Elizabeth Lamkin, Author at M&K Legacy Wealth

Equity Markets Looking To Be A Treat In October

Posted on October 5, 2026October 5, 2026 by Elizabeth Lamkin

Executive Takeaway: September is historically the worst performing month for stocks, with an average S&P 500 decline of 2.6% over the past five years. This year, the S&P 500 fell only 0.45% while the tech-heavy Nasdaq 100 rallied 3.2%. October is traditionally a strong buying month, with seasonal year-end rallies typically beginning in late October. With S&P Technology breaking out to new record highs, signals suggest the year-end rally may already be underway.

September Outperforms Historical Norms as Tech Breaks Out

Despite seasonal headwinds, equity markets held up remarkably well through September.

Historical Outperformance: While September averages a 2.6% decline for the S&P 500 over the past five years, the index lost just 0.45% this September.
Tech Leadership: The Nasdaq 100 gained 3.2% in September, propelled by major technology constituents.
Record High Breakout: The State Street Technology Select Sector SPDR ETF (XLK) broke out to a new record high of 201.39 before closing near 199.81, serving as a powerful confirmation of the ongoing secular bull market.

Employment Report Showed Weakness In September

Following the FOMC’s 25-basis-point rate hike on September 16, Friday’s Nonfarm Payrolls report called into question the central bank’s assumption that economic expansion is unthreatened.

Payroll & Unemployment Softness: September nonfarm payroll growth came in weaker than expected, and the unemployment rate ticked up 0.1% to 4.2%.
Household Survey Divergence: Civilian employment from the Household Survey—which captures farmers, self-employed individuals, and sole proprietors (~4 million more workers than nonfarm payrolls)—showed even greater deceleration. Because the Household Survey is more sensitive to turning points in the economic cycle, it signals broader labor cooling.
Structural Labor Shifts: Immigration trends and baby boomer retirements are reshaping the worker pool, requiring strategists and policymakers to re-evaluate traditional labor market models.

The Bear Is Visiting The Bond Market, But Inflation Is Easing

Fixed income markets continue to experience upward yield pressure across the curve.

10-Year Yield Peak: The 10-year Treasury yield touched 5.23%, its highest level since June 2007. Over the past year, as 10-year yields surged from 4.08% to 5.23% (+115 bps), a 10-year duration bond lost 10%–12% in price.
Rate Normalization: Yields between 0% and 3% were historically abnormal; a range of 5%–6% reflects the longer-term historical average for long-term Treasury rates. Unless 10-year yields break decisively above 2007 highs toward 6.0%, rates should hold near current levels following softer labor data.
Softer PCE Inflation: Personal Consumption Expenditures (PCE) and Core PCE (3.0% YoY) came in softer than expected after data revisions.
2-Year Yield Level: The 2-year Treasury yield (4.7955%) is holding below key resistance at 5.0%, pricing in one final Fed rate hike in December.

3Q26 Earnings Season Forecast: EPS Up 29.5%

As third-quarter earnings season begins, analyst estimates have been revised upward at an above-average pace.

Strong Growth Momentum: S&P 500 year-over-year earnings growth for 3Q26 is forecast at 29.5% (up from 26.7% estimated on June 30), marking the third consecutive quarter above 25% EPS growth.
Sector Leaders: All 11 GICS sectors are expected to report positive growth, led by Energy (+114.0%), Information Technology (+65.0%), Communication Services (+51.5%), and Materials (+29.4%).
Calendar Year Expectations: CY 2026 S&P 500 earnings growth is projected at 32.4%, supporting Sanctuary’s S&P 500 year-end target of 8,225 and long-term target of 10,000–13,000.
All-Time High Profit Margins: Corporate profits as a percentage of GDP have reached an all-time high in data extending back to 1945, providing fundamental support for equity valuations.

Key Market Levels & Indicators Summary

Indicator / Asset	Last Price / Yield	Context & Performance Highlights
S&P 500 Index	7,722.72	YTD: +12.8% \| Held strong through September (-0.45%)
NASDAQ Composite	27,190.86	YTD: +17.0% \| Strong tech sector support
NASDAQ 100 Index	749.58	YTD: +22.0% \| Up +3.2% in September
Russell 2000 Index	2,832.90	YTD: +14.1% \| Up +1.3% in MTD
10-Year Treasury Yield	5.2300%	Highest since June 2007; normalizing in 5%–6% range
2-Year Treasury Yield	4.7955%	Holding below 5.0% technical resistance
Core PCE Inflation (YoY)	3.0%	Fed’s preferred inflation metric came in softer than expected
S&P 500 3Q26 EPS Growth	+29.5% YoY	3rd straight quarter exceeding 25% earnings growth
National Average Diesel	$6.373 / gal	Eased off peak ($6.528) following G7 emergency stock release
Bitcoin	$84,436.89	YTD: +3.7% \| YoY: +30.1%
Gold	$4,141.19 / oz	YTD: +4.1% \| Holding above $4,100

Consumer Spending Resilient as G7 Coordinates Emergency Oil Release

While consumer sentiment showed softness, actual household spending behavior remains surprisingly strong.

Confidence vs. Action: Conference Board Consumer Confidence dropped from 88.6 to 81.9 in September due to elevated fuel prices. However, real consumer spending rose YoY in August.
Income Tier Strength: Bank of America credit card data confirms solid spending growth across all income brackets, with lower-income cardholders showing stronger growth than middle- and upper-income cohorts.
Holiday Forecast: The Mastercard Economics Institute predicts total U.S. holiday retail sales (excl. gas/autos) will grow +5.5% YoY, led by an +11% surge in e-commerce.
Freight & G7 Action: Freight costs remain up >16% YoY due to diesel costs. In response, the G7 and IEA announced a coordinated emergency release of 100 million barrels of oil and diesel over four months, initially prioritizing diesel supply to cap shipping inflation.

AI Infrastructure Buildout, Space-Based Data Centers, & Anthropic Mega-IPO

Secular technology investment continues to accelerate across new frontiers.

Semiconductor Supply Deficits: ISM manufacturing data underscores persistent shortages in semiconductors, memory (DRAM), and electrical equipment. Backlogs are rising, and the VanEck Semiconductor ETF (SMH) reversed its downtrend to reach 617.81 as it tests record highs.
Data Centers in Orbit: To bypass power grid capacity limits and water cooling constraints, SpaceX (SPCX) launched Alphabet’s (GOOGL) AI TPU chip into Earth orbit. Space data centers leverage continuous solar energy and natural space cooling.
Anthropic Mega-IPO: Reports indicate AI pioneer Anthropic is preparing for an initial public offering as early as mid-November, with formal marketing starting the week of November 9 and trading expected before Thanksgiving.

Sector Model Readings & Overbought / Oversold Oscillator Status

Information Technology retained the top spot in Sanctuary’s sector model, followed by Energy and Healthcare. Utilities remains the main laggard for the ninth consecutive week.

Sector	Current Rank	13-Week Rate of Change Oscillator Status
Information Technology	1	Overbought (+1.1974)
Energy	2	Overbought (+1.6244)
Healthcare	3	Neutral (-0.3599)
Communication Services	4	Neutral (-0.1690)
Industrials	5	Oversold (-2.6399)
Materials	6	Oversold (-1.2029)
Financials	7	Oversold (-1.0897)
Consumer Staples	8	Oversold (-1.2331)
Consumer Discretionary	9	Oversold (-1.4755)
Real Estate	10	Oversold (-1.4601)
Utilities	11	Oversold (-2.0612)

Disclosures & Disclaimer

Sanctuary makes no representation as to the accuracy or completeness of information contained herein. Any forward-looking statements are based on assumptions, may not materialize, and are subject to change without notice. The information is based upon data available to the public and is not an offer to sell or solicitation of offers to buy any securities mentioned herein. Any investment discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. Investments are subject to risk, including but not limited to market and interest rate fluctuations. Any performance data represents past performance which is no guarantee of future results. Prices/yields/figures mentioned herein are as of the date noted unless indicated otherwise. All figures subject to market fluctuation and change. Additional information available upon request.

Comments regarding cryptocurrencies or cryptocurrency-based securities are for informational purposes only and do not constitute investment advice or a solicitation to buy or sell any cryptocurrency-related product. These products involve significant risks, including high price volatility, evolving regulations, limited market liquidity, and vulnerability to fraud and cyberattacks.

Securities offered through Sanctuary Securities, Inc., member FINRA/SIPC. Advisory Services offered through the SEC registered investment advisers Sanctuary Advisors, LLC and tru Independence. Sanctuary Wealth consists of the wholly owned subsidiaries: Sanctuary Advisors LLC, Sanctuary Securities, Inc., and tru Independence, as well as Sanctuary Alternative Holdings, Sanctuary Asset Management, Sanctuary Insurance Solutions, Sanctuary Global, and Sanctuary Global Family Office.

Stocks March On- Without Tripping on Rates or Slipping on Oil

Posted on September 28, 2026October 5, 2026 by Elizabeth Lamkin

Executive Takeaway: Despite higher interest rates and persistently elevated oil prices, the S&P 500 remains within 1% of its all-time high. Following the FOMC’s 25-basis-point rate hike, several Federal Reserve officials reinforced their hawkish stance, while manufacturing and services data came in stronger than expected. Ongoing geopolitical tension with Iran has kept WTI crude above $90 per barrel, and national diesel prices reached a record $6.50 per gallon. Meanwhile, technology leadership and a Bitcoin breakout signal that risk appetite remains firmly intact.

The 10-Year Treasury Yield Has Passed 5% — What’s Next?

The 10-year Treasury yield has climbed past 5% (testing 5.18%), driven by stronger-than-expected S&P Global manufacturing and services PMI readings, elevated oil prices, a weak 5-year Treasury auction, and persistent fiscal deficit concerns.

Key Technical Threshold: The 10-year yield is now testing 5.18% and approaching 5.3%, a level last seen in 2007.
Market Impact: If yields remain below 5.3%, long rates could retreat somewhat. However, a sustained break above 5.3% could spark broader market fears that yields are heading toward 6%.
Valuation Squeeze: Higher long-term yields continue to put pressure on equity valuations, particularly for small-cap stocks (Russell 2000 down 8%) and other rate-sensitive sectors.

Strong Economic Data Keeps Further Fed Rate Hikes In Play

Strong economic data releases reinforce the growth narrative while keeping central bank tightening on the table.

PMI Strengths: S&P Global manufacturing rose to 57.0 and services reached 54.7, pushing the composite index to a five-year high. Manufacturing strength was heavily buoyed by demand from the AI and defense sectors.
Policy Flexibility: These robust activity numbers support ongoing corporate earnings growth while giving the Fed ample room to execute another rate hike if inflation remains sticky.
Market Pricing: Futures markets are currently pricing in a high probability of another 25-basis-point rate hike by December.

Higher Oil Prices Keeping Pressure On Treasury Yields

Geopolitical developments in the Middle East continue to drive energy volatility and fixed-income yields.

Strait of Hormuz Talks: As world leaders convened at the United Nations, Iran proposed reopening the Strait of Hormuz on its terms. White House officials initially called discussions “productive,” but negotiations appeared to break down over the weekend.
Oil-Yield Correlation: WTI crude oil remains above $90 per barrel ($93.04). Oil prices and 10-year Treasury yields continue to move in tight lockstep. Any pullback in crude could offer yield relief, whereas a renewed crude rally will keep yields elevated.
2-Year Yield Signal: The 2-year Treasury yield climbed to 4.85%, reflecting clear market expectations for additional Fed tightening before year-end.

The Treasury Curve Is Bear-Flattening

The yield curve is undergoing a classic bear-flattening structure as short-term rates rise faster than long-term rates.

2s-10s Spread: The spread between 2-year and 10-year Treasury yields has narrowed to 28 basis points (0.28%).
Economic Implication: This flattening pattern indicates that investors anticipate further monetary tightening and potentially slower future economic growth, even as inflation and fiscal deficit expansion anchor long yields at elevated levels.

Key Market Levels & Indicators Summary

Indicator / Asset	Last Price / Yield	Technical Context & Key Levels
S&P 500 Index	7,686.14	Within 1% of all-time high
Russell 2000 Index	2,810.00	Down 8% due to rate pressure on small caps
10-Year Treasury Yield	5.1856%	Testing levels last seen in 2007; key resistance at 5.3%
2-Year Treasury Yield	4.8536%	Pricing in another Fed rate hike before year-end
2s-10s Spread	0.2800% (28 bps)	Bear-flattening yield curve
WTI Crude Oil	$93.04 / bbl	Remains above $90; tightly tied to 10Y yield
National Average Diesel	$6.50 / gal	Record high; inflating transportation costs
S&P Global Mfg PMI	57.0	5-year high driven by AI & Defense demand
S&P Global Services PMI	54.7	Solid expansion; exceeded market expectations
Bitcoin	$84,157.50	Broken out of 8-month base; signaling crypto winter end
VanEck Semiconductor (SMH)	600.52	Broke intermediate downtrend; uptrend resumed

Technology Leadership Remains Intact & Crypto Winter Ends

Despite rising rates, secular growth drivers continue to power leadership sectors.

Low Correlation to Rates: Since 1990, weekly data show a correlation of only 0.034 between Technology stock performance and the federal funds rate. Earnings growth and secular trends exert a far greater influence than central bank rate decisions.
Magnificent 7 & Semiconductor Breakouts: The Magnificent 7 Index reached new all-time highs, while the VanEck Semiconductor ETF (SMH) broke above its intermediate downtrend to resume its primary uptrend. Tech, AI infrastructure, chips, and cybersecurity continue to lead.
Bitcoin Breakout: Bitcoin broke out of an eight-month consolidation base and is testing that breakout near $84,157. Broad strength across Bitcoin, semiconductors, and big tech confirms strong underlying risk appetite and liquidity, signaling an official end to the “crypto winter”.

Midterm Elections Are Beginning To Affect Sector Performance

With the U.S. midterm elections just over five weeks away, political forecasting is impacting sector allocation.

Developing Democratic Wave: Strategas analyst Dan Clifton notes that political conditions closely mirror the 2006 midterm election cycle. A second-term president facing low approval ratings due to Middle East conflict and high gasoline prices creates a setup similar to 2006, when Democrats gained 31 House seats and 6 Senate seats.
Affected Sectors: Shifting election expectations are actively driving performance in Industrials, Real Estate, Financials, Defense, Energy, and Healthcare.

Sector Model Readings & Overbought / Oversold Oscillator Status

Information Technology reclaimed the top spot in Sanctuary’s sector momentum model, while Utilities remains the primary laggard for the eighth consecutive week.

Sector	Current Rank	13-Week Rate of Change Status
Information Technology	1	Near Overbought (+0.7930)
Energy	2	Overbought (+1.0919)
Healthcare	3	Neutral (+0.1029)
Communication Services	4	Neutral (+0.4898)
Financials	5	Neutral (-0.4470)
Materials	6	Near Oversold (-1.1099)
Industrials	7	Oversold (-2.7071)
Real Estate	8	Oversold (-1.6589)
Consumer Staples	9	Oversold (-1.2250)
Consumer Discretionary	10	Oversold (-1.3009)
Utilities	11	Oversold (-2.4977)

Disclosures & Disclaimer

Markets and Investors Settle In For A New Rate-Hiking Cycle

Posted on September 21, 2026October 5, 2026 by Elizabeth Lamkin

The Fed Moves The Punch Bowl

The Federal Open Market Committee (FOMC) unanimously voted to raise the target federal funds rate range by 25 basis points to 3.75%–4.00%. The latest dot plot reveals that 16 out of 18 committee forecasters anticipate another rate hike before year-end.

Core Rationale: Chair Warsh cited solid labor market metrics, elevated inflation trends, and geopolitical instability as key drivers behind the decision.
Policy Stance: Chair Warsh downplayed the neutral rate as an “academic” concept, noting current financial conditions are not overly restrictive. The Fed’s strategy in 2026 focuses on clawing back the accommodation provided during 2025’s rate cuts.
Capital Competition: Aggressive capital deployment by technology hyperscalers (funding massive AI data center infrastructure) is driving up competition for capital and contributing to upward pressure on Treasury yields.
Global Synchronization: Price pressures are widespread globally, with central banks such as the European Central Bank (ECB) already embarking on monetary tightening cycles.

Market Expectations & Interest Rate Outlook

Futures markets are currently pricing in more tightening than outlined in the Fed’s Summary of Economic Projections (SEP) median target of 4.1% for year-end 2026.

Hike Probabilities: Fed funds futures indicate a 53% probability of a 25 bps rate hike at the October 28 meeting. If rates remain unchanged in October, the implied probability of a December 9 rate hike surges to 76%, with further hikes projected into 2027.
Yield Curve Pressure: Rates surged across the curve following sticky CPI and PPI data alongside elevated energy costs. The 2-year Treasury yield jumped to 4.7% (testing critical resistance between 4.7%–5.0%), while the 10-year Treasury yield tested 5.0% before closing at 4.996%.

Earnings Momentum & Technology Sector Resilience

Forward Earnings Momentum: Stock prices follow earnings growth trends. While elevated yields raise discount rates, strong forward earnings allow equities to absorb higher interest rates.
“Three Steps and a Stumble”: Historical equity market behavior demonstrates that it typically takes multiple rate hikes before stock bull markets stumble—a threshold the current market has not reached.
Rate-Insensitive Tech Leadership: Information Technology relative performance exhibits virtually no correlation with the Fed funds rate. The Magnificent 7 (Mag 7) Index is currently technical-positioned for an upside breakout toward new all-time highs.
Money Supply Cushion: Broad money supply (M2) growth at 5.4% YoY provides essential systemic liquidity to cushion financial markets against rate tightening.

Historical Analysis: Rate Hiking Cycles Since 1980

Historical data across 10 central bank rate-hiking cycles confirms that rate increases are rarely “one and done”.

Cycle / Fed Chair	First Hike	Last Hike	Duration (Mo)	# of Hikes	Start Rate	Peak Rate	S&P 500 Performance
Volcker I	02/15/1980	03/03/1980	0.6	2	14.00%	20.00%	-2.52%
Volcker II	08/07/1980	05/08/1981	9.0	9	9.50%	20.00%	+6.78%
Volcker III	05/02/1983	08/21/1984	15.7	4	8.50%	11.75%	+3.53%
Greenspan I	04/30/1987	02/24/1989	21.9	16	6.00%	9.75%	-0.43%
Greenspan II	02/04/1994	02/01/1995	11.9	7	3.00%	6.00%	+0.13%
Greenspan III	03/25/1997	03/25/1997	< 1.0	1	5.25%	5.50%	0.00%
Greenspan IV	06/30/1999	05/16/2000	10.5	6	4.75%	6.50%	+6.80%
Greenspan / Bernanke	06/30/2004	06/29/2006	23.9	17	1.00%	5.25%	+11.57%
Yellen / Powell I	12/16/2015	12/19/2018	36.1	9	0.25%	2.50%	+20.93%
Powell II	03/16/2022	07/26/2023	16.3	11	0.25%	5.50%	+4.79%
Warsh (Current)	09/16/2026	Ongoing	Ongoing	1	3.75%	4.00%	TBD
Historical Average	—	—	16.2	8.2	5.16%	9.00%	+5.16%
Historical Median	—	—	15.7	8.0	5.25%	6.25%	+4.16%

Energy Shocks & Financial Market Innovation

Crude Oil Drives Treasury Yields: Escalating attacks involving Iran and regional allies in the Persian Gulf and Red Sea pushed WTI crude oil past $100/bbl ($100.83). The 10-year Treasury yield is tightly coupled with oil prices ($R^2 = 0.9249$). Every $1/bbl increase in crude adds approximately 1.38 bps to the 10-year yield; $110 oil implies a 5.06% yield, while $115 oil implies a 5.13% yield.
Freight & Transportation Squeeze: Retail gasoline ($4.47/gal) and diesel ($6.45/gal) are elevating freight costs. J.B. Hunt (JBHT) issued a rare earnings warning citing high energy costs, signaling broader potential margin compression across transport logistics.
SEC Tokenization Sandbox: The SEC granted a 5-year Innovation Exemption for Tokenized Securities Venues (TSVs) to trade listed NMS stocks using permissioned onchain liquidity pools. While subject to volume caps, OFAC compliance, and issuer opt-outs, this supervised testbed underscores institutional movement toward blockchain market rails.

Disclosures & Disclaimer

Wednesday’s Rate Decision to Speak Volumes About Inflation Fight

Posted on September 14, 2026October 5, 2026 by Elizabeth Lamkin

Executive Summary

Last week, stocks finished lower in a holiday-shortened week as higher oil prices, rising interest rates, and renewed inflation concerns pressured both equity and fixed income markets.

The S&P 500 Index fell 0.8%, while the Russell 2000 small-cap index declined 2.4%, reflecting the pressure of higher long-term interest rates.

West Texas Intermediate (WTI) crude oil settled near $100 a barrel as the war with Iran tightened global oil supply. Diesel prices hit a record $6.20. The 10-year Treasury yield closed near 5%, its highest level since October 2023. That move followed Friday’s Consumer Price Index (CPI) report, which came in slightly higher than expected, pushing the probability of a 25-basis-point rate hike at this Wednesday’s Federal Open Market Committee (FOMC) meeting to 88%.

Key Takeaway: We believe the markets will view a rate hike by the Federal Reserve (Fed) as a positive and give the Fed greater credibility in its commitment to fighting inflation. At the same time, Oracle Corporation’s (ORCL) earnings report showed that demand for artificial intelligence (AI) infrastructure remains very strong.

The S&P 500 has been oversold on a daily basis. This could be a sign that equities can rally on good news and would be counter to the historical decline that takes place in September (the 5-year average is a decline of 2.68%).

Key Market Levels & Indicators

Indicator / Asset	Last Price / Value	Key Highlight / Context
S&P 500 Index	7,656.98	Oversold daily stochastic (28.5); High: 7,816.70
Russell 2000 Index	2,903.94	Down 2.4% last week under rate pressure
WTI Crude Oil (CL1)	$100.05 / bbl	Broke above $97 resistance; testing $110–$120 targets
National Average Diesel	$6.204 / gal	Record high due to global supply bottlenecks
10-Year Treasury Yield	4.9669%	Near 5.0% threshold (highest since Oct 2023)
2-Year Treasury Yield	4.6254%	Leading indicator for expected Fed rate hikes
Gold	$4,349.08	Up 19.7% year-over-year
Bitcoin	$77,310.67	Weakest YTD asset class (-11.8%)

Markets Have Already Priced In a Fed Hike

The FOMC announces its interest rate decision Wednesday afternoon. It will publish a Summary of Economic Projections (SEP), detailing members’ expectations for interest rates, inflation, and economic conditions, followed by a news conference by Fed Chair Kevin Warsh.

At last Friday’s close, the Fed funds futures market priced an 88% chance of a 25-basis-point hike, raising the target rate from 3.50%–3.75% to 3.75%–4.00%. If the FOMC holds rates steady, the market will be surprised and the move will likely be taken as a negative.

CPI Overview: Headline CPI rose 0.4% in August (3.4% YoY). Core CPI (excluding food and energy) rose 0.3% on the month, slightly above the 0.2% expected.
PPI & Labor: Producer prices came in hotter than expected due to rising energy costs. Meanwhile, private domestic purchases were solid, jobless claims remained near 60-year lows, unemployment held at 4.1%, and August payrolls surprised to the upside.

10-Year Treasury Yields Near 5% Doing the Fed’s Work

The 10-year Treasury yield reached 4.98% before finishing the week at 4.97%, while the 30-year yield touched its highest level since 2007 near 5.40%.

Higher long yields raise borrowing costs for mortgages and auto loans while elevating the discount rate applied to long-duration growth stocks. Existing home sales in August remained depressed below a 4-million annual rate. We expect the 5% yield level on the 10-year to hold, and yields could ease if the Fed delivers a rate hike that restores market confidence in inflation control.

Oil Above $100 Is an Inflation Problem

WTI crude settled at $100.05 after touching $104 Friday morning. Ongoing conflict with Iran continues to severely curtail global supply:

Houthi forces seized control at the Bab al-Mandeb Strait.
Saudi Arabia shut down its East-West pipeline following drone attacks, cutting the primary bypass around the Strait of Hormuz and reducing flow by an estimated 2 to 3 million barrels a day.

With oil breaking above resistance at $97, momentum could carry prices toward $110–$120. The Energy sector remains our top overweight sector and is the best-performing sector year-to-date, up nearly 45%.

AI Demand Remains Strong: The Constraint Is Memory and Money

Earnings from Oracle (cloud infrastructure revenue up 121%) and Dell confirm that the AI infrastructure buildout remains extremely powerful:

Dell: Booked $60.9 billion in AI server orders in a single quarter (up from $24 billion), ending with a $95 billion backlog.
Hyperscaler CapEx: Spending by Amazon, Alphabet, Microsoft, and Meta is expanding from the mid-$400 billions in 2025 to $700–$800+ billion in 2026.

Supply Bottleneck: High-bandwidth memory (HBM) chips from SK Hynix, Samsung, and Micron (MU) are sold out through 2026, with 2027 capacity already being pre-allocated. Because new semiconductor fabs won’t deliver major output until mid-2027 or later, physical memory supply—not customer demand—is the primary bottleneck capping server shipments.

Disclosures & Disclaimer

Flat Equity Markets Prepare for A Rally

Posted on September 8, 2026September 8, 2026 by Elizabeth Lamkin

Federal Reserve Signals & Market Volatility

Federal Reserve Chair Kevin Warsh’s highly anticipated Jackson Hole speech struck a distinctly hawkish tone. Reiterating the Fed’s firm 2% inflation target, Warsh raised the probability of another interest rate hike before the year ends. His comments—paired with a sudden surge in oil prices triggered by renewed geopolitical tensions between the U.S. and Iran—ignited fresh volatility across fixed income markets.

However, Fed Governor Christopher Waller offered a softer, more dovish perspective shortly after, indicating support for holding rates steady. Waller’s comments helped calm bond markets, pulling yields back down as rate-hike expectations cooled. Despite all the noise and headline risk, equity markets have remained essentially flat since mid-August.

MARKET SUMMARY: While Fed speeches and oil price spikes triggered short-term volatility in bond yields, stock markets have shown remarkable resilience, trading largely sideways since mid-August.

Strong August Jobs Report Keeps Rate Hikes on the Table

The latest employment data delivered a massive surprise. Non-farm payrolls jumped by 162,000 in August—roughly three times higher than consensus expectations—while figures from prior months were revised upward. Although recent month-to-month employment data has been choppy (the 3-month moving average sits at roughly 71,000), the overall labor market remains structurally sound and near full employment.

Key highlights from the August jobs report include:

Unemployment Rate: Held steady at a low 4.1%.
Wage Growth: Remained moderate at 3.1% year-over-year, suggesting minimal wage-driven inflationary pressure.
Fed Implications: The strong headline job gain renewed upward pressure on interest rates and swung expectations back toward a potential rate hike.

Crude Oil Prices Surge: Energy Sector Outperforms

Energy markets have seen a sharp move. West Texas Intermediate (WTI) crude oil surged from its intraday low of $82.25 to a high of $93.14 per barrel. Key technical levels to watch:

Key Resistance at $97: As long as WTI stays below $97, oil is expected to stay within a defined trading range. A breakout above $97 could open the door to test recent highs near $110–$117.
Sector Impact: Higher oil prices raise broader inflationary concerns, putting upward pressure on bond yields. However, rising energy prices remain a powerful catalyst for S&P 500 Energy stocks—a sector where portfolio positioning remains overweight.

Treasury Yields & Bond Market Volatility

Despite non-stop debate over interest rate direction, the 10-year Treasury yield is essentially right back where it was in 2023. Long-term interest rates have traded within a consistent range for nearly three years, capped near 5.0% (a high reached in late October 2023).

From a technical standpoint, 10-year yields are forming a broad rectangular pattern. While an eventual breakout (higher or lower) will mark a major macro shift, a near-term breakout is unlikely.

Meanwhile, bond market volatility (as measured by the ICE BofA MOVE Index) spiked recently but appears set to retreat in the short term—a welcome relief for fixed-income portfolios. Key catalysts to watch this week include the upcoming Consumer Price Index (CPI) and Producer Price Index (PPI) reports, which will provide vital clues for the Fed’s upcoming policy meeting.

Corporate Earnings: High Margins, Higher Expectations

Strong corporate profit growth remains a primary cornerstone of the ongoing bull market, heavily fueled by rapid Artificial Intelligence (AI) adoption. For instance, Dell Technologies (DELL) recently reported Q2 earnings well above consensus estimates and raised its fiscal outlook, highlighting robust enterprise AI demand.

Key corporate finance trends driving market confidence include:

Expanding Profit Margins: Consensus 12-month forward operating margins for the S&P 500 have expanded from 18.8% at the beginning of the year to 21.2%, with broad participation across most sectors.
Broad Earnings Breadth: 82.2% of S&P 500 companies posted year-over-year profit growth in Q2 (up from 80.6% in Q1). While extreme breadth can sometimes precede market pauses, analysts expect earnings growth to peak several quarters out.
Upward Earnings Revisions: Yardeni Research’s Net Earnings Revisions Index (NERI) reached +8.3% in August—a 57-month high marking 13 consecutive positive months. All 11 S&P sectors posted positive revisions, offering strong fundamental support for equities.

Could September’s “Pain Trade” Actually Be a Rally?

Historically, September has a reputation for being the toughest month for stocks, averaging a 2.7% decline over the past five years. However, entering September with deeply oversold technical readings across the S&P 500, Nasdaq 100, and Semiconductor ETF (SMH) creates prime conditions for a tactical rally.

TACTICAL OUTLOOK: If the consensus among investors is positioned for a September pullback, the true “pain trade” might actually be stock prices pushing higher into early autumn. Our year-end target for the S&P 500 remains 8,225 (a ~6% upside from current levels).

Disclosures & Disclaimer

No Summer Break for the Bull – Sun Keeps Shining on the Markets

Posted on August 17, 2026 by Elizabeth Lamkin

Softer Inflation Gives Summer Rally a Boost

Softer-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) readings last week reinforced the view that inflation pressures are moderating. This pushed interest rates lower, particularly the 2-Year Treasury yield.

The bumper crop of earnings that has been announced so far is averaging 30% above expectations—powering stocks to record highs. If this level remains as the actual “beat number” for the quarter, it will mark the highest earnings surprise reported by the S&P 500 index since FactSet began tracking this metric in 2008. Earnings are up 51% year-over-year, putting the index on track for a second consecutive quarter of earnings growth above 25% and a seventh consecutive quarter of double-digit growth. Revenues for the quarter rose more than 15% year-over-year, the strongest pace since the fourth quarter of 2021. Five sectors delivered at least double-digit revenue growth: Energy, Information Technology, Communication Services, Financials, and Real Estate.

Consumer Price Inflation Data Easing

The July CPI report showed headline inflation rising just 0.1% month-over-month and 3.4% year-over-year. The surprise was that the previous month’s reading was revised down to -0.4%. Core CPI (excluding food and energy) advanced 0.2% month-over-month and 2.5% year-over-year, the slowest annual core reading since early 2021. The softer inflation data eased concerns about interest rate hikes later this year.

PPI Confirms the Disinflationary Trend

The Producer Price Index (PPI) came in below expectations, with the month-over-month reading at 0.0% (versus the expected 0.2%) and the year-over-year reading at 4.7% (below the expected 4.9%). PPI excluding food and energy came in slightly above expectations, but the market focused on the softer overall data. Declining energy and food input costs are feeding through to wholesale prices, giving the Federal Open Market Committee (FOMC) additional flexibility on interest rate decisions. The market continues to lower expectations of an interest rate hike this year.

Retail Sales Come in Significantly Below Expectations

July retail sales came in significantly below expectations, declining 0.6% versus expectations for a 0.1% increase. A lower-than-expected number could be due to a drop in sales following the World Cup, which ended on July 19. This surprise is lowering interest rates while pushing out an expected interest rate hike. Federal Reserve Chair Kevin Warsh is believed to be more likely to favor cutting interest rates than raising them, and the latest data increasingly supports that view.

Wage Growth Is Falling Which Should Ease Inflation

Annual growth in weekly earnings of production workers continues to slow. Weaker wage pressures reduce one of the key arguments for additional rate increases and support the outlook for lower front-end yields. Wage growth is a key indicator of future inflation, and slowing wage growth signals that inflation should ease in the months or quarters ahead.

Two-Year Treasury Yields Breaking Down

Last week highlighted that the 2-Year Treasury yield appeared to be breaking down. Confirmation came from the weaker inflation and retail sales data. The target is a move toward 4.0%–3.8%. Lower interest rates are supportive of higher stock prices. Historically, the trend in the 2-Year has foreshadowed the direction of Fed interest rate policy.

The Odds of a Near-Term Rate Hike Are Receding

Market-implied odds of a 25-basis-point hike at the September, October, and December FOMC meetings have retreated sharply following soft inflation reports. September probability has fallen from a mid-July peak near 72% to roughly 32%. The term structure now shows December higher than September, suggesting the market sees a higher chance the Fed skips a hike at the September meeting and potentially acts later, if needed.

Earnings Are Extraordinarily Strong Across Sectors

Ten of the eleven S&P 500 sectors reported positive year-over-year earnings growth in the second quarter. Only the Healthcare sector had a decline in earnings.

Energy and Communication Services had year-over-year earnings growth above 100%.
Consumer Discretionary and Technology followed with 92% and 70% earnings growth, respectively.
Part of the strength in 2Q earnings is coming from tariff refunds.

Revenue Growth Remains Powerful

S&P 500 revenue growth for 2Q26 reached 15% year-over-year, the highest pace since the fourth quarter of 2021. Energy led with more than 40% growth, followed by Information Technology with 36%. Strong top-line expansion provides a solid foundation for continued earnings momentum. Business backlogs have been rising, indicating demand remains strong within the economy.

Net Earnings Revisions Rise Sharply

Analyst net earnings revisions continue to rise substantially, supporting higher stock prices in the months ahead. Seasonally, earnings estimates tend to fall as we move into the third and fourth quarters. Estimates rising sharply now point to the strength of earnings power in this AI-driven business cycle. Revisions to earnings estimates are the strongest models for predicting the direction of stock prices. The rate of increases in earnings estimates for the S&P 500 is a strong confirmation that we remain in a secular bull market. The S&P 500 target for this year is 8,225, raised in June from 7,500.

Market Breadth Confirms Record Highs in Stocks

The S&P 500 cumulative advance-decline line has reached a new all-time high. Broad participation across stocks reduces the risk of a narrow, fragile rally and reinforces the secular uptrend. Commercial and Industrial (C&I) loans are expanding at an 8% annual rate. This indicates ongoing business investment and credit demand, consistent with an expanding economy, even if the pace remains below prior cycle peaks. This is bullish for bank earnings going forward.

Return on Equity Favors Technology

Return on Equity (ROE) is a key measure of how efficiently a company generates profits from shareholders’ capital and one of Warren Buffett’s preferred indicators of business quality. At 33%, ROE among Technology stocks remains substantially higher than the 20% for the broader S&P 500. This differential continues to support the sector’s long-term leadership within the secular bull market.

Technical analysis suggests gold prices have found a base near $4,000. The SPDR Gold Shares ETF (GLD) and related stochastic oscillators point to a very oversold and improving price momentum following the recent correction. The target on Gold remains $5,000, serving as a solid hedge in portfolios.

Junior Gold Miners Offer Leverage to Higher Gold Prices

Gold mining equities, particularly the more leveraged junior producers, stand to benefit if Gold prices resume their advance. The VanEck Junior Gold Miners ETF (GDXJ) shows similar technical oversold conditions, with price momentum starting to turn positive

Disclosures & Disclaimer

Bull Market Goes Wide…Will It Go Long?

Posted on August 10, 2026August 17, 2026 by Elizabeth Lamkin

Weaker Jobs Data, Lower Interest Rates: Earnings Are Abundant & Rotation Continues

The July labor report came in much weaker than expected, driving interest rates lower, while second-quarter productivity improved significantly and far exceeded expectations. Artificial intelligence (AI) may be an important contributor to these stronger productivity gains. Corporate earnings have been superb, driven by actual revenue growth. Margin debt (i.e., borrowing to buy stocks) likely eased in July as Technology stocks, particularly Semiconductors, pulled back. Even so, market rotation has broadened leadership and helped propel the S&P 500 to record highs — a seasonal pattern common during the summer months. The combination of market rotation and new highs indicates a strong bull market.

In July, we raised our year-end S&P 500 target to 8,225. From a technical perspective, the recent breakout to new highs points toward 7,900–8,000. We do expect volatility to continue, so maintaining a balanced portfolio remains as important as ever.

Earnings & Revenue Growth

Second-quarter results are mind-bending. Energy led all sectors with estimated year-to-year earnings growth of 147.0%, helped by elevated refining margins. Communication Services grew 117.0% on cloud and AI monetization gains, helped by Alphabet (GOOGL), while Information Technology grew at 70.4% on a clean sweep of earnings beats in Hardware and Semiconductors. Materials rose 41.7% on higher commodity prices and industrial demand. Healthcare lagged at -6.7%.

By the end of last week, 88% of S&P 500 companies had reported results. So far, overall earnings growth is running at 50.4%, an exceptionally strong pace, particularly given that the economy appears to be in the mid-to-late stage of the business cycle. That strength in corporate earnings growth provides a solid fundamental foundation for the market’s record highs, even as markets continue to navigate the conflict with Iran and the resulting higher oil prices.

The earnings surge is genuine. Revenue growth accelerated by nearly 5%, while profit margins expanded at one of the fastest rates excluding the pandemic and the Global Financial Crisis (GFC). Even after filtering out unrealized investment gains, the data continue to show robust underlying earnings growth.

We continue to believe the economy remains in the Inflation Boost phase, a concept we introduced in our May Monthly Report, in which moderate inflation supports pricing power, revenue growth, and ultimately stronger corporate earnings.

Labor Market & Productivity

Surprising Softness: The July jobs report showed a loss of 23,000 positions against expectations of an 80,000 gain. Prior months were also revised lower. July seasonal adjustments are notoriously hard to model because of school calendars and summer patterns. The data also shows the unemployment rate remains low at 4.1%.
Low-Hire, Low-Fire Dynamic: The data indicate a low-hire, low-fire environment rather than widespread layoffs. Emigration has replaced strong immigration flows. An aging population with Baby Boomers retiring continues to reduce the share of people working or looking for work.
Rate Case Softens: This softens the case for near-term rate increases by the Federal Reserve (Fed). It also underscores the importance of productivity to economic growth.
Productivity Surge: Second-quarter productivity rose 1.4% at an annualized rate, well above analysts’ expectations of 0.6%. We had anticipated continued improvement in productivity; many on Wall Street had not. We believe that AI is beginning to lift output per worker. Higher productivity helps companies grow profits without adding as many employees, supporting earnings strength.

Deleveraging, Speculation, & Sector Turning Points

Margin debt relative to the Wilshire Index climbed from 1.43% in September 2024 to 2.05% in June 2026, signaling increased speculation. As Technology stocks, particularly Semiconductors, corrected sharply during July, margin debt likely declined as investors reduced leverage. Even so, margin debt remains low relative to historical levels, which reduces the risk of forced selling during market stress.

Semiconductors Near A Turning Point Semiconductor stocks have experienced a 20%–30% correction driven by deleveraging. The sell-off has made valuations in the sector more attractive, and Semis now trade at a lower forward price-earnings multiple than the broader market. Semis responded to the short-term near oversold reading we highlighted last week. The weekly stochastic has not yet generated a buy signal, though we believe conditions are approaching one and remain bullish on the sector.

Metals and Mining Bottoming We believe Gold and Silver have bottomed. Copper continues to look stronger because of real demand from data-center construction, re-industrialization, and electric power needs. Industrial metals exposure offers a direct way to participate in physical demand tied to technology infrastructure.

Market Breadth & Global Outlook

The global secular bull market continues. The iShares MSCI EAFE ETF (EFA), which tracks developed markets outside the United States and Canada, has reached a new all-time high. The MSCI Emerging Markets ex-China Index (EMXC) remains in an uptrend following its recent correction.

Domestically, the Russell 2000 and the equal-weighted S&P 500 both hit new all-time highs. Sector rotation has lifted prices across more of the market while Technology and Semiconductors worked off earlier overbought positions. Broad participation provides a healthier foundation for sustained gains than narrow leadership by a handful of giant companies.

Sector Performance & Oversold/Overbought Readings

Top Sectors: Information Technology returned to 1st place last week, followed by Healthcare (2nd) and Energy (3rd).
Bottom Sectors: Utilities dropped to last place (11th), followed by Communication Services (10th) and Consumer Staples (9th).
Overbought Conditions: Healthcare and Financials.
Oversold Conditions: Communication Services and Consumer Discretionary (Consumer Staples and Utilities are near oversold).

Inflation Takes Center Stage

This week delivers important data on inflation and interest rate expectations:

Wednesday: July Consumer Price Index (CPI) and Core CPI.
Thursday: Producer Price Index (PPI).
Friday: Advance Retail Sales.

Together, these reports will provide crucial signals on economic health, Fed policy, and the trajectory of interest rates while corporate earnings wrap up.

Disclosures & Disclaimer

Warsh Steady at the Helm as PCE Cools and GDP Deflector Rebounds

Posted on August 3, 2026August 17, 2026 by Elizabeth Lamkin

Fed Policy, Economic Growth & Sector Trends

The Federal Open Market Committee (FOMC) voted 9 to 3 to keep the federal funds rate in a range of 3.50% to 3.75%. The three dissenters are known hawks — policymakers who favor higher interest rates to fight inflation more aggressively.

Federal Reserve (Fed) Chair Kevin Warsh said the Committee remains fully committed to its 2% inflation goal and will not accept a higher target. He noted that, since the last FOMC meeting, markets have already tightened financial conditions on their own and that business investment, especially in technology, remains strong.

Reporters Play Hardball With Fed Chair On Interest Rates

Seven of the nine reporters who posed questions to Fed Chair Warsh after the latest policy meeting took an unusually confrontational approach. They repeatedly asked why rates were raised immediately, challenged the decision to hold rates steady, and showed far less deference than is customary for a Fed chair. (Yes, new Fed Chairs are always tested, but this seemed especially strident.)

Even the more measured questions from Nick Timiraos of The Wall Street Journal and Brian Chung of NBC carried a sharper edge to their questions than usual. In response, Warsh noted that he has held the job for only 8½ weeks while inflation has run above the Fed’s 2% target for more than five years.

Imports And Lower Government Spending Held Back Second-Quarter Growth

Second-quarter economic growth came in softer than most analysts expected. The official measure of total U.S. output, Gross Domestic Product (GDP), rose at only a 1.5% annual rate, lower than the expected 1.8%. Consumer spending stayed solid and continued to support the economy.

The weaker headline number was caused mainly by a larger-than-expected jump in imports and a small drop in government spending. Imports are subtracted from the GDP calculation, and they surged, which pulled the overall growth rate lower — even though American households kept spending.

AI Investment Rose, but Technology Imports Offset Much of the Gain

Companies spent heavily on artificial intelligence (AI) equipment and data center capacity in recent quarters. That capital investment normally adds to economic growth. At the same time, a large share of the servers, chips, and related gear was imported. Imports reduce the GDP total, so the investment boost and the import drag largely canceled each other out. In one recent quarter, the two forces were almost equal in size.

Core Consumer Prices Cooled, but Broader Inflation Pressures Reappeared

The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) price index, continued to match what economists had forecast and showed further cooling in June. That softer reading gave the Fed room to leave interest rates unchanged.

In contrast, the broader GDP price index, which covers all goods and services produced in the United States, accelerated to a 6.2% annual rate in the second quarter (up from its earlier peak of 9.4% in 2022). Two forces drove this increase:

Energy Prices: Rose sharply due to ongoing conflict with Iran and related shipping disruptions.
AI Import Volume: Reduced real GDP and, by simple arithmetic, pushed the price deflator higher.

Market Technicals: S&P 500 & Semiconductors Oversold

S&P 500 Index: Had a 5% correction off its high, creating an oversold 14-day Stochastic reading while holding key support levels. The index needs to respond to this oversold level to avoid another leg down.
Semiconductor Sector (SMH): The VanEck Semiconductor ETF corrected 25%, creating an oversold condition. Similar to the 1990s Dot-Com period (which saw 30%-50% pullbacks during an ongoing bull trend), semiconductors remain leaders of this secular bull market.
WTI Crude Oil: Prices remain range-bound between the 100-day moving average ($90) and 200-day moving average ($76), indicating elevated energy costs ahead.

Disclaimer: Securities offered through Sanctuary Securities, Inc., member FINRA/SIPC. Advisory Services offered through SEC registered investment advisers Sanctuary Advisors, LLC and tru Independence. Information is based on public data and is not an offer to sell or buy securities. Past performance is no guarantee of future results.

Here Come The Earnings – Amid Oil Spikes, Rate Decisions, and Inflation Data

Posted on July 27, 2026July 27, 2026 by Elizabeth Lamkin

Markets Navigate Oil Spike and Tech Earnings Pressure

Both the equity and fixed income markets were volatile last week due to higher oil prices and concerns over the ongoing large capex spending by some of the mega technology companies.

Oil prices surged last week as the U.S. continued its strikes on Iran — heightening supply fears again — while Iran-backed Houthi rebels claimed attacks on two Saudi oil tankers in the Red Sea. WTI crude oil prices surpassed resistance in the $80–$85 per barrel range, climbing as high as $93. However, with the prospect of negotiations, oil prices have collapsed and are trading in the low 80s.

Earnings also contributed to volatility within the equity market as both Tesla (TSLA) and Alphabet (GOOGL) announced continued heavy spending on capex, which is weighing on quarterly free cash flow. Investors now head into a heavy slate of earnings and central bank decisions with risk levels elevated and volatility likely to remain high as rotation continues across the equity market.

2-Year Treasury Yield Rises To Test Resistance

With higher oil prices raising concerns over inflation, the market has pushed interest rates higher. The 2-Year Treasury yield has retraced roughly 50% of its previous decline and is now testing resistance at 4.3%. If that level holds, the yield could retreat toward 4.0%. A decisive break above 4.3% would open the door to a move toward 4.8%–5.0%. Such a move would likely rattle the equity markets and extend the current correction.

10-Year Treasury Yield Also Testing Key Resistance

The 10-Year Treasury yield is testing key resistance near 4.8%–5.0%. We believe that if the strikes on Iran subside and oil prices decline, this test should prove successful. However, if the attacks continue and oil prices push higher, the risk is that yields could move higher.

S&P 500 Approaching Oversold: Needs To Rally

The S&P 500 is approaching oversold levels, but it needs to respond to prevent another down leg. Without a positive response, the Bears are likely to remain in control.

Nasdaq 100 With A Bearish Top

The Nasdaq 100 appears to have formed a top with risk of a deeper correction. The Semiconductors have the same pattern. We did highlight in our Mid-Year Outlook that the Bucking Bull would return. Without a rally soon, the risk is the correction in Technology will continue because the Nasdaq 100 is heavily weighted in Tech.

Tech Earnings Spotlight AI Capex Spending and Cash-Flow Concerns

Tesla (TSLA) and Alphabet (GOOGL) both reported second-quarter results that triggered sharp share-price declines despite underlying positive data. Tesla posted strong revenue growth, but adjusted earnings came in below consensus as profit margins declined, and the company generated negative free cash flow. Alphabet delivered solid revenue growth, beat earnings forecasts, led by strong results in Google Cloud, but raised its 2026 capital-expenditure forecast above expectations and also reported negative free cash flow for the first time.

Market reaction showed investors are increasingly focused on the scale of spending and concerned about free cash flow. The continued high capex spending shows the deep competition among the big Tech companies. They are operating in an environment where the winner takes all, and all are trying to be number one.

Competition Heats Up

Competition is heating up. Moonshot AI, a Chinese AI company, recently introduced its Kimi K3 large language model, which has drawn substantial attention as a potential challenger to U.S. frontier AI models such as Anthropic’s Claude. Reports indicate Kimi used high-end Nvidia chips — despite export restrictions — and relied on distillation (a machine learning technique where a large, complex teacher model trains a smaller, efficient student model to mimic its behavior) of existing U.S. models, following a path similar to DeepSeek 18 months ago. It is also expected that the Kimi K3 model learned and trained using the Claude LLM model without permission.

On a positive note, Intel (INTC) provided optimism last Thursday when it reported earnings that beat estimates on major fundamental metrics. Overall, the week reinforced that volatility remains within the major Technology companies, especially in semiconductors and technology hardware.

Rails Catch Ride On Consolidation Progress

Union Pacific (UNP), Norfolk Southern (NSC) and CSX (CSX) all advanced sharply last week. The catalyst was an agreement in which Canadian National Railway (CNI) said it would not oppose Union Pacific’s proposed acquisition of Norfolk Southern. Norfolk Southern also beat second-quarter profit estimates, while CSX raised its margin outlook and reported strong volumes.

These Rail stocks rose on the news, standing out against a weaker broader market. Their move signals that investors see tangible progress on consolidation and solid underlying demand in the rail sector. Railroads are a cyclical industry, and their strength suggests cyclical sectors remain well supported. It is also a sign that the economy is growing.

We remain positive on the Industrials sector where the Rails are positioned. This offers a reminder that selective industrial strength can appear even when headline indexes are under pressure. Sector rotation is keeping the equity market in a bullish pattern — at least for now.

Key Macro & Market Trends & The Great Wealth Transfer: How Big Is It Really?

Estimates of the coming intergenerational wealth transfer vary widely. Cerulli Associates projects that older generations will pass more than $100 trillion to heirs in the decades ahead. A more recent study from Visa puts the figure for Baby Boomer wealth transferred to Gen X and Millennials over the next 20 years at roughly $36 trillion.

The difference is large, yet both numbers point to a substantial shift of assets. For investors, this matters because the recipients are likely to reallocate portfolios, increase demand for advice, and influence long-term flows into equities and other risk assets. While the exact size remains debated, the direction of the transfer is clear and will unfold over many years.

Presidential Cycle Average Returns

Average equity returns across the four-year presidential cycle since 1952 show that performance so far in the current presidential term through the end of June 2026 is well above average performance for the mid-term year.

Japan Trade Data Shows Resilient Demand

Japan reported that both exports and imports grew in June at the fastest pace since November 2022, beating estimates. Exports rose sharply, helped by semiconductor shipments tied to artificial intelligence and data center demand. Imports also increased, driven in part by higher energy costs.

The figures point to continued underlying demand for Japanese goods and recovery in its economy. We believe these trends offer a constructive signal for trade and technology-related supply chains, supporting the broader global growth narrative.

Defense Stocks Remain Attractive

European defense stocks continued to draw investor interest last week on the back of ongoing rearmament efforts. Rheinmetall (RHM, Frankfurter Wertpapierbörse) is expanding gunpowder and ammunition capacity as Europe races to replenish stockpiles. The broader sector, including names such as Dassault Systèmes (DSY, Euronext Paris), Thales (HO, Euronext Paris), and Indra Sistemas (IDR, Bolsa de Madrid), has also benefited from the same multi-year spending push.

At the same time, U.S. defense manufacturers have been directed by the Trump Administration to increase production and replenish stockpiles of munitions expended in Ukraine and Iran. The dual pressure of European rearmament and U.S. replenishment creates a supportive backdrop for the sector on both sides of the Atlantic.

For investors, this remains a structural theme rather than a short-term trade. Spending commitments are multi-year, order backlogs are strong, and selective opportunities continue to exist even after the strong gains of recent years.

Sector Readings & Rankings

Energy was strongest last week, followed by Information Technology, then Industrials; this is the same order as the prior week. Technology is weakening, signaling a correction is in place. Consumer Discretionary was in last place, followed by Communication Services, then Consumer Staples.

Our sector model analyzes S&P 500 GICS sector classifications, using a weighted measure of price momentum across three time periods. We rank each sector from best to worst based upon the average of its 40-, 26-, and 13-week relative price performances. We rank each sector from 1 to 11, with 1 being the strongest and 11 the weakest.

Sector	Jul 24	Jul 17	Jul 10	Jul 3	Jun 26	Jun 19	Jun 12	Jun 5
Energy	1	1	2	5	3	5	2	2
Information Technology	2	2	1	1	1	1	1	1
Industrials	3	3	3	2	2	2	3	3
Healthcare	4	4	4	3	5	10	8	7
Real Estate	5	5	5	6	7	6	9	5
Financials	6	6	9	8	9	9	11	11
Materials	7	7	7	4	6	4	4	4
Utilities	8	10	10	10	4	11	5	10
Consumer Staples	9	8	8	7	8	7	7	8
Communication Services	10	9	6	9	10	3	6	6
Consumer Discretionary	11	11	11	11	11	8	10	9

Overbought / Oversold (OBOS) Sector Analysis

Healthcare was overbought last week, followed by Financials and Industrials as near overbought. Technology is correcting. Consumer Discretionary and Communication Services were oversold, while Materials and Consumer Staples were near oversold. We note that Consumer Discretionary was unusually oversold.

Our tactical sector rotation model uses the S&P 500 GICS sector classifications. We apply a 13-week rate of change methodology that normalizes the rankings from overbought (OB) to oversold (OS).

Rank	S&P Sector	Normalized Oscillator	Status
1	Healthcare	1.4363	Overbought
2	Financials	0.9724	Near Overbought
3	Industrials	0.6014	Near Overbought
4	Information Technology	0.3430	Neutral
5	Real Estate	0.3115	Neutral
6	Energy	0.1813	Neutral
7	Utilities	-0.3420	Neutral
8	Consumer Staples	-0.7405	Near Oversold
9	Materials	-0.8667	Near Oversold
10	Communication Services	-1.6772	Oversold
11	Consumer Discretionary	-2.5622	Oversold

Earnings, Data, And Rates, Oh My!

This week draws major earnings, key inflation data, and rate decisions from 3 global central banks. Buckle up!

This is the biggest week for second-quarter earnings with a third of the S&P 500 companies reporting. This also brings a dense cluster of policy decisions and data. The Federal Open Market Committee (FOMC) announces its rate decision on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Thursday night into Friday. On Thursday, the June Personal Consumption Expenditures (PCE) price index will be released.

Earnings season continues with reports from major companies including Microsoft (MSFT), Meta Platforms (META), Amazon (AMZN), Apple (AAPL), ExxonMobil (XOM), and Chevron (CVX).

Expect increased levels of volatility this week as the Bull is expected to Buck. Remain Fearless.

Weekly Calendar (July 27–31, 2026)

Day	Economic Data / Events	Earnings Highlights
Mon (Jul 27)	8:30 AM Durable Goods	Universal Health
Tue (Jul 28)	8:30 AM Advance Economic Indicators Report, Wholesale Inventories, Retail Inventories 9:00 AM S&P Case-Shiller Home Price Index 10:00 AM Conference Board Consumer Confidence	Invesco
Wed (Jul 29)	2:00 PM U.S. Interest Rate Decision (FOMC)	Ares Capital, UBS, Microsoft, Meta Platforms
Thu (Jul 30)	8:30 AM Advance Estimate GDP, Weekly Jobless Claims, Personal Income, Consumer Spending, PCE Price Index	Apple, Amazon
Fri (Jul 31)	8:30 AM Employment Cost Index 9:45 AM Chicago Business Barometer (PMI) 10:00 AM U.S. Michigan Final Consumer Survey	Chevron

Disclosures & Disclaimer

Volatility Bucks the Bull, But Earnings Drive the Markets Onward

Posted on July 20, 2026July 20, 2026 by Elizabeth Lamkin

U.S. Markets Navigate Mixed Signals In A Volatile Week

Last week, markets endured a mixed bag of softer inflation data, hawkish Federal Reserve (Fed) commentary, strong bank earnings, rising oil prices amid Iran tensions, and continued rotation out of Semiconductor chip stocks.

While we expect near-term choppiness to persist, we believe that patient investors will be supported by underlying earnings resilience and ongoing, long-term secular trends.

Softer Inflation Data

The June Consumer Price Index (CPI)—a key government measure of the average change over time in prices paid by urban consumers for a market basket of consumer goods and services—came in significantly weaker than expected by economists. This cooler reading helped push Treasury yields lower, lifting bond prices, which generally translates into reduced borrowing costs for mortgages, corporate loans, and other forms of debt. Lower yields can support stock valuations and interest rate-sensitive sectors in the near term.

The Producer Price Index (PPI)—which measures changes in the prices producers receive for their goods and services—also came in below expectations, reinforcing the disinflationary signal from the CPI. These data points should give the Fed more flexibility on policy timing—including potential rate cuts later this year. While Fed rhetoric remains cautious, the data gives policymakers greater flexibility and leaves the door open to a range of interest rate outcomes in the second half of the year.

Warsh Congressional Testimony: Hawkish Tone

New Fed Chair Kevin Warsh delivered a notably hawkish message in his congressional testimony, stressing that inflation has remained too high for too long and rejecting any idea that the softer CPI signaled “mission accomplished” on reducing it. Warsh’s tone matched his comments during his first Federal Open Market Committee (FOMC) meeting. So far, investors have been encouraged by Warsh’s firm stance on inflation.

Interest Rate Expectations

Markets began last week pricing in meaningful odds of a rate hike at the late-July FOMC meeting. After the softer inflation data was released, those expectations dropped sharply, with the probability of a near-term hike falling to roughly 10% by last Thursday’s close.

Strong Bank Earnings Underpin Financials

Last week, major U.S. banks kicked off the second-quarter earnings season with impressive results, as all eight large institutions in the S&P 500 index that reported beat Wall Street earnings expectations.

Firms such as Goldman Sachs (GS) posted record revenue from equity trading, investment banking, and initial public offerings (IPOs), while Bank of America (BAC) and others showed healthy gains in lending as well as investment banking activities. These beats reflect resilient consumer spending, steady loan demand in a higher-rate environment, and strong performance in capital markets businesses, including IPOs. (Remember, many of the banks recently raised their dividends.)

These strong bank earnings offer reassurance about the underlying strength of the economy and our bullish outlook for the Banks sector overall. While near-term volatility from interest-rate uncertainty and geopolitical risks remains, these results underscore the sector’s ability to generate solid returns.

Oil Rises On Iran Tensions But Hits Resistance

Oil prices posted solid weekly gains last week amid escalating tensions in the Persian Gulf, where U.S. strikes on Iran and disruptions to shipping through the critical Strait of Hormuz have once again raised supply concerns. West Texas Intermediate (WTI) crude oil—the primary U.S. oil benchmark—has climbed into the upper $70s to low $80s per barrel.

There is significant resistance in the $80–$85 per barrel range for WTI, and so far, the commodity has respected this level without breaking higher on a sustained basis. Higher oil prices support energy stocks, but they do feed into broader inflation worries. While geopolitical risks retain an upside potential in crude prices, the market’s adherence to technical resistance suggests that any further spikes may be capped for now. Investors should brace for continued volatility in energy prices. We continue to favor Energy companies, and 2Q earnings for the sector are expected to come in strong.

Major Oil Companies Benefit From Higher Prices And Strong Cash Flows

Integrated energy giants such as Exxon Mobil (XOM), Chevron (CVX), and Shell (SHEL) have been direct beneficiaries of the recent lift in crude oil prices, which boosts their upstream production revenues, while their refining and chemical businesses provide some natural hedge against volatility.

Oil refiners also remain attractive, as constrained refining capacity can support refining margins. Many of these companies are generating robust free cash flow—cash left over after capital spending and dividends—which they are using for shareholder returns through buybacks, dividends, and selective acquisitions.

Defense Stocks Gain Relevance Amid Geopolitical Tensions

Rising geopolitical risks from the Iran conflict have highlighted the strategic importance of U.S. defense capabilities and domestic supply chains. With weapon stockpiles drawn down by support for Ukraine and military operations in the Persian Gulf, companies in the Aerospace & Defense sector stand to benefit from increased spending and accelerated production needs.

JPMorgan Chase CEO Jamie Dimon has underscored this opportunity by directing the bank to invest its own capital and provide substantial financing for national security and related industries through its broader Security and Resiliency Initiative. The effort includes a $24 million investment in the Philadelphia Navy Yard. This environment underscores the long-term case for selective exposure to established defense names with strong backlogs and technological edges, even as near-term budget and procurement cycles can introduce volatility.

Technology Faces Rotation Amid AI Spending Concerns

The Technology sector, a clear leader in the ongoing secular bull market, experienced notable rotation and pressure last week, with chipmakers and the broader group pulling back amid concerns over elevated capital spending, stretched valuations in select companies, and high market leverage, particularly in Semiconductor stocks. Semiconductor stocks had surged sharply, creating overbought conditions that invited profit-taking.

Meanwhile, the Magnificent 7—Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), and Tesla (TSLA)—had largely worked off their earlier outsized gains and, after becoming oversold, began to rally. Apple led the advance by reaching new record highs. This kind of volatility was expected.

Earnings momentum remains robust, with the sector delivering strong guidance and superior growth prospects driven by artificial intelligence (AI) infrastructure demand. Any near-term weakness should be viewed as a potential opportunity to reposition into the clearest long-term winners with durable moats, strong cash flows, and proven execution in the AI buildout.

AI Boosts Business Formation and Job Creation

Artificial intelligence (AI) is proving to be a powerful force for new business creation rather than simply displacing jobs, according to Torsten Slok, chief economist at Apollo Global Management. Large language models (LLMs) and related tools are dramatically lowering the cost and complexity of launching companies, fueling a surge in the formation of new U.S. businesses—particularly solo and small operations in high-productivity sectors.

This dynamic highlights AI’s broader economic lift: it not only drives infrastructure demand but also spurs entrepreneurship and future hiring. While short-term disruption in certain roles is real, the net effect supports long-term growth and reinforces the sector’s leadership in the secular bull market.

Moonshot Challenges U.S. Frontier Models

A frontier model is the most advanced large language model (LLM) available at a given time, pushing the boundaries of reasoning, coding, creativity, and complex problem-solving. Moonshot AI, a Chinese company, has attracted attention with its latest model, Kimi 3, which reportedly rivals leading U.S. models in context length and overall performance on certain benchmarks.

While Kimi 3 demonstrates China’s rapid progress in AI, the broader risks to U.S. frontier model firms remain significant: intense global competition, rapid capability diffusion, and concerns over intellectual property practices. One flashpoint is distillation—training a smaller model using the outputs of a larger one—which U.S. companies argue can cross into IP infringement when proprietary model behavior is copied without authorization. Moonshot’s Kimi has sparked controversy for responses that occasionally mimic the style of models like Claude (Kimi has reportedly said, “Hi, I’m Claude”), though no definitive proof of direct copying has been established.

Near-term, developments like this can pressure U.S. frontier companies through heightened competition and valuation scrutiny, much as the DeepSeek releases earlier in the year triggered sell-offs in AI-related stocks despite the long-term innovation tailwinds. These episodes highlight the fast-moving nature of the AI race and the importance of focusing on firms with durable competitive advantages, strong execution, and clear paths to monetization amid global rivalry.

Sector Readings

Energy Now In First Place, Information Technology Second, Industrials Third; Consumer Discretionary Still In Last Place, Followed By Utilities

Energy moved to the top spot last week, followed by Information Technology which moved down a notch, indicating it may be weakening. Consumer Discretionary is in last place, followed by Utilities: these two have been in the same order at the end of the sector rankings for 3 weeks.

What To Watch This Week: Welcome to Hyperscalers Week

This is a week where earnings announcements should rise above economic data and geopolitical news.

This will be a week heavy with earnings—a veritable “hyperscalers week,” with major technology leaders such as Alphabet (GOOGL) and Tesla (TSLA) reporting results alongside other important names including IBM (IBM), ServiceNow (NOW), Texas Instruments (TXN), defense contractors like Lockheed Martin (LMT) and RTX (RTX), and several industrial and consumer companies. These earnings will be closely watched for updates on AI spending, cloud growth, vehicle and robotics demand, margins, and overall business confidence.

Investors will also see lighter economic data such as weekly ADP employment figures, flash Purchasing Managers’ Index (PMI) readings for manufacturing and services, weekly jobless claims, and new home sales, which should provide additional context on the health of the consumer and business activity.

On the geopolitical front, developments around the Iran conflict remain a key risk factor. While Gulf States have redirected much of their oil exports away from the Strait of Hormuz via pipelines, any escalation of military action could still pressure energy prices and broader risk appetite.

We believe that a solid set of earnings reports could reinforce confidence in the earnings-driven bull market, while any notable misses or cautious guidance might add to near-term volatility. Overall, we expect continued volatility but maintain patient optimism that strong fundamentals in leading sectors will prevail for the balance of the year—Remain Fearless!

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