The fragility of the Middle East ceasefire worsened after the weekend talks between the US and Iran failed to reach any consensus, though neither side declared the dialogue broken. Vice President Vance asserts that Tehran has not accepted the White House's "red lines," particularly on the issue of nuclear weapons. Thus, though complicated, the diplomatic channel remains open and the ceasefire is still in effect.

Our take

Most significantly, financial markets are operating as if the extreme scenarios have been ruled out. The past week has suggested that neither Iran nor the US is seeking further escalation and that, perhaps, negotiations could continue despite the disappointment of the weekend talks in Islamabad. As such, a good portion of investors continues to hold on to the idea that, despite the deteriorating context, some negotiated exit could still be found.

Energy prices are rising sharply this Monday after President Donald Trump announced a new blockade of vessel passage through the Strait of Hormuz. US forces will begin closing passage for ships bound for Iran starting at 8am Mexico City time. International oil prices are once again surpassing $100 per barrel, with an advance of more than 7%.

Our take

The energy market has largely returned to pre-ceasefire conditions, except that now the United States will also block the remaining flows (up to two million barrels) linked to Iran through the Strait of Hormuz. The key remaining question is whether the US resumes its offensive against Iran, increasing the risk of attacks on energy infrastructure across the region, which could have a lasting impact beyond the extension of the war.

Throughout the week, the major US lending institutions will report their first-quarter 2026 figures. Goldman Sachs reports today, Monday, followed by Citigroup, JPMorgan, and Wells Fargo on Tuesday, while Bank of America and Morgan Stanley will do so on Wednesday. In addition, other major non-financial companies are also reporting results this week, most notably Johnson & Johnson (Tuesday), Abbott Laboratories, Netflix, and PepsiCo (Thursday).

Our take

Analyst consensus expects net income for S&P 500 companies to have increased by more than 12% year-on-year in the quarter, though what will matter most is what companies say about the potential impact of the sharp rise in energy prices and supply chain disruptions on their sales (demand) and costs.

China's export growth likely slowed in March following the strong rebound recorded in the first two months of 2026. Port and maritime shipping data indicate that outbound shipments have slowed, likely reflecting the impact of the war with Iran, which is beginning to weigh on global demand and trade logistics. The sharper decline in the number of containers destined for the US also suggests that higher tariffs continued to divert Chinese goods toward other markets.

Our take

The expectation is that exports rose 8.6% in the third month of the year, following the 21.8% increase recorded in the January-to-February period. Meanwhile, import growth is likely to have slowed to 10.0%, from 19.8% in the first two months. In both cases, these represent robust expansions.

Markets and Stocks

Goldman Sachs opened the first-quarter earnings season today in a particularly complex environment. According to Bloomberg, analysts expect S&P 500 earnings to grow 12% for the quarter, the weakest since the second quarter of 2025, though that number includes a significant contribution from the energy sector, the only sector in the index that gained in March. Excluding technology, the expected growth falls to around 3%, the weakest in two years. Five themes will dominate the earnings season narrative: the impact of the energy shock on margins, the threat of AI on software business models, tensions in private credit, the state of the consumer amid high energy prices, and updates on tariff exposure.

Corporate News

Grupo Herdez announced the creation of a strategic partnership with Froneri International, a joint venture between Nestlé and PAI Partners, for the ice cream business in Mexico. Under the terms of the agreement, both parties will maintain a 50% stake, with Froneri making a capital contribution to finance its growth plan. The transaction does not imply a cash inflow for Grupo Herdez at closing. Froneri will assume full operational control to implement its specialized model, which will lead Grupo Herdez to deconsolidate the business's results from its income statement. The transaction is subject to approval from the National Antitrust Commission and is expected to close during 2026.

Goldman Sachs reported earnings per share of US$17.55 in the first quarter, beating estimates, with total revenues of US$17.23 billion (also above consensus). The equities division recorded its best quarter with revenues of US$5.33 billion (+27%), while investment banking grew 48% to US$2.84 billion, driven by an acceleration in M&A activity. However, the fixed income, currencies, and commodities division fell short of expectations, with revenues declining 10% and coming in below estimates. Goldman also raised its credit loss provisions to double what was expected.

LVMH reports its quarterly sales today in Paris, opening the European luxury sector's earnings season. The Iran conflict directly hit Gulf markets, which had been the most dynamic growth segment for the luxury industry in recent years, with regional sales contracting amid disruptions to air traffic and tourism. The global luxury company index has lost more than 30% of its value since its June 2024 peak, affected by the combination of a slowdown in China, lower consumer spending, and now the energy shock.

The to-do list

Quote of the day

"Success is the sum of small efforts repeated day after day."

— Robert Collier