Launch Pad

Navigating earnings season with uncertainty. Earnings season is kicking off against an uncertain backdrop, with investors focused on how companies will navigate the combined pressures of the Iran conflict, inflation, private credit stress, and AI disruption. The S&P 500 is coming off its worst quarter since 2022, and while earnings are still set to grow about 12%, the number drops to roughly 3% outside of tech, highlighting uneven strength. Rising oil prices are boosting energy sector profits but weighing on most other industries through higher costs, while concerns about consumer resilience are intensifying. At the same time, investors are watching whether beaten-down tech stocks can regain leadership amid ongoing fears about AI disrupting software businesses. Additional risks include uncertainty around tariffs tied to Trump’s policies and growing pressure in private credit markets. 

High expectations. U.S. equities remain relatively expensive despite their recent pullback, with the S&P 500 still trading at a premium compared to global peers. Investors are demanding a higher equity risk premium amid geopolitical uncertainty and AI-related disruption, meaning current valuations may still embed optimistic assumptions. While inflation and recession risks appear contained for now, markets still rely on continued economic growth to justify current pricing. Some strategists see a potential entry point in beaten-down tech stocks, though broader sentiment remains cautious, and momentum has weakened. Valuations, especially among mega-cap tech, are still high, and ongoing uncertainty around inflation and credit conditions continues to weigh on outlook. 

U.S. consumer confidence has fallen to a record low, with the University of Michigan sentiment index falling to 47.6 as Americans grow more worried about inflation driven by the Iran conflict. Expectations for price increases rose, with consumers now anticipating 4.8% inflation over the next year, the  biggest jump in over a year, while longer-term expectations also edged higher. Both current conditions and future outlook measures deteriorated significantly, reflecting growing concerns about personal finances, job prospects, and overall economic stability. Rising gasoline prices in the U.S., now above $4 per gallon, are eroding purchasing power and likely to curb discretionary spending in the coming months. While some improvement is expected if supply disruptions ease and energy prices stabilize, uncertainty remains high. 

China’s auto sector is relying more on exports for growth, with shipments rising 73.7% year-over-year in March to nearly 700,000 vehicles despite disruptions from the Middle East conflict. Strong overseas demand, particularly in regions facing higher fuel costs, has helped offset a weak domestic market, where sales fell more than 15% amid rising oil prices and reduced EV incentives. The imbalance highlights how China’s auto industry is pivoting outward as growing competition, high inventories, and slowing economic conditions weigh on local demand. Even electric vehicle makers are feeling pressure at home, though companies like BYD continue to see growth internationally. 

Canada may have an opportunity to ease tensions with Trump by taking a more active role in the Iran conflict, particularly in helping to stabilize global supply chains. Given Canada’s abundant capacity in oil, LNG, and critical minerals, Canada could leverage its position to strengthen negotiations ahead of a key review of North American trade relations. Mark Carney has so far taken a balanced stance, condemning Iran while emphasizing de-escalation and avoiding direct military involvement. However, potential contributions such as naval support, de-mining operations, or humanitarian aid could help Canada align more closely with U.S. priorities without fully joining the conflict, helping improve Canada’s standing with Washington. 

We brought you a story on the real identity of Banksy a few weeks ago, and now another long running story is back in focus. New claims have emerged about the identity of Satoshi Nakamoto, the creator of Bitcoin, with the New York Times presenting evidence that points to Adam Back as a potential candidate. The theory is based on Back’s deep involvement in early cryptography, links to the Cypherpunk movement, and linguistic similarities between his writing and Satoshi’s. However, Back has denied the claim, maintaining that the true identity of Bitcoin’s creator remains unknown and should stay that way. The latest claims add to a long list of attempts to identify Satoshi, none of which have been confirmed. Whoever Satoshi is, they are unlikely to be short of resources, with estimates placing their holdings at roughly $80 billion.   


Diversion: No room service required  
 

Aluminum is at a four-year high on the LME, as President Trump’s blockade of Iranian ports threatened more disruptions to shipments from the Persian Gulf. Aluminum was up as much as 2.3%, reigniting a rally driven by supply shortages due to the U.S.-Iran war, as the Middle East accounts for about 9% of global aluminum output. Spot aluminum contracts also rallied further above those in the future, with the spread on contracts over those for delivery in three months jumping as much as 43% from Friday to reach $95.50 a ton, the highest since 2007. A premium for current contracts is known as backwardation, and it signals a growing call on immediate deliveries as buyers hunt for alternative sources of the metal. Emirates Global Aluminium PJSC, the region’s top producer, has invoked force majeure clauses on at least some deliveries after one of its smelters was put out of action by an Iranian attack earlier this month. So far this year, aluminum futures have surged by nearly 19%. Other base metals were mixed but are broadly at risk from weaker demand as soaring energy prices hurt the global economy, although aluminum has gained due to the supply crunch arising from the war.