Resilient in the Aggregate
The resilient consumer is doing fine despite higher gas prices
Summary: Banks reported earnings last week and confirmed that the economy remains resilient despite turbulence from Iran and increased uncertainty. Capital markets activity slowed somewhat, but pipelines are still strong.
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Macro
The economy remains resilient
“At this point, the underlying economy still remains relatively robust. If the resolution of the conflict drags, that probably will be a headwind in some of these areas, particularly inflation trends, as we get further into the second and the third quarter..At the moment, M&A and capital markets have been pretty resilient to that, and the environment continues to be quite constructive.” - Goldman Sachs (GS 0.00%↑) CEO David Solomon
“...we still see continued resiliency in the underlying economy, and the financial health of the consumers and businesses we serve remains strong..Despite slowing employment momentum, U.S. economic growth has held up. The U.S. consumer remains resilient in the aggregate.” - Wells Fargo (WFC 0.00%↑) CEO Charles Scharf
“The U.S. economy remained resilient in the quarter, with consumers still earning and spending and businesses still healthy. Several tailwinds are supporting this resiliency, including increased fiscal stimulus, the benefits of deregulation, AI-driven capital investment and the Fed’s asset purchases.” - JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon
“The economy continues to hold up well despite the ongoing concerns and uncertainty regarding tariffs and other policies. The situation in Iran poses new risks to the U.S. and global economies through energy prices and uncertainty. Consumer spending has slowed but continues to grow in aggregate.” - M&T Bank Corporation (MTB 0.00%↑) CFO Daryl Bible
“As we look ahead, the macroeconomic backdrop remains constructive despite some softening of sentiment recently. Consumer spend, core loan demand, and credit delinquency trends all indicate relative stability.” - US Bancorp (USB 0.00%↑) CEO Gunjan Kedia
The consumer is doing fine
“But right now, in the end, the story remains the same, which is resilient consumer that’s doing fine despite higher gas prices.” - JPMorgan Chase (JPM 0.00%↑) CFO Jeremy Barnum
“And I must say, obviously, we’re looking at this every day, globally, not only the US but globally, and we’re seeing the consumer quite resilient, very resilient..We haven’t seen an impact on demand since the war started.“ - PepsiCo (PEP 0.00%↑) CEO Ramon Laguarta
“U.S. Consumer Cards saw 4% revenue growth with spend up 5% and delivered a 19% RoTCE as American consumers remained resilient.” - Citigroup (C 0.00%↑) CEO Jane Fraser
“The U.S. consumer continues to spend through all these different platforms here at Bank of America. To put that in context, the total spending by consumers across all the ways they move money into the U.S. economy at Bank of America is $4.5 trillion a year. For 2025, you can see that it was up 5% from 2024. And that 5% growth has been consistent in the first quarter of ‘26 compared to the first quarter of ‘25.” - Bank of America (BAC 0.00%↑) CEO Brian Moynihan
“The financial health of consumers and businesses remains strong. Consumers are spending more than a year ago, which includes spending more on gas, but they haven’t slowed spending on everything else.” - Wells Fargo (WFC 0.00%↑) CEO Charles Scharf
Labor markets are the linchpin
“I would caution, though, I think it remains fundamentally the case that the biggest single reason that the consumer credit performance is healthy is that the labor market is strong. And if you get bad outcomes in the Middle East, much higher energy prices or other problems that sort of do eventually track what has been, I think, from many people’s perspective, a surprisingly resilient American economy and a very resilient U.S. consumer, and that winds up having knock-on effects on the labor market, then you will see that come through, clearly.” - JPMorgan Chase (JPM 0.00%↑) CFO Jeremy Barnum
Employment is high, and wages are growing
“I’m giving what we see today in the spending, even in early April here. And that’s the critical thing, what they do, not what they say they’re going to do, and that’s going to be dictated more, am I employed? Do I have a job? Are my wages growing? And I feel that my money is being well spent. And that’s where inflation can make them shift money around but not necessarily stop it.” - Bank of America (BAC 0.00%↑) CEO Brian Moynihan
Labor markets may be cooling, though
“The U.S. labor market continues to cool in an orderly but uneven fashion with few signs of systemic stress. Layoff activity remains contained. Weekly jobless claims reinforce this picture and are not signaling labor stress. The unemployment rate dipped to 4.3% in March, but this continues to reflect slower rehiring and longer job searches, not renewed labor market strength.” - Wells Fargo (WFC 0.00%↑) CEO Charles Scharf
Uncertainty has increased
“I do think that the level of uncertainty is higher, and so we have to watch that carefully. Certainly, talking actively to CEOs, and CEOs are looking carefully at how what’s going on, particularly with commodity prices, is translating into the economy and into consumer demand. I think it’s fair to say that people did not see that really translating through in the first quarter, but that doesn’t mean that people aren’t extremely cautious about whether or not it will translate through in the second quarter. My guess is to the degree that energy prices remain high, you will see that translate through a little bit.” - Goldman Sachs (GS 0.00%↑) CEO David Solomon
“Employers are getting buffeted by geopolitical events, tariffs, wars that are ongoing or started, and that clearly drives employer hesitation. In our mind, the client hesitation is more related to those events than any particular concerns or possible impacts of AI into their workforce.” - ManpowerGroup (MAN 0.00%↑) CEO Jonas Prising
Confidence is not great
“I don’t know that we can square for you the headline surveys on consumer confidence or small business confidence, which are all not great, how we square that with what we actually see. So when you look through spending patterns, growth in savings, activity levels, loan growth, like everything we see day-to-day in our business is almost at complete odds with the surveys you see on confidence.” - PNC Financial Services (PNC 0.00%↑) CEO William Demchak
Inflation expectations are up
“I’m not forecasting anything, I’m simply saying, for JPMorgan, we have to be prepared for a recession, and that you can have stagflation. You see people mentioned that we have to be prepared for stagflation. Obviously, if you have stagflation, and higher rates for longer and credit spreads gap out, that will put a lot of stress and strain on leveraged companies as they refinance.” - JPMorgan Chase (JPM 0.00%↑) CEO James Dimon
“...and inflation is now a greater risk to growth and will likely cause central banks to lean towards more restrictive monetary policies.” - Citigroup (C 0.00%↑) CEO Jane Fraser
Higher oil prices could impact the economy with a lag
“...the impact of higher oil prices will likely take some time to materialize...We have seen historically that it often takes consumers several months to reduce their spend levels on other categories to adjust for higher oil prices.” - Wells Fargo (WFC 0.00%↑) CEO Charles Scharf
“I would say for me in particular, I’m still carefully watching anything that is most closely tied to consumer discretionary spending, especially with recent increases in energy prices. That certainly hits discretionary spending. Sectors like trucking, auto, restaurants, those are things that I want to watch more closely.” - First Horizon (FHN 0.00%↑) Chief Credit Officer Thomas Hung
International
The global economy has shown resilience too
“...Showed good resilience in a geopolitical and economic environment that remained disrupted, amplified by the conflict in the Middle East. The United States experienced a good start to the year. In Europe and Japan, resilient local demand helped to partly offset lower tourist spending. Asia (excluding Japan) saw strong growth, confirming the improvement in trends observed starting in the second half of 2025. The Middle East was impacted by the conflict in March, following a very positive start to the year. The conflict had a negative impact of around 1% on organic growth for the quarter.” - LVMH (LVMHF)
International economies are more exposed to the impact of the Iran conflict
“...the impact of the Middle East conflict is hitting Asia and Europe harder than countries such as the U.S. and Brazil, which are more insulated from energy shocks. Clearly, the longer this goes on, the more pronounced the second- or third-order impacts are going to be around the world.” - Citigroup (C 0.00%↑) CEO Jane Fraser
The world may be shifting toward self-reliance
“My 2026 schedule has already been filled with rich dialogue with CEOs, sovereign wealth funds, pension funds, insurance CIOs, wealth managers, and governments. In these conversations, I hear a consistent theme: the world feels different, not just uncertain, but different. The world is reorganizing around self-reliance.” - BlackRock (BLK 0.00%↑) CEO Laurence Fink
Financials
Banks are healthy
“There really is not anything new or interesting to say this quarter. We’ve looked at it through every angle. Early roll rates, delinquency rates, cash buffer, spend, discretionary spend, non-discretionary spend, it all looks consistent with prior trends and fundamentally, healthy.” - JPMorgan Chase (JPM 0.00%↑) CFO Jeremy Barnum
Q1 was strong
“Performance was strong across our businesses. In the CIB, revenue grew 19%. Markets revenue reached a record $11.6 billion, while IB fees increased 28% due to stronger advisory and ECM activity.” - JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon
“We saw continued positive impacts from the investments we have been making with diluted earnings per share increasing 15%, revenue increasing 6%, loans increasing 11%, and deposits increasing 7% compared to a year ago.” - Wells Fargo (WFC 0.00%↑) CEO Charles Scharf
“In the first quarter, we delivered a very strong performance, generating net revenues of $17.2 billion, net earnings of $5.6 billion, and earnings per share of $17.55, all three of which were the second highest in the history of Goldman Sachs. As a result, we delivered a return on equity of 19.8% and an ROTE of 21.3%.” - Goldman Sachs (GS 0.00%↑) CEO David Solomon
“...the firm generated a record quarter with revenues of $20.6 billion and EPS of $3.43. The top and bottom line results are an ongoing demonstration of the capabilities of our integrated firm in periods when clients and markets are active.” - Morgan Stanley (MS 0.00%↑) CEO Ted Pick
“It’s been a standout start to the year for BlackRock. Our first quarter revenue, operating income and earnings per share grew double digits. We expanded margins by over 100 basis points, and we delivered 8% organic base fee growth. That’s our seventh consecutive quarter at or above 5%, bringing the last 12 months organic base fee growth to 10%.” - BlackRock (BLK 0.00%↑) CFO Martin Small
“We picked up right where we left off last year with an exceptionally strong start to 2026. This morning, we reported net income of $5.8 billion for the first quarter with an EPS of $3.06 and an RoTCE of 13.1%, 4 of the 5 core businesses saw revenue up double digits. Overall revenues were up sharply at 14%” - Citigroup (C 0.00%↑) CEO Jane Fraser
“Bank of America delivered strong first quarter 2026 results. Revenue grew 7% year-over-year to $30.3 billion. Earnings per share were up 25% year-over-year to $1.11 per share.” - Bank of America (BAC 0.00%↑) CEO Brian Moynihan
IPO activity slowed but appears set to rebound
“That said, there’s no question that with the conflict in the Middle East, IPO activity slowed a little bit, particularly in March. I do think there’s a very full pipeline, and at the end of the day, equity markets have been extremely resilient, and if that resilience continues, I do think you’ll see IPO activity accelerate again. There’s some very large IPOs that are lined up.” - Goldman Sachs (GS 0.00%↑) CEO David Solomon
“I think on the equity capital market side, you’ve certainly seen some delay in IPO activity in the latter part of the first quarter, assuming some of the volatility subsides or stabilizes, you may see some of that start to come back. There’s certainly a pipeline of companies sort of waiting to go. And then” - Wells Fargo (WFC 0.00%↑) CFO Michael Santomassimo
“I think if we can get to a period now where we resume some of the narrative that we had going into 2026, which was a very strong one, I think what you’ll see is effectively the resumption of pipeline hitting the marketplace.” - Morgan Stanley (MS 0.00%↑) CEO Ted Pick
There’s still significant activity in M&A
“You saw extraordinary accruals during this quarter in M&A. You also saw extraordinary replenishment. Okay? The backlog really did not move very significantly at all, even though we had extraordinary accruals. We continue to see significant activity on the M&A front, and unless the overall environment got much, much worse, I don’t see that slowing based on what we see at the moment.” - Goldman Sachs (GS 0.00%↑) CEO David Solomon
“Building on the momentum in the H2 of last year, M&A activity broadened across sectors, with notable strength in technology and industrials.” - Morgan Stanley (MS 0.00%↑) CFO Sharon Yeshaya
Capital markets are wide open
“...the financing markets are sort of wide open still. So we still expect to see a lot of activity on the debt side, both investment grade and sort of leverage finance. And so there’s plenty of money on the sidelines to sort of be put to work there. And that’s certainly been the case for a while.” - Wells Fargo (WFC 0.00%↑) CFO Michael Santomassimo
Loan growth has been solid
“And final thing, John, is if you take a look at the loan growth disclosure that we put out, I think it’s on Page 8 of our release, you’ll see pretty broad-based now from each of the lines of business. Pretty broad-based by each of the products. So we’re not reliant on any one thing, and that gives us a little more confidence around durability.” - Bank of America (BAC 0.00%↑) CFO Alastair Borthwick
“Clearly, we saw more than what we expected in terms of loan growth in the first quarter. And on an average basis, that’s going to pull into the second quarter.” - PNC Financial Services (PNC 0.00%↑) CFO Robert Reilly
“We’ve talked about loan growth to being in kind of that 3% to 4%, but I certainly think it’s going to be higher than that. It’s probably more in a mid-single-digit range from a broader loan growth perspective for the full year. I think there’s just a lot of momentum.” - US Bancorp (USB 0.00%↑) CFO John Stern
Credit metrics remain stable
“Credit performance remained strong with net loan charge-offs stable at 45 basis points.” - Wells Fargo (WFC 0.00%↑) CEO Charles Scharf
The next credit cycle could be worse than people expect
“And I pointed out that I think there’s been some weakening in underwriting and not just by private credit elsewhere. And there will be a credit cycle 1 day. And I think when there’s a credit cycle, losses will be worse than people expect relative to the scenario. I don’t think it’s systemic. It almost can’t be systemic at that size relative to anything else.” - JPMorgan Chase (JPM 0.00%↑) CEO James Dimon
Private credit concerns may be overblown
“...the soundbite you ought to walk away with here is that we don’t see any loss content in this book and certainly don’t see any exposure to a systemic event, which, by the way, we don’t expect, but were there to be one, a systemic event in private credit.” - PNC Financial Services (PNC 0.00%↑) CEO William Demchak
CRE activity is rebounding
“And then from a CRE perspective, seasonally, it always kind of drops off in the first quarter, but we had over $1 billion in originations in March, really, really strong. We’re off to a great start in the second quarter. So we have a lot of confidence that CRE is going to get on track and start to grow this year and do really well.” - M&T Bank (MTB 0.00%↑) CFO Daryl Bible
“CRE pipelines have continued to build. As you know, that’s a business for us that loans originate and fund up over a three, four, five-year period and then pay off all at once. We haven’t seen pipelines this strong since the 2021, 2022 timeframe when rates were essentially zero. Those pipelines are building.” - First Horizon (FHN 0.00%↑) CEO Bryan Jordan
“On the CRE side, we’ve talked about the headwinds in terms of project starts over the last several years going into the perm market. We started to really see that pace of our payoffs decelerated. And we believe with a very, very strong pipeline, especially now compared to a year ago, we should start to see some very good net growth on the CRE side later this year as well.” - First Horizon (FHN 0.00%↑) Chief Credit Officer Thomas Hung
Banking and retail are similar businesses
“And we buy and sell almost $4 trillion a day. And you make a little bit each time you buy and sell, and then you have to manage the exposure and the risk. So they do a great job in that. Every now and then you’re on the wrong side of something in a credit or a commodity or rate side or something like that. And you see that. But to me, that’s kind of the cost of doing business. That’s like a retailer having inventory that they can’t sell. The real question is, do you serve your clients every day with great products and great service and great execution? And the answer is yes. And that’s where the real business is...Sometimes we take a risk that we were wrong, and we’re okay with that. We never panic over that. You’ve never seen us say, “My God, we were on the wrong side of this trade.” No, because we’re there serving clients. Very often, you’re on the wrong side of a trade because the client wants to sell and you’re not really dying to buy, but you do it anyway to serve a client. It’s a business. It’s a very good business.” - JPMorgan Chase (JPM 0.00%↑) CEO James Dimon
Consumer
Gas is only 3% of consumers’ spend
“So I think gas or energy cost is something like 3% of the typical consumer’s expenditure, at least in our portfolio. So it’s not nothing, but it’s not overwhelming. We’ve looked to see if there’s kind of evidence in there of people trading, decreasing other discretionary spending to adjust for higher gas prices, but it’s just kind of not enough yet to be visible.” - JPMorgan Chase (JPM 0.00%↑) CFO Jeremy Barnum
Food is 15%
“We estimate that energy or gasoline is about 3 to 4% of a household’s budget, food is about a 15%. So they have a lot of other areas where they can optimize their budgets… but we haven’t seen anything yet that… we would change our position.” - PepsiCo (PEP 0.00%↑) CEO Ramon Laguarta
But lower-income households spend a higher percentage on gas
“Gas represented 6% of our total debit card spend and 4% of our total credit card spend before the rise in oil prices. They now represent 7% and 5% of debit and credit card spend. Note that these numbers are higher for low-income households.” - Wells Fargo (WFC 0.00%↑) CEO Charles Scharf
Lower-income cohorts are under pressure
“What we’re seeing is increasing pressure on the lower-income cohorts. It’s reflected in ongoing affordability changes; we’re seeing further pressure from staff regulation and so forth. So -- and by the way, the middle and income customers remain more stable in terms of the pressures that we’re seeing there. But that said, we recognize our customers are focused on value. Our lower-income households are most elastic.” - Albertsons Companies (ACI 0.00%↑) CEO Susan Morris
“...increasingly bifurcated beneath the surface....confidence indicators and underlying balance sheet trends point to rising stress with less-affluent consumer. Upper-income consumers continue to benefit from elevated equity prices, home equity, and cash buffers accumulated earlier in the cycle, allowing discretionary spending to remain firm. By contrast, lower-income households are more exposed to higher interest rates and energy prices.” - Wells Fargo (WFC 0.00%↑) CEO Charles Scharf
“...there is a growing divide between higher- and lower-income households, often called the K-shaped economy. The higher-end consumer continues to be stronger in its spending, while the lower-end consumer has not declined but maintained and is vulnerable to the risks in the environment.” - M&T Bank (MTB 0.00%↑) CFO Daryl Bible
“...thank you very much for the indication you provided big picture by brand for Fashion & Leather Goods in Q1, which basically confirmed that we are a bit in a K-shaped economy where the brands more exposed to high net worth individuals seem to be clearly performing better.” - LVMH (LVMHF) Morgan Stanley Research Division Edouard Aubin
US luxury spending is relatively strong
“You can see the strong performance of Asia, excluding Japan, which is up 7% at constant currencies, driven by growth across divisions, in China and North Asia in particular. Europe and Japan are both down 3%, partially reflecting less dynamic tourist consumption, notably in Europe. U.S. momentum improved sequentially to plus 3%, driven by Watches & Jewelry, Fashion & Leather Goods and Selective Distribution.” - LVMH (LVMHF) CFO Cecile Cabanis
“Geopolitical tensions, notably in the Middle East, also weighed on traffic and performance during the quarter, a point I will come back to. Regional trends remained uneven. Western Europe continued to face headwinds, while North America delivered an excellent quarter with growth across all brands clearly standing out as the group’s strongest region.” - Kering SA (PPRUY) CFO Armelle Poulou
Technology
Agentic AI is accelerating compute demand
“The shift from generative AI and the query mode to agentic AI and command and action mode is leading to another step up in the amount of tokens being consumed. This is driving the need for more and more computation, which supports the robust demand for AI silicon.” - TSMC (TSM 0.00%↑) CEO C.C. Wei
Semiconductor foundries are getting a strong signal from their customers’ customers
“Having said that, AI-related demand continued to be extremely robust...Our customers and customers of customers, who are mainly the cloud service providers, continue to provide us with their very strong signal and positive outlook. Thus, our conviction in the multi-year AI megatrend remains high, and we believe the demand for semiconductors will continue to be very fundamental.” - TSMC (TSM 0.00%↑) CEO C.C. Wei
They are feeling more comfortable ramping up CapEx to meet high demand
“We now expect our 2026 capital budget to be towards the high end of our range of between $52 and 56 billion as we continue to invest heavily to support our customers’ growth. Even as we invest for the future growth with this level of CapEx spending in 2026, we remain committed to delivering profitable growth to our shareholders.” - TSMC (TSM 0.00%↑) CFO Wendell Huang
“Both our Memory and Logic customers are responding to this unprecedented demand by increasing capital expenditures and accelerating capacity expansion plans this year and beyond. Those investments are supported by long-term agreements with their own customers... I think I mentioned before, we see our customers having a lot less hesitation to really accelerate their capital expenditure.” - ASML Holding N.V. (ASML 0.00%↑) CEO Christophe Fouquet
TSMC is increasing 3nm capacity globally, breaking historical norm due to unprecedented AI-driven demand
“Historically, we do not add additional capacity to a node once it’s reached its target capacity. However, as a foundry, our first responsibility is to provide our customers with the most advanced technologies and the necessary capacity to unleash their innovations. Based on our assessment, to meet the strong demand in AI application, we are stepping up our CapEx investment to increase our N3 capacity.” - TSMC (TSM 0.00%↑) CEO C.C. Wei
Supply constraints are expected to persist into 2027
“It takes 2 to 3 years to build a new fab. And with the current schedule, we believe that ‘27, we will announce it anyway when we enter ‘27, but let me say that, it takes time to build a new fab, it takes time to ramp it up. And so we expect this to continue to be very tight.” - TMSC (TSM 0.00%↑) CEO C.C. Wei
“In the Memory business, many customers have commented that they are sold out for the remainder of the year and that they expect the supply limitation to persist beyond 2026, despite their plans to add significant capacity.” - ASML Holding N.V. (ASML 0.00%↑) CEO Christophe Fouquet
There are no shortcuts to foundry industry leadership
“...actually, both Intel and Tesla, they are TSMC’s customers. But again, they are our competitors, and we view Intel as our formidable competitor and do not underestimate them. But having said that, there are no shortcuts. The fundamental rules of the foundry game never change. They need the technology leadership, manufacturing excellence and customer trust, and most of all, the service, which has been mentioned by Jensen; thank you for his wording. Again, let me say that it takes 2 to 3 years to build a new fab, no shortcuts. And it takes another 1 to 2 years to ramp it up.” - TSMC (TSM 0.00%↑) CEO C.C. Wei
Corporates are spending a lot of money on AI services
“I’m back to the drawing board, because the budget I thought I would need is blown away already” - Uber (UBER 0.00%↑) CTO Praveen Neppalli Naga
Banks are focused on cyber threats and getting early access to Mythos
“I think I said in the Chairman’s letter, it is our largest risk. So I think JP -- every industry is different. So in context, I think JPMorgan is very well protected. We spend a lot of money. We’ve got top experts. We’re in constant contact with the government. We’re constantly updating things, but AI has made it worse, it’s made it harder. Of course, we read about Mythos, which we’re testing now and looking at it and it does create additional vulnerabilities.” - JPMorgan Chase (JPM 0.00%↑) CEO James Dimon
“We’re aware of Mythos and its capabilities. We have the model. We’re working closely with Anthropic and all of our security vendors to kind of harness frontier capabilities wherever it’s possible.” - Goldman Sachs (GS 0.00%↑) CEO David Solomon
Jensen wishes that he had been more aggressive about investing in the AI labs early
“A long time ago, we just didn’t have the ability to do it. At the time, I didn’t deeply internalize how difficult it would be to build a foundation AI lab like OpenAI and Anthropic, and the fact that they needed huge investments from the supplier themselves. We just weren’t in a position to make the multi-billion dollar investment into Anthropic so that they could use our compute. But Google and AWS were. They put in huge investments in the beginning so that Anthropic, in return, used their compute. We just weren’t in a position to do that at the time. I would say my mistake is I didn’t deeply internalize that they really had no other options, that a VC would never put in $5-10 billion of investment into an AI lab with the hopes of it turning out to be Anthropic. So that was my miss. But even if I understood it, I don’t think we would’ve been in a position to do that at the time. But I’m not going to make that same mistake again.” - Nvidia (NVDA 0.00%↑) CEO Jensen Huang
Industrials and Transport
The industrial environment is showing signs of stabilizing
“During the first quarter, the industrial environment showed signs of stabilizing. U.S. PMI averaged about or above 52 for the quarter and industrial production was slightly positive year-over-year in January and February. This lines up with the gradual improvement we began to see late last year.” - Fastenal (FAST 0.00%↑) CFO Max Tunnicliff
Industrial sentiment is favorable
“Customer sentiment remained generally favorable throughout the quarter. While trade and tariff uncertainty continues to be part of the backdrop, most customers are viewing this uncertainty primarily as a cost and planning issue rather than a demand issue. As a result, activity levels remain healthy, and we continue to see solid engagement across our customer base. From an end market perspective, growth was broad-based. Manufacturing activity remains solid, particularly in heavy manufacturing, which continues to benefit from our fastener expansion and momentum in key accounts.” - Fastenal (FAST 0.00%↑) CFO Max Tunnicliff
“...we’re encouraged by the developing short-term momentum and equally excited by the long-term market opportunity. This is supported by improving business confidence in the US, as evidenced by the increase in CEO confidence reported by The Conference Board, rising manufacturing PMI in the US and Europe, and strong business resilience.” - ManpowerGroup (MAN 0.00%↑) CEO Jonas Prising
Freight markets are getting tighter
“What we’re seeing is a freight market that has fundamentally less slack than it did in prior cycles. Capacity has been steadily exiting for an extended period, driven by regulatory enforcement, rising costs, and financial performance that does not support capital reinvestment. Even if spot rates increase, capacity continues to lead the industry.” - J.B. Hunt Transport Services (JBHT 0.00%↑) EVP of Sales & Marketing Spencer Frazier
Middle East conflict is tightening global aluminum markets
“At the same time, disruptions tied to the Middle East conflict, including the closure of the Strait of Hormuz, have pushed energy and freight costs higher, while related demand losses are weighing on refinery margins outside of China” - Alcoa (AA 0.00%↑) CEO William Oplinger
Materials & Energy
It would take several months for oil markets to normalize, even if fighting stopped today
“So, the best case would be the end of the conflict like today, no more shots fired. Even in that situation, you’re going to have several months of major disruptions to energy markets before they can kind of normalize...The first thing to resolving the dislocation in the market, obviously, is a lasting ceasefire and credibility around that ceasefire. That would allow maritime flows to restore back to something close to normal, say, 80% of normal. We think, again, the best-case scenario is that’s going to be about 2 months for 80% of trade flow to resume through the Strait of Hormuz. More likely, it could even be 3 to 5 months before that happens.“ - Expeditors International of Washington (EXPD 0.00%↑) Chief Economist for Onyx Strategic Insights Adam Karson
Oil demand is expected to contract this year
“Oil demand is expected to contract by 80 kb/d this year, as the Iran war upends our global outlook. This is 730 kb/d less than in last month’s Report and a forecast 1.5 mb/d 2Q26 decline would be the sharpest since Covid-19 slashed fuel consumption. Initially, the deepest cuts in oil use have come in the Middle East and Asia Pacific, mainly for naphtha, LPG, and jet fuel. However, demand destruction will spread as scarcity and higher prices persist.” - The International Energy Agency
Oil prices are up 27% q/q, and natural gas is up 42%
“Brent averaged $81.13/bbl in the first quarter of 2026 compared to $63.73/bbl in the fourth quarter of 2025. The US gas Henry Hub first-of-the-month index averaged $5.05/mmBtu in the first quarter 2026, compared to $3.55/mmBtu in the fourth quarter of 2025. The bp RIM averaged $16.9/bbl in the first quarter 2026 compared to $15.2/bbl in the fourth quarter 2025.” - BP (BP 0.00%↑) Q1 2026 Trading Statement
Energy, not semiconductors, is the primary constraint on AI industry expansion
“My point is that none of the bottlenecks last longer than a couple of years, two, three years, none of them. Meanwhile, we’re improving computing efficiency by 10x, 20x, and in the case of Hopper to Blackwell, 30x to 50x. We’re coming up with new algorithms because CUDA is so flexible. We’re developing all kinds of new techniques so that we drive efficiency in addition to increasing capacity. None of those things worry me. It’s the stuff that’s downstream from us. Energy policies that prevent energy from… You can’t create an industry without energy. You can’t create a whole new manufacturing industry without energy.” - Nvidia (NVDA 0.00%↑) CEO Jensen Huang