Q1 Earnings, China GDP, Global Economy | 3 Things You Need to Know This Week

Transcript

Tim Schluter:

Hello, and welcome to 3 Things You Need to Know This Week— our regular series designed to help you sift through the noise across financial media and understand what really matters for markets. To stay up to date with our latest market insights. Subscribe to our YouTube channel or visit fisherinvestments.com. And with that, here are three things you need to know this week.

First, Q1 2026 Earnings Season.

Some of the biggest names in banking and finance prepare to report their earnings this week, officially kicking off the Q1 2026 earnings season. Heading into this season, analysts are projecting a 13.2% increase in earnings for the S&P 500 and a 9.7% rise in revenue. Information Technology and Energy are expected to lead the way. If these projections hold, it will mark the sixth consecutive quarter of double-digit earnings growth— a testament to the resilience of the global economy. This resilience comes despite the constant drumbeat of headlines about the conflict in the Middle East. One key indicator of economic strength? The steepening global yield curve. The yield curve measures the difference between short-term and long-term rates. It plays an important role in the financial system, especially for banks. Here's why: Banks borrow money from customers through short-term deposits, then lend it out at long-term rates. The steeper the yield curve, the bigger the difference—and the bigger the profits for banks. This profitability fuels growth, not just for banks but for the broader economy and stock markets, as banks provide the capital businesses need to expand. In fact, Financials were the second-best performing sector in global equities in 2025, benefiting from this steepening yield curve. It's important to remember that while these earnings reports provide valuable insights, markets don't just react to earnings results. They look ahead. Stocks often move well before companies release their numbers, pricing in expectations for future performance.

Next. China's GDP.

On Thursday, China will release its GDP report for the first quarter of 2026 In Q4 2025, China recorded year-over-year GDP growth of approximately 4.5%, down slightly from 4.8% in Q3— continuing a trend of slowing growth seen over the past several years. Some might interpret this as a sign of economic decline, but we see it differently. Sustaining rapid growth becomes increasingly challenging as economies mature and expand. In our view, China's slowing GDP growth is not a sign of stagnation. It's a natural part of its evolution into a more mature economy similar to the US and eurozone. And while many feared the impact of US tariffs, China's trade surplus topped $1 trillion last year, driven by strong global demand for its goods. Importantly, whether Thursday's GDP report exceeds expectations or falls short, what matters most is that China, despite facing economic headwinds, is still expected to contribute positively to global economic growth. This resilience should benefit stocks and reward investors with a diversified, long-term strategy.

Finally, insights on the global economy.

This week, the World Bank and the International Monetary Fund, known as the IMF, kick off their annual spring meetings, and on Tuesday, the IMF is set to release its updated World Economic Outlook. Back in January, the IMF raised its 2026 global GDP growth forecast to 3.3%. However, risks remain, including geopolitical tensions, trade disruptions and fiscal challenges. That said, it's important to remember: GDP is not a precise economic measure, and investors shouldn't overreact to minor growth revisions. The IMF's commentary often revisits well-known topics—like tariffs and energy prices—which are already baked into market expectations. But strong GDP growth isn't a prerequisite for positive stock returns. Even slow, steady growth can support rising markets.

And that's it for this episode of 3 Things You Need to Know This Week.

 For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit fisherinvestments.com. Thanks for tuning in and don't forget to hit 'like' and 'subscribe'.