Good morning, investors. The US and Iran did not compromise on a peace deal over the weekend. Late Sunday, the US military set plans to begin a new “blockade” on the Strait of Hormuz at 10 AM this morning, something markets already seem jittery about.

That said, one of Wall Street’s most closely-watched strategists is focused on another, more fundamental corner of finance.

Comparisons between the Strait of Hormuz closure and previous oil shocks do not make sense.

That’s according to Mike Wilson, Morgan Stanley’s chief equity strategist.

In a note Sunday, he argued that investors who position for a replay of the 1970s or 1990s are making a mistake largely on account of the earnings strength underpinning financial markets.

In every prior oil shock that tipped the economy into recession, corporate profits were already deteriorating when crude prices spiked.

Oil volatility was a finishing blow to an already weakening cycle.

Yet this time, earnings are accelerating.

The median S&P 500 company is growing EPS in the double digits, the fastest pace since 2021.

Meanwhile, estimates tracked by FactSet call for 17% earnings growth this year, with quarterly acceleration building through the next three quarters.

Barclays, for one, recently raised its 2026 S&P 500 earnings per share estimate to $321, representing roughly 16% year-over-year growth.

That's the opposite of what preceded the 1973 embargo, the 1979 Iranian Revolution and Iraq's invasion of Kuwait, as Wilson noted.

"This is also why the comparison to prior oil shocks is less concerning to us," he said.

"In those cycles, earnings were already deteriorating or falling sharply. Today, they are accelerating from already high levels.”

Given that profits are rising, Wilson argues, the S&P 500's 18% decline in forward P/E since last October represents a classic bull market correction — falling multiples paired with improving earnings — rather than the start of a bear market.

That’s an important distinction.

In bear markets, earnings and multiples tend to collapse together whereas during corrections, valuations compress while profits hold or improve.

It’s worth pointing out, too, that oil prices remain in more modest territory than headlines suggest.

Adjusted for inflation, US crude prices near $97 a barrel sits well below the peaks of 1980 and 2008.

What’s more, the US is sitting on a consumer cushion that didn't exist in prior oil shocks with tax refunds running more than 10% larger this year.

“Markets trade in advance of the headlines,” Wilson said.

“Investors should do the same."

📈 US stocks are coming off their best week of the year. Even with mixed economic data closing out the winning stretch, the major indexes rallied on optimism for more clarity on the Middle East. (WSJ)

⛽ Higher gasoline costs pushed inflation higher in March. Consumer prices rose 3.3% in the month, with energy prices jumping 10.9%. Still, core prices rose less than expected, indicating that underlying inflation remains contained. (CNBC)

📊AI has prevented 1 million new hires. While AI-linked layoffs hover at 27,000 so far in 2026, the hiring rate has collapsed to the lowest level since April 2020 with companies turning to AI to handle a growing share of work. The data point to a slowdown across sectors and age groups. (ProCap Insights)

🗓 April 13, 1976: The US Treasury reintroduced the $2 bill as a Federal Reserve Note on Thomas Jefferson's birthday, marking the nation's bicentennial. It remains the least circulated denomination in American currency.

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