Weekly Investment Update (04/17/2026)

As we have argued in recent weeks, periods of geopolitical stress do not always translate into lasting market damage, particularly when diplomacy begins to reassert itself before economic fundamentals materially deteriorate. That is increasingly the backdrop today. Progress toward a more durable agreement with Iran still appears incremental rather than complete, but the direction is constructive: The ceasefire has held, the rhetoric around nuclear negotiations has improved, and even partial stabilization in the Strait of Hormuz meaningfully reduces the probability of the kind of prolonged shock investors feared at the outset. Markets do not need a perfect resolution to respond well. They need evidence that the worst-case path is becoming less likely.

At the same time, the earnings backdrop continues to validate a more resilient view of the economy and markets. Early bank results, spending data, and labor-market readings all point to consumer and corporate sectors that remain on firmer footing than many expected, while consensus still looks for a sixth consecutive quarter of double-digit earnings growth for the S&P 500. Just as important, companies appear better prepared than in past cycles to absorb input-cost pressure through pricing discipline and operating efficiency. There will still be headlines that test investor sentiment, but the broader pattern is one we have emphasized throughout: Episodic volatility can be uncomfortable, yet if geopolitical risks begin to fade as earnings power remains intact, the market’s long-term trajectory is unlikely to be meaningfully altered.

Earnings Strength Amid a Resilient Backdrop

What is happening: The start of the Q1 earnings season has set a constructive tone for markets. The estimated year-over-year earnings growth rate for the S&P 500 is roughly 15%, an exceptionally strong pace. Over the past two decades, there have only been three occasions when consensus expectations were this high at the start of the reporting season. Moreover, earnings growth is on track to reach 18% to 19%, assuming the historical trend of positive revisions continues. This would mark the sixth straight quarter of double-digit growth.

U.S. banks, among the first to report, have posted solid earnings beats driven by strong revenue, particularly in capital markets, which benefit from elevated market volatility. Banks also highlighted robust client activity, with consumer spending largely undeterred by higher energy costs. As of April 16, earnings are beating estimates by 10.8%.

Although earnings growth is broadening to sectors such as energy and cyclicals, technology-related earnings still drive a significant share of overall growth, leaving the outlook somewhat sensitive to a potential slowdown in the sector. At the same time, this dynamic leaves U.S. markets less exposed to energy shocks, as technology spending tends to be less affected than other sectors. This was reflected in results from TSMC, one of the first chipmakers to report this week. In addition to earnings and revenue beats, the company raised its revenue outlook, maintained strong capital expenditure forecasts, and downplayed impact of supply disruptions (e.g., helium) related to the Middle East conflict.

Why it matters: What’s driving strong earnings is a combination of broadening growth momentum, U.S. dollar tailwinds, and the ongoing AI boom. The cyclical upturn is reflected in the ISM manufacturing PMI, which remained in expansion territory through March after several years of contraction, as well as in the broader services PMI. Improvements in the Philadelphia Fed and Empire manufacturing PMIs point to another healthy read for ISM manufacturing in April. Dollar weakness, down 5% year-over-year, has supported sectors such as materials, technology, and energy. Meanwhile, AI beneficiaries continue to propel earnings growth, led by companies such as Nvidia and Micron.

The recent oil price shock, on the surface, could pressure the key earnings drivers noted above, as higher energy costs can weigh on capex and consumer demand, while economic uncertainty may support U.S. dollar appreciation. However, oil prices remain well below prior peaks, and the imbalances are easing due to rerouting, record emergency releases from the International Energy Association, and a growing number of ships transiting through the Strait.

With banks setting a positive tone, a constructive earnings season can help extend the recovery across equity markets. Banks are also an important economic bellwether and generally underperform when recession fears rise, as they boost provisions to nonperforming loans ahead of slowdowns. In this reporting season, provisions were generally lower, and while recession probabilities have increased modestly since the oil shock, they are likely nearing a peak if oil prices stabilize and economic data hold firm. U.S. hard data and surveys have remained solid on balance, with improved breadth in manufacturing production, strong vehicle sales, and new lows in jobless claims. More timely business surveys have shown little evidence of deterioration. This backdrop remains supportive for cyclical sectors and broadening earnings growth, particularly if oil prices normalize back below $90 per barrel.

Bessemer portfolios are overweight J.P. Morgan, Citi, and Bank of America, while our largest sector overweights are communication services and industrials.

Victor Orbán Defeated as Hungary Backs Pro-European Opposition in Landslide

What is happening: Hungarian voters delivered a decisive defeat to Prime Minister Viktor Orbán in last weekend's parliamentary elections, ending his 16-year tenure. Péter Magyar’s Tisza (Respect and Freedom) party secured a two-thirds supermajority, winning 138 of 199 seats, while Orbán’s Fidesz (Alliance of Young Democrats) party was reduced to just 55 seats with the far-right Our Homeland party gaining 6 seats. Voter turnout reached nearly 80%, the highest since the fall of communism in the 1990s, as voters reacted to weak economic growth, entrenched corruption, and deteriorating public services. Orbán conceded defeat on Sunday night, easing concerns he might contest the result.

In the immediate aftermath, Hungarian markets rallied as investors welcomed Magyar’s pledges to tackle corruption and repair relations with the European Union (EU). The forint strengthened 4% against the U.S. dollar, and the Hungarian stock market rose 8% on Monday.

Why it matters: The result marks a significant turning point. While most polls pointed to a Tisza victory, a supermajority was not widely anticipated. Magyar has indicated that he will use his constitutional majority to dismantle Orbán’s control over institutions, including the judiciary. European Commission President Ursula von der Leyen noted that “Hungary has chosen Europe” and discussed with Magyar the release of about €20 billion in EU funds that had been frozen due to rule-of-law and corruption concerns. In addition, the EU’s €90 billion loan package for Ukraine, intended to support Kyiv’s war effort and previously blocked by Orbán, now appears likely to move forward. The outcome represents a blow to Russian President Vladimir Putin, who had viewed Orbán as a key ally within the EU.

For the EU and the wider West, the implications are both strategic and economic. Under Orbán, Hungary often served as a veto point within the EU and NATO, blocking unified positions on Ukraine, sanctions, rule-of-law standards, and relations with Russia and China. A more pro-European government in Budapest will not transform Europe overnight, but it should contribute to a more cohesive bloc, reduce internal divisions, and strengthen credibility on issues such as democracy, corruption, and the rule of law.