You Need Confidence & Clarity

Six Things You Should Know

1. Equity Markets – were mixed this week with U.S. stocks (S&P 500) gaining +1.36% while international stocks (EAFE) slumped -0.04%.
2. Fixed Income Markets – were down this week with investment grade bonds (AGG) falling -0.54% and high yield bonds (JNK) losing -0.05%.
3. Fed Minutes – Details from the June Federal Reserve meeting showed policy makers were split on the future of interest rates, with new chair Kevin Warsh describing the debate as a “family fight.”. In line with Warsh’s history of eschewing forward guidance, the meeting provided little clarification on what the Fed’s projected dot plot looks like and that decisions will be made based on “incoming information”.
4. U.S./Iran – Tensions flared again this week after minor clashes threatened to strain the interim ceasefire. Renewed hostilities have restoked oil price concerns as the two sides continue to navigate permanent peace deal talks. 
5. Cybersecurity Reminder- Scammers are increasingly using Remote Access Tools (RATs) along with phishing emails or texts to take control of devices like phones, tablets, and computers. Once installed, these tools can give cybercriminals access to sensitive information, including your Schwab accounts. These attacks can be hard to spot, so if something doesn’t feel right- like unusual account activity or suspicious messages- trust your instincts. If you sense suspicious activity, please call us immediately or report any concerns to Schwab at 800-515-2157. 
6. Key Insight – [VIDEO] Most Americans don’t feel particularly confident in their financial lives, but even for those that do, we see all too often that a lack of clarity around how to deploy their resources causes unnecessary anxiety, misallocated resources, and/or potential dangers due to misplaced confidence. We walk through some real-world stories to highlight these situations, and how we can help improve them. [ARTICLE] As we’ve discussed this year, there is always something that poses a challenge to markets and investors … sometimes past challengers reappear as well. We discuss the not-so-new potential threats, some reasons for optimism through year end, as well as a friendly reminder to focus on building the right plan, instead of worrying about predictions.

Insights for Investors

By Tim Mitrovich

We discussed back in our piece Lessons from the “Ring” (my favorite commentary to put together so far this year) that just as stepping into ring comes with challengers and “punches,” so too does the life of an investor. 

In fact, sometimes you face the same challengers more than once! And right on cue, the same week Conor McGregor steps back into the ring after 5 years away, and against former opponent, Max Holloway, the markets are also facing some common challengers that created a bit of scare this week after a strong start to July. 

Most notably came the news Tuesday that Iran had attacked some ships, leading the US to respond with not only significant attacks, but also a renewed ban on the sale of Iranian oil. This led to an uptick in oil, still hovering near $70 a barrel, as well as pullback in risk assets. We find it encouraging that despite some hyperbolic headlines, that oil’s move has actually been pretty muted. So, while some may attempt to sound the alarms again, we believe a back-and-forth end to this conflict was always the more likely path. There still seems to be enough momentum to reach an agreement, driven primarily by Iran’s need not just for the money from oil but due to an ever-increasing lack of places to store it without shutting down their fields.  

Another market challenger we’ve seen before that is making news again: the angst around the Japanese yen and bond market. Last August we saw global stock and bond markets experience significant volatility as markets worried about the unwinding of what is called the Yen-Carry Trade, a phrase that represents the long reality of people borrowing money at Japan’s historically low rates to buy assets around the world. The concern was/is that as their rates rise that (a) people will need to sell global assets to repay those debts, and/or (b) as Japan’s yields rise, Japanese investors may be more tempted to keep their assets “at home” in Japan. This week’s JGB’s (Japan’s government bonds) saw their 10-year benchmark yield approach 3% after many years below 1%. This is believed to be a result of the Prime Minister’s large spending plans. (See Japanese bond yields march toward 3% as fiscal fears escalate). I’d expect this “worry” to build and likely have its moment at some point, but it is a good sign that, rather than one sudden move, yields have been rising now for some time likely giving investors time to begin to reposition. (For more see Japanese yen is at 40-year low) 

Lastly comes renewed fears around the solvency of Social Security. In a statement that largely flew under the radar, the Social Security Board of Trustees released their most recent report on June 9^th and opined to the effect that benefits will have to be cut by roughly a quarter in six years due to depleted funds. (Source: Social Security to Face Cuts) Social security worries are always somewhere lurking in the background, but expect this to become a bigger talking point around upcoming elections as well as US budgetary concerns. 

As a result of the above, along with continued worries around various aspects of the tech sector, investors remain quite bearish (see accompanying chart) despite what remains a solid year for risk markets so far in 2026. 

Taking the other side of the argument, Tom Lee of Fundstrat laid out his three primary reasons for optimism heading into the second half noting: 

“Inflation is cooling, not accelerating. Seven of the last eight CPI reports have come in below expectations, with April the lone shock tied to the Iran conflict and petroleum supply. Year-over-year inflation sits at 2.85%, and easier comparisons in June, July, and August (against last year’s tariff-driven prints) could pull the headline number lower.  

A softer labor market gives the Fed room. June payrolls rose just 57,000 against a Street estimate near 113,000, alongside 74,000 in downward revisions over the prior two months. Weakness in retail and food-services hiring points to less wage pressure, which sits at the heart of the Fed’s inflation concern and supports a more dovish path.  

The second-half setup looks constructive, with two things to watch. ISM has moved back above 50 after three years below it, historically a signal for earnings acceleration, and 2027 S&P earnings estimates have risen $48 to $400, leaving the market cheaper on forward earnings than at the start of the year even with the index up nearly 10%. Offsetting that, margin debt is up 54% year over year (a pattern that has preceded consolidation), and large-cap growth managers are trailing their benchmarks at the worst rate in five years.” (Source: Fundstrat, 7/8/26)  

Whether it’s the uncertainty around markets or Social Security, the key is to make sure you understand where your funding/income would come from in a prolonged downturn. Failing to do so brings in a “sequence of returns” risk, which is the true danger from volatility. Many advise clients to hold excess cash to address this, but that only creates a new problem from the erosion of purchasing power due to inflation and the low returns found on cash today.  

The better approach is to make sure to properly diversify across many asset classes, not just US stocks and bonds, as well as to design a portfolio that produces stable and sufficient income regardless of the market’s returns.  

If you or someone you know needs help which such a design to put to rest concerns like the one’s troubling markets today, reach out anytime.  

Have a wonderful weekend,  

Tim and the team at TEN Capital 

Data, Just the Data

• U.S. Existing Home Sales – fell 2.4% in June to a seasonally adjusted annualized rate of 4.09 million units. The average price of existing home sales rose by 1.8% year-over-year to $440,600, the highest level in over a year. 
• U.S. Jobless Claims – initial claims fell by 2,000 last week to 215,000 and below expectations. Continuing claims rose by 8,000 to 1,814,000, the highest since March but below expectations. 
• Eurozone Retail Sales – rose by 0.2% in May following a downward revision to April’s reading. Year-over-year sales are 1.6% higher. 
• Japan Household Spending – fell 0.4% year-over-year in May for the 6^th consecutive month of contraction.