final chapter for JPow

📊 EARNINGS SEASON: THE SCORECARD SO FAR

We are roughly a third of the way through Q1 2026 earnings season. And the numbers are honestly impressive.

84% of S&P 500 companies that have reported so far have beaten EPS expectations. That is above the historical average. The blended earnings growth rate is sitting at 15.1% year on year, which would mark the 6th consecutive quarter of double-digit earnings growth.

Net profit margins are at 13.4%. The highest level ever recorded since tracking of this metric began in 2009.

Pete's Take 👇 Strong season. No question. But here is what I find interesting. Even companies beating estimates are only seeing their stocks rise about 0.9% on average after results. The market has priced in a lot of good news already. That tells you the bar this week is not just "beat the number." It is beat the number AND say something that surprises. Good earnings with weak guidance will get punished. Keep that in mind.

💻 MAG 7 EARNINGS: THE WEEK THAT MATTERS

Five names. This week.

Wed Apr 29: Meta, Microsoft and Alphabet all report after market close.

Thu Apr 30: Amazon and Apple reports.

Here is what the market is watching.

Meta is expected to report revenue around $55.5 billion, about 31% higher than the same quarter last year. EPS consensus is around $6.67. Meta has not missed a sales expectation since Q2 2022. 14 straight quarters of beats. The question is not whether they hit the number. It is what Zuckerberg says about AI returns.

Microsoft is a cloud story. Azure growth is tracking near 38% for the quarter. Revenue consensus is around $81 billion. The market will dissect every line item related to AI monetisation. Will OpenAI be a plus or minus?

Alphabet is the Google Cloud play. Growth could clear 48% this quarter. Revenue consensus is around $107 billion. Market has set a price target of $410, calling Google Cloud "well-positioned for cloud share gains."

Amazon targets revenue around $177 billion. AWS performance and any commentary on e-commerce margins, especially with tariff uncertainty still lingering, will drive the market reaction.

Pete's Take 👇 One topic running through all names is AI capital expenditure. Every single one of these companies is spending billions building the AI infrastructure of the next decade. The market has been rewarding that spend on faith for two years now. This week, it wants receipts. If the AI investment is showing up as actual revenue growth and not just cost, the rally continues. If guidance gets cautious, expect a pullback. Watch the guidance more than the headline number.

🏦 JPOW'S FINAL CHAPTER

This one does not get enough attention.

This week, Jerome Powell chairs his final FOMC meeting as Fed Chair. His last press conference is tomorrow, Apr 29. After more than 8 years leading the Fed through COVID, the fastest rate hike cycle in modern history, and the start of cuts, he hands the keys to Kevin Warsh.

Warsh, nominated by Trump, is expected to be confirmed by the Senate Banking Committee on Apr 29. He officially succeeds Powell in May.

Rates are expected to hold at 3.50% to 3.75%. No cut. No hike. The Fed is in full wait-and-see mode.

The Iran war oil shock is the reason. WTI crude is hovering around $96. Brent is above $107. Higher energy costs keep inflation sticky. And sticky inflation means Powell leaves without finishing the job on cuts.

Wall Street is genuinely divided on what comes next under Warsh.

• JPMorgan thinks rates stay unchanged for all of 2026.

• Bank of America still expects two cuts this year.

• Warsh himself has signaled he wants a dual approach of balance sheet reduction and rate cuts, which some read as more dovish than Powell.

Pete's Take 👇 This is a transition moment, and transitions create uncertainty. Powell era has seen one of the most turbulent economic cycles in modern history. Warsh walks in sandwiched between an oil shock on one side and a slowing economy on the other. Whether he moves fast or stays patient defines the next 12 months for rate-sensitive stocks, bonds and property.

My honest view? Do not try to predict his first move. Watch the Jun and Sep FOMC meetings. That is where his real character comes out.

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Pete
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The information provided in this newsletter is for informational purposes only and does not constitute financial advice. Readers should seek their own independent financial advice before making any investment decisions. Please note that while Pete is a portfolio manager, the opinions expressed in this newsletter are his own and do not represent the views of any organization. Always perform your own research and due diligence before investing.