(performance data as of April 30, 2026)
“Oil and gas crisis from Iran war “worse than 1973, 1979 and 2022 together.”
– Fatih Birol, Head of the International Energy Agency (IEA)
Schizophrenic headlines be damned; investors just got a confidence-boosting shot of adrenaline in the form of decidedly positive corporate earnings results. We closed out April in a way that seemed to shift sentiment from macro concerns to profitability euphoria despite oil supply nearing the brink. What me, worry?
It’s hard to argue against the resilience of the U.S. economy, or at least the market’s ability to weather various storms and continue its ascent. Earnings season has now concluded, and what a doozy it was. Over 80% of reporting S&P 500 Index1 (S&P 500) companies beat earnings expectations2. But earnings weren’t just good, they were phenomenal. Over the long term, earnings growth has tended to come in around the 7-8% range. This quarter, however, average year-over-year earnings growth was in the mid-20% range — levels typically seen coming out of a recession or a significant market shock (e.g., the Covid recovery). Neither scenario characterizes our current environment. So, despite pundits raising concerns over stretched valuations in U.S. markets, there’s a very strong case to be made that these lofty levels are completely justified. But, beyond the numerical headlines, there are two other interesting points of context. First, the fact that over 80% of companies beat earnings estimates goes to show that strength is broad-based. It’s not just the Magnificent 73 that are experiencing tailwinds; it’s a much more inclusive group of winners. Second, as pointed out by the Financial Times2, U.S. equity returns have been less a function of price to earnings or P/E multiple expansion (i.e. the price paid for each dollar of earnings isn’t increasing). Rather, investors seem more focused on fundamentals, or “following earnings”, which is a departure from recent behaviour seemingly driven by “vibes.” If that is, in fact, what’s going on, many would surely welcome this as a healthy development.
But, with oil supply constraints increasing and rising prices showing up at the pumps, grocery stores and elsewhere, analysts who were keenly waiting for reports indicating whether U.S. consumers were carrying on with their propensity to spend, got good news. American Express added to optimism, noting that spending from younger cardholders (Millennials and Gen Z) remains exceptionally strong and continues to drive overall growth, with the American Express CEO remarking that cardholders “don’t care about gas prices.”4 While that’s certainly a positive signal to bake into the overall reading of the current environment, it is worth noting, however, that Amex cardholders do tend to skew more affluent. As a result, it’s a segment of the population that tends to be less susceptible to macro pain or is at least among the last groups to tighten their purse strings.
While those on the wealthy end of the spectrum may not be overly concerned about gas prices, we cannot ignore the fact that we are marching closer and closer to what could very well be an oil supply crisis. As mentioned in past comments, the closure of the Strait of Hormuz is, perhaps, the single most significant catalyst impacting the global economy – if not today, based on the relative strength of the Artificial Intelligence (AI) buildout, it certainly has the potential to negatively overshadow AI positivity in the coming weeks and months. A recent article in the Financial Times5 put forward an assessment that the oil market was four weeks from a tipping point. Their comments suggested that at the onset of June, we could see a significant increase in oil prices as the Strait of Hormuz blockade reduces global stockpiles below critical levels. Markets are beginning to price in the chances of a much longer conflict after President Trump told oil company executives in late April that the blockade in the Strait could continue for months. They note that unless things change very soon and material quantities of oil are allowed to reach their end markets, June is increasingly looking to be a tipping point when something must give, otherwise, the industry will begin shutting down and a recession would be imminent. Remember, the unfolding “crisis” to date has been one characterized by readily available oil but at much higher prices. The next phase takes the “readily available” bit out of the equation, as countries reach the bottom of their strategic reserve barrels and, thus, will considerably increase prices further.
On the economic side, much discussion (and speculation) is taking place with regards to the impact of AI on U.S. employment. Both Mark Zandi, Chief Economist at Moody’s Analytics, and Kathryn Anne Edwards, Labour Economist and Policy Consultant with the National Academy of Social Insurance, voiced their concerns during interviews over the past month. According to Zandi6, the U.S. labour market represents the biggest risk to the economy right now, indicating that layoffs is what he’ll be following most closely over the coming months. In his view, AI, tightened immigration and uncertainty stemming from the war in Iran (with inflation implications) are the three most significant things set to potentially reshape the labour market. Meanwhile, Kathryn Edward’s comments7 didn’t leave you feeling warm and fuzzy either. Her read is that we’re currently seeing a “slowing of the gears” of the labour market with hiring, quits and growth in wages all pointing to a decline in labour market mobility (i.e. the ability and willingness of workers to jump to different roles/employers). She, too, is keenly watching for layoffs, saying that amidst a labour market that’s already churning very slowly, layoffs could “lead to a terrible recession quite quickly.” Meanwhile, while people may be following job creation figures, there’s certainly some underlying context of concern. According to her, roughly 700,000 jobs were added in the Health Care sector last year. Every other sector of the U.S. economy experienced job losses. In her words, “without health care jobs? Big recession.” And unfortunately, these sorts of jobs don’t feel as productive to the economy because health care is notorious for being a bloated, poorly organized sector that is massively reliant on government subsidies.
In other news, the AI race is heating up with what some characterize as a “gold rush” to get cheap Chinese tokens. Tokens, for those unfamiliar, are essentially fundamental units of data that are generated to answer questions within large language models (LLMs) like ChatGPT. It increasingly seems as though these AI tokens will become the oil of the future, powering the digital age, and, as it stands today, China is producing these tokens far more inexpensively than anyone else. In fact, it’s currently about 6x more expensive to generate tokens in the U.S. relative to China. This matters because consumers and businesses are moving beyond simple queries into agentic AI, the latter of which is far more token-intensive. The U.S. still maintains a lead in terms of overall quality of AI models, but could we see an intensification of users opting to get 80% of the value for 20% of the cost using Chinese models instead? With many Silicon Valley startups now using Chinese agents or LLMs to power their tech, this structural advantage that China continues to build up will very likely be seen by the U.S. administration as a national security issue, leading them to potentially lock China out of the U.S. market. While it’s perhaps hard for some investors to wrap their heads around the notion that NVIDIA may yet have lots of growth runway ahead after already quickly climbing to become the world’s largest company, strong tailwinds are blowing for the company as agentic AI creates a premium for AI tokens with more powerful chips needed (i.e. their latest generation Blackwell chips).
And finally, we move to a topic that typically excites investors – initial public offerings (IPOs). There’s a buzz amongst the investing community about potential upcoming IPOs from OpenAI, Anthropic and SpaceX. Some estimates peg the combined valuation of these three companies, once they go public, at roughly $3.75 trillion8. On an inflation-adjusted basis, that equates to more than the value of all dot-com era IPOs combined7. One issue, though, is that private companies have increasingly stayed private for longer, meaning the “startup” growth phase tends to be captured by private investors, potentially leaving less upside for public-market investors once they gain access to purchase shares. Another potential issue, in this case, is that the $3.75 trillion will need to come from somewhere, and it seems highly unlikely there’s a mountain of cash on the sidelines for investors to draw from. Instead, they’re almost certainly going to be selling down other assets to fund what they believe to be an exciting new opportunity. Related to that point, think about the exchange-traded fund (ETF) universe. These IPOs are immediately going to constitute some of the largest equities in the world, meaning they will be included within broad-market indexes very quickly, forcing most index-tracking ETFs to rebalance their portfolios accordingly (i.e. sell down existing positions to raise enough cash to buy “market-weight” positions in these three new stocks). Go a step further now. Even for active managers, many of them are benchmark aware and, unless they’re running concentrated strategies seeking to generate alpha from high-conviction stock picks, many of them simply can’t afford not to own a piece of these companies, because they worry about potential underperformance relative to their benchmark if these stocks climb. As such, it’s hard to believe this won’t put pressure on some of the largest incumbents in the S&P 500 Index, as investors of all shapes and sizes seek liquidity to fund their new IPO purchases.
After getting thumped in March, equity markets across the world rebounded strongly in April, based largely on a combination of “ceasefire” relief in the Middle East, coupled with an incredibly strong U.S. corporate earnings season. Leading the way was the Nasdaq 100 Index9 (Nasdaq), which benefitted from a strong rotation back into Tech and AI-adjacent companies. However, even with a return nearing 16% in April, the Nasdaq still considerably trails Emerging Market (EM) equities (MSCI EM Index10) year-to-date (YTD), which returned over 13% in April, bringing YTD returns to 15.6%.
So, what’s driving Emerging Markets? You guessed it…AI! The current composition of the MSCI EM Index is not a reflection of the underlying economies right now. Instead, it’s basically become a bet on the AI capital expenditure build out we’re seeing. For the last 2-3 years, the main drivers of returns in this EM index have been Taiwan Semiconductor Manufacturing Corporation (TSMC) as well as SK Hynix and Samsung, the latter two based in South Korea and representing two of the “big three” memory chip manufacturers (the third being Micron in the U.S.). On a YTD basis, these three EM companies have driven almost 70% of the entire MSCI EM Index’s earnings growth11.
Beyond the regional lens, it seems global markets continue to rise even amidst geopolitical uncertainty and oil supply concerns because it feels like we’re largely in a Tech and Services economy, particularly in the U.S. If that’s truly the reality today, then perhaps, rising energy costs won’t be as detrimental to global markets as some might think. I, for one, though, am not holding my breath.
Canada was a relative underperformer in April, but a one-month return of 3.8% is certainly nothing to scoff at. While the Health Care sector posted the strongest return of 13.2%, this is a sector that represents less than 0.15% of the overall market, so even with performance that strong, it was a rounding error in terms of overall contribution. The Financials sector did most of the heavy lifting, representing over 30% of the S&P/TSX Composite Index12 and delivering a return of close to 11%. The Energy sector delivered a more modestly positive return yet maintains a massive lead in terms of YTD performance vs. all other sectors, now up over 32% as domestic energy producers are profiting handsomely from considerably higher oil prices. The top-performing stocks in April were Tech stock BlackBerry (blast from the past), up 63%, Curaleaf Holdings Inc. (Health Care, +59%) and Keel Infrastructure Corp (Tech, +51%).
In the U.S., the Communication Services, Information Technology and Consumer Discretionary sectors were each up well over 10%. From an individual stock performance perspective, the comparisons aren’t even close. The Information Technology sector saw some absolutely astronomical one-month returns. In fact, there were seven different tech companies that posted stock returns above 50% just in April. Leading the way by a mile was Intel, up 114% as several catalysts converged all at once to propel what seems like a real turnaround story. The primary driver of its performance in April was a blockbuster earnings report that saw non-GAAP earnings per share of $0.28 vs. analyst estimates of just $0.01. GAAP refers to ‘Generally Accepted Accounting Principles’ to which every reporting company must adhere. By contrast, non-GAAP earnings is a voluntary metric typically used to add additional context to an earnings report to show “core” business results that exclude one-time, non-cash, or non-operational expenses. Such an enormous earnings beat had one analyst covering Intel quoted as saying this was a “complete reset of the Intel thesis”13. Investors seem to have come around to what was a questionable turnaround story, with the company seeing massive demand from the AI buildout, with prominent AI partnership announcements and strong forward guidance leading to a wholesale repricing of the company’s role in the semiconductor ecosystem. Rounding out the rest of the 50%+ club in tech were AMD (+74%), SanDisk (+73%), Seagate (+72%), ON Semiconductor (+63%), Western Digital (+61%) and Micron (+53%).
International equities, as measured by the MSCI EAFE Index14, returned 5% in April. Despite that, this represents underperformance vs the U.S.; International investors would have still breathed a sigh of relief after the painful previous month. Return drivers in this bloc of countries were much the same as the U.S., with the Information Technology sector leading the way, up over 19%. While the MSCI EAFE Index has more constituents than the S&P 500, it’s still notable that this index, too, had seven tech stocks rising by 50% or more. They were Kioxia Holdings (Japan, +100%), Ibiden Co (Japan, +86%), ST Microelectronics (Switzerland, +64%), Nokia (Finland, +60%), Murata Manufacturing (Japan, +54%), Infineon Technologies (Germany, +53%) and Renesas Electronics (Japan, +52%).
From an equity factor standpoint, Momentum and Growth jumped to the top of the charts, swapping places with Dividends at the bottom, while Quality was nestled comfortably in the middle, up over 8%. Meanwhile, gold continued its descent, albeit just marginally. After declining over US$600/oz in March (-12%), it shed just $32/oz in April for a 0.70% dip. It appears the persistence of expectations for little or no rate cuts in the U.S. has dampened demand for the shiny metal relative to yield-bearing assets like U.S. Treasuries.
On the currency side, the U.S. dollar (USD) declined by 2.3% vs. the Canadian dollar (CAD). And, while the USD was generally weaker vs. a basket of global currencies (-1.9%), CAD benefitted from higher oil prices and a shift in policy sentiment. Investors are now pricing in a higher likelihood of a rate hike in Canada if oil-induced inflation persists, while in the U.S., even though rate hikes aren’t priced in yet, rate cut expectations have all but evaporated.
Recall back in March, there was almost nowhere to hide in fixed income, with aggregate bond performance both in Canada and the U.S. declining by around 2%, based on the rapid change in sentiment surrounding inflation and the knock-on effects of what that meant for central bank expectations. Fortunately, that negative re-pricing seems to have largely played out in March, while April saw some modestly positive (though some might call it flat) performance. Echoing remarks from our last commentary, particularly here in Canada, our Fixed Income team views that expectations for rate hikes by the Bank of Canada (BoC) seem stretched, and economic growth concerns are going to potentially keep it from entering into a near-term hiking cycle. Unless we see inflation expectations heat up in earnest and even greater rate hikes being priced in, fixed income investors could possibly be set up to benefit from a resumption of the diversification benefits of bonds in portfolios. Skeptics, though, might see President Trump as too much of a wild card. As well, they may be underestimating the pain tolerance of the Iranian regime, with regard to ensuring their counter-war against the global economy remains intact, as they stifle any meaningful outflows of oil through the Strait of Hormuz. If this worst-case scenario comes to pass, it could trigger a domino effect; sending oil prices, inflation and interest rates higher.
Canadian and U.S. bond yields, once again, increased over virtually all tenors (time to maturity), reflecting increased inflation expectations. Our comments from last month remain relevant still. Here in Canada, our Fixed Income team expects to see a re-steepening of the yield curve, with short-term rate expectations set to come down, further reflecting their view that we could see economic growth as a bigger challenge than inflation, putting the BoC in more of a “wait and see” mindset relative to what the market is currently expecting.
On the rates front, both the BoC and the U.S. Federal Reserve (Fed) held interest rates steady at their respective policy meetings in April. The BoC noted that while there’s little evidence right now that oil prices have fed through more broadly to goods and services prices, should oil prices continue to increase, and particularly if they stay elevated, they are prepared to act (i.e., raise rates). Quoting from BoC comments, “monetary policy is focused on ensuring the jump in energy prices does not turn into persistent inflation” and “there may be a need for consecutive rate increases in the policy rate.” On the flip side, however, given the estimated slack in the domestic economy and the assessment that the Canadian job market is soft (with job losses in sectors targeted by tariffs), should the U.S. impose significant new trade restrictions on Canada, the BoC “may need to cut the policy rate further to support economic growth.” This disinflationary pressure suggests that investors might be overly aggressive in pricing in two hikes for the remainder of 2026.
High-yield credit spreads declined by 0.45% in April, marking the largest monthly move since this time last year when President Trump backed away from his Liberation Day tariff threats. Yield spreads started the month at 3.28% and ended at 2.83%, in part because the rhetoric and the headlines surrounding the conflict with Iran were less disruptive. Recall that spreads spiked somewhat dramatically at the end of March, amid President Trump’s Truth Social firestorm threatening annihilation for Iran. Of course, his actions, thankfully, didn’t match his rhetoric, and with each ultimatum and deadline that passes without consequence, the markets continue to increasingly discount the President’s words. Beyond these hostilities, though, investors continued to bid up stocks amidst a strong earnings season. The resilience of the U.S. economy and, in particular, the strong earnings reports coming out of the Energy, Industrials and Consumer Cyclical sectors (which tend to dominate the high yield bond universe), led to investors re-rating the default risks of these companies and the relative attractiveness of their high yield bond issues. Said another way, April represented a re-pricing of risk in high-yield bonds with markets concluding that some of the macroeconomic and policy fears (i.e. blanket 10% tariffs) overstated near-term default risks. Spreads are historically tight and, while they can bounce around near these levels for an extended period, their current low level implies there’s little margin for error if growth deteriorates or policy mistakes have a bigger impact than currently expected.
We’re excited to announce that on May 14, we launched the Guardian i3 Canadian Dividend Growth Fund (Series A and Series F mutual fund units), a strategy that our i3 InvestmentsTM team has managed for over a decade.
And finally, don’t miss the latest episode of Buy the Way, where I sat down with Micha Choi, VP and Portfolio Manager with Guardian Capital Advisors, a division of Guardian Partners Inc., for a special episode focused on Women and Wealth.
Thanks as always for your attention. Have a great month of May!
1 The S&P 500 is an index of 500 stocks designed to reflect the risk/return characteristics of the large-cap US equity universe.
2 Financial Times & Pushkin, Unhedged Podcast, The Buy America Trade, May 7, 2026, https://shows.acast.com/unhedged/episodes/the-buy-america-trade
3 Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla
4 PYMNTS, Amex Leans on Millennials and AI as Card Spending Accelerates, April 23, 2026, https://www.pymnts.com/earnings/2026/amex-leans-on-millennials-and-ai-ascard-spending-accelerates/
5 Financial Times, Weekend edition, Oil Market Four Weeks From Crunch, May 2-3, 2026, https://www.ft.com/content/b26ba4ce-4324-4ea9-926d-caf036f20832?syn-25a6b1a6=1
6 Vox Media, Prof G Markets Podcast, The ‘Ceasefire’ Won’t Save the Economy, April 10, 2026, https://open.spotify.com/episode/1Bk6oqPC4Z6JRzvFmtsgIM
7 Vox Media, Prof G Markets Podcast, Is the Labor Market About to Tip Us into Recession?, April 17, 2026, https://open.spotify.com/episode/3Xe38ExqawXWkInkIHfhZA
8 Vox Media, Prof G Markets Podcast, Don’t Try to Beat This Market – Here’s What to Do Instead, April 13, 2026,
https://open.spotify.com/episode/4skOgsCq90MES0LNMY7Ega
9 The Nasdaq-100 Index® includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization.
10 The MSCI Emerging Markets Index captures mid- and large-cap representation across 27 Emerging Markets countries.
11 Vox Media, Prof G Markets Podcast, The Biggest IPO in History Isn’t What You Think It Is, April 28, 2026, https://open.spotify.com/episode/0wOjssolRRDOyspnsATC8X
12 The S&P/TSX Composite Index is the benchmark Canadian index, representing roughly 70% of the total market capitalization on the Toronto Stock Exchange (TSX) with
about 250 companies included in it.
13 Tech Insider, Intel Q1 2026 Earnings: $13.8B Revenue, 22% Data Center Surge, 15% Stock Jump, April 24, 2026, https://tech-insider.org/intel-q1-2026-earnings-13-6-billion-revenue-data-center-surge/
14 The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada.
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Published: May 13, 2026
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