Bracing For a Prolonged US-Iran Conflict
Ring the bell: four of the Mag Seven report after the market closes.
Key Takeaways
Big Day for the Big Tech: The key event today will come after the bell, when, within a two-minute span, we will see Alphabet, Amazon, Meta, and Microsoft all report — with the key focus on AI-related revenues, capex, and guidance (these are the four largest spenders on AI computing infrastructure). A whole lot is at stake for the overall market, seeing as the Mag Seven group has re-emerged as the hottest trade on Wall Street and is on pace for its best month since November 2020 — a lot of hope is being priced in.
Canada’s Economic Mood Gets a Spring Thaw: The Canadian dollar has rallied nicely from over C$1.392 at the end of March to C$1.369 currently. Investors are applauding some of the recent economic reports, the recent moves from Ottawa on pipeline expansion approvals, and this belated strategy by Prime Minister Carney to blaze a trail for a new sovereign wealth fund — and, in the process, securing some pledges from foreign entities. We also had the Spring budget update yesterday containing no surprises — with the FY2026 deficit now projected to come in -C$11.5 billion below projections, at C$66.9 billion, which is close to next year’s forecast of C$65.3 billion. Both numbers represent budget gaps of around 2% of GDP, which compares to north of 5% in the U.S.
Economic Anxiety Splits the GOP: All the while, the President’s failure to deliver on his affordability campaign continues to cost him dearly at the polls. His approval rating, as per the Real Clear Politics average, has slumped to just 40%, his lowest mark yet. A recent Fox News poll found seven in ten people believe the economy is getting worse — that compares to 55% a year ago. And, all of a sudden, these poll numbers are causing some fissures among the GOP rank and file, and that is manifesting in policy gridlock, even before the November midterms — with an array of bills being held up, including defense, farming, and Homeland Security funding.
