Raising our estimates on the other side of the wall

Inflation remains the market’s main concern, but the latest rise in prices looks more like an oil shock than a lasting shift in the trend.

Bonds have reacted sharply, yet equities have held up better because earnings growth is still strong and margins are improving.

The outlook also benefits from a patient Federal Reserve, tax relief for consumers, and a broadening market that is no longer led only by mega-cap technology stocks.

With earnings estimates moving higher again, the case for U.S. equities remains constructive even if inflation stays elevated for a while longer.

Risks remain around energy prices, geopolitics, and any delay in Fed easing, but the broader setup still favors stocks over bonds.