North American stocks are climbing to record highs despite elevated oil prices and ongoing geopolitical uncertainty, with investors focusing on strong corporate earnings.
BNN Bloomberg spoke with Talley Leger, chief market strategist at The Wealth Consulting Group, who said earnings momentum, positive guidance and sector rotation are helping support the rally.
Key Takeaways
- S&P 500 earnings growth could approach 20 per cent, supported by strong analyst expectations and typical earnings beats.
- Investors are looking past geopolitical shocks, with historical patterns showing strong returns following Middle East conflicts.
- Inflation impact from oil remains limited, with gasoline accounting for less than three per cent of the U.S. consumer price index.
- Portfolio positioning is shifting away from energy toward consumer discretionary as oil price gains are seen as temporary.
- Technology continues to lead earnings upgrades, with AI-driven investment supporting broader gains across sectors.
Read the full transcript below:
ANDREW: Despite high energy prices and the lack of a peace deal, or a long-lasting peace deal, in the Middle East, U.S. stocks are hitting record highs, and the TSX is only about — well, as of yesterday — about 400 points from its peak. Let’s get more from Talley Leger, chief market strategist at The Wealth Consulting Group. Talley, thanks for giving us the time.
TALLEY: Absolutely. Great to see you again. It’s been a while, Andrew.
ANDREW: Yeah, I really appreciate it. So interesting, isn’t it? People discounting this energy shock that we’ve had, it appears, or investors bidding stocks to record highs.
TALLEY: So, not that surprising, and I would invoke the famous saying from Nathan Rothschild: “Buy on the sound of cannons.” And that was the title of a note I penned the Monday after the war broke out over a month ago, and that typical geopolitical playbook has been working just fine. And the takeaway, Andrew, was that the 12-month forward returns from conflict in the Middle East involving the U.S. and Israel are almost 20 per cent. So now we have yet another tailwind that gets us to our optimistic outcome for U.S. stocks this year.
ANDREW: Talk to us more just about earnings. Earnings, obviously, ultimately the thing that drives stocks. Is the picture OK?
TALLEY: Well, 100 per cent, and again, that’s another major fundamental tailwind that gets us to our target for 2026. And look, I think that the bottom-up analyst consensus estimate for the first quarter anyway is about 13 per cent, and the average undershoot from that cohort is about seven. So we could get to 20 per cent earnings growth just on the behavioural aspects alone. And again, this is one of the driving factors of our optimism for the year.
ANDREW: Right now, how are you thinking about inflation? Obviously, this increase in oil prices is inflationary. What are the implications of that?
TALLEY: So yeah, after being pretty cool-headed about the increase in prices last year, we have acknowledged this year we’re entitled to change our opinion on inflation. A little bit of an increase here, but Andrew, let’s not get carried away. Remember that gasoline is less than three per cent of the consumer price index here in the U.S. So yeah, as expected, we saw a little bit of an increase. But the point is that there’s a big difference between good and bad inflation, Andrew, and as long as producer prices keep growing faster than consumer prices — and that’s still the case — we have a tailwind for margins, and that’s another driving factor for earnings and ultimately the stock market.
ANDREW: What may — have you made significant changes to your portfolio, or what is the biggest change, if you have?
TALLEY: Great question. So we have done some trimming, protecting gains in the energy sector. Our view has been that this energy spike is temporary, or transitory, as policymakers like to say, and we started nibbling in consumer discretionary. That trade over the past month has been working very nicely. Consumer discretionary is ripping off the lows, and I think we were right to protect those gains in the energy sector. But as far as technology and small caps go, steady as she goes, because those trades, which we didn’t change, are still working very well for us.
ANDREW: Can we just loop back into the energy shock at this stage? You reckon that, looking at the patterns and futures in particular — WTI briefly going to a premium to Brent — the market is looking at what are fears of extreme short-term scarcity of fuel?
TALLEY: Yeah, so I think it’s important for investors to take a step back. When it comes to the U.S., we actually have record production. And sitting here at my home in New Jersey as a Canadian, I realize that the U.S. imports its oil from Canada and Mexico, and our North American energy infrastructure is secure, at no imminent threat of an attack from Iran or anyone else in the Middle East. So I think it’s important to kind of calm down and realize that ultimately, this is a fear premium embedded in the price of oil in Texas. And technically, from my lens, these prices want to fall back down.
ANDREW: That’s interesting, yeah. And, of course, we do — you may have touched on this already — the futures are not telling the full story about this surge in actual barrels that people need right now.
TALLEY: Yeah. Well, I think that there was a little bit of a mismatch in the comparison between the May contract for WTI and the June contract for Brent. And it gets a little bit wonky pretty quickly. But when you do an apples-to-apples comparison for June, WTI is still trading at about a $10 or more discount to Brent. And I think that’s the rub, Andrew — that it’s important, again, to realize that WTI is the North American benchmark, whereas Brent is the international benchmark. And there are pricing discrepancies because of things like the grade we’re talking about, transportation costs, you know, insurance and things like that that have to be considered.
ANDREW: Now you’ve touched on technology. Where are you in this debate that the AI capex buildout is excessive, and there won’t be profits from AI to justify these hundreds of billions of dollars in investments?
TALLEY: So when we look at the analyst revisions, it’s actually technology that is helping lead the charge and enjoying upgrades here. And if you don’t believe the analysts, listen to the companies themselves. In fact, it’s very clear that the guidance is coming from almost single-handedly the technology sector. So the fundamentals here — whether it’s revenues, margins or earnings — are still the name of the game when it comes to technology. Now, having said that, while we do think that tech has an important role to play, the role that it is playing is helping to engender or enable a catch-up phase for the rest of the market, and that’s where the mid- and small-caps come in, and some of the other sectors, like industrials, consumer discretionary, materials and the like.
ANDREW: We’ll leave it there. Talley, thank you very much indeed. Talley Leger, chief market strategist at The Wealth Consulting Group.
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This BNN Bloomberg summary and transcript of the April 16, 2026 interview with Talley Leger are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
