In this video, Vito discusses how corporate earnings are holding strong despite uncertainty around energy markets. 

Market Resilience amid Geopolitical Headwinds

Good morning, we want to break down what's driving financial markets right now. While headlines focus on geopolitical tensions, corporate earnings are telling a very different story.

The Challenge

Let's start with the elephant in the room: energy prices. Tensions between the U.S. and Iran have spiked oil prices, creating uncertainty about whether this is temporary or a longer-term supply problem. If the Strait of Hormuz stays disrupted, we could see real pressure on inflation and growth heading into summer.

But here's the key—this is just the latest shock in a series of challenges. Over the past few years, we've faced inflation spikes, rate hikes, geopolitical conflicts, and tariffs. Yet the global economy has remained resilient."

The Bright Spot

So what's holding markets up? Earnings. U.S. first-quarter results have exceeded expectations, and profit forecasts keep moving higher. Technology and AI-related companies are leading the charge, while energy companies are benefiting from higher commodity prices.

In fact, equities are up roughly 8% year to date, driven largely by these strong fundamentals rather than just sentiment. That's meaningful.

There's also some encouraging news on the geopolitical front. President Trump's visit to Beijing has improved U.S.-China relations, with both sides describing the tone as constructive. A trade truce reduces escalation risks between the world's two largest economies."

The Headwind

Now, we can't ignore the elephant in the bond market. Global yields have risen sharply—the U.S. 10-year is now at 4.56%, and Canada's is at 3.58%.

Higher yields mean better income opportunities, but they also increase borrowing costs. That could eventually weigh on household spending, which is crucial for the economy."

So where does this leave us? Despite uncertainty around energy markets, corporate fundamentals are holding strong. Here’s what matters: profit growth depends on stable economic conditions.

If energy disruptions drag on, we could see real headwinds. That's why we're staying invested in equities at target levels while maintaining diversified exposures to navigate whatever comes next.

Thanks for tuning in and see you in two weeks.