From the Desk

We are over 80% of the way through earnings season, and first-quarter results have been surprisingly strong. Earnings per share (EPS) across the S&P 500 Index are up a resounding 27% over last year. There were some oversized gains from ownership in high flying AI startups. So, when normalized for those non-operating gains, EPS was still up 17%. The breadth of this performance across sectors and companies is also very notable.

A lot of the key themes remain in place. The mega-cap technology companies involved in the datacenter buildout are still pouring large sums into their AI infrastructure. And while enthusiasm runs high that all this will be transformational, the market is getting more hardnosed about tracking progress on AI revenue. And hyperscalers that unexpectedly increase capex, without a compelling revenue story, are taking a hit.

Over 70% of earnings-reporting companies noted concerns about the Middle East and energy disruptions. And some revised their outlook to reflect margin weakness over the next several months. However, the aggregate outlook for margins still remains strong.

One measure of investor sentiment is how the market reacts to companies beating or missing earnings. For example, when valuations are running high, beating earnings expectations is met with a yawn, while missing expectations is punished. Based on the day after price changes, both the reaction to earnings beats and misses this quarter were moderate and right in line with their long-term averages. In other words, what companies were signaling and what the market expected were well aligned.

Sources: Bloomberg, The Financial Times, 2026.

The 2026 Infrastructure Investor Global Summit in Berlin brought together a broad group of over 3,000 attendees, including both investors and lenders, to discuss how European infrastructure markets are evolving. The pipeline of new infrastructure transactions is purported to be largely driven by digital and energy transition, which are in line with market trends in North America. The evolving landscape continues to present investors with new financing opportunities, though the quality of investments may vary significantly depending on structure or commercial terms.

Digital infrastructure was front and center throughout the conference. Data centers continue to attract strong interest, though investors are becoming more selective, particularly with respect to location. There is also the expectation that longer‑dated private capital will increasingly play a larger role in refinancing bank debt for these assets. Sentiment around fiber was broadly constructive, with recent challenges in certain markets viewed by many as operator‑specific rather than structural. Towers also remain an important theme, underscored by the sizable issuances seen in 2025. European mobile network operators are expected to continue to monetize their tower portfolios, and platforms that have already accessed the capital markets are expected to return as repeat issuers.

In power and energy, discussions reinforced that the energy transition remains a core theme, particularly in Europe, where geopolitical uncertainty has sharpened the focus on reducing reliance on gas. Offshore wind continues to require meaningful amounts of capital, with financing needs remaining elevated across Europe. As a result, there was increased focus on structuring considerations, tenor and pricing, particularly as lenders continue to manage exposure alongside rising demand. Interest in battery energy storage systems was also prominent, reflecting the growing need to manage grid load as intermittent renewable generation, such as solar and wind, does not always align with peak demand. Overall, the discussion pointed to sustained investor appetite to continue building out renewable infrastructure and strengthen long‑term energy independence across Europe.

As demand for infrastructure financing continues to rise, commercial terms and deal structures will be under pressure to ease, reinforcing the need for investors to remain prudent and disciplined in achieving the adequate risk–reward balance.

Source: 2026 Infrastructure Investor Global Summit.

Three years ago, regulators argued the largest U.S. banks needed approximately 19% more capital to withstand stress. Today, after intense industry pushback and shifting priorities in Washington, the conversation has flipped. Capital requirements may fall by 5%–6% in the name of simplicity and lending growth. The goal is clear: to get banks lending more to Main Street. But that assumption deserves scrutiny.

Nonbanks didn’t take mortgage share just because banks were constrained. They outexecuted them. One industry study by the National Bureau of Economic Research showed that fintech lenders, which are now major players in the mortgage industry, process loans about 20% faster and, in many cases, deliver reportedly better customer experiences. Regulation played a role, but it’s not the whole story. So, what happens if banks get capital relief?

Freed-up capital doesn’t automatically flow into mortgages or small business lending. It might go to trading desks, buybacks, mergers and acquisitions, or, increasingly, lending to the very nonbanks taking share in the private credit market. The real question isn’t whether banks can lend more. It’s whether they want to compete in businesses in which they’ve already lost structural ground.

Sources: Bloomberg, U.S. Federal Reserve, ABA Banking Journal, National Bureau of Economic Research, 2026.