Launch Pad

Iran has proposed reopening the Strait of Hormuz in exchange for the U.S. lifting its blockade and ending the war, but Trump is seen as unlikely to accept, leaving the ceasefire in a fragile stalemate. Diplomatic efforts continue, with Iran’s foreign minister Abbas Araghchi engaging regional partners, while tensions remain elevated across the region, including renewed risks involving Hezbollah and ongoing disputes over Iran’s nuclear goals. The uncertainty is already spilling into the global economy, with disruptions to oil flows driving higher fuel costs and forcing airlines to cancel flights. 

Margins are holding up, for now. It’s still early in earnings season, but with about 30% of S&P 500 companies having reported, profit margins are looking resilient despite concerns around higher oil prices. According to FactSet, the blended net margin for Q1 2026 currently stands at 13.4%, which would mark the highest level since the firm began tracking the data in 2009, if sustained, surpassing the previous record of 13.2% set in Q4 2025. Strength is being led by Tech, while Energy is lagging, reflecting cost pressures. Sector performance is mixed overall, but margins remain above historical averages in several areas. Looking ahead, expectations are for further expansion, with margins projected to rise through the rest of 2026, suggesting that, at least for now, profitability is holding up even as macro risks build. 

Inflation risks in Canada are beginning to broaden beyond energy, with concerns that the Iran war will push up everyday costs. Disruptions to fertilizer supply, much of which flows through the Strait of Hormuz, could reduce crop yields and raise grocery prices, while higher fuel costs are already increasing expenses across farming, transportation, and packaging. At the same time, rising input costs are spreading globally, with Chinese exporters beginning to lift prices on a wide range of goods, adding to inflationary pressure. Economists are taking notice, with expectations for U.S. inflation moving higher as these effects build. 

China is stepping up fiscal support to stabilize growth, with government spending rising 2.6% year-over-year in Q1, an acceleration from last year, as policymakers respond to rising global risks linked to the Middle East conflict. Total expenditures reached 7.47 trillion yuan, with nearly a quarter of the full-year budget already deployed, signaling a more aggressive front-loaded approach to support the economy. At the same time, revenues grew more modestly, and a sudden decline in land sales (down over 24%) continues to strain local government finances amid the ongoing property market downturn. The moves highlight how Beijing is leaning more heavily on fiscal stimulus to offset external uncertainty and domestic weaknesses, choosing to shift towards policy support to maintain growth momentum. 

Government debt across the globe is at historically high levels, and despite warnings from the International Monetary Fund to rein in deficits, structural forces like rising defense spending, industrial policy, and the AI race mean governments are unlikely to cut back anytime soon. Governments are running larger deficits, and it appears that they are in no rush to shrink them. Consider the One Big Beautiful Bill. In countries like the U.S., deficits are already elevated despite near full employment, and similar trends are unfolding across developed economies. Experts are noting that the recent shift toward persistent fiscal expansion (often called fiscal dominance) may support economic growth and benefit equities and real assets, but it also increases the risk of higher inflation and creates a more challenging environment for bonds, where returns could be eroded over time. 

Rising energy and commodity costs from the Iran war are threatening to derail the fragile recovery in global consumer demand, as companies face growing pressure on margins and may be forced to raise prices again. Firms like Procter & Gamble have already warned of significant profit hits from higher input and logistics costs, and a growing number of companies are cutting guidance or signaling price increases. While there were early signs of demand stabilization, further price hikes risk pushing cost-conscious consumers toward cheaper private-label alternatives or reduced spending altogether. Given the challenging environment, investors will be paying even closer attention to retail earnings later in May to get a sense of what lies ahead for consumers. 

Insider trading. A U.S. Army Special Forces soldier was arrested for allegedly using classified information to profit from bets on prediction markets, highlighting concerns around insider trading in these platforms. The soldier, who was involved in the mission to capture Venezuelan leader Nicolás Maduro, is accused of placing bets ahead of the operation on Polymarket, turning roughly $33,000 into about $400,000 by wagering on outcomes he knew were in the works. He now faces multiple charges including fraud and misuse of government information. Prediction market activity has risen in recent weeks, with growing scrutiny over potential insider trading, so it’s likely this won’t be the last time we hear about cases like these. 


Diversion: Guess it’s bath time now

Nickel is at the highest level in nearly two years, as reduced mining quotas in major producer Indonesia and a global sulfur shortage tightened the supply outlook. Futures on the LME have risen 7% since the start of the Iran war, which is driving a surge in prices of sulfur, a key reagent used in processing, and fueling concerns over disruptions to global mining. Nickel mining in Indonesia was already under pressure after the country slashed its production quota to revive prices for the metal. Indonesia accounts for well over half of global production, thanks to a wave of Chinese investment in smelters. Other base metals were mixed, as efforts to resume peace talks between the U.S. and Iran remained at an impasse, and the prolonged war has dented the outlook for global economic growth.