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    Market ReportEarningsTechMacro

    Earnings won’t save you from this

    Q1 growth hit 27.7%, the best since 2021. The April CPI drops at 8:30, and Brent is back above $105.

    By VonTrend Staff
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    27.7%.

    That is the blended year-over-year earnings growth rate for the S&P 500 this quarter, the highest since Q4 2021. Of the 89% of companies that have reported, 84% beat estimates, the highest beat rate since Q2 2021. In aggregate, earnings are coming in 18.2% above consensus.

    The net profit margin for the quarter is running at 14.7%, well above the five-year average of 12.3%. By every historical measure, this is an exceptional quarter.

    What matters:

    • The April CPI report drops at 8:30 AM ET. Consensus expects headline inflation of 3.7% year over year, with core CPI at 2.7%. March came in at 3.3% with the largest monthly increase since June 2022.

    • Brent crude is trading around $107 this morning after climbing roughly 3% overnight. WTI is near $101.

    • The Trump-Xi summit begins Wednesday in Beijing. Trade, rare earths, Iran, and AI are all on the table. Sixteen CEOs are on the plane, including Musk and Cook.

    The earnings season has been extraordinary. And it might not matter by noon.

    The CPI is the only number that moves the Fed.

    The problem with 27.7% earnings growth alongside $107 Brent is that the inflation math does not cooperate. March headline CPI surged 0.9% month over month, the hottest print since June 2022, driven almost entirely by energy. April is expected to be worse. Consensus calls for 0.6% month over month and 3.7% year over year.

    The Cleveland Fed’s nowcast sits at 3.56%. Wall Street is higher at 3.7%. The gap between those two numbers is the entire trade today.

    Below 3.56% and rate-cut odds reopen. Every rate-sensitive name that has lagged this rally gets a bid. At 3.7% or above, the Fed’s one-cut-in-2026 guidance starts looking generous. The 10-year yield, sitting around 4.40% this morning, pushes toward 4.50%.

    There is also a technical wrinkle. The Bureau of Labor Statistics is updating its owners’ equivalent rent methodology with this print. A semiannual reading that was recorded as zero change during the October government shutdown gets revised. That alone could add noise to core CPI that has nothing to do with actual shelter costs.

    Realty Income (O) is the clearest expression of that rate bet. It yields 5.2% with a price-to-FFO that has compressed to the lowest level since the 2022 rate spike. The stock has underperformed the S&P by double digits year to date. A CPI miss to the downside would be an immediate catalyst. A hot print sends it lower.

    Intel rewired the semiconductor supply chain in one week.

    Intel (INTC) stock is up more than 240% in 2026 after a preliminary manufacturing deal with Apple (AAPL) and a reported chip-packaging partnership with SK Hynix. Shares surged roughly 14% Friday and added another 6% in premarket Monday to around $130.

    The shift is structural. Apple has been exclusively with TSMC (TSM) since ditching Intel’s own chips in 2020. A move back to Intel for manufacturing, even partial, validates the U.S. government’s $9 billion equity stake in the company. That stake is now worth roughly $56 billion.

    TSM fell 2.4% on the news. For a company that has held a near-monopoly on cutting-edge chip manufacturing, even a partial loss of Apple volume forces a repricing of the premium the market has assigned to its dominance.

    Applied Materials (AMAT) reports Thursday and sits at the center of this theme. It supplies the equipment both Intel and TSMC need to build advanced fabs. Whether the manufacturing dollars flow east or west, AMAT collects on both sides.

    Beijing is the wildcard.

    The Trump-Xi summit starting Wednesday covers trade, technology, rare earths, and Iran in a single sitting. China suspended exports of critical rare earth elements earlier this year, disrupting supply chains for automakers and defense contractors across Europe, Japan, and South Korea.

    Any progress on rare earth access is a direct catalyst for defense and EV supply chains. JD.com (JD) reported this morning with revenue of RMB 315.7 billion, up 4.9% year over year. Net income dropped sharply from a year ago, but narrowing food delivery losses suggest the growth bet is starting to pay off. It is the first major Chinese earnings print heading into the summit.

    Where things stand.

    The S&P 500 closed Monday at 7,412, another record. The Nasdaq finished at 26,274. The Dow settled at 49,704.

    The premarket tone is cautious ahead of the CPI release. Gold added roughly 1% overnight, holding near recent highs.

    The market is telling two stories at once. Earnings say the economy is accelerating. Oil says inflation is not done. At 8:30, we find out which one the Fed has to listen to.

    Author
    VonTrend Staff