Ceasefire Collapses, Earnings Season, AI’s Infrastructure Wall

During the weekend, talks between the US and Iran collapsed over the weekend with no alignment on terms.

Trump responded within hours, ordering a naval blockade of the Strait of Hormuz to prevent Iran from selectively allowing vessels through.
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Brent crude surged 7% back above $101, WTI blew past $104, and S&P futures opened Monday down 0.5%.
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But here's what matters more than the headline: ​
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​The market is structurally more stable than it was four weeks ago. Iran came to the table. ​
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That signal — that Tehran is looking for an exit — matters more than the fact that talks failed on round one. The US is firmly in control of the escalation cycle now, using the blockade as leverage rather than reacting to Iranian provocations.
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During the ceasefire window, US allies regrouped militarily — Israel pressed its Lebanon offensive and restarted offshore gas production. The strategic position has shifted decisively.

The immediate pressure remains oil. March CPI already showed gasoline accounting for 75% of the headline increase (+21.2% m/m).

Core inflation at 2.6% is contained, but the Fed is boxed in — markets are pricing essentially no cuts through 2026. Meanwhile, earnings season launches this week with banks setting the tone and TSMC testing the AI thesis on Thursday.

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Key Drivers This Week

Ceasefire Collapses: US Retakes the Offensive

The ceasefire that briefly calmed markets lasted exactly four days. ​
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US-Iran talks over the weekend produced no alignment, and Trump escalated immediately ordering a naval blockade of the Strait of Hormuz effective Monday. This isn't defensive posturing.
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The blockade prevents Iran from selectively allowing allied vessels through while blocking others, eliminating Tehran's last point of leverage over Gulf shipping.

Brent surged 6.9% to $101.79. WTI hit $103.60. Heating oil spiked 8.7%. JPMorgan warns oil could hit $120 if the Hormuz stalemate drags into July. Goldman says another month of closure keeps Brent above $100 for all of 2026.

But Proflex reads the strategic picture differently from the panic pricing.
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Iran came to the negotiating table — met face-to-face, engaged for 21+ hours of talks. That reveals a regime looking for an exit, not an escalation. The US used the ceasefire window tactically: Israel pressed its assault on Bint Jbeil in southern Lebanon, restarted its second offshore gas field, and regrouped coalition forces that had been losing ground. The military position is stronger now than before the ceasefire began.

Earnings Season Begins: Banks Set the Tone

Goldman Sachs kicked off Q1 earnings Monday with a top-and-bottom-line beat — EPS of $17.55 vs $16.49 expected, revenue of $17.23B.
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Equities trading hit a record $5.33B (up 27% YoY), and investment banking fees surged 48% to $2.84B on an M&A wave.
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​CEO David Solomon's framing was pointed: "The geopolitical landscape remains very complex so disciplined risk management must remain core to how we operate."

The real test of banks comes Tuesday: JPMorgan, Wells Fargo, and Citigroup all report.
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The market is watching for:

- Consumer spending patterns — are households pulling back under $4+ gas prices?
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- Credit provisions — Goldman's jumped to $315M vs $150M expected
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- Forward guidance — will banks mark down the rest of 2026?

S&P 500 Q1 earnings are expected to grow 14% YoY — the sixth consecutive quarter of double-digit growth, the longest streak since 2011 (Nationwide).

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Full-year estimates have actually risen to +19%. The numbers look strong. TSMC reports Thursday — Q1 revenue already confirmed up 35% YoY with records across the board. This is the AI litmus test for the week.

AI's Infrastructure Wall: $650B in Capex, Only 5GW Built

The AI trade is priced for exponential growth. The infrastructure to support it tells a different story.

Of approximately 16 GW of data center capacity planned for 2026, only 5 GW is actually under construction. The remaining 11 GW hasn't broken ground despite requiring 12–18 months to build.

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Transformer and switchgear delivery times have ballooned from 2 years to up to 5 years. US manufacturing can't keep up.

It gets worse further out: of 21.5 GW announced for 2027, only 6.3 GW is under construction. Beyond 2028, almost nothing has broken ground.

Money isn't the bottleneck. Hyperscalers have committed $650B+ in capex this year — AWS scaled its Mississippi investment to $25B, TSMC is investing $165B in Arizona chip fabs, and Aligned just broke ground on 540MW in Texas.
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​The bottleneck is physical: permits, grid equipment, power supply, and labor.

PJM Interconnection — the grid operator covering 13 states — faces a potential 60GW power shortfall.
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Its latest capacity auction showed a 6.5GW gap. An emergency auction targeting 15GW of new generation won't begin until September 2026.
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Meanwhile, 25% of planned projects haven't even secured a power source.
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Maine has passed a moratorium on large data centers. Public opinion is turning against AI infrastructure broadly. And the US doesn't manufacture enough critical components domestically — builders depend on imports, often from China.

This creates a two-speed market: operators who've secured power and permits command enormous pricing power, while the rest face multi-year delays.

The Energy-AI Nexus: The Hidden Constraint

Rising energy costs are hitting at precisely the moment AI needs more electricity than the grid can provide.
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March CPI showed headline inflation surging to 3.3% YoY, with energy costs up 10.9% m/m. Core remained contained at 2.6%, but the energy pass-through into electricity pricing is just beginning.
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The DOE estimates AI and data center growth will create 50GW of new electricity demand by 2030.

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PJM's summer peak load is projected to grow 3.6% annually to 222GW by 2036. Coal plant retirements have slowed dramatically — only 4 plants retired in 2025 vs 94 in 2015 — because regulators need every megawatt available.
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Trump has already rolled back Biden-era soot standards to keep coal plants running specifically for AI power.

🔍 What We're Watching

• Whether JPMorgan's earnings call Tuesday softens or escalates Dimon's stagflation warning
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• Brent crude — does $102 hold, or does blockade-driven supply fear push toward $115?
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• Any Strait of Hormuz backchannel signal — Pakistan or Oman mediation updates
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• Hyperscaler AI capex guidance on April 28-29 earnings calls and any language around delivery timelines
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• Data center moratorium legislation spreading beyond Maine

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🧭 Proflex Playbook – Ceasefire Over, Fundamentals in Focus
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The market lost its peace dividend over the weekend. But four weeks into this conflict, the worst-case scenario — uncontrolled escalation — is off the table. Iran came to negotiate. That changes the calculus.
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Our conviction stays anchored in the data:

• Focus on Structural Growth: Continue to overweight the secular AI theme, recognizing its multi-year runway.
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• Anticipate Shallow Corrections: Use dips as accumulation opportunities, not reasons for fear, understanding that "none of the corrections stick."
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• Diversify Thoughtfully: Recognize the "decorrelation" across asset classes; consider gold, silver and Bitcoin for portfolio resilience.
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• Develop Mental Models: Prioritize long-term planning (6-12 months out) over short-term news, aiming for consistent, incremental gains.

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If you're an All-Access or Managed Portfolio subscriber, our positioning has already shifted ahead of this moment—scaling up asymmetric hard asset plays while hedging for earnings volatility and geopolitical tail risks.

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Until next week,
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— The Proflex Team
​ Trusted Macro Insights. Calm Investing. Tactical Trades.

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