliver. 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 (May 2027) 13.59%. 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 15% 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 2Q26 has now started. Here’s a list of companies reporting this week. Highlights include: Microsoft, and Meta (Wednesday, After Close), and Apple, and Amazon (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: Haver Analytics, Datastream, Worldscope, Bloomberg, Goldman Sachs Global Investment Research, ISABELNET.com

Revenue growth estimates for 2026 are forecasted to grow by 11.0% (10.8% on June 30th), and earnings growth estimates for 2026 are predicted to grow by 27.3% (24.0% on June 30th), so the future looks bright. Introducing forecasts for 2027, which sound again very positive, with revenue to grow by 8.3% (8.1% on June 30th) and earnings to grow by 15.3% (17.4% on June 30th). 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. While the price of oil had eased, it did come back, and it is too soon to say if the spike in inflation will be transitory or permanent. 

Three highlights this week. The first chart, from Deutsche Bank, shows that the S&P 500 has traded sideways for the past three months, much as it did last  November to March. Here there’s also the Fed in the balance, looking to raise rates possibly as soon as in September. This, coupled with the incoming midterm elections in November, make a breakout only possible in the case of exceptional earnings, and lower oil prices, as it might be the case. The second chart, from Goldman Sachs, shows that the market has traded sideways until the elections, with clarity providing a platform for a further climb. History might well repeat itself with this. The final chart, again from Goldman Sachs, plots their and the market’s expectations of a recession in the next 12 months. Given it’s so low, some market pundits are speculating about a possible complacency – I don’t think so, unless the Fed starts raising rates aggressively.

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 lead major global markets with a great performance YTD. The Bank of Japan is 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. While the BOJ raised rates to 1% in June, the highest level in 31 years, it is seen as behind the curve, which is why – barring interventions – the JPY is continuing to fall, especially vs the USD. 

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 34.1% 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 36.2% 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 86.7% in 2 years+ and has outperformed the FTSE MIB Index by 2775+ bp in this timeframe, with a Sharpe Ratio of 1.7

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

My Japanese Equities Portfolio is up 6.5% 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.