Earnings and investment spending shape market momentum: Insights from Jurrien Timmer - April 27, 2026
Markets are climbing in the face of uncertainty, and earnings are doing much of the work. Fidelity’s Director of Global Macro, Jurrien Timmer, shared his perspectives on the forces shaping markets today, including earnings momentum, investment spending, fiscal dynamics and the evolving role of diversification.
Here are some of the key points from his commentary.
Earnings momentum is doing the heavy lifting
This earnings season has stood out not just for how many companies have beaten expectations, but by how much. About one third of companies have reported so far, and roughly 78% have exceeded earnings expectations. What has been more unusual is the size of those surprises, which have averaged approximately 1,000 basis points. More importantly, the magnitude of positive earnings surprises has increased as the reporting season has progressed. While earnings strength has shown resilience, it also suggests potential support from recent results and expectations for upcoming quarters.
Investment tied to artificial intelligence has been part of that story, particularly through spending on data centres, semiconductors and memory. Still, the broader takeaway is resilience. Areas linked to technology spending have remained range‑bound during periods of stress and then moved higher as conditions improved.
Markets have remained focused on earnings despite recent shocks
Recent market behaviour also reflects how investors are weighing geopolitical developments. Oil prices rose, trading near $97 at the time, yet equity markets behaved as though the move could prove temporary. Rather than reacting primarily to energy prices, market attention remained focused on the earnings backdrop. That pattern was also visible in valuations. During the pullback, equity prices declined by about 10%, while valuations compressed by closer to 19%. In Jurrien’s view, uncertainty was repriced quickly, even as price declines remained relatively contained.
Solid growth meets weak consumer confidence
Another key theme is the disconnect between strong economic data and subdued consumer sentiment. Growth has been running above potential, which he described as consistent with a mid‑cycle environment. At the same time, measures of consumer confidence have remained near historically low levels. Inflation helps explain that gap. Even though the pace of inflation has moderated, consumer prices are up roughly 30% since 2020. With everyday costs still elevated, confidence remains under pressure despite continued economic expansion.
Debt, yields and the yield‑curve balance
Debt levels add another layer of complexity. U.S. government debt is approaching $40 trillion, or about 112% of GDP, raising longer‑term sustainability questions. Long‑term interest rates have been relatively stable, but debt management decisions still matter. In Jurrien’s framing, policymakers may prefer lower long‑term rates and a steeper yield curve. Such an outcome could encourage banks to absorb more duration over time and gradually reduce pressure on the Federal Reserve’s balance sheet. There are limits to that path. If short-term rates were pushed lower too aggressively, the bond market may react negatively, which could potentially lead to an increase in long-term rates. He framed this as a risk scenario rather than a base case.
Commodities and diversification regain relevance
Commodities are taking on renewed importance in a more fragmented global environment. Deglobalization, tariffs and geopolitical risks tied to shipping routes and energy supply have lifted the strategic relevance of real assets. Canada’s positioning reflects this shift. Its exposure to commodities and moves toward sovereign wealth structures stand out at a time when energy and materials may play a more prominent role. From a diversification perspective, commodities have also shown improving characteristics. The Bloomberg Commodity Index has become more negatively correlated with both stocks and bonds, which can be valuable in an environment where bonds may not consistently offset equity risk.
Bitcoin and the shift from “really bad” to “less bad”
Jurrien discussed Bitcoin through the lens of an asset allocator rather than as a permanent holding. He described its recent momentum as shifting from “really bad” to “less bad,” a point where allocators often begin paying attention. After peaking near $126,000, Bitcoin pulled back toward $60,000 and later traded in the higher $70,000 range. Compared with historical drawdowns of 80% to 90%, this pullback was relatively mild. As the asset matures, he expects both rallies and drawdowns to become less extreme. Looking ahead, he outlined two possible paths. Historical trends indicate a potential for another upcycle, but the timing is uncertain. Over the shorter term, a downside technical break would be negative, while an upside move would signal a shift away from bearish patterns.
Valuations remain elevated, but fundamentals still lead
Valuations remain high, but context is important. Earnings growth has been strong, running near 17% year over year, with five‑year growth around the mid‑teens. Estimates for the coming years remain in solid double‑digit territory. Some valuation metrics appear stretched. The CAPE ratio is near 40, and trailing price‑to‑earnings multiples are in the 20s. However, when viewed through a discounted cash‑flow lens, Jurrien places greater emphasis on the equity risk premium. With credit spreads near historical lows and profit margins around record levels near 15.5%, his framework suggests the equity risk premium sits close to 4%, broadly in line with where it should be. In his view, this backdrop differs from periods such as 2000 when valuations diverged sharply from fundamentals.
Conclusion: Watching what comes next
For now, earnings momentum remains the anchor supporting markets. At the same time, risks remain worth monitoring. Overspending, particularly in areas such as data centres, could eventually change the narrative as this cycle evolves.
