I woke up this morning and it was cloudy, rainy, and cold; which for Upstate New York can mean only one thing…
What it also means is that it’s time for a Summer 2026 market recap: What Actually Happened (and why it’s important)
1. A Narrow Straight Can Have a Wide Effect
Oil dropped into the low $70s in June when a ceasefire looked possible, then rocketed past $100 in July when fighting flared back up near the Strait of Hormuz. By mid-August, the ceasefire had quietly expired with nothing to show for it.
Why it matters: Oil is basically a tax nobody voted for. When it spikes, gas and shipping costs climb, inflation gets stickier, and the Fed gets more nervous about cutting rates. You don’t have to watch oil futures to feel this, it shows up in your grocery bill and in how long “high rates” stick around.
In the portfolios: This is basically the reason Rotational exists. Holdings like SHLD (defense tech) and NLR (uranium and nuclear) are designed to catch exactly this kind of geopolitical shock, so when oil and defense headlines get scary, these are the pieces meant to hold up or even climb while everything else wobbles.
2. The Fed Went From a Singular Voice to a Group Debating Whether a Hot Dog Is a Sandwich or Not
Love him or hate him Jerome Powell saw us through one of the most tumultuous and complicated economic times we’ve ever seen. The stakes may have been higher with Bernanke and the Great Recession, but whatever you want to call these last six years they had Powell juggling political, social and economic pressures simultaneously. And the reality is he did a phenomenal job.
New Chair Kevin Warsh has been running meetings all summer, and the “we’re all on the same page” era is over. Most recently three members dissented in favor of a hike in July, first time that’s happened since 2016, and the minutes suggest this disagreement runs even deeper than that.
Why it matters: The Fed sets the price of borrowing money. A united Fed is predictable; a divided one is not, and markets haaaaate not knowing what’s coming. Practically speaking, don’t hold your breath for cheaper loans anytime soon, the timeline keeps getting pushed back.
In the portfolios: This is part of why something like CAOS (a tail risk fund) sits in our fixed income sleeves. It’s insurance against exactly this kind of “nobody knows what the Fed does next” stretch… you don’t need CAOS to pay off every quarter, just the quarters like this one.
P.S. A hotdog is NOT a sandwich.
3. Inflation Cooled Off, Then Got Cold Feet
May came in hot at 4.2%. June cooled things off nicely, down to 3.5%. Then July’s PCE print (the Fed’s preferred measure) ran back up to 3.7%, partly thanks to the oil spike I mentioned above.
Why it matters: Inflation doesn’t move in a straight line, no matter how badly financial media wants it to. But zoom out from the monthly zigzags and the bigger point is this: prices for the stuff you actually buy, groceries, gas, rent, insurance, keep climbing most years, even in months when the “inflation rate” looks like it’s cooling off. Cooling off just means prices are rising a little slower, not that they’re coming back down. That’s why the same grocery run costs more than it did a couple years ago, even though nothing about your habits changed.
The back and forth actually matters beyond just being confusing to follow. The Fed is watching these same swings to decide whether it’s safe to cut interest rates, and a bumpy, unpredictable inflation picture makes them more hesitant to do that. That hesitation is what’s kept things like mortgage rates, auto loans, and credit card rates elevated for longer than a lot of people expected. So when you see inflation reports jumping around, it’s not just a headline, it’s why borrowing money still feels expensive.
For your day to day, none of this is abstract. It's the difference between rates coming down versus staying elevated for longer. And on the inflation side itself, it's a reminder that cash sitting in a checking account, or even a low-interest savings account, is quietly losing purchasing power every year inflation runs above zero. A dollar today buys less than it did last year, and it'll buy less again next year, regardless of which report you're looking at. That's the whole reason "just save it" isn't a full financial plan for anyone, whether you've got $500 or $500,000. Investing exists to try to grow your money faster than prices are rising, so you're not quietly falling behind just by standing still.
In the portfolios: USCI (a commodity index fund), held inside our fixed income sleeves, is one of the more direct inflation hedges you’ve got. When prices for oil, metals, and other raw materials rise, this piece is built to rise with them rather than get squeezed by them.
4. The Job Market Is Sending More Mixed Signals Than Two People Trying to Figure Out if It's the Handshake, the Hug, or the Combo
Hiring fell short of expectations month after month (57K jobs added in June against a forecast of 115K), and unemployment only looked steady because people were leaving the workforce, not because things were actually getting better. By August, some reports showed payrolls going negative.
Why it matters: A cooling job market cuts both ways. It’s a legitimate warning sign for the economy, but it’s also historically the thing that finally gets the Fed to cut rates, which tends to help both stocks and bonds. The tricky part is that it’s landing at the same time as the inflation picture is bouncing around, cooling in June, then running hot again in July. That’s the kind of mixed signal that makes the Fed’s job murky at best. Normally a weakening job market alone would be a clear green light to cut rates. But with inflation still acting unpredictable, the Fed can’t just focus on jobs, it has to weigh a slowing economy against the risk that cutting rates too soon lets inflation take off again. That’s exactly why you’re seeing a divided Fed instead of a unified one, jobs data is pointing one way and inflation data is pointing another, and there’s no clean answer that satisfies both at once.
That’s the bigger picture worth sitting with: the economy rarely hands you one clear signal to react to, it’s usually two or three conflicting ones at the same time, and figuring out which one matters most is a moving target even for the people setting policy. If you don’t already have somewhere between three and six months of expenses set aside in cash, a wobblier job market is as good a nudge as any to get there, not because a recession is guaranteed, but because having that cushion means you’re not personally forced to guess correctly about how this all shakes out either.
In the portfolios: This is the kind of environment core bond holdings like BND and AGG are built for. When the economy shows cracks, bonds tend to get a bid as investors look for safety, which is the ballast function these funds play.
5. Silicon Valley Bet the Ranch on AI But Wall Street Still Wants to Know “Where’s the Beef”
Amazon, Microsoft, Alphabet, and Meta collectively spent roughly $725 billion in AI infrastructure so far for 2026. Investors cheered it through the spring, then spent July asking, essentially, “okay, but where’s the return?” before recent earnings this month (Microsoft’s Azure crossing $100B in annual revenue) helped to settle some of the collective nerves.
Here’s the part that’s easy to miss: the S&P 500 itself barely moved in July, but that headline was actually hiding a lot. Over 300 of the 500 companies in the index actually finished the month well in the positive territory, and nearly 100 of those companies were up by double digits! The index looked flat though because a handful of massive AI names dragged it down enough to cancel out all that strength underneath.
Why it matters: A small handful of companies now make up an outsized chunk of the S&P 500. That means if you own a plain index fund and think you’re “diversified,” you’re more exposed to “does the AI bet pay off” than you might assume, and you can also miss out on strength happening everywhere else, because a few giant names are big enough to drag the whole average down even when most of the index is doing fine.
In the portfolios: This is exactly the kind of month direct indexing is built for. Instead of just owning “the S&P 500” as one blended number that averages winners and losers together, direct indexing holds the individual stocks separately, so you can actually capture the gains from those 300+ companies that were up, rather than having them washed out by the handful of mega-cap names dragging the average down. It’s the difference between owning the average and owning the pieces that made up the average.
6. Investors Got Tired of Tech and Then Remembered Value Stocks Still Exist
After tech led the charge through the first half of the year, July flipped the script. The Nasdaq fell while the Dow, small caps, energy, and industrials picked up the slack. By August, small caps were setting records of their own.
Why it matters: This is the entire case for diversification in one paragraph. If your money was parked entirely in tech-heavy funds, July stung…. but if you also held some value stocks or small caps, you barely noticed.
In the portfolios: This is exactly why Core Equity sleeve doesn’t just hold QQQ. VTV (value stocks) and VB (small caps) sit right alongside it, so when tech has a rough month, you’re not fully exposed to just one side of the story.
7. Long-Term Bond Yields Hit Levels We Haven’t Seen in Almost 20 Years
(Truth be told, it’s George’s dinner time and I couldn’t think of a witty title for this one because he is literally just staring at me)
The 30-year Treasury spiked on deficit worries, sticky inflation, and heavy government borrowing, dragging bond fund returns down with it.
The yield curve is basically a menu of interest rates for different loan lengths, short-term, medium-term, all the way out to 30 years. Normally, longer loans carry higher rates since lenders want more compensation for locking up money longer. This summer, the long end spiked hardest: the 30-year Treasury hit a 19-year high near 5.28%, while shorter-term bonds barely moved. That’s the bond market saying it’s worried about the next 20-30 years of deficits and borrowing, not next year.
Why it matters: People assume bonds are the “safe” part of the portfolio, and they are, in the sense that you get your money back at maturity. But bond prices absolutely can drop when yields rise, which is exactly what happened this summer. The upside: if you’re buying bonds today, whether it’s a new position, reinvesting a maturing bond, or just contributing to a fund that holds bonds, you’re locking in a higher rate than someone would have two years ago. A bond fund that’s been quietly getting hurt on price also means the yield it pays out going forward is now higher too.
In the portfolios: BLV (long-term bonds) felt this the most directly, since longer-dated bonds are the most sensitive to rising yields. BSV (short-term bonds) barely noticed, which is exactly why both sit in the same sleeve together. It’s also why we actively skew how much sits in short versus long-term bonds (”duration exposure”) depending on what we’re seeing in the bond market and across the yield curve.
8. Like a Jam Band Concert That Just Won't End; Tariffs Came Back for an Uninvited Encore
A proposed 50% tariff on Canadian goods and fresh trade tension with China rattled specific stocks in August, while some retailers (like Target) actually got a tariff refund tailwind.
Why it matters: Tariffs create very specific winners and losers even while the broader market shrugs. There’s no clean “tariff trade” or single investment that protects you from this kind of headline, trade policy shifts too fast and hits too unpredictably for that. What actually helps is everything we’ve already covered working together. Diversification means you’re never fully exposed to one sector or one country’s trade relationship. Rebalancing means if tariffs hammer a specific holding, you’re not stuck overweight in it, the process trims and adds along the way regardless of the reason behind the move. And small, calculated positions inside the Rotational Sleeve, rather than big bets on any single trade story, mean that when a tariff headline does sting a specific name, it’s a minor scrape instead of a real hit to the account. It’s less about predicting the next tariff and more about already being built so no single one of them can do much damage.
9. And at the End of the Day: Markets Still Don’t Care
Despite everything above, the S&P 500 crossed 7,800 for the first time in mid-August, and small caps notched new highs right alongside it:
Why it matters: This is the part people always forget, markets climb the metaphorical walls of worry all the time. Scary headlines and record highs happened in the same week. Waiting for “no bad news” before investing is a losing game; time in the market almost always beats trying to time the market.
In the portfolios: SPY, the largest single holding in Core Equity Sleeve, is your direct line to this. This is where rebalancing and dollar cost averaging quietly do their job in the background too. When tech runs ahead of everything else, like it did for most of the first half of the year, rebalancing trims a little off names like SPY and QQQ and adds it to the pieces that lagged, like VTV (value) and VB (small caps), so you’re not left over exposed to a handful of Mega Cap AI companies. Then when the script flips, like it did in July when value and small caps took the lead and tech cooled off, rebalancing works in the other direction, trimming some of the gains from VTV and VB and adding back into SPY and QQQ. Either way, you’re systematically buying low and selling high across your own holdings instead of chasing whichever one had the better month. And if you’re regularly adding to your retirements accounts (through us, through work, or through wherever), dollar cost averaging means some of that money is being used to buy during July’s wobble as much as August’s record highs, so you’re never betting everything on picking the perfect month to invest.
Both are really the same idea just executed in different forms: you don’t have to correctly guess when to buy or when to trim, the process does it for you, month after month, whether the headlines are good or bad.
So what does all this mean?
Put the nine threads together and you get a summer that gave you real reasons for optimism, strong earnings, record highs, better rates on new bonds, and real reasons for caution, a cooling job market, a divided Fed, an oil shock, tariffs flaring back up, all at the same time. That tension isn’t unique to this summer, markets almost always have some good news and bad news pulling in opposite directions, this season just put it on full display. What is true about summers specifically, is that markets tend to quiet down as institutional investors take time off (believe it or not, fund managers going to the Hamptons does genuinely slow the markets down), which historically means fewer big swings on average, but sharper reactions when news does hit, which is exactly what we saw: calm months on the surface, punctuated by sharp moves on oil, Fed dissents, and tariff headlines.
None of us, including me, can tell you with certainty which of these threads will matter the most now, or in the future, and we’re not going to pretend otherwise. What we can tell you is where we’re focusing our energy, and it’s not on prediction. It’s on the things actually within our control: how diversified your money is across stocks, bonds, sectors, and geographies, how disciplined the rebalancing stays so today’s winners don’t quietly turn into tomorrow’s concentrated risk, and how deliberately those positions are weighted so no single surprise can do outsized damage. That’s not a passive stance, it’s an active one, just aimed at what’s controllable rather than what’s predictable.
If there’s a reason for real optimism heading into the fall, it’s this: earnings are strong, the economy is still growing, and even a messy, uneven summer like this one didn’t stop markets from setting new highs. If there’s a reason for continued caution, it’s that several of these threads, the labor market, the Fed’s next move, geopolitical flashpoints, are genuinely unresolved and could go either way. Both of those things are true at once, and that’s ok. It’s exactly why the plan doesn’t change based on which headline shows up first. We’re watching all of it closely, and we’re managing what needs managing, so you don’t have to carry that uncertainty alone.
Now I seriously need to go feed George.