Macro4Micro: Market Commentary

Employment Situation June 2026: Back to a Crawl 7-2-26

JOLTS May 2026: Openings Flat, Hires Down, Layoffs Up 7-1-26

Music to Ponder: Hope Rising or Blood Simmering? 6-30-26

The Election Gambit: Economic Risk and Policy Uncertainty 6-29-26

Personal Income & Outlays May 2026: Bad Inflation, Balanced Spending 6-26-26

Trade Deficits: The Moving Parts and Macro Goals Matter Most 6-24-26

The FOMC Dance: Will Warsh and Trump Find a Rhythm? 6-17-26

Geopolitical risk: Trump’s Nuclear Saber Rattling? 6-14-26

The Fall of CBS 6-3-26

Yield Curve: Vegas Odds Keep Moving

Glenn Reynolds, CFA — Sun, 26 Jul 2026 22:08:29 GMT

What happens in the Fed Chair’s thoughts … stays in the Fed Chair’s thoughts.

A big week lies ahead with the FOMC and Warsh getting another test in “communication” (or absence of). The market gets the first estimate of 2Q26 GDP, a fresh read on PCE inflation (with income and outlays), and the countdown begins on trade partner responses to the deluge of new tariffs under dubious (but legal) standards.
The UST curve had another bad week and is moving closer to the Oct 2023 highs than to the end of 2024. Mortgages are creeping closer to 7% with over 6.8% to end the week in the broader Mortgage News Daily survey.
The Vegas odds (FedWatch) on FOMC actions as we go to print shows a 62.1% chance of unchanged fed funds for this week’s meeting and odds of 37.9% for 1 hike this week. Looking further ahead to the Dec 2026 FOMC meeting, the odds of no change are down to 6.9% with 1 hike at 32.3%, 2 hikes at 39.7%, and 3 hikes at 18.3%.
The oil wildcard is a major challenge to manage in the best of times. Past stagflation experiences (4Q73-1Q75 recession, 1980-1982 double dip) are hard to ignore even if many conditions today are starkly different. Oil matters from household cash flow to power costs to raw materials and always with an eye on how to recover higher costs (pricing power, etc.). The choice away from price increases would be lower profits or use cost offsets (payroll? capex?) at a time when tariff costs are also rising.

The above chart details the weekly UST deltas. All 7 bond ETFs we track on our weekly asset return commentaries turned up negative on the week given this adverse shift.

The post-Iran UST deltas are updated above (the bombing started on 2-28-26), and there is little mystery around what unfolded with an ugly bear flattener from 2Y to 30Y. That bearish shapeshifting hits consumer financing costs while punishing long duration assets. Mortgages have moved further away from the 6% line and closer to 7% with the 10Y UST being the driver of 30Y mortgages.

The above chart updates the YTD UST deltas with the worst of the damage coming after Iran and as inflation moved higher and saw 4% headline CPI and PCE handles breached in May. That came ahead of what is now looking like temporary relief in June (see CPI June 2026: Eye of the Storm? 7-14-26, Producer Price Index June: Still Hurts…Just Less 7-15-26). The oil pressures of July will show up in the next inflation releases in August. This week gets the PCE inflation release for June

The chart highlights how the UST curve has migrated since COVID to current times across some hiking, easing and now possibly back to hiking. The latest UST yield curve numbers are very close to the Oct 2023 peak when the 10Y UST and 30Y mortgages hit cyclical highs. That peak 10Y UST in Oct 2023 just missed 5.0% but hit that level intraday on 10-23-23.

The UST curve currently is higher than in Dec 2024 from 2Y to 30Y with more pronounced steepening out the curve to the 30Y. The short end is lower now than in late 2024 based on the 2025 easing actions. We detail the hikes, easing actions, and dates in the boxes.

Market participants can debate what is driving the curve higher since Dec 2024 (Biden’s last full month) across inflation, tax breaks, tariffs, oil, soaring UST supply vs. global demand, and record interest expense even with more deficits ahead to fund.

The main point is not who wins that inflation debate (nobody has won that since the 1970s, so good luck), but the market votes on how the factors all roll up into market clearing levels. That is not what drives bond and portfolio performance – not politically motivated double talk. As we saw this past week again, the trend has been bad for bonds. The YTD numbers on 4 of the 7 bond ETFs we track show high quality bond ETFs in the red YTD (TLT, LQD, GOVT, AGG). Rising longer rates can also flow into growth stock valuations, hurt mortgages/housing, and impact consumer credit costs at a time of strained affordability and borderline negative real wage growth with declining savings rates.

A very brief summary of the timeline in reverse chronological order:

July 28-29, 2026: We have an FOMC meeting this coming week with FedWatch showing an overwhelming odds bias favoring hikes through the Dec 2026 FOMC meeting. Chaos in the Gulf and the Iran War is not helping.

Dec 2024 to July 2026: Spin the partisan to-and-fro any way you want, but rates are higher now than Dec 2024 beyond 2Y UST. The direction of the 10Y and 30Y is bad news. Depending on Fed action, the lower rates from 3M to 1Y could be narrowed vs. Dec 2024 if the odds-on favorite hikes unfold. Dec 2024’s upper bound was 4.5% vs. the current 3.75%.

3-1-22 to 12-31-22: ZIRP was scrapped in mid-March 2022, and the year was a grim one for risky assets even if the much-expected recession never arrived. Personal Consumption stayed positive in 2022 and unemployment stayed low. PCE growth ramped up in 2024.

12-31-20 to 12-31-21: ZIRP was in place, the vaccine wave was on (thank God RFK Jr. was not in power), consumers were pent up, risky assets were soaring, refinancing and extension of liabilities brought joy in the form of low coupons, housing took off, refinancing of mortgages brought household cash flow benefits, and “perceived” growth stocks soared (Peleton?!). The yield curve steepened as bondholders saw the Fed was late to the inflation party as easy money and supply-demand imbalances took a toll.

The above chart is another busy one, but it does offer a lot of historical reference points for what UST curves looked like at cyclical peaks or as they approached the doorstep of bad times (in some cases brutal recessionary times). The rule of thumb is that a flat curve later in cycles sets the stage for potential struggles and it is wise to step carefully.

We highlight the 9/16/24 yield curve above that came just before the September easing. Many market watchers had a bullish view on the curve going into 2025, including the long end. That certainly did not play out as we have covered in earlier commentaries. As we moved into 2025 and 2026, we saw rates move higher along with the steepening. It is safe to say that the market will be highly sensitive to tightening moves and raising the front end.

Of course, when worries really pick up we can see a UST curve flattening start to invert as more portfolios buy UST, reduce risk, and get more defensive. Watching for signs of fundamental weakness becomes very important. The good news is that the US economy is so large and diverse and services oriented that it takes waves of problems to drive macro contraction risk.

These periods in the chart cover a lot of cyclical timelines that saw structural changes, regulatory evolution (banks vs. brokers, etc.), periodic bouts of asset excess, diverse credit cycles (including reckless underwriting), and a slew of sector themes (commercial real estate, autos, banks, TMT, RMBS, structured credit, etc.) from Carter to Trump. We look at a range of them in yield curve context in the links below.

The action in the chart starts in the late 1970s, cuts across the double-dip stagflation bout of 1980-1982 and then into the Reagan bull markets. The wide array of mishaps from 1989 to 1992 (hung bridge loans, Drexel collapse, commercial real estate excess, bank turmoil, etc.) moved into the Clinton boom years and then eventually into a tech bubble.

Then came new millennium adventures when derivative counterparty risk and structured credit took bank/broker interconnectedness and leveraged risks and systemic threats to new heights. The bank system crisis is a long story that the typical coconut in Congress has a few party line talking points to use (“Wall Street greed” or “Let the markets work, no bailouts” or “Wall Street vs. Main Street,” etc.). There is always a lot more to the stories and events of the time.

The following links cover the background of a range of UST curve shifts and some of the historical UST slope shapeshifting from Volcker to Greenspan and the later parade of Fed Chairs.

The Fed gets so much coverage it is hard to escape, but knowing what came before can help sort out some of the revisionist “modifications” of history.

Greenspan’s Last Hurrah: His Wild Finish Before the Crisis 10-30-22
Wild Transition Year: The Chaos of 2007 11-01-22
Bear Flattener: Today vs. 1994 and Aftermath 10-18-22
UST Moves: The 1990-1991 Risk Factor Pig Pile 10-24-23
UST Moves: 1988-1989 Credit Cycle Swoon 10-20-23
Greenspan’s First Cyclical Ride: 1987-1992 10-24-22
UST Slope Update: Some New Inversion Highs 12-8-22
UST Curves: Slope Matters 10-25-22
Yield Curve Lookbacks: UST Shifts at Cyclical Turns 10-16-23
Fed Funds, CPI, and the Stairway to Where? 10-20-22
UST Moves 1978-1982: The Inflation and Stagflation Years 10-18-23
UST Curve History: Credit Cycle Peaks 10-12-22
Business Cycles: The Recession Dating Game 10-10-22

Market Commentary: Asset Returns 7-19-26

Glenn Reynolds, CFA — Mon, 20 Jul 2026 03:43:53 GMT

The week saw an anxiety contest between those more worried about a tech correction vs. those concerned about Iran escalation and the potential for cascading macro fallout. The IBM headlines and selloff of -26% rattled the markets (who is next in earnings season?), and the Semiconductor ETF (SOXX) posted a -10.2% week.
The risks of oil prices heading higher were largely shaken off by the UST curve with WTI over $82 to end the week vs. $71+ the prior Friday. As of later Sunday night, we see $84+ WTI. The UST curve moved lower on the week, but the broad benchmarks were all negative with NASDAQ, the S&P 500, Russell 2000, and Midcaps all in the red.
Banks reported exceptional earnings with the underlying business color offering reassurance on asset quality and the state of the consumer.
This coming week brings minimal macro releases but a major wave of earnings including Alphabet, GM, Tesla, and some key bellwethers in homebuilders (D.R. Horton, Pulte) along with some important consumer finance bellwethers (Synchrony, Ally, Amex).
A more distant worry on the list that is well behind a tech correction, Iran, and lurking pressure on inflation was Hegseth’s concerns around testosterone counts in the military (character and courage we assume is important). We could not help but wonder what Hegseth would have said to 5 foot-5 inch, 112-pound Audie Murphy.

The above table updates the running timeline returns for the debt and equity benchmarks we monitor. We see duration pressure on bonds from the recent curve setbacks with 1-month returns for the AGG index and IG Corporates in the red and the UST benchmark at 0%. The UST benchmark is negative for 3 months and YTD. IG Corporate benchmark with its longer duration is also negative for 3 months.

Equities are seeing growth stocks and tech getting dialed back for the trailing 1-month period with NASDAQ and Russell 3000 Growth negative for 1 month. 3 months returns are still solid, but as we cover in more detail charts below, the semiconductor sell-off and intermittent selloffs and rallies in software and SaaS based service operators is being felt. We address those topics in the relevant “tech check” sections below.

As we go to print, the Iran escalation sent WTI back briefly above $85 Sunday night then back to $84. The flowthrough of oil risks and Iran scenario spinning will make for interesting Q&A in the earnings season as AI capex goals get updated and notably for the hyperscale players and those most exposed to the AI ecosystem.

The above chart updates the UST deltas for the week with a very mild decline across the curve despite the upward oil pressure still threatening inflation (see CPI June 2026: Eye of the Storm? 7-14-26, Producer Price Index June: Still Hurts…Just Less 7-15-26).

The above chart updates the post-Iran UST deltas (bombing began Feb 28) as the ugly bear flattener unfolded from 2Y to 10Y/30Y. The inflation that ensued hit 4% handles for CPI and PCE in May while CPI dipped to 3.5% at the headline level in June. These inflation moving parts are tenuous.

The decline in YoY CPI to 3.5% headline and 2.6% core in June was driven by the -5.7% MoM in Energy for June that still left Energy YoY at +15.7% and Gasoline at 26.7%. That is still ugly in the context of very strong equity valuations. As we see on the screen this past week, those energy inflation metrics have a high risk of reversing with the Iran escalation.

The above table updates the YTD numbers for the UST deltas. The bond ETF returns see 5 of the 7 bond ETFs in the bottom quartile for the week as we cover further below in the charts. For YTD, we see 2 of the 7 bond ETFs have negative returns on the duration impact.

The tech bellwether table updates various timeline returns for some notable tech ETFs, and the “Mag 7+3” (includes Broadcom, Oracle and Taiwan Semi). We look at more single names and tech sector ETFs in our “tech check” charts below.

We see 3 of the Mag 7 leading the week in positive range with Apple, Microsoft and Amazon followed by the Software ETF (IGV). After that, the weekly returns flip to negative with the Semiconductor ETF (SOXX) sitting on the bottom with -10.2% for the week and -13% for 1 month but an impressive +25.6% for 3 months and still over +73.5% YTD. That double-digit sell-off was a very small dent in context with the trailing 1 year at +112.6%. We look at more of the underlying single names in the tech check timeline return charts below.

The update of the weekly returns in our broader group of 32 benchmarks and bellwethers shows a 16-16 positive-negative score. We look separately at the broader mix of tech names in our “tech check” update with that group of 32 much more heavily weighted to the downside and negative returns with a 9-23 score.

We see the large cap benchmarks (S&P 500, NASDAQ) in the bottom quartile based on tech weightings. The 11 S&P 500 sectors weighed in with a score of 6 negative and 5 positive as tech took a beating. The Russell 2000 and Midcaps were also both negative but less so and up in the 3rd quartile.
The reactions to Iran escalation have been mild in the securities markets this week despite WTI closing at $82.49 Friday, up from $71.41 the prior Friday. The UST curve might face the need to reassess this week.

The market will have much to digest this week as a slew of earnings come out with Alphabet and Tesla plus a wide range of industry groups including autos, freight and logistics, defense and aerospace, airlines, consumer finance (notably in credit cards), and major homebuilders.

We saw some benefits this past week for interest-rate-sensitive sectors tied to the downward shift of the UST. That helped push 5 of 7 bond ETFs into positive range on duration tailwinds. That also included the dividend-heavy ETFs such as BDCs (BIZD), Consumer Staples (XLP), and Real Estate (XLRE). We look at the UST deltas in more detail in the full asset return commentary to be posted later.

The top quartile is led by E&P (XOP), Energy (XLE), and Midstream (AMLP) in the top 3 slots with Financials (XLF) and Regional Banks (KRE) showing optimism after soaring earnings of major banks gave reassuring color on asset quality and the health of the consumer. Synchrony and Ally will give some more granular details on consumer credit this week. Amex will offer some signals on spending. The BDCs (BIZD) made the top quartile given the absence of negative loan color (so far) although those issuer-specific BDC earning releases come closer to the end of the season.

In the bottom quartile, we see Tech ETF (XLK) on the bottom with the Equal Weight NASDAQ 100 ETF (QQEW) in 2nd to last. Tech performance undermined NASDAQ and the S&P 500 given relative tech weightings as they ended up in the bottom quartile. Communications Services ETF (XLC) was in the bottom quartile as both Netflix (NFLX) and Meta (META) were hit hard and to a lesser extent Alphabet (GOOGL) struggled.

The chart updates our tech check mix of 32 single names, tech-based ETFs, and broad market benchmarks. The overall positive-negative score for the week was 9-23 with the 9 asset lines including 3 of the Mag 7 names (AAPL, MSFT, AMZN) along with a mix of software and SaaS-based names that had previously been on the receiving end of the AI displacement panic. Those include Adobe (ADBE), Intuit (INTU), Salesforce (CRM), FactSet (FDS), Palantir (PLTR), and Microsoft (MSFT).

The 6 software and SaaS names in the top quartile are still all in negative range YTD, so this is quite a flip. The next stage of tech name reassessment will get tested as earnings season rolls out. The market will seek more color in reporting season for a sense of where the broader AI ecosystem stands in its expectations for capex from the big hyperscale names. The focus will be looking to gauge capex timing and drill down into any changes in the pace and timing of the data center expansion. A variable will be what the rapid escalation of the Iran War means for the UST curve and old school “valuation math.”

In what was a bloodbath week for semiconductor equities, we see 6 of 8 names in the bottom quartile. The semi operators were joined by Oracle (ORCL) and IBM, who was crushed with major earnings and guidance setbacks that sent IBM stock down by -26%. That IBM performance was headlined by Barron’s as the “biggest wipeout on record” for the company.

IBM was catching a ride on the AI excitement despite being more of a legacy hybrid business mix. As of last week, the YTD return on IBM was only -2.9% as it avoided the worst of the sell-off felt in software and SaaS. IBM has now dropped down into the YTD bottom quartile at -28.2% wedged between ADBE and PLTR.

The Semiconductor ETF (SOXX) posted -10.2% on the week with the Software ETF (IGV) slightly in positive range at +0.42% at the top of the 2nd quartile. The more balanced Tech ETF (XLK) posted -5.5% in the upper half of the 3rd quartile. NASDAQ made the 2nd quartile but was a few notches behind the Russell 2000, Midcaps (MDY) and the tech-heavy S&P 500. The Mag 7 mix was 3 positive in the top quartile, 2 negative in the 2nd quartile with Alphabet (GOOGL) and META, and 2 in the red in the 3rd quartile with NVDA and TSLA.

The AI ecosystem stocks that had ridden the wave to new highs will face a lot of grilling in the earnings Q&A sessions. The same is true for the Mag 7 capex kings with inquiry likely to be locked in on how the data center buildout pace is expected to scale up (or slow down) based on equipment logjams, waves of state and local political reactions, and consumer sector (i.e. voter) pushback with a critical midterm election dead ahead. The headlines around electricity shortfalls and inflation pressure there and threats to water supply have all been on the front burner. We will see how many sets of kid gloves come out in sell side Q&A.

The 1-month timeline for the broader mix of 32 benchmarks and ETFs shows a strong performance by energy and financials in the top quartile. We see E&P (XOP), Diversified Energy (XLE) and Midstream in the top 5 along with Healthcare (XLV) and Regional Banks (KRE) rounding out the top 5. Interestingly, the BDC ETF (BIZD) has been making a slow comeback and was in the top quartile with Financials (XLF) and Real Estate (XLRE).

The low quartile shows the Tech ETF (XLK) on the bottom with tech-heavy NASDAQ and the Equal Weight NASDAQ 100 (QQEW). The UST curve moves hit duration with the long duration UST 20+Y ETF (TLT) with the IG Corp ETF (LQD) also in the red in the bottom quartile. Base Metals (DBB) saw some weakness as the shortages from the Strait of Hormuz started to look like it would ease. The Iran escalation could quickly bring back some of those supply problems and send prices of more commodities than oil higher again such as aluminum or copper. The risk of an oil spike and commodities replay will be getting debated this week.

The tech check mix over 1 month has been painful as evident in the bottom quartile numbers with 7 of 8 posting double digit negative returns with 6 of the names in the bottom quartile tied to semiconductors. Intel was the worst of the semi performers at -21.5% in 2^nd to last and only Oracle (included in the IGV software ETF) worse at -31.1%. We already addressed IBM in the weekly comment as the other name outside the semis.

The top performers in the high quartile include 5 software/SaaS names in the top quartile along with 3 of the Mag 7 – Apple, Meta, and Amazon. The 5 software and SaaS names have seen a rotation into that subsector after it was radically repricing lower during the “AI panic” that was driving such names dramatically lower. The 5 names in the top tier for the month included Adobe (ADBE), FactSet (FDS), Intuit (INTU), Salesforce (CRM), and ServiceNow (NOW). Those 5 names are all posting double digit negative returns YTD as we break out in another chart herein.

The 3-month return timeline for the broader mix of 32 benchmarks and ETFs posted a 21-11 score. The top quartile includes the Tech ETF (XLK) at #1 followed by the Equal Weight NASDAQ 100 ETF (QQEW). We see Regional Banks (KRE), Financials (XLF), Health Care (heavy on pharma), E&P (XOP), and the Russell 2000 in what is a reassuring and diversified mix.

The bottom quartile includes Communications Services (XLC) with Netflix getting slaughtered and negative returns for Meta, Comcast, and Disney among others. For bond ETFs, we see 4 of 7 in the red on duration with EM sovereigns (EMB), short UST 1-3Y (SHY) and HY bonds (HYG) each slightly positive well under 1%. Consumer Discretionary (XLY) was held back by weak retail performance.

The YTD returns for the broader group of 32 are showing a solid stretch on rising earnings for numerous industry groups. Bond ETFs have struggled. The bottom quartile saw 5 of the 8 ETFs tied to bonds with 7 of the bottom 10 being bonds. The 3 names on the bottom included Communications Services (XLC), the BDCs (BIZD), and Consumer Discretionary (XLY).

The winners in the top quartile show a cyclically diverse range of industries across energy related with E&P (XOP), the diversified Energy ETF (XLE), and Midstream (AMLP) along with the Tech ETF (XLK) again along with Transports (XTN), the Russell 2000, Regional Banks (KRE) and Industrials (XLI). That is a broad mix.

The returns for the YTD tech check mix post a score of 19-13 with the bottom tier once again dominated by Software and SaaS-based services names. While some of those negative returns for the software/SaaS group have been reduced, the same is true for the gains in the semiconductor lead winners.

The extraordinary returns for the AI ecosystem names in the top tier run from Dell at +214.8% down to Applied Materials (AMAT) at #5 with a +106% return. Making the top quartile took a +31% return as posted by Taiwan Semi (TSM). The Hi-Lo range of 270 points is well down from where it was but still highlights the outsized spike in the semis narrowly and AI plays broadly.

The trailing 1-year returns are obviously impressive for any cycle and the score is holding at 31-1 with only the BDC ETF (BIZD) in the red at -15.3%. We see the Energy ETF (XLE) now on top at 37.2% vs. the Transports (XTN) at #2 with +35.8%. It took 23.5% to make the top quartile while the median for the asset lines is around 13.5% for the LTM period.

Industrial Production June 2026: Sideways Syndrome 7-18-26

Company Profile: Ford Motor and Ford Motor Credit 7-17-26

Producer Price Index June: Still Hurts…Just Less 7-15-26

CPI June 2026: Eye of the Storm? 7-14-26

Market Commentary: Asset Returns 7-12-26

Existing Home Sales June 2026: The Stall is On 7-11-26

Employment Situation June 2026: Back to a Crawl 7-2-26

JOLTS May 2026: Openings Flat, Hires Down, Layoffs Up 7-1-26

Music to Ponder: Hope Rising or Blood Simmering? 6-30-26

The Election Gambit: Economic Risk and Policy Uncertainty 6-29-26

Personal Income & Outlays May 2026: Bad Inflation, Balanced Spending 6-26-26

New Home Sales May 2026: Weak Volumes, Stable(ish) Prices 6-25-26

Trade Deficits: The Moving Parts and Macro Goals Matter Most 6-24-26

The FOMC Dance: Will Warsh and Trump Find a Rhythm? 6-17-26

Geopolitical risk: Trump’s Nuclear Saber Rattling? 6-14-26

The Fall of CBS 6-3-26

Market Commentary: Asset Returns 7-12-26

Glenn Reynolds, CFA — Sun, 12 Jul 2026 18:11:49 GMT

Did Little Marco set me up?

The week saw a meltdown of an already struggling Trump-Iran MOU process that had been a cluster of circles from the outset. Oil has remained remarkably contained given the reality that framing the supply side of the ledger is a bit of a moonbeam at this point as is how the market will price the forward risk factors.
The week will bring CPI and PPI data with more eyes looking ahead to how oil might play out with the highly uncertain response of Trump to the Iran challenge and how the later summer supply-demand balances get handicapped and what it all might mean for the UST curve. Higher oil would in theory mean stubborn inflation expectations and steepening risk.
As of Sunday morning, the FOMC odds of fed funds easing per FedWatch CME models are not likely to make Trump happy. The odds of 1 cut by the Dec 2026 FOMC meeting date are at 0% while the odds of 4 hikes are higher than that at +1.6%. The odds of no fed funds actions stand at 14.6% while 1 hike is 37.8%, 2 hikes 33.7%, and 3 hikes 12.3%. The next leg of the oil journey with a theorical Iran deal will not make curve odds an easy exercise even if hikes will remain the consensus.
Housing remains under a cloud on mortgage rates while financing costs for consumer purchases will see little relief. The 30Y mortgage rate stood at 6.64% as of late Friday per the Mortgage News Daily survey with the Freddie Mac benchmark set at 6.49%. Seeing such funding costs set against negative real wage growth is not a friendly macro backdrop for the home stretch in 2026. Add in health care premium stress in a “low hire” market and the GDP relief on the PCE line is still hard to see.

The above table updates the running timeline returns for the debt and equity benchmarks we monitor. We see the adverse duration effects of the UST curve action in the UST benchmarks and also the negative return impact on the long duration IG Corp index. The UST benchmark is negative for 3 months and YTD with only +2.69% for the trailing 1-year for UST. We break out the UST deltas in the next series of charts.

Equities posted very solid numbers for 1-month, and we see rolling 3-month returns that are better than many full years. The trailing 1-year has been well ahead of the long-term returns on the equity asset class but impressively so in the case of growth stocks and related benchmarks.

The Russell 2000 index has posted very strong returns for 3 months, YTD, and 1 year. The returns on the Russell 2000 benchmark are ahead of the large caps YTD and over the trailing 1 year despite some dazzling tech subsector returns. As we cover in the tech charts further below, tech has seen some massive winners in the semiconductor space and across the AI ecosystem broadly, but some major setbacks in software and SaaS services have undermined headline tech returns. The Mag 7 performance has generally been less than magnificent as we have covered in past commentaries.

The UST curve had another challenging week as noted above with the yield curve move higher undermining bond ETF returns. With the Iran MOU in disarray and the “ceasefire over” (the term “ceasefire” has had a very loose definition so far), there will be a fresh round of handicapping around how the Strait will play out. There will also be considerable uncertainty on when crude and refined product inventory rebuilding (especially China demand) could ramp up ahead the fall.

This week we get fresh CPI and PPI data. The UST curve will get a fresh test. While the headline and core numbers dominate the conversation, the product line items are something we always like to focus on. Some CPI lines show very little connection to reality and the household cash flow experience (e.g. health insurance “deflation” and “owners’ equivalent rent”). Electricity will remain under scrutiny with all the power and data center headlines. It is about a lot more than oil and gasoline costs with raw materials and freight and logistics costs (see Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26, CPI May 2026: The 4% Rubicon 6-10-26).

The above chart updates the post-Iran UST deltas and the ugly bear flattener that unfolded from 2Y to 10Y/30Y. The inflation that ensued and hit 4% handles makes a statement on incompetent governance in economics and geopolitics. We also see no shortage of disinformation out of Washington and the “talking econ heads” on energy and tariffs and what it all means in the unit cost and pricing transmission mechanism.

We cannot get factual and conceptual commentary on how this will all play out across the product and services lines when the President will not admit the buyer writes the check for the tariff cost. His policy and economist bobbleheads just fall into line denying simple facts and economic reality.

The above table updates the YTD numbers for the UST deltas. The bond ETF returns see 5 of the 7 bond ETFs in the bottom quartile as we cover further below in the charts. For YTD, we see 3 of the 7 bond ETFs have negative returns on the duration impact.

The above table updates the tech bellwethers and broad benchmarks. We add some more single names in the return tables further below, but the above table includes Mag 7 plus the volatile Oracle (ORCL) with Broadcom (AVGO) and Taiwan Semi (TSM).

The “Mag 7 +3” had a decent week with Meta turning in an unusual banner week in what has been a poor year vs. many bellwether tech names that we break out below in the ‘tech check” return timelines. The table shows META, AVGO, NVDA, TSLA, and AAPL ahead of the NASDAQ. MSFT continues to struggle with Alphabet (GOOGL) also in the red this past week. Taiwan Semi also lagged.

The following is a cut and paste of our LinkedIn post on Saturday with some edits:

The chart updates the weekly total returns for the broader group of 32 benchmarks and ETFs we monitor. As we see in the chart, it was a mixed week with a score of 15-17 for positive-negative. That includes 6 of 7 bond ETFs in the red (only HY was positive) with duration taking a hit on an adverse UST move.

Both the S&P 500 and NASDAQ large cap benchmarks were positive and in the top quartile. The Russell 2000 small caps and Midcaps (MDY) were in the bottom of the 3rd quartile in negative return range. The S&P 500 saw 6 of its 11 sectors in the red with the critical larger sectors posting positive returns (notably Tech, Financials, Consumer Discretionary, Communications).

We see Energy (XLE) at #1 along with E&P (XOP) at #3 in the top 3 as oil rebounded modestly on the Iran setbacks. The Tech ETF (XLK) rallied to #2 on the partial tech rebound that saw semiconductors rally along with some AI ecosystem names in a partial comeback from the recent selloff. Meta (META), Broadcom (AVGO), and NVIDIA (NVDA) had very strong weeks.

Meta was caught up in AI headlines for a big week at +14.8%. First the big rally came in news around META AI model releases and new cloud initiatives. Meta reported to be launching a cloud business to sell excess AI capacity. Then on the weekend Meta pulled an AI offering back that would allow all types of privacy violation high jinks by tapping into Instagram. We will see how the market sorts that out in what has generally been a poor performer YTD in returns.

As we cover in our separate Tech Check return commentary, there were still plenty of bottom dwellers this week in the software and SaaS side of the subsector mix. The Software ETF (IGV) posted a -1.24% with the Semiconductor ETF (SOXX) at +2.65%.

Cyclicals and rate-sensitive ETFs dropped into the bottom quartile with Homebuilders (XHB) dead last as the UST curve backed up ahead of this coming week’s CPI and PPI numbers. Existing home sales were weak again as median home prices hit an all-time high and inventories declined. That is not going to help the affordability story as monthly payment strain is still tied to the UST curve. Mortgage rates ended the week over 6.6% (Mortgage News Daily survey) and 6.49% for the weekly Freddie Mac 30Y.

In the bottom quartile, we see duration hit with the long duration UST 20+Y ETF (TLT) in the bottom 4 joined by the longer duration IG Corp ETF (LQD). Interest rate sensitive sectors such as the dividend-heavy Consumer Staples ETF (XLP) and Utilities ETF (XLU) were also in the bottom tier. The cyclical Materials ETF (XLB) and Industrials ETF (XLI) also lagged in the curve and Iran news. Earnings season picks up with a wave of banks this week.

The following is a cut and paste of our LinkedIn post on Saturday with some edits:

The chart updates the price returns for the “tech check” mix we monitor each week. The score for the week was 19-13 in a spotty performance for the bellwethers that are spread across the quartiles. That includes 3 of the Mag 7 in the top quartile. For the trailing 1-month period, only Meta and Apple are in the top quartile.

The volatile swings of June are entering July with a partial reprieve as both the Semiconductor ETF (SOXX) at +2.65% and the Tech ETF (XLK) at +2.87% were both positive while a modest negative for the Software ETF (IGV) at -1.24% saw more software and SaaS names leading the count in the bottom quartile.

The outliers on the week included Meta (META) at #1 in a rare banner week of +14.8% for a name that YTD sits in the middle of the 3rd quartile at +1.38% and well below the median return for the group YTD of just under +12%.
The other outlier on the rolling post-holiday week was Intel (INTC) at -8.73%. The good news for INTC holders is that the company still weighs in at #3 YTD at +197.7%. INTC is still positive for the rolling 1-month period at +2.62% after this week’s selloff.

The low quartile is still more heavily weighted in the software and SaaS-based services names that have been plagued by the AI displacement fears of recent weeks and months. Away from INTC as an outlier, the bottom quartile includes Palantir (PLTR), Salesforce (CRM), Microsoft (MSFT), the Software ETF (IGV), FactSet (FDS) and IBM as a mixed business line operator that has swung around in the weekly rankings.

For the Mag 7, we see MSFT and Alphabet (GOOGL) in the red in the bottom tier with the other 5 of the Mag 7 in positive range including Amazon (AMZN) at the top of the 3rd quartile, Apple (AAPL) in the 2nd quartile, and TSLA, NVDA, and META in the top quartile. Meta’s model announcements and cloud business headlines sent META to a rare big week.

As noted in our other comments, “Meta pulled an AI offering back that would have allowed all types of privacy violation high jinks by tapping into Instagram. We will see how the market sorts that out in what has generally been a poor performer YTD in returns.” META is still mired down in the low positive range YTD where it ranks #5 in YTD returns among the Mag 7.

The 1-month score of 24-8 featured a diverse mix in the top quartile lead by Industrials (XLI) with both Financials (XLF) and Regional Banks (KRE) in the mix along with the Russell 2000 small caps. We take that as a constructive commentary on the cycle and asset quality despite the inflation headwinds and less supportive FOMC prospects.

We see E&P (XOP) and Energy (XLE) in the bottom tier along with Base Metals (DBB) facing some setbacks in commodity pricing. That could change quickly if the Strait disruptions get worse and the supply turmoil is sustained in coming days.

The UST curve has been a setback of late as evident in the bottom tier with dividend heavy equities such as Consumer Staples (XLP) and Real Estate (XLRE) getting treated as bond surrogates and the long duration UST 20+Y ETF (TLT) in the red along with the IG Corp ETF (LQD).

For the 1-month tech check mix, we see a 24-8 score with software and SaaS-based services names taking a beating again in the red zone. ORCL continues to get periodically pummeled with a -30.1% rolling month. ORCL remains mired in the bottom quartile YTD at -27.8%.

The 2^nd to last return and those above were less troubling with Salesforce (CRM) at -4.45% in a crowded software mix. One outlier in the bottom tier was Qualcomm (QCOM) at a slight negative, but QCOM remains in the 3^rd tier YTD at +10.6% in a tight group with the S&P 500, META, and AMZN.

The rebound in the semiconductor and AI ecosystem names keep the divergent subsector performance trend in place. Advanced Micro (AMD) took #1 and remains in the top 5 YTD as discussed below. AMD was followed by Applied Materials (AMAT), and Dell (DELL) with Meta (META) posting a banner week that pushed it into the top tier for the month. The Meta rally was in part tied to AI model news as discussed in the earlier 1-week recap above.

We include a rolling 3-month recap for the broader mix of benchmarks and industries, and we see a score of 23-9. E&P (XOP) and Energy (XLE) join some of the more curve-sensitive ETFs in the bottom quartile including 3 bond ETFs (TLT, LQD, GOVT) along with the Utilities ETF (XLU). The Communications Services ETF (XLC) presented a very mixed performance by single names with Meta and Alphabet performing well but names such as Netflix, Comcast, T-Mobile, and Warner Brothers dragging it down.

The YTD returns for the 32 benchmarks and industry groups posted a 26-6 score. That very favorable mix reflects the breadth of the positive performance even if the headline benchmarks were heavily wagged by semiconductors and AI related valuation trends. A median return along the asset lines of 10.5% for the period through July 10 is a very impressive run rate.

The weakness in Consumer Discretionary ETF (XLY) is notable and is partly evident in the very weak Personal Consumption Expenditure growth in 1Q26 and the consumer sector soft indicators such as sentiment metrics. There is no hiding from the very grim PCE growth in services as well as goods at +0.5% (see GDP 1Q26 Final: PCE Growth Plunge 6-25-26).

Consumption has been in better balance in the recent monthly Personal Income and Outlays releases, but the plunging savings rate and a broad mix of consumer borrowing metrics are flashing signs of trouble. The health care setbacks in ACA premiums and even loss of health care coverage or shift to higher deductible plans combined with negative real wage increases constitute bad news.

The YTD tech check returns post a score of 20-12 with the entire bottom quartile comprised of software and SaaS-based service operations. We also see the Software ETF (IGV) in the red in the third quartile along with Tesla, Communications Services ETF (XLC), and IBM.

The big winners are the usual suspects with the semiconductor and AI infrastructure beneficiaries. DELL at #1 was not likely to be on many “most likely” lists to start the year for a Top 5 slot in this lineup.

The Semiconductor ETF (SOXX) at #6 and +93.0% boasts a return differential of over 105 points relative to the Software ETF (IGV) at -12.5%. It took a YTD return of +42.8% (Taiwan Semi) to make the top quartile and +134% (Applied Materials) to make the top 5.

The trailing 1-year return has been holding at a score of 31-1 with only the BDC ETF (BIZD) in the red at -14.0%. We see the Tech ETF (XLK) on top by a material increment at +45.3% vs. the Russell 2000 at #2 with +33.2%. It took 22.6% to make the top quartile while the median for the asset lines was over 14%.

Market Commentary: Asset Returns 7-5-26

Employment Situation June 2026: Back to a Crawl 7-2-26

JOLTS May 2026: Openings Flat, Hires Down, Layoffs Up 7-1-26

Music to Ponder: Hope Rising or Blood Simmering? 6-30-26

The Election Gambit: Economic Risk and Policy Uncertainty 6-29-26

Personal Income & Outlays May 2026: Bad Inflation, Balanced Spending 6-26-26

New Home Sales May 2026: Weak Volumes, Stable(ish) Prices 6-25-26

Trade Deficits: The Moving Parts and Macro Goals Matter Most 6-24-26

The FOMC Dance: Will Warsh and Trump Find a Rhythm? 6-17-26

Housing Starts May 2026: Weaker for both Single Family and Multifamily 6-16-26

Industrial Production May 2026: Steady, Balanced Utilization Levels 6-15-26

Geopolitical risk: Trump’s Nuclear Saber Rattling? 6-14-26

Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26

Employment May 2026: Big Rebound, Low Multiplier Bias 6-5-26

The Fall of CBS 6-3-26

Market Commentary: Asset Returns 7-5-26

Glenn Reynolds, CFA — Sun, 05 Jul 2026 23:38:41 GMT

I have in my hand a list of 20 million Communist illegal immigrants who voted for Joe Biden in 2020. I will disclose it in two weeks. Maybe.

The pain in semiconductors comes with some continued second-guessing around valuations for the AI ecosystem names. The stunning YTD numbers for numerous critical tech sectors will get fresh tests on data center uncertainty. The software and SaaS names are gross underperformers in 2026 but some are starting to creep back.
As data centers come under siege by environmental interests, state and local legislative challenges, and community activists, the market could see more concerns in funding appetites (debt or equity). We will see what comes out of guidance in the earnings season and any revised growth rates getting framed for the intermediate term.
The performance of semiconductor equities was shaken again this past week with inflation not helping a consumer story that faded in 1Q26. While resilient, consumers are still on the wrong end of negative real wage growth after the wave of June macro releases.
Earnings kick into gear with the big banks the week of the 13^th, and the pricing and volume questions for companies broadly could bring more signals by industry. Questions include how materials and power costs have flowed into cost structures with Canada and Mexico in the crosshairs on the tariff front. Mexico is a critical low-cost supplier for labor intensive inputs while Canada is a key resource provider even as it ranks as the #1 export market for around 3 dozen US states.
The UST curve steepened on the week given the balance of factors as the market seems to be looking past Iran to a happy ending and ignoring the weaker jobs numbers and downward revisions as influencing the FOMC soon or materially improving inflation expectations.
The CME FedWatch odds as of midday (Sunday) still see 0% chance of 1 cut by the Dec 2026 FOMC meeting set against 41.9% odds of 1 hike, 26.7% for 2 hikes, and 7.2% for 3 hikes. The odds of “no change” stand at 23.4%. Those odds will continues to gyrate on events (see Employment Situation June 2026: Back to a Crawl 7-2-26, JOLTS May 2026: Openings Flat, Hires Down, Layoffs Up 7-1-26).

The above chart updates the running timeline returns for the debt and equity benchmarks we monitor. Debt returns are again all positive despite the adverse curve moves. Credit spreads for bond benchmarks have been steady in the midst of all the private credit headlines. Those headlines have weighed more on select financial market equities and subsectors (e.g. BDCs, private equity managers).

Equities are showing the pressure of the tech sell-off in the 1-month numbers, but 3-month results still show the tech leadership with some constructive performance numbers outside tech. We look at those in the ETF charts further below.

The 1-year time horizon shows a very special year for Russell 2000 small caps. Large caps have also been stellar YTD, but recent weeks have been flagging with some downside volatility.

The above chart updates the 1-week UST deltas as the curve steepened despite the recent adverse trends in inflation metrics. Payroll numbers were weak (but not that weak) with the JOLTS numbers reflecting more favorably on prospects than the pace at which they are being filled. Both the ADP and the BLS payroll reports show the main drivers are still in services with additions to goods or manufacturing still light.

The above chart updates the post-Iran UST deltas (bombing began on Feb 28) as a bear flattener unfolded from the 2Y. The 2Y shows the biggest move as a reflection of how the market is looking at FOMC policy on the front end.

The YTD UST deltas reflect the bear flattener effects that played out across Iran, oil, adverse inflation metrics, and how that has all flowed into inflation expectations. The muted stagflation fears have further eased with progress (but not a firm resolution) on Iran.

The tech bellwethers above show another week of big winners and losers but this time with the software names and 6 of the Mag 7 winning and semiconductors losing. We see Apple ranked #1 at +12.2% with Semiconductor ETF (SOXX) in dead last at -9.42%. In contrast, the Software ETF (IGV) hit positive double digit returns at +10.39%. We look at a broader mix of tech benchmarks and ETFs and single names in other charts further below.

We see the tech heavy NASDAQ and S&P 500 just below the median slot with 1% handles for each. The notable trend in the weekly numbers was “software wins and semis lose” with some exceptions such as the always volatile Oracle (ORCL) in 2^nd to last at -8.0%. The Equal Weight NASDAQ 100 (QQEW) was in the middle just above NASDAQ.

The 3-month and YTD timeline retells the interesting story of big winners and big losers across the tech subsectors as we present in more detail below, where we break out more software and SaaS single names. Microsoft at -17.1% and Oracle at -27.9% YTD make a broad statement just in those two narrow cases.

The following is a cut/paste from our weekend LinkedIn posts with minor edits.

The week was shortened by the July 4 holiday, but the major equity market benchmarks have been looking past the inflation headlines, the slower PCE growth from the consumers seen in 2026 and waiting for a final (a real “final”) settlement with Iran. The S&P 500 and NASDAQ were positive on the week with Russell 2000 and Midcaps (MDY) both negative.

The score for the 32 asset lines was 19-13. Winners include Health Care (XLV) at #1, BDCs (BIZD) at #2, Financials (XLF) at #3, Communications Services (XLC) at #4, and Consumer Discretionary (XLY) rounding out the top 5.

The “rotation” theme returned with semiconductors and SOXX ETF taking a beating while the Tech ETF (XLK) was 2nd to last above (see our separate “Tech Check” commentary). In contrast, software and SaaS names bounced back. The Equal Weight NASDAQ 100 ETF (QQEW) still made the top quartile.

The weak payroll numbers this week (in theory) could offer some reassurance to those focused on the curve, but rates drifted higher and the 2Y to 10Y steepened. Duration took a hit with the long duration UST 20+Y (TLT) 3rd from last. Homebuilders (XHB) were last in part on mortgage worries and weak residential hiring. Negative real wage growth seen in the BLS release raises the risk of wage pressure with household basket affordability in a bad place now.

Weak jobs will not help housing, and the UST setbacks saw 6.6% to end week in the Mortgage News Daily survey. The 6.43% for Freddie Mac’s weekly update (on Thursdays) was down modestly from the prior Thursday and down vs. 6.67% at this time last year.

The S&P 500 near highs are reassuring as long as we keep in mind that the S&P 500 hit 70 record high days in 2021 and 57 in 2024 before the 39 in 2025 and 24 in 2026 (Source: Seeking Alpha). New highs come and go, but the trick will be steady optimism around recession avoidance (for now, steady-as-she-goes on that topic) and stabilization of the consumer. At current PCE levels (+0.5% in 1Q26), that is a very low bar, and the spring PCE monthlies have been resilient.

The Iran wildcard to this point reflects optimism for a good result but predicting Iran’s and/or Trump’s behavior is a tricky variable to price. The direction of refined products has been questioned by the White House as if inventory costs do not matter, but more success on Iran should flow into energy costs at a lag even if not in the case of electricity.

We are entering June quarter earnings season with more guidance ahead and a greater sense of how some industries are dealing with inflation and the risks associated with the USMCA review process and potential EU trade tension. Trump again threatened 100% tariffs on the EU and is yet to admit that the buyer writes the check for the tariff. On tariffs, it is tough to discern the distinction between what he knows (or cannot retain or admit) vs. what he says. The choice is disinformation or ignorance.

The following is a cut/paste from our weekend LinkedIn posts with minor edits.

The chart shows a wild week in tech equities across single names, ETFs, and techcentric benchmarks. The semiconductor subsector and software and SaaS based names reversed relative trends in stark fashion. The Software ETF (IGV) posted +10.4% and the Semiconductor ETF (SOXX) was down by -9.4%.

The tech-heavy NASDAQ and S&P 500 were sitting in the middle of the pack of 32. NASDAQ and the S&P 500 posted 1% handle returns in a week that showed dispersion but nothing like the gaping Hi-Lo range often seen in recent months between semis and software. The Russell 2000 small caps and Midcaps (MDY) were slightly negative in the 3rd quartile.

The bottom quartile mix is clear enough with 6 of 8 directly tied into the semiconductor subsector. We also see legacy tech leader Cisco (CSCO) with its heavy exposure to the AI ecosystem and related capex boom. Oracle (ORCL) is housed in the software ETF (IGV), but also ties directly into the needs of AI buildouts and data centers. ORCL took a swoon with the benchmark AI plays.

The bottom quartile ran from -19.6% in last place with Micron (MU) up to the leader of the low quartile, which was Broadcom (AVGO) at -4.87%. In the overall mix of 32, we see a Hi-Lo range of over 40 points, and it took over 10% to make the top quartile on the week.

In the top quartile, we see many of the names which had been taking a beating YTD as recent weeks saw semiconductors soaring. Palantir (PLTR) weighed in at #1 with a +20.5% price return followed by FactSet (FDS), ServiceNow (NOW), Adobe (ADBE) and Apple (AAPL). Salesforce (CRM) also worked its way back into the top quartile with Microsoft (MSFT) and the more consistent IBM.

The MAG 7 had a very rough June as we covered in our weekly asset return commentaries along the way. This transition into July shows a partial comeback this past week with Apple (AAPL) and Microsoft (MSFT) back in the top quartile with only NVIDIA (NVDA) in the red in the 3rd quartile. Meta (META), Amazon (AMZN), Tesla (TSLA), and Alphabet (GOOGL) were clustered in the 2nd quartile.

The 1-month scoreboard weighs in at 21-11 for positive-negative returns with the tech, energy, and metals backtrack on display in the low quartile. We see the upstream energy exposure (XLE, XOP) underperform. Base Metals (DBB) sits on the bottom after a sharp decline from the peak. That seems to signal that markets are looking past Iran in oil and notably aluminum supply from the Strait of Hormuz along with pressure off copper supply expectations.

The main story is still tech selloffs with the Tech ETF (XLK), NASDAQ, and the Equal Weight NASDAQ 100 (QQEW) in the bottom tier. The tech-weighting of the S&P 500 left that broad market benchmark in the red sitting on the bottom of the 3^rd quartile.

The mix in the top quartile reflects well on how the market sees macro fundamentals stabilizing. While Health Care at #1 is consistent with the big pharma rallies, the Regional Banks ETF (KRE) at #2 and Financials ETF (XLF) at #3 is a vote of confidence with Homebuilders (XHB) and Industrials (XLI) rounding out the top 5.

The 1-month timeline for the Tech Check mix certainly tells a clear story with only Applied Materials (AMAT) and Intel (INTC) in positive range among the tech single names detailed. We see major declines in Oracle (ORCL) at -42.7%, Qualcomm (QCOM) at -26.8% and Broadcom (AVGO) at -25.1% in the bottom 3.

For the other 5 in the bottom quartile we see the software and SaaS-based names (CRM, NOW, ADBE, PLTR, INTU) that had been getting trounced since the onset of the AI panic around business models. Those 5 names are all posting negative returns YTD as we detail further below.

The 3-month timeline returns for the broader group of 32 benchmarks and ETFs shows a score of 28-5. All the tech names are in positive range with the winner of the pack being the Tech ETF (XLK) at #1. The top 5 also include the Equal Weight NASDAQ 100, NASDAQ, and the tech-heavy S&P 500. The Russell 2000 also made it into the top quartile.

Energy was beaten back for the rolling 3 months with E&P (XOP) and diversified Energy ETF (XLE) in the bottom two after the explosive rise on oil and LNG faded sharply around the Strait of Hormuz “almost-deal.” That would correct the supply shock risk premium if it stays on track.

That oil relief gave a boost to Transports (XTN) in the top ranks. The erratic performance of Homebuilders (XHB) can get wagged over the short term by the UST curve, but the short term core outlook for builders remains poor at this point in margins and pricing. That said, homebuilders have very resilient cash flow dynamics.

In terms of the UST curve and bond ETFs, we see the long duration UST 20+Y ETF (TLT) in slightly negative range. The UST and high quality bond ETFs (GOVT, SHY, AGG, LQD) posted minimal positive returns. The riskier duo (HYG, EMB) performed slightly better with credit spreads very unflappable given the scale of the Iran headlines and related macro noise.

The YTD returns for the broader mix of 32 shows a score of 29-3. The bottom tier shows BDCs in last place with a moderate negative total return of -6.5% as high dividend rates cushion the blow of private credit nerves and some bad, excessive underwriting in the private credit space.

We see weak results in Communications Services (XLC) where numerous top holdings have generated very weak returns (most negative). XLC was dragged down by Meta (META), Netflix (NFLX), Comcast (CMCSA), Disney (DIS), and T-Mobile (TMUS).

The winners in the top quartile show some diversity outside of tech with Transports (XTN) on top ahead of the Tech ETF (XLK) with two energy ETFs (XOP, XLE) and the Russell 2000 rounding out the top 5. The top quartile also included Industrials (XLI) and Materials (XLB) for some cyclical optimism along with Regional Banks (KRE) for some optimism on asset quality.

The YTD Tech Check return profile at a score of 19-13 is a case study in subsector return divergence with the semiconductor and AI ecosystem contrasting with a very different zone seen in the software and SaaS services operators. The Hi-Lo range starts with Micron (MU) at 241.8% and runs through #32 Intuit (INTU) at -58.4%.

Even with the steep selloffs of the past month, entry into the top quartile still required a 42.9% return. We see triple digit returns from #1 MU down through #5 Applied Material (AMAT). At #6, we see the Semiconductor ETF (SOXX) at 88.1% or over 100 points ahead of the Software ETF (IGV) with -14.1%.

The bottom quartile is all software and SaaS running from Intuit (INTU) in last place at -58.4% up to FactSet (FDS) at -13.8% at the top of the low quartile. The Mag 7 YTD weighed in with 4 positive and 3 negative returns spread across the 2^nd, 3^rd, and bottom quartile.

The score seldom changes for the trailing 1-year period with such a strong 2026. We once again see 31-1 with only the BDCs (BIZD) in the red at -12.6%. We see 6 of the 7 bond ETFs in the bottom quartile with EM Sovereign debt making the 3^rd quartile.

In the top tier, tech is unsurprisingly on top with XLK followed by Transports (XTN), Russell 2000, NASDAQ, and Base Metals (DBB) in the top 5. Energy (XLE) joins DBB as side effects of the Iran crisis with Industrials (XLI) and Health Care (XLV) joining a diversified mix in the top tier.

See also:

Employment Situation June 2026: Back to a Crawl 7-2-26

JOLTS May 2026: Openings Flat, Hires Down, Layoffs Up 7-1-26

Music to Ponder: Hope Rising or Blood Simmering? 6-30-26

The Election Gambit: Economic Risk and Policy Uncertainty 6-29-26

Personal Income & Outlays May 2026: Bad Inflation, Balanced Spending 6-26-26

New Home Sales May 2026: Weak Volumes, Stable(ish) Prices 6-25-26

Trade Deficits: The Moving Parts and Macro Goals Matter Most 6-24-26

The FOMC Dance: Will Warsh and Trump Find a Rhythm? 6-17-26

Housing Starts May 2026: Weaker for both Single Family and Multifamily 6-16-26

Industrial Production May 2026: Steady, Balanced Utilization Levels 6-15-26

Geopolitical risk: Trump’s Nuclear Saber Rattling? 6-14-26

Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26

Employment May 2026: Big Rebound, Low Multiplier Bias 6-5-26

The Fall of CBS 6-3-26

Happy 250th Birthday America

Glenn Reynolds, CFA — Fri, 03 Jul 2026 19:42:04 GMT

Nobody said this would be easy!

We cite the words of some Founding Fathers as food for thought in very troubling times. Warnings about tyrants and despots and the intrinsic threat of the power-hungry was the recurring theme. Freedom of religion and oppression via religion came up along the way (thus Christianity was not written into the Constitution despite many repeated efforts to inject it over many subsequent decades).
The worries around the damage that can be done by factions, political parties and individual groups seeking to concentrate power was something we learned about in elementary school and secondary school before we all joined parties, got opiniated, perhaps felt pressured by the church, started to ignore facts, and forgot what we knew.
With the exception of including Benjamin Franklin, we cite the first 4 Presidents. As a reminder, 3 of those 4 Presidents owned slaves and hailed from Virginia, which was later to be one of the “Stars and Bars” confederate states. Adams was against slavery on moral grounds.

George Washington was renowned for his Farewell Address that signaled to the country his fears of what could happen to the President’s office if the power-hungry refused to push away from the table to pass the mantle. These days, we cannot even get judicial appointees in hearings to admit Trump is limited to two terms under the post-FDR 22nd Amendment. George Washington was especially worried about partisanship and political parties being divisive. After all, two extreme parties can be bad (the current GOP and Democrats would agree with half of that).

A few notable quotes from Washington’s Farewell Address:

“The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries which result gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of public liberty…
…It is important, likewise, that the habits of thinking in a free country should inspire caution in those entrusted with its administration, to confine themselves within their respective constitutional spheres, avoiding in the exercise of the powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create, whatever the form of government, a real despotism. A just estimate of that love of power, and proneness to abuse it, which predominates in the human heart, is sufficient to satisfy us of the truth of this position.”

Note: Anything in here ring a bell in 2026? Checks and balances are MIA, SCOTUS was stacked in a process that was “rigged” (to use Trump’s favorite word), and some Cabinet members were picked to purge expertise and objectivity (notably Defense, DOJ, Intelligence) or go into quasi-liquidation mode (Education).

Where have you gone, George Washington? Our nation turns its lonely eyes to you…

Some quotes to ponder from Benjamin Franklin—a man who does not need a memory jogger. Franklin had his fingers in a lot of pies including the Declaration of Independence, the Constitution, and foreign policy:

“Those who would give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety.”
“Without freedom of thought there can be no such thing as wisdom; and no such thing as public liberty, without freedom of speech.”
“Sell not…liberty to purchase power.”
“Only a virtuous people are capable of freedom. As nations become more corrupt and vicious, they have more need of masters…”
“This Constitution…can only end in despotism…when the people shall become so corrupted as to need despotic government, being incapable of any other.”

John Adams is an outlier in the original wave of Virgina Presidents as a Massachusetts “Harvard guy.” Virginia had the largest economy and most clout, but Adams snuck in as Washington’s Vice President before losing his run for a second term. He will always carry the taint of the Alien and Sedition Acts which in fact gives him a little more in common with Trump. Adams was an advocate of the separation of church and state. That is a distinction from Trump even if Adams was far more religious in practice and fact. Adams shared a common fear of despotism and oligarchy. His quote on “facts and evidence” below puts him on a different planet than Trump.

“When economic power became concentrated in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny.”
“The fundamental Article of my political Creed is, that Despotism, or unlimited Sovereignty, or absolute Power is the same in a Majority of a popular Assembly, and Aristocratical Counsel, an Oligarchical Junto and a Single Emperor. Equally arbitrary cruel bloody and in every respect, diabolical.”
“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.”

Thomas Jefferson was a legendary wordsmith and primary author of the Declaration of Independence, and no founding father distrusted centralized power more than he did. He was an advocate of freedom of the press (not “a thing” these days in Washington when broadcast licenses get threatened and Trump sues networks).

“Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.”
“I have sworn upon the altar of God, eternal hostility against every form of tyranny over the mind of man.”
“I have been ever opposed to the party, so falsely called federalists, because I believe them desirous of introducing, into our government, authorities hereditary or otherwise independent [sic] of the national will. These always consume the public contributions and oppress the people with labour & poverty.”
“Our liberty depends on the freedom of the press, and that cannot be limited without being lost.”
“Bigotry is the disease of ignorance, of morbid minds; enthusiasm of the free and buoyant. Education & free discussion are the antidotes of both.”
“I agree with you that it is the duty of every good citizen to use all the opportunities, which occur to him, for preserving documents relating to the history of our country.”
“Our particular principles of religion are a subject of accountability to our god alone. I enquire after no man’s and trouble none with mine; nor is it given to us in this life to know whether yours or mine, our friend’s or our foe’s, are exactly the right.”

James Madison was one of the Federalist Papers authors (with Alexander Hamilton and John Jay). Madison was especially focused on factions. He also flagged the risks of war as a means of concentrating power and control. In today’s terms, if a leader suddenly turns into a proponent of war and use of military in contrast to his promises, that may raise some questions on what his motives might be. Sound familiar in 2025-2026. Military purges? Removing expertise from the foreign policy ranks to be replaced by inexperienced henchmen?

“The accumulation of all powers… in the same hands… may justly be pronounced the very definition of tyranny.”
“The strongest passions and most dangerous weaknesses of the human breast; ambition, avarice, vanity, the honorable or venal love of fame, are all in conspiracy against the desire and duty of peace.”
“If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy. Of all the enemies to public liberty, war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other... No nation could preserve its freedom in the midst of continual warfare.”
“War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.”

Music to Ponder: Hope Rising or Blood Simmering?

Glenn Reynolds, CFA — Tue, 30 Jun 2026 20:44:52 GMT

We put together a brief playlist that harkens back to some earlier periods of political and social disarray. Here we go again.
The songs offer historical perspective on the good, the bad, and the ugly of some volatile decades and provide a reminder that it takes time, effort and endurance to work through the process of change and turmoil.
The songs remind us that history, facts, and social currents are real and should not be buried in doubletalk, revisionism, or a pile of propaganda (insert alternative “pile” as preferred).

Below you’ll find a 10-song playlist as food for thought. We line them up by release year.

A Change is Gonna Come (Sam Cooke 1964)

The song captures the hope for civil rights progress and better days as LBJ in the White House raised hopes for desegregation, voting rights, and equal protection under the law. Trump wants to bury that challenging history or at least massively dilute the facts.

Mississippi Goddam (Nina Simone 1964)

Nina Simone was an epic musical talent with a very distinctive soul voice and was also a classical pianist. She was very active in civil rights during turbulent times. In past commentaries, we have covered Black voter suppression in Mississippi and Alabama (among others), as cited in the song. The shockingly low registration numbers before the Voting Rights Act are hard to believe. As we covered before, “Black voter turnout in Mississippi was 29% in 1888, 2% in 1892, and 0% in 1895... Although Mississippi had the highest Black population of any state in the 1960s, only 6.7% of eligible Black voters were registered to vote by 1964.” Nina clearly had the right to use “Goddam” in the title (see The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26, Martin Luther King Jr.—MLK was a Fact, Not a Theory 1-15-24).

Only a Pawn in Their Game (Bob Dylan, 1964)

Dylan’s voice is an acquired taste for many, but he was a poet of protest. This song flags the practice of pitting poor whites vs. Black people (“the poor white man’s used in the hands of them all like a tool…”) The message is also that the leaders of the “right” want your vote but do not care about you otherwise. Dylan had no shortage of protest songs, but this one seems to capture a core MAGA strategy in current times. The recurring chant of DEI is also part of the usual racist trope (dog whistle?) now used on the right while the left sees the diversity theme diluted as they struggle to counterpunch.

Deportee (Plane Wreck at Los Gatos) (The Byrds 1964, lyrics Woody Guthrie)

This is a song that reminds us that there is a long history of dehumanization of immigrant workers/deportees that make it into poems and songs. Deportee lyrics stem from a Woody Guthrie poem written after a 1948 plane crash in California carrying 28 migrant workers being deported and 4 Americans (the flight crew and a guard). News reports cited the American names but only the term “deportees” for the Mexicans who were buried in a mass grave. That got Woody Guthrie’s blood up as he wrote a poem assigning names in 1948. Music was added in 1958. The press coverage did not reflect well on U.S. Christian values (sound familiar?). After the Byrds in 1964, Springsteen and others would play the song as well.

Eve of Destruction (Barry McGuire 1965)

This one has suddenly picked up relevance with Trump’s apparent compulsion to keep threatening nuclear destruction of Iran and a willingness to drop “Mushroom Cloud #3” in the history of the world after the first two were dropped by the U.S. on Japan. Truman fired MacArthur for less. The destruction goes well beyond geopolitics these days and gets back to the apparent strategy of control by division and hate (in the song, “When human respect is disintegratin’ this whole crazy world is just too frustratin’”).

Fortunate Son (Creedence Clearwater 1969)

This was about Vietnam and how the poor were the ones who were drafted and sent to fight while deferments for college kids kept them out of harm’s way. This song resonates with those who see Trump as the “pretend warrior” with so many deferments before those ran out, but then he caught a mysterious case of bone spurs as diagnosed by a doctor who just happened to be a tenant of his father. Unsurprisingly, the end of college deferments saw the draft end quickly once the “Fortunate Sons” might be at risk. Money talks. The draft was over, troop counts reduced, and the war wrapped up. Saigon fell when my brother and I were in high school, but the voters demanded an end. Lucky for us. Otherwise, who knows what our “high and tight flattop” Marine father would have demanded or expected of us.

Ball of Confusion (Temptations 1970)

As the 1960s came to a close, the Vietnam War had driven mass protests against the war (“hell no we won’t go,” draft card burning, “four dead in Ohio,” etc.). Protests and the use of drugs sometimes also saw violence, especially with widespread racial tension after MLK’s assassination in 1968. World-class riots hit some urban centers. The Temptations’ lyrics and checklist are ones for the ages. Sadly, we revisit many of the same issues in recent years (Mideast Wars, violence by Trump supporters on Jan. 6, George Floyd protests, fentanyl, etc.). As the song states: “Run, run, run…but you sure can’t hide.”

War (Edwin Starr 1970)

This one does not require much of an explanation. Good God y’all.

I Am Woman (Helen Reddy 1972)

This song was played on the radio on my drive to school a thousand times, and it became an anthem for women’s rights after a long stretch of abrogation of rights and sociopolitical mismanagement by the ruling “old white guys.” The Equal Rights Amendment was approved by Congress in 1972 and sent to the states with a seven-year deadline. It needed 38 states; 35 ratified before the original deadline, and no additional states joined before Congress’s extended 1982 deadline. The story did not end there: Nevada ratified in 2017, Illinois in 2018, and Virginia in 2020, giving ERA supporters the 38-state count they argue is enough. Opponents point to the expired deadline and attempted rescissions by five states; as of 2026, the National Archives has not certified or published the ERA as part of the Constitution, so its status remains legally contested rather than settled. These days, the shadow of Dobbs weighs heavily, and the war on women in the military is coming from that slick-haired Christian White Nationalist racist misogynist in the Pentagon who is undermining the advancement of women. This all may require a fresh “We Are the World” style chorus of the Helen Reddy tune—2026 style. The fundamentalist Christian movement is also dividing women as so many face the social pressures and hand-waving religious propaganda on the role of women.

Born in the U.S.A. (Bruce Springsteen 1984)

This song is a natural choice, even though it arrived well after the peak turmoil of the 1960s and early 1970s. Cheering for the working man has long been politically expedient, especially when so many Americans are still struggling to move up economically. The cost of college has become obscene, and the returns on a debt-laden degree can be uncertain. Opportunity in a great country is often promised by politicians who later reveal themselves as narrow-minded, resentful, or hostile to the very people they claim to champion. Those false promises have helped fuel a political ascent built on grievance: say one thing in one room, do little or nothing in the next. When working people cannot find real upside, their anger becomes easy recruiting ground for Trump-style politics, which channels frustration without delivering much in return. Blaming DEI may be the slogan, but it is not a solution. That message may face a harder test in the midterm elections after the 2025–2026 performance, especially if voters decide that the stated priorities did not match the results.

In the end, these songs are not just relics from another era; they are reminders that every generation gets tested by some familiar mix of fear, division, cynicism, courage, and hope. The details change, the slogans get updated, and the villains often arrive in fresh packaging, but the underlying struggles remain stubbornly recognizable: voting rights, women’s rights, war, immigration, racial justice, economic fairness, propaganda, and the exploitation of grievance by those seeking power. Music does not fix any of that by itself, but it can name what people are feeling before politics admits what is happening. It can stir memory, sharpen anger, revive hope, and remind us that change usually comes neither quickly nor politely. So, as the summer heats up, maybe this playlist is less nostalgia than warning label: listen closely, remember clearly, and do not let anyone convince you that the past has nothing to say about the present.

The Election Gambit: Economic Risk and Policy Uncertainty

Glenn Reynolds, CFA — Mon, 29 Jun 2026 21:42:09 GMT

Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed voter suppression…

If you believe political risk=policy risk=economic risk, then the chaotic Washington headlines cut across some critical variables for the market. That includes the full gamut from tariffs to Iran to whether Congress has a role to play in checking “governing by executive order.” Not tackling the topics is more about relationship caution and controversy avoidance, a habit that is too common in institutional finance.
The 2026 midterm elections will be the next ground zero for policy stress in the face of the worst political divisions since 1860. Regionalism, race, religious aggression (“White Christian Nationalism”), and the basic application of existing law all roll up into a case study of “division by design” driven by those in power.
On the political risk front, Trump’s fixation on the SAVE Act has now flowed into a legislative logjam, with the housing bill held hostage by his fanatical desire to undermine voter turnout in urban areas of swing states. He seeks to undermine and limit mail-in voting, unless he can ban it outright.
We have covered the executive orders to weaponize the US Postal Service in an earlier commentary, and that order was somewhat of a “SAVE lite” variation (see The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26).

We have discussed the scale of mail-in voting broadly to hammer home how shatteringly disruptive such a ban would be for everyone. That is, after all, the goal. The hostage in the process is the voter rolls in a fight over who gets to control them. At its core, that is a question of whether the “Elections Clause of the Constitution” applies. The 2026 plan is the warmup for 2028.

The constitutional problem is not subtle…

That Elections Clause could not be more literal and clearly stated (see Elections Clause (Article I, Section 4, Clause 1) below):

The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.
The Congress shall assemble at least once in every Year, and such Meeting shall be on the first Monday in December, unless they shall by Law appoint a different Day.

Easy translation for anyone not deluded by megalomania is “no King can set the rules on elections.” The states decide. Only the people’s broad base of representatives in the House and Senate can change that.

It does not take much reading on the founding fathers to know that their concern around accidentally setting up a new king was paramount. The states would run the elections, not a king or a wannabe dictator.

That Elections Clause was in part to defend against abuses of executive control, like we have today with Trump regularly reaching for even more. It was also to make sure small states were protected from big states using their influence with the executive branch. We have the opposite today in the electoral college realities. Such are the rules, but those are the rules.

The issues get crazy from there, as we see from a recent NY Times story from the past week:

“Postmaster General David Steiner said at a Senate hearing on Wednesday that under a new proposed rule, the Postal Service would not deliver mail-in ballots in states that decline to hand over sensitive data about voters to the federal government.”
“…in his testimony before the Senate Homeland Security Committee on Wednesday, Mr. Steiner said that the proposed rule would in effect halt the delivery of mail-in ballots in states that do not comply with Mr. Trump’s demands.”

Who sets the rules again?

Evidence is not there, but it seldom matters in the power grab…

The voter fraud claims on “illegals” is a fraud by itself, as numerous states and independent reviews have shown. So it is a solution to a problem that does not exist, with the real motive in the “solution” being a desire to sow chaos and cause stress and a failure of the process. That would in turn allow the voting fraud complaints to clear the obstacles to Team Trump declaring an emergency and cancelling election results.

As a reminder of the objective studies done on non-citizens voting, the results are broad-based in concluding that such fraud is negligible. That includes some conservative and Libertarian think tanks.

For a few easy links:

Trump’s Claims About Noncitizens Voting Are False. We Can Prove It. (CATO Institute)
Debunking Lies About Voting and Citizenship (Brennan Center for Justice)
How widespread is election fraud in the United States? Not very (Brookings)
Analysis: Heritage Foundation’s Database Undermines Claims of Recent Voter Fraud (Brennan)
Unpacking Myths About Noncitizen Voting — How Heritage Foundation’s Own Data Proves It’s Not a Problem (American Immigration Council)
Update: Review of Claims of Noncitizen Registrants and Voters, Feb. 2026 (Center for Election Innovation & Research)

Besides the usual attempt to support the “Big Lie,” Trump’s motives are to depress turnout, create chaos in the voting mechanics, and maximize commitments from the less-than-heroic but ambitious GOP Congressional ranks. Team Trump is essentially setting the table in advance to challenge the vote. As of now, Trump holding the House is looking very doubtful even with all the gerrymandering repetitive stress syndrome.

That handicapping foreshadows what for Trump would be a loss of control of legislation and the risks of Democrats deciding what hearings take place on “sensitive topics” — notably Epstein, corruption, conflicts of interest, the 747 and emoluments violations, etc.

The scale of mail-in votes remains underappreciated…

The mail-in voting attacks raise obstacles for millions of voters — almost 50 million in 2024 — as we detail below in an excerpt from an earlier commentary:

“The White House will try to understate the significance of his proposed mail-in actions, but it is an enormously threatening move. As a frame of reference, voting tallies in the 2024 election (won by Trump) indicates 1 in 3 voted by mail for an estimated 48 million. That includes 40% of that group comprised of voters 65+ years in age. The balance across “geographic settings” showed 1 in 3 urban, 1 in 3 suburban, and 1 in 4 rural voters. Of the 48 million, white voters were around 27 million. The stats include 1 in 4 Democrats and 1 in 4 GOP with 5 states showing 1 in 3 GOP. That is a lot of votes.”

It is a “percentage game” that targets congested urban areas vs. ex-urban and rural. If you can suppress the same percentage of the vote to stay home, then the absolute vote counts are much more impacted in the metro areas. Trump can’t risk losing control of the purse strings and “who runs the hearings” in the House.

Trump also might be thinking about 2028, when he could very well seek a third term, Constitution be damned once again. Some of his recent appointees to the court refused in Congressional hearings to answer the simple question, “Can Trump run for a third term?” Not a lot of profiles in courage these days.

Could that bring an Obama ticket to take him on if “3 is the new 2”? It gets weirder by the year.

The executive order on voting: constitutional amendment by fiat?

The voting process as designed in the executive order to weaponize the US Postal Service is doomed to fail, as we covered in the SNAFU piece, where we cut and pasted some of the technology and labor demands in the Trump order that the USPS will need to execute.

Legal risks, threats, and manpower detours are faced by an entity, the US Postal Service, that loses billions. There is no way the demands of the executive order can be handled by the Post Office. All one needs to do is look at the hurdles being set up.

I have nothing against the Post Office — my father worked at the Post Office in South Station Boston for years — but the massive losses and inability to deal with the challenges of the Executive Order would require a massive, multi-billion-dollar series of investments and hiring. Make that multi-multi billion. That also would entail going to Congress for hearings on the viability of the undertaking and what it entails in dollars, investment, people, and years. That would improve transparency and shine a light on the fact it is designed to fail and certainly not to increase legal voter turnout. Then again, Trump “does not do the Congress thing” unless he has no other choice.

As an executive order, Trump has once again ducked checks and balances. That is why he got back to the SAVE Act ultimatums. The SAVE Act has the same problem of minimal attention being paid to the massive obstacles faced by the population of voters, especially for them to have all the right documents from authentic birth certificates to social security cards or new passports. Anyone ever tried to penetrate those bureaucracies? It is safe to say those without means and working two jobs are effectively being encouraged to “stay home.”

In the end, the USPS operational execution would melt down under the executive orders, and then the fraud flag would be getting flown by Trump, Markwayne Mullin in DHS, and perhaps Pulte in DNI, along with the full weight of Todd Blanche, Trump’s personal lawyer and AG, running the DOJ. This is where political risk starts to flow into macro risks. The courts would be very busy and political turmoil would spike. Meanwhile, asset allocators could start to frame the US as a very large emerging market.

The “enforcers” of the executive order look like a rogue’s gallery of loyalists…

The control of the process from the White House is a shocking departure from what the Constitution says. That gives the threat effects both legal teeth, DOJ and the AG, and potential violent enforcement, DHS with the masked, armed gangs of ICE and Team Steroids.

From the Executive Order:

“The Secretary of Homeland Security, the Commissioner of SSA, and the Postmaster General shall coordinate with the Secretary of Commerce in effectuating all relevant aspects of the implementation of this order.”
“The Attorney General shall enforce compliance with the applicable Federal statutes referenced herein and provide guidance to election officials, including any instrumentalities thereof; contractors; individuals involved in the administration of Federal elections; or public or private entities engaged in the printing, production, shipment, or distribution of ballots.”

That motley crew of enforcers includes the head of the USPS, who was out this past week promising full compliance with the executive order. Anyone remember the head of the USPS in Trump 1.0 who ripped out numerous high-speed sorting machines? He was a wealthy corporate executive and a big Trump supporter.

The AG is a former Trump personal lawyer who blocks a lot of the Epstein disclosure and was involved, somehow, in the transfer of Maxwell to a cushier prison. The voter rolls and elections controlled by the states roll up under this crew? Meanwhile, the head of DHS challenged the head of the Teamsters to a fight during the Senate hearing. Seriously. Perfect to oversee ICE.

Getting past the document hurdles: gestating an elephant…

The basic tech, overall resource needs, time to implement, and smoothing the path for execution in the post office is challenging enough. The sales pitch of “all we want is ID” by Trump fans is a misdirection play to avoid discussing their intent and the logistical challenges. Driver’s license is an ID, but the vote suppressors need more barriers to guard against a risk that is statistically zero, with very little rounding.

Birth certificates and social security cards are hard enough to get turned around, especially when you have moved far away from your old City Hall. Passports are a challenge and cost money many do not have. The hurdles are clear in terms of documents from the same government that is actively designing a process they want to see fail.

Official driver’s license as a test case…

As a side story, I finally got my own “official” NY driver’s license recently. It took months to get the information together, and when you are 68, chances are if you can find your social security card it may have disintegrated in your wallet.

Name changes have been raised as an example, and I got a small taste of that. Women will have nightmares in that name change category. For the new official NY State Driver’s license, I faced the challenge of my social security name being different than my historical name used in life. The first name and middle names are reversed from my birth name.

I thus had to jump through hoops at the DMV. Social security had no problem taking the max out of my paycheck for 45 years under my functioning name, but getting an updated social security card is a challenge. I finally got the license after a while with some supervisor third degree. I had been driving in NYC for 45 years, so it should not have been hard. But it was not easy. Imagine voting personnel with the legal threats from Trump hanging over them?

In my narrow case of the DMV, I think being an old white guy living on the Upper East Side helped. To be blunt, an old Black or Latin American guy in Pennsylvania or Georgia — no offense to either state, but NY is not a swing state — might have a different experience on voting registration documents.

The intent to deter and suppress is obvious to anyone who is not corrupt, deluded, a cult member, and/or a partisan hack. The government interests who demand this, Team Trump, do not want it to work. The goal is to suppress and disrupt and discourage. Record turnout in 2020, the highest since women had the right to vote, was how Trump got his butt kicked by 7 million votes. They know that. They naturally want low turnout.

Happy 4th of July

It seems like a really bad way to celebrate the 250th in a nation of immigrants, as Ronald Reagan believed before the later onslaught of racist xenophobes. His final speech used to be a governing principle in the US, even though history shows a lot of immigration laws passed, including the 1924 Act.

From Ronald Reagan’s last speech:

“Since this is the last speech that I will give as President, I think it’s fitting to leave one final thought, an observation about a country which I love. It was stated best in a letter I received not long ago. A man wrote me and said: You can go to live in France, but you cannot become a Frenchman. You can go to live in Germany or Turkey or Japan, but you cannot become a German, a Turk, or a Japanese. But anyone, from any corner of the Earth, can come to live in America and become an American.”

The weeks ahead will be challenging with Constitutional limits being abused regularly. We will see voting remain under siege from now through the election and beyond, and the separation of powers and co-equal branches of government get tested.

Not exactly Founding Father moments and the parades of youth…

With the 250th approaching on July 4, it is hard for a boomer to see this chaos while remembering the patriotic days of youth going to events for the American Legion and VFW, whether barbecues or parades. My father, who enlisted in the Marines to fight in Korea, would inevitably be in the local Legion Post color guard with some WWII and Korea vets. He voted for Goldwater and Nixon. Despite that, it is hard to say what he would think of Trump; my father loathed draft dodgers but was not too fond of liberals. Trump honoring himself on the day would certainly lead to some strong language.

We also await how the ICE intimidation factor will play out. Markwayne Mullin seems fine with the idea. My mother worked at the voter polls at East Junior High in Brockton, MA. I can’t help but wonder how she would react to seeing violent masked meatheads from ICE patrolling outside.

Brockton was an old industrial town that had its roots in immigration, with many coming to find work in the “shoe capital of the world” in late 1800s and early 1900s — note: largest supplier of boots to the Union Army. Today, that town still has a very large population of descendants from immigrant stock, including Irish, Italian — Rocky Marciano was the “Brockton Blockbuster” — Polish, and Lithuanian from the first waves. In recent years, it has been more about Cape Verdeans and Haitians. I still have family there while I live in the melting pot of NYC. I guess that makes this topic personal as well as about economics and patriotism.

Such towns have a lot of residents whose histories cut across the generations on the way to citizenship. My hometown also saw a significant influx of migrants from the South escaping Jim Crow and racism in the 1960s — classmates and teammates from my early years. They were often escaping Trump’s perverse view of what “Christian” means.

In the end, the fear of “illegals voting” is about power and control. The threat is concocted by the dishonest and unethical but most of all by the power hungry. The goal remains suppression by any other name.

Market Commentary: Asset Returns 6-28-26

Glenn Reynolds, CFA — Mon, 29 Jun 2026 01:36:09 GMT

The asset return profile showed a material shift this past week with tech getting hammered and the semiconductor group facing one of its few weekly setbacks in recent months. The S&P 500 earnings growth trends have been anchored in 2026 YTD by a subset of the Mag 7 and semiconductor leaders, but they have been joined by the major oil companies upstream and downstream (e.g. XOM, CVX, VLO) after Iran. A range of commodity-based firms were also rewarded by the Gulf disruptions (at a cost to the consumer).
We still have no shortage of trade and geopolitical risks floating around as we approach the official review date for the USMCA next week. We also heard more threats from Trump of 100% tariffs on trade partners who levy digital services taxes on US companies. Playing chicken with the domestic politics of other nations creates a scenario where the EU and Canada and potentially Mexico might retaliate all at once. Strange times can bring strange outcomes. That would be a shock given the EU and Canadian history of backing down, but the timing of the insults and the trade threats could bring a harder pushback response than usual.
The inflation news was bad this past week with the 1Q26 PCE price index showing 4% handle increases for both headline (4.6%) and core (4.4%) while May 2026 posted a 4% handle headline for the month at 4.1%. In the plumbing of the May numbers, we see Energy Goods and Services at +24.3%, Goods at +4.8%, Nondurable Goods at +5.6%, Durable Goods at +3.3% and Services at +3.8%. PCE Services ex energy and housing was +3.9%. (See Personal Income & Outlays May 2026: Bad Inflation, Balanced Spending 6-26-26, GDP 1Q26 Final: PCE Growth Plunge 6-25-26)).
FedWatch odds of an FOMC easing by the Dec 2026 meeting has essentially been zero. The latest odds (Sunday afternoon) of 1 hike by Dec 2026 are 41.5% and “no change” at 21.9%. We see 2 hikes at 27.9%, 3 hikes at 8.0%, and 4 hikes at 0.8%. Those odds will swing around with Iran, oil and inflation readings. The trend has generally been very bad for the easing scenario.
Our theory is the realities of political events and policy disputes show a convergence of politics and economics that has not been this high since the New Deal years of the 1930s even if every President has had their share of challenges from wars to bank crises to asset bubbles and even pandemics.

The above table summarizes the time horizon returns for debt and equities. The UST rally helped fixed income this week, but the past month in equities shows NASDAQ in the red alongside the tech-heavy S&P 500 and Russell 3000 Growth benchmark.

The trailing 3 month numbers remain dazzling in equities as the market looks past Iran and have stays in pursuit of the AI dream despite some tossing and turning on growth metrics and a reassessment of “what can go wrong?” in the valuation assumptions.

Looking back over 1-year in equity returns, the numbers run as high as 4x the long-term equity market returns. The market has pushed past higher rates and a de facto abandonment of easing expectations (unless something goes very wrong). The nervousness around a major correction in equities (or near bear market move such as late 2018) will remain. The instability and bad intent that routinely manifest in Washington will not help.

The above chart updates the weekly UST deltas as a supportive but moderate bull steepener unfolded despite the adverse PCE inflation metrics. Oil declines helped while the final estimate of 1Q26 GDP moved materially lower with severe weakness in Personal Consumption Expenditure (PCE) growth.

As we covered in the GDP commentary, the PCE growth was extremely weak in historical context with Services especially so. PCE growth was well below those posted in 2024 (See Personal Income & Outlays May 2026: Bad Inflation, Balanced Spending 6-26-26, GDP 1Q26 Final: PCE Growth Plunge 6-25-26).

The above chart updates the post-Iran UST deltas from 2-26-26 (bombing began 2-28-26). We see a bear flattener as the 2Y UST was pummeled on the radical shift in odds for fed hikes vs. fed easing as covered in the bullets.

The YTD deltas show the inflation toll and gradual dissipation of easing confidence. As cited in the prior chart, the dagger was the Iran fallout and how that has reverberated along the chain from raw materials to OEMs and into the costs of delivering services.

With oil prices coming down to near pre-Iran levels, the time lags across working capital cycles or inflation expectations will take time. Costs built into inventory and sustained inflation in such areas as health care, electricity, and housing along with recurring higher financing costs tied to debt incurred in 2025-2026 will undermine any “all is well now” sales pitches from the White House. Consumers have a household budget and balance sheet hangover in many cases.

The tech bellwether returns in the table tell a simple story this week with all names and ETFs listed in negative range except the Equal Weight S&P 500 ETF (RSP). We look at a range of single names in our “tech check” charts below.

We see Oracle (ORCL) and Broadcom (AVGO) putting up double-digit negative numbers this week as 6 of the Mag 7 underperformed the S&P 500 and NASDAQ and all the bellwethers were below the Equal Weight S&P 500 (RSP). In a rare week of outperformance, the Software ETF (IGV) at -1.0% beat the Semiconductor ETF (SOXX) at -7.74%.

The 1-month numbers were also grim with all of the Mag 7 in the red and 6 of the 7 in negative double digits while Apple posted -8.0%. Oracle at -23.1% and Broadcom (AVGO) at -13.4% also had brutal months. The 3-month time horizons are all positive and more dispersed with META, MSFT, and TSLA in low single digits.

The following is a cut-and-paste from our Saturday LinkedIn posts with some minor updates and edits:

The chart updates the running 1-week total returns on the 32 benchmarks and ETFs we monitor with an overall positive-negative score of 21-11. The diverse base of winners outside tech includes Health Care (XLV) at #1 followed by Regional Banks (KRE) and Homebuilders (XHB). Dividend heavy Real Estate (XLRE), Utilities (XLU), and Consumer Staples (XLP) follow.

Health Care (XLV) saw some very strong performance from the Pharma names including some double-digit moves in major pharma holdings. The Homebuilders (XHB) were helped by those looking past the inflation nerves and oil price threat, but there was also some relief in the KBH earnings guidance despite posting a quarter with lower margins and weaker selling prices. The new home sales numbers from the Census bureau were soft, but builders have seen some takeover activity with more consolidation expected.

We saw tech taking a beatdown this week while some of the commodity pressures related to the Strait of Hormuz traffic is starting to get reflected in ETFs such as Base Metals (DBB) and the chemicals-heavy Materials ETF (XLB).

The losers on the week were tech ETFs such as XLK, which is sitting in dead last at -5.28%. We also see pressure on tech-heavy benchmarks with NASDAQ and S&P 500 in the red and well behind small caps and midcaps.
The Equal Weight NASDAQ 100 ETF (QQEW) is in the bottom quartile along with Communications Services (XLC), which posted -2.73%. We look at the weak tech equity performance in our separate tech check chart.

Bond ETFs saw duration relief with a positive-negative score of 5-2 as a bull steepener unfolded and the curve posting moves in 2Y at -12 bps, 10Y at -8 bps, and 30Y at -3 bps. The long duration UST ETF (TLT) was on top in return but riskier credit assets are seeing some spread pressure. The HY ETF (HYG) and EM Sovereign ETF (EMB) were both slightly in the red for the week in the bottom of the third quartile.

The FOMC remains a question mark for bonds as oil has come down while chaos in the MOU process seems to be the order of the day. The activity in the Strait leaves an asterisk on what defines a ceasefire (e.g., some shooting and bombing is OK), but the oil markets still saw WTI dip below the $70 line to $69.23 on Friday vs. $75.85 the prior Friday.

Lower oil eases some of the bear steepener scenarios driven by the long end. The reality this week was that all we saw was bad news for May inflation metrics. May PCE headline inflation and the 1Q26 PCE price index posted 4% handles.

The following is a cut-and-paste from our Saturday LinkedIn posts with some minor updates and edits:

The chart updates our Tech Check list with a rough showing on the week. We see a positive-negative score of 9-23 as the big winners of recent periods – notably in semiconductors – experienced a relatively brutal week by recent standards. We have seen much worse from the software and SaaS names in sell-offs, but 4 major names in the bottom quartile with double-digit negative returns got the attention of people worried about excess valuations and bubble risk.

Oracle (ORCL) as a software play has been especially volatile and came in last place at -19.4% with Palantir (PLTR) also ugly at -12.1%. Both of those names are in the Software ETF (IGV). Seeing Taiwan Semi (TSM) and NVDA in the bottom tier will keep sector watchers on edge.

Micron has been the star of the show in 2026 at just under a 300% return, but the week was very quiet for MU at -0.15% even after an amazing quarter. We see Applied Materials (AMAT) still in the top tier since no one is questioning sustained investment in semi equipment. The Russell 2000 and Midcaps (MDY) were the only broad benchmarks in the top tier. The Mag 7 were all in the red for the week. That Mag 7 group is all in the red for the trailing 1-month also.

We see the Semiconductor ETF (SOXX) in the bottom quartile at -7.74% while the Software ETF (IGV) was also in the red with a smaller negative return of -1.0%. The software and SaaS names saw 4 stocks (FDS, CRM, ADBE, NOW) move up into the top quartile. As we will detail in the broader asset return commentary, those same 4 names are deeply in the red YTD. The best of those (FDS) is at -20.1% YTD and the worst (ADBE) is at -42.1% YTD.

The more diversified IBM with its recent twists and turns (quantum computing, government investment interest, etc.) captured #1. IBM has a play on numerous markets (AI, quantum, software) and has a stabilizing services component (consulting) that takes a lot of risk out of the equation. IBM had initially been tagged with the software and SaaS selloff and is still in the red YTD (-8.3%)

For the 1-month timeline, we see a score of 21-11 for the broader peer group of 32 benchmarks and ETFs. The Russell 2000 small caps made the top quartile and Midcaps (MDY) placed near the top of the 2^nd quartile. NASDAQ was mired in the bottom quartile with a -5.0% return while the S&P 500 at -2.1% sat at the bottom of the 3^rd quartile just behind the Tech ETF (XLK).

The top quartile shows a healthy diversified mix that included Homebuilders (XHB) on top by a material increment as more investors look past Iran and the UST rate anxiety. That Iran deal is not wrapped, but the long end of the curve has been friendlier with the long duration UST ETF (TLT) making the low end of the top quartile. All 7 bond ETFs were in positive range even if barely for HY (HYG) and the short UST 1Y-3Y UST ETF (SHY).

The top quartile included Health Care (XLV) at #2, Regional Banks (KRE) at #3, Transports (XTN) at #4, and Industrials (XLI) rounding out the top 5. That sends the signal of a supportive view on the cycle.

The lower oil prices and potential to get the Trump-Iran MOU to the finish line sent the 3 energy ETFs (XOP, XLE, AMLP) into the bottom quartile.

The 1-month Tech Check mix shows a rough month and a score of 11-21. We see all of the bottom quartile lines in double-digit negative range and the same for 5 of the 8 in the third quartile. We see 6 of the Mag 7 with double-digit negative returns with Apple the best of “the 7” at -8.0%.

The worst performers were mixed across subsectors with Qualcomm (QCOM) in last place at -23.9% behind Oracle (ORCL) at -23.1% and Palantir (PLTR) at -17.3%. The bottom quartile is well diversified for the month and not just dominated by the software and SaaS beatdown we had been seeing. The bottom quartile includes 3 of the Mag 7 (GOOGL, TSLA, AMZN).

The winners include Applied Materials (AMT) at +37.9% followed by Dell (+31.0%) and Micron (MU) at +26.4%. That is before a distant drop to IBM at +8.35%.

The 3-month time horizon starts the measurement period around a month into the Iran War. Tech’s AI ecosystem was rocking, so the recent weakness is still trumped by the sprinting start with the Tech ETF (XLK) at #1. We see the Equal Weight NASDAQ 100 (QQEW) at #3 with +21.7% as part of the tech strength.

The score of 28-4 includes the 3 energy ETFs in the red as the oil and gas crisis subsided. That in turn offered support to the Transports which ranked #2 at 25.6%. The Russell 2000 small caps at #4 and NASDAQ rounded out the top 5. Homebuilders (XHB) and Regional Banks (KRE) wrapped the rest of the top tier along with the tech heavy S&P 500 with Midcaps (MDY) just behind it. That was a healthy overall mix for the leaders.

The YTD rankings show a score of 28-4 with Communications Services (XLC) on the bottom just behind the long suffering BDC ETF (BIZD). Consumer Discretionary (XLY) and Financials (XLF) are two major sectors of the S&P 500 that continue to lag.

The winners in the top tier include Transports (XTN) at #1 just ahead of Tech (XLK) followed by the two broad upstream energy ETFs (XOP, XLE). Russell 2000 had been among the winners YTD along with Midcaps (MDY) in the top tier. NASDAQ sits at the bottom of the 2^nd quartile and the S&P 500 in the 3^rd quartile.

The median return along the asset lines is around 9.1% as we near the end of the 1H26 period this week. That is a very healthy 6-month pace. For the YTD period, it took 15.8% to make the top tier. The Hi-Lo range was almost 37 points. If we toss out the Hi and Lo, the range was almost 35 points.

The YTD Teck Check numbers show a wild year to say the least with the top 3 all posting returns above the 200% threshold led by Micron (MU) at 297.7%, Intel (INTC) at 247.8%, and Dell (DELL) at 217.4%. Then we see the AI ecosystem collection and semiconductor-heavy mix with Taiwan Semiconductor (TSM) at the low end of the top quartile with a 42.3% return. That is over a 250 point Hi-Lo range just in the top quartile.

The bottom quartile is dominated by the software and SaaS based services operators that have been crushed since the downside of “AI domination” started to infect the forward-looking views on these software names and the threat to business models.

The median across the 32 asset lines is around 4.9%, so that is quite a dispersion of results with a Hi-Lo range of 356 points from top to bottom. Toss out the Hi and Lo names and the range is still 290 points.

The 1-year time horizon has been steady at 31-1, and that remains in place again this week. Despite the bouts of worry on the lack of market breadth and narrow leadership of tech in long stretches of 2026, we see a healthy mix with Tech (XLK) at #2 and NASDAQ at #8 in the top quartile but otherwise a healthy group of diverse industries with Transports (XTN) at #1, Russell 2000 at #3, Energy (XLE) at #4, and Regional Banks (KRE) at #5. We also see Base Metals (DBB) riding the Iran disruptions with Industrials (XLI) wrapping the top tier lineup.

Personal Income & Outlays May 2026: Bad Inflation, Balanced Spending 6-26-26

New Home Sales May 2026: Weak Volumes, Stable(ish) Prices 6-25-26

Trade Deficits: The Moving Parts and Macro Goals Matter Most 6-24-26

Market Commentary: Asset Returns 6-21-26

The FOMC Dance: Will Warsh and Trump Find a Rhythm? 6-17-26

Housing Starts May 2026: Weaker for both Single Family and Multifamily 6-16-26

Industrial Production May 2026: Steady, Balanced Utilization Levels 6-15-26

Geopolitical risk: Trump’s Nuclear Saber Rattling? 6-14-26

Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26

Employment May 2026: Big Rebound, Low Multiplier Bias 6-5-26

The Fall of CBS 6-3-26

US-Vietnam Trade: History has its Moments 7-5-25

JD Vance and Nixon History: Clueless

Glenn Reynolds, CFA — Sat, 27 Jun 2026 18:26:31 GMT

Does this look like a deep state?

Team Trump has taken politics, economics, finance, education, religion, science geopolitics, race, and gender and tied them all into a Gordian knot soaked in Krazy Glue.
A lack of credibility and factual accuracy in so many different areas undermine the veracity in all – including Iran.

The picture shows the Senate Watergate hearings, and the reality is impossible to match up with JD Vance’s latest concocted theory on a deep state leading to the downfall of Nixon like the deep state attacking Team Trump.

This picture shows some of JD’s “deep state” characters on the committee chaired by Sam Ervin (D-NC). Sam Ervin does not fit the latest “Communist conspiracy” spin coming out of the White House. Ervin voted against the Civil Rights Act legislation (the 1957, 1960, and 1964 versions), the Voting Rights Act (1965), and the Immigration and Nationality Act of 1965. He actively worked against desegregation. In today’s parlance, he would be a racist xenophobe. He is better remembered as a heavily decorated WWI hero and a leader who stood up to Richard Nixon in Watergate and Joe McCarthy (a friend of Nixon in the early years) in the McCarthy censure of 1954.

We see Senator Inouye (D-HI) as one of JD’s deep state operatives. He had the distinction of holding his Senate seat from his election in 1962 through 2012. Inouye served in the Japanese American 442^nd combat unit and fought fascists and Nazis in Europe and was awarded the Congressional Medal of Honor (search for that story!).

Senator Howard Baker (R-TN) was the ranking member on the Watergate Committee. He served in WWII and is one of the most respected GOP Senators in history. He held office from 1967 to 1985, became Majority Leader, and served as Chief of Staff under Reagan. He is famous for the phrase “What did the President know and when did he know it?”

I watched as many hearings as possible in my high school years. The story of a rogue President breaching his duties and abusing the constitution got worse as the hearings went on. JD Vance left out a lot of plot lines, but it is easy to search for details on AI (JD was heavy on the “A” and light on the “I”). JD skipped the Saturday Night Massacre when GOP leaders refused to obey Nixon and Nixon’s notorious attempt to get rid of the independent special prosecutor Archibald Cox. In the end, he succeeded but the damage was done in terms of trust and his reputation. Today’s GOP leaders do not demonstrate such courage.

Nixon engaged in a constitutional abuse not seen again until Trump. Nixon’s former AG ended up in jail along with numerous White House counsels and advisors. JD forgot to mention that it was the iconic conservative Barry Goldwater (R-AZ) who delivered the message to Nixon to resign or be impeached.

The “Deep State” that really set it off was a lone black security guard (maybe that annoyed JD the most) at the Watergate. The guard called the police to report a break-in at DNC Headquarters. The burglars included anti-Castro figures and a former CIA spook with other former intel professionals involved in the planning. Then came the coverups.

Anyone who was around, watching the hearings, or who later read any accounts know that JD’s account was nonsense. His lack of faith in his audience and low respect for facts was obvious. He seems to hope the bar for ethics in office will be lowered to below ground. This speaks to the constant disinformation and misinformation that comes out of the White House and Executive Branch.

It is always good to research facts and details.

Trade Deficits: The Moving Parts and Macro Goals Matter Most

Glenn Reynolds, CFA — Wed, 24 Jun 2026 23:19:20 GMT

We have heard plenty of commentators claim that the shrinking trade deficit proves “the Trump plan” is working. That view shows how little progress has been made in applying reality checks to tariffs and trade flows. If the policy is working, the evidence should show up in the real economy, jobs, specific subsectors, corporate earnings in affected industries, and the consumer “price experience.”
We look at some notable April 2026 trade deficit and import/export lines (the 1-month lag means April is the most recent available) to shed some light on what is behind the material decline in the total trade deficit. The main variances are out of Switzerland, Ireland, and China for various reasons that still do not amount to a major US macro success story.
If the goal of tariffs was just to make the trade deficit lower, that is “success with an asterisk” since it is supposed to be traced to reshoring and increased manufacturing jobs in the BLS release. That is not happening.
There is also the simple reality that an increased goods trade deficit has usually been a sign of a strong US economy and increased demand. The flip side is the goods deficit typically has declined in weak economies (just look at the post-crisis years). With +1.6% GDP growth and +1.4% growth in personal consumption expenditure in 1Q26 (as of the 2^nd estimate) then the flip side may be a part of the explanation (notably with China). The tariffs did not help as prices have been rising along the supplier chain (see Trade Deficits: Math Challenge 1-30-26).
The trend line in 2026 has a range of distortions tied to pre-buying in 2025 ahead of tariffs and IEEPA. We also see some idiosyncratic variables by country such as the flow of gold (e.g. bullion imports) with US-Switzerland showing a massive deficit in 2025 on gold flows and pharma/medicines (see Switzerland-US Trade: A Deficit that Glitters 2-3-26).
If there was ever an easy example to show that a higher trade deficit can be good, we can cite the exploding trade deficit with Taiwan that has fueled the tech boom and capital markets gains (see US-Taiwan Trade: Risks Behind the Curtain 2-1-26). Just wishing that all the semiconductors were made in the US misses the point. There was a reason that US multinationals chose Taiwan in a free and open market. Bemoaning the location of the semiconductor supplier chain is somewhat like wishing the US was energy self-sufficient in 1974. Reality matters.

The above chart highlights the line items across goods trade deficits, exports, and imports for the 4 months YTD 2026 vs. the like period of 2025. We show the total lines as noted and detail exports and imports for each region and the major trade partners in the sample.

We also frame the trends at some trade partners where trade surpluses exist YTD. That includes Brazil, where Trump slapped on high IEEPA tariffs to extort the release from prison of his “coup bro” (US-Trade: The 50% Solution? 7-10-25). We see the surpluses grow in the 4 trade partners presented.

The full product line recaps are for another day, but pre-buying, energy flows, and aircraft are typical drivers for these surplus nations. The export deltas are part of the story for the Netherlands, UK and Switzerland with lower imports in 2026 for all 3 (dramatically so for Switzerland). We will get into those again for 2026 after more time has passed since the same distortions will apply. We offer some product line mix details in numerous commentaries in the links below.

The tariff Swiss miss on concepts…

The surplus YTD with Switzerland is an especially unusual case given the massive trade deficit in 2025 as relative macro panic sent a flood of gold bullion flowing into the US (the Swiss are the gold refiners, the US exports raw gold). The Swiss are also major exporters of pharma/medical supplies where imports from Switzerland experienced heavy pre-buying ahead of the planned punitive tariffs. That clearly distorted the 2025 goods deficits with numerous trade partners. The swing from a major trade deficit with Switzerland through April 2025 into a surplus generated a variance of almost $70 billion through 4 months.

Saint Patrick should have driven the snakes out of Washington …

The other extreme outlier was Ireland with a trade deficit swing of around $54 billion in another case of tariff threats and pre-buying (see Tariffs: Enemies List 3-6-25). Pharma and medicines (not Guiness and butter) have been a major part of the trade deficit story with Europe and especially Ireland. There is no question there is a low base of exports to Ireland from the US, but the pharma imports into the US had been massive. The Swiss and Irish trade deficit variance is around 58% of the total.

China keeps diversifying away from US, but tariffs still bite the consumer…

The other big variable in the trade deficit swing was China with a decreased deficit of -$44.5 billion. If we add in the China deficit delta with Switzerland and Ireland, that comprises over 78% of the total deficit deltas. Separately, Vietnam adds $20 bn into the YoY deficit.

The trade flows with China have always been a big deal in the macro picture with China’s exports to the US long-considered a restraint on US inflation and a godsend to those looking to build out low-cost global supplier chains whether for inventory on the shelves or low-cost inputs along the supplier-to-OEM chain. Those global supplier chains have been a core part of textbook “lean manufacturing.”

That ready access to low-cost China supplies has now been taken off the table with tariffs. We have described China imports in the past as a “systemic threat to the cost of sales line” and unit costs and inventory cost are rising as a result (see China Trade: Shrinkage Report 1-28-26). Margins will see financial and operational adjustments in 2026-2027.

That China pressure comes even as raw materials and an energy spike associated with the Iran War. The Strait of Hormuz crisis brought reverberating disruptions across petrochemicals, inorganic chemicals, the oil/refined products supply chain, freight and logistics costs, and metals.

Questions to ponder on tariffs to filter the nonsense…

We have written plenty on the topic of tariffs, but we would cite a few easy questions to revisit when someone makes a blanket statement on Trump’s tariff policy “working.” Hope is different than reality in economic terms.

Is the goal only to reduce the trade deficit?

If the conclusion is only to reduce the deficit, then there is a need for an “Intro Econ Primer” with a tutor who speaks very slowly. The deficit is a net number, so the related questions are easy enough to ask on imports and exports. Oil and LNG going much higher is just one line of many. The higher export of energy was caused by a war that had costs as well. We add in a few more questions in the import vs. exports product topics:

Is the goal to just lower imports or raise exports?
In what product classes?
If the US is the largest consumer market in the world, is a spike in exports even possible for many product lines when the target trade partners have low-cost labor?
Does the US have the ability to provide substitutes to replace that import line facing a tariff?
How do currency trends factor into the import-export flows?

Is the goal to reduce low-cost sourcing opportunities for businesses and consumers?

No party would admit that as a goal, but that is the effect even if not a stated goal. Trump will not even admit that the buyer writes the check for the tariff. He even claimed (in social media posts) that IEEPA refunds would go to the sellers (presumably someone might have informed him that was wrong).

Does the labor arb essentially make it impossible for the US to compete in some product lines?

This is the case with China and Mexico for many assembly line goods such as auto parts and some electronics. The same is true in apparel for low-cost Asian supplier chains. This labor arb will be a focal point when Trump potentially drops the hammer on Mexico in the USMCA review (or termination, which he believes he can do without Congress).

In the end, the absence of low-cost supplier chain alternatives comes out of the profit margins of importers or the pockets of households – or both.

Is the goal to make the consumer pay more for goods and services by increasing pricing power of US companies?

This is another topic where tariff fans will not admit the risks. Since the buyers get hit with a tariff they must pay, the importers or OEMs facing higher cost suppliers need to mitigate the tariff effects to offset them in whole or in part. Without adequate US substitutes, the price pressures could flow into higher prices and reduced affordability.

That price upside could be one-time effects or phased in and thus may not meet the “econ nerd’s” definition of inflation (recurring price pressures). It is still a running expense line that impacts importer cash flow, and the affordability of the household basket along with the corporate “cost of sales” line.

In the event of tariff mitigation strategies, the effect can also lead to downsizing, restructuring or exiting product lines where the tariffs bite.

Is this all just a waiting game until other executive actions by the “next President” and Congress?

The US trade regime is a case of “live by the executive order, die by the executive order” since Congress has been bypassed. That opens up a wide range of “promises to be made later” in future campaigns. Such time horizon unpredictability complicates the planning issue of long-term capex planning when executive orders can be so easily reversed.

Tariff commentary and some historical links:

After a tumultuous period in tariffs after the 2024 election and with a lot more change to come with the USMCA, we add some links below.

The factual misstatements and abandonment of basic concepts have been hallmarks of the process since 2018. Many GOP leaders whisper in corners about what is factual but will not be vocal on the economics.

We did not think it should be so hard to get a Secretary of Treasury or the head Trade Rep to make a simple statement such as “the buyer writes the check for the tariff.” Then he can explain the effects along the economic chain. Even CNBC tends to wimp out on the follow-up questions to keep GOP dignitary guests coming back. Lame.

We attach a collection of the tariff commentaries below.

Switzerland-US Trade: A Deficit that Glitters 2-3-26

US-Taiwan Trade: Risks Behind the Curtain 2-1-26

Trade Deficits: Math Challenge 1-30-26

China Trade: Shrinkage Report 1-28-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

Canada-US Trade: Trump Attack N+1 1-25-26

US-Canada Trade: 35% Tariff Warning 7-11-25

India Tariffs: Changing the Music? 7-11-25

Taiwan: Tariffs and “What is an ally?” 7-10-25

US-Trade: The 50% Solution? 7-10-25

Tariff Man Meets Lord Jim 7-8-25

South Korea Tariffs: Just Don’t Hit Back? 7-8-25

Japan: Ally Attack? Risk Free? 7-7-25

US Trade in Goods April 2025: Imports Be Damned 6-5-25

Tariffs: Testing Trade Partner Mettle 6-3-25

US-UK Trade: Small Progress, Big Extrapolation 5-8-25

Tariffs: A Painful Bessent Moment on “Buyer Pays” 5-7-25

Trade: Uphill Battle for Facts and Concepts 5-6-25

Tariffs: Amazon and Canada Add to the Drama 4-29-25

Ships, Fees, Freight & Logistics Pain: More Inflation? 4-18-25

Tariffs, Pauses, and Piling On: Helter Skelter 4-11-25

Tariffs: Some Asian Bystanders Hit in the Crossfire 4-8-25

Tariffs: Diminished Capacity…for Trade Volume that is…4-3-25

Reciprocal Tariff Math: Hocus Pocus 4-3-25

Reciprocal Tariffs: Weird Science Blows up the Lab 4-2-25

Tariffs: Enemies List 3-6-25

US-Mexico Trade: Import/Export Mix for 2024 2-10-25

Aluminum and Steel Tariffs: The Target is Canada 2-10-25

Trade Exposure: US-Canada Import/Export Mix 2024 2-7-25

US Trade with the World: Import and Export Mix 2-6-25

The Trade Picture: Facts to Respect, Topics to Ponder 2-6-25

Tariffs: Questions to Ponder, Part 1 2-2-25US-Canada: Tariffs Now More than a

Negotiating Tactic 1-9-25

Mexico: Tariffs as the Economic Alamo 11-26-24

Tariff: Target Updates – Canada 11-26-24

Trump, Trade, and Tariffs: Northern Exposure, Canada Risk 10-25-24

Trump at Economic Club of Chicago: Thoughts on Autos 10-17-24

Facts Matter: China Syndrome on Trade 9-10-24

Market Commentary: Asset Returns 6-21-26

Glenn Reynolds, CFA — Mon, 22 Jun 2026 02:57:12 GMT

So many people to insult, so little time.

The asset return story for the past week saw the initial news of a “final” Iran deal outweigh the very hawkish FOMC meeting that roiled the UST markets. As we roll into the last days of 2Q26, the Iran backdrop is getting ugly again with confusion and potential flareups leading to a wider range of potential outcomes than initially envisioned.
Among “relationship problems,” we can add concerns around France and the role that its UN seat can play in sanctions. France has expectations around such issues as missiles, which had been left out of the MOU (see France Delivers a Second Devastating Checkmate to Trump 6-20-26 on Substack). That France news got little play in the US, but the topic has been covered broadly in France and Israel. Meanwhile, Trump plays “The G7 insult game, collect all 6” with Meloni the target the past week.
This week brings a fresh round of PCE inflation metrics with the “Income and Outlays” report along with the final GDP data for 1Q26 GDP with its current weak +1.6% headline GDP numbers and +1.4% for PCE growth (see GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26). The market will also get a critical earnings report from Micron, which YTD has been the best performer on our Tech Check list as detailed below.
As we go to print, the FOMC odds remain bearish as covered in the FOMC SEP report (see The FOMC Dance: Will Warsh and Trump Find a Rhythm? 6-17-26). The Vegas line over at CME FedWatch on Sunday night post odds of 1 cut at 0% by the Dec 2026 FOMC meeting. We see the odds of no change at 10.1%, 1 hike at 32.8%, 2 hikes at 36.9%, 3 hikes at 17.4%, and 4 hikes (+100 bps) at +2.9%. That marks an especially grim direction for the target rate probabilities since Iran started.
With oil down below a $76 handle to end the week (under $85 the prior Friday) after a growing confidence that Trump would simply declare victory, the Trump self-control factor soon moved back down to lower expectations. The MOU process is again taking some blows. Trump threatening Iran while the negotiation was getting underway was a creative game theory move when Iran is clearly not cowed.

The above table updates the timeline returns for the broad debt and equity benchmarks we monitor. The debt indexes are all back in positive range for the 1-month time horizon, but the post-Iran curve action has left the UST index at zero for 3 months. The 1-year time horizon for equity returns makes a statement with results at a multiple of the long-term returns on the equity asset class.

Equities have clearly been strong, but the Russel 3000 growth benchmark had a rough month with a lot of software and SaaS names taking body blows as we have covered along the way. We break out the very divided tech return subsector performance in charts below.

From NASDAQ to Russell 2000, the double-digit returns have faced pockets of headwinds at the headline level with Iran and inflation. The concentrated tech leadership and weaker breadth come up in second-guessing staying power if the UST curve struggles. There is a lot riding on getting this MOU wrapped.

The 1-week UST deltas are posted above, and we clearly see the bear flattener coming out of the FOMC meeting and bearish fed funds expectations. The critical turning point would be the Iran MOU outcome since the bond market will hate any potential for protracted upward oil price pressure. That in turn could still flow into fed policy and the risk of inflationary trends pressuring consumers. If oil heads higher again, risk still lurks for long-dated UST rates hitting the housing sector even harder and undermining growth stock “valuation math.”

The above chart updates the post-Iran UST deltas using 2-26-26 as a starting point (the bombing started Feb 28). The 2Y and 10Y UST frame a bear steepener with 2Y UST at +77 bps, 10Y at +44 bps, and 30Y +23 bps.

The above chart updates the YTD UST deltas with the 10Y and 30Y taking less heat than the short end. The bond ETFs have been able to remain in low positive return range with the credit markets riding coupons and tight spreads. There has been a smaller impact of late on long duration assets than we were seeing along the way. The oil markets could change that muted duration hit if Iran cannot get settled constructively.

The Magnificent 7 heavy ETFs…

Some of the benchmarks and industry ETFs we include have issuer concentration elements that leave them wagged by a few names. When looking across some of the bellwether industry and subsector ETFs in the rankings, it is good to keep in mind which narrow ETFs (vs. broad market benchmarks) get wagged more by the “Magnificent 7” including Consumer Discretionary (XLY) with Amazon and Tesla, Tech (XLK) with Microsoft, Apple, and NVIDIA, and Communications Services (XLC) with Alphabet and Meta.

The “Mag 7+3” have all been considered a key part of the tech drivers when Broadcom (AVGO), Oracle (ORCL) and Taiwan Semiconductor (TSM) are added to the mix. Those market cap rankings have been moving around across the months, and the growth in names such as Micron ($1.28 trillion market cap 6-18-26) may require some new grouping and tag lines as 2026 proceeds. Oracle is more a software and systems company that has been volatile and has fallen off the pace (ORCL is a holding in the Software ETF, IGV). Taiwan Semi has been consistent, and Broadcom is well entrenched in “the trillion plus club” at this point with a $1.96 trillion market cap this past week.

The tech bellwethers and benchmarks had a good week with semiconductors rolling along in a fresh rise as we cover in more detail in the tech check charts below. The only two asset lines in the red this week were Microsoft (MSFT) on the bottom with a -2.8% return and the Software ETF (IGV) slightly ahead of MSFT at -2.0%. The Semiconductor ETF (SOXX) posted +9.0% this week for a return differential of 11 points. We see Taiwan Semi (TSM) sitting on top with Broadcom (AVGO) at #3.

SOXX, with a total return of +89.1% for 3 months, makes a strong statement about what has been driving the NASDAQ and tech heavy S&P 500. SOXX returns at +119.2% YTD and +183.3% LTM are extraordinary. For the week, we see 5 of the Mag 7 lagging the NASDAQ and the Equal Weight NASDAQ 100 ETF (QQEW). We see 4 of the Mag 7 lagging the S&P 500 for the week.

The following is a cut and paste from our weekend LinkedIn post with some edits:

The chart details the trailing 1-week total returns (4-day trading week, but we use 5-day rolling) that weighed in at a positive-negative score of 19-13 in a holiday week that featured critical Iran developments and the first Warsh FOMC meeting that roiled the market with a hawkish tone. Sharply lower oil saw a Friday WTI close at $76.54 vs. $84.88 the prior Friday.

The bear flattener was caused by 9 of 18 voters (Warsh did not vote) seeing hikes. That included 3 seeing 1 hike, 5 seeing 2 hikes, and 1 voter seeing 3 hikes. For the week, the 2Y UST spiked by over +14 bps, the 10Y was -2 bps, and the 30Y down by -7 bps. That in turn drove the long duration UST ETF (TLT) into the 2nd quartile while the short duration UST 1-3Y ETF (SHY) edged into negative range. The good news in the markets was Iran and oil on the week managed to outdo the FOMC meeting.

Equities had a good week with NASDAQ and Russell 2000 in the top quartile while S&P 500 and Midcaps (MDY) were positive. The S&P 500 posted a score of 6-5 in its 11 sectors. Tech, Financials, Consumer Discretionary, and Industrials were among the major positive sectors this week and showed solid breadth and diversification after a period dominated by tech price action.

The chart shows the big winners and losers with the 3 energy ETFs (XOP, XLE, AMLP) in the bottom 3. XLK was on top with NASDAQ in the top 5 just ahead of the Equal Weight NASDAQ 100 (QQEW). The Homebuilder ETF (XHB) was in the top quartile on the longer dated UST curve rally even though the Mortgage News Daily 30Y mortgage rate did not move much yet with a late week close of 6.58%.

The Iran plot thickened as the market heard plenty of trash-talking of the Iran MOU and the considerable uncertainty that remains. As we go to print, the Strait was closed again based on Israeli attacks on Lebanon. Meanwhile, France has chimed in with its stance that its approval is needed on the removal of any UN Iran sanctions. Things are getting messy.

France has a range of views on what needs to be in the Iran deal for Trump et al to address (e.g. Iran missiles) and Ukraine support. There is room for the US-EU situation to get very ugly quickly when Trump is more dependent on EU support than he is willing to admit out loud or to himself. Congress has been left out, so we wonder how he will deal with the French. Hegseth was over in Europe this week telling NATO their performance was “shameful.” That won’t help.

The US-EU had had a bad week that could get worse, so Trump thought it was a good idea to insult the right-wing head of Italy (Meloni), who was (past tense) his only remaining EU fan with dictator wannabe Orban now residing in the ‘’Where are they now?” category. Trump took personal shots at a woman who at times seemed to be the only one in the G7 that could tolerate his behavior and bluster. That ship just sailed.

The following is a cut and paste from our weekend LinkedIn post with some edits:

The weekly Tech Check posted a 21-11 as semiconductors generated another big week and took over the entire top quartile. Meanwhile, the theme for the week on the downside was a fresh beatdown of software and SaaS-based services players with Adobe (ADBE) sitting on the bottom at -10.8%. In the chart, we use a 5-day rolling return even though this week was a holiday-shortened 4 days with Juneteenth.

We see some of the usual suspects from the SaaS service subsector near the bottom such as Salesforce (CRM), ServiceNow (NOW), FactSet (FDS) and Intuit (INTU). The tech subsectors remain starkly divergent with the median for the tech check mix around 1% with a Hi-Lo range of 25.4% from #1 to #32.

The top 5 companies each posted double-digit returns for the week. That top quartile included the Semiconductor ETF (SOXX) at +8.95% vs. -2.0% for the Software ETF (IGV). We see Intel (INTC) at #1 with 14.6% just ahead of Micron (MU) at +13.9%, the capex-sensitive Applied Materials (AMET) at #3 and +11.7% followed by other leading semiconductor players comprising the remainder of the top tier.

The dispersion of returns follows a familiar pattern that we see in the YTD performance with “Semis on the left” and “Software on the right.” We break out the wider range of timeline returns for the tech mix in the full asset return commentary we will post tomorrow. Over that YTD horizon, we see the bottom 7 names all posting price returns of -21% or worse from Microsoft at -21.5% down to Intuit at -59.7%. That is an ugly profile for the software and SaaS-based service players. We see many of the same names among the worst performers above for the recent weekly numbers.

For industry and subsector asset allocators and old school stock pickers, the Hi-Lo ranges have been daunting. This week shows a Hi-Lo range of 25 points. The YTD Hi-Lo differential is 357 points from Micron to Intuit. Throw out the Hi and Low point, and Intel vs. Adobe still post a 307 point YTD differential.

For the week, none of the Mag 7 made the top quartile but only Microsoft was in the red in the bottom quartile. For the YTD period, we see 3 of the Mag 7 in negative return range with only 2 of the Mag 7 even making it into the bottom half of the second quartile (Alphabet and NVIDIA).

The 1-month returns across the broader group of 32 benchmarks and ETFs posted a score of 25-7 with a remarkably solid month in the face of uncertain outcomes for Iran and some ugly inflation data released in CPI and PPI (see Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26, CPI May 2026: The 4% Rubicon 6-10-26, PCE Inflation: Income and Outlays April 2026 5-28-26).

The bottom 3 asset lines include the 3 main energy ETFs (XOP, XLE, AMLP). Those negative returns reflect less panic in oil and gas markets and “progress” (in relative terms) in Iran and the material pullback in oil prices to the $76 area from $96 handles back on May 23, 2026.

The winners include a diverse mix of tech asset lines (XLK, QQEW), cyclicals (e.g. Industrials ETF, XLI), some of the more sensitive subsectors to oil prices (Transports, XTN), and the interest rate sensitive with Homebuilders (XHB) seeing some relief on the long UST news.

The 1-month tech check drives home the two different worlds of the semiconductor subsector vs. the software and SaaS service operators. The score for the past month was 16-16 with major outliers on the positive and negative side of the asset lines. We see a Hi-Lo return range of almost 106 points. If we exclude the Hi (Dell at +72%) and Lo (Intuit at -33.8%), we still see a Hi-Lo return differential of 90 points. SOXX posted a +29% return with the Software ETF (IGV) at -4.1%.

The 3-month returns on the broader mix of 32 benchmarks and ETFs include around 3 of the 4 months of the post-Iran period and some wild swings in the tech names when the AI displacement risks drove a bad case of nerves. The score of 26-6 frames a very strong running period.

We see Russell 2000 and NASDAQ in the top 5 along with the Equal Weight NASDAQ 100 ETF (QQEW). We also see the S&P 500 and Midcaps (MDY) in the top quartile, so that presents a well-diversified mix of solid performers in a tumultuous period since the Iran War was raising some challenges.

We see the Tech ETF (XLK) well ahead at #1 with the 3 main energy ETFs (XOP, XLE, AMLP) anchoring the bottom tier. The Transports ETF (XTN) had been supported by the easing in jet fuel and refined products after the initial spike.

The YTD 2026 returns of the broader mix posted a 27-5 score with the BDCs on the bottom along with Communications Services ETF (XLC) and Health Care (XLV). Among major S&P 500 sectors we see the Financials ETF (XLF) and Consumer Discretionary (XLY) in the red.

Among the winners, we see Tech (XLK) joined by Energy (XLE) and E&P (XOP) while Transports (XTN) also placed at #2 in the top 5 along with the Russell 2000 small caps. Midcaps (MDY) also made the top quartile. NASDAQ and the S&P 500 were down in the second quartile. On a positive note for breadth YTD, Industrials (XLI) and Materials (XLB) made the top quartile.

It took 14.75% to make the top quartile, and that was over a period of less than 6 months. Those are very strong annual run rates.

The YTD returns on the Tech Check mix posted a score of 19-13 with a top quartile performance less than 6 months that you seldom see in a career. We see the top 6 all in triple digits from Micron (MU) at +297% to the Semiconductor ETF (SOXX) at +112%. We see Intel (INTC) at #2 with +263% and Dell at #3 with +225%. It took 52% to make the top quartile.

The negative returns include a wave of software and SaaS services operators. That includes 11 lines in negative double digits and 7 names worse than -20%. The AI threat themes continue in speculation just as the valuation of names in the AI ecosystem have a highly speculative element as well. For the Semis, the current revenue run rates and earnings growth is very real. We will get Micron’s numbers and guidance this week.

The 1-year time horizon for the broader 32 benchmarks and ETFs remains at 31-1 with the BDCs still in last place at -13.4%. We see 6 of 8 bond ETFs in the bottom quartile with only the EM Sovereign ETF (EMB) cracking double digits.

Housing Starts May 2026: Weaker for both Single Family and Multifamily 6-16-26

Industrial Production May 2026: Steady, Balanced Utilization Levels 6-15-26

Geopolitical risk: Trump’s Nuclear Saber Rattling? 6-14-26

Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26

Employment May 2026: Big Rebound, Low Multiplier Bias 6-5-26

The Fall of CBS 6-3-26

New Home Sales April 2026: Slow Start to Spring 5-28-26

PCE Inflation: Income and Outlays April 2026 5-28-26

GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26

D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26

Market Commentary: Asset Returns 6-14-26

Glenn Reynolds, CFA — Mon, 15 Jun 2026 03:27:44 GMT

JFK in Berlin: “We cannot negotiate with people who say what’s mine is mine and what’s yours is negotiable.”

We review the asset return results across a range of time horizons after a week with ugly inflation trends, and an Iran “deal” announced on Sunday (or MOU in process that could be signed this coming Friday). The details are not clear nor are the scale of side deals which will not likely get reported. An end to the reckless, poorly planned fiasco is worth celebrating if it holds.
Inflation has stayed grim, but the market has been looking past the May inflation numbers. There were many “worst since 2022” references the past week with many stand-alone lines posting bad numbers that do not get much media visibility (see Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26, CPI May 2026: The 4% Rubicon 6-10-26).
The Strait of Hormuz supply shock remains tenuous even if scenarios on the aftereffects (e.g., when does China step back in to buy?) have ebbed and flowed. The risk of escalation still cannot be ruled out after Trump issued a less-than-veiled nuclear strike threat over the weekend (see Geopolitical risk: Trump’s Nuclear Saber Rattling? 6-14-26). Like the long drive one experienced as a kid, some in the market will say “call me when we get there.”
The market gets its first Warsh-led FOMC meeting this week as investors will be looking for candor or hints of macro doubletalk and politicized ambiguity. Retail Sales will offer some new color this week on the consumers while Housing Starts will offer another important signal on how builders are dealing with traffic and mid 6% mortgage rates.
Toxic geopolitics, USMCA threats, a fresh wave of tariffs, and wholly dysfunctional domestic politics with some bad policy intent (voter suppression, fresh ICE swarm threats at NYC) have not taken a sentiment toll in the market (yet), but negative real wage growth and plunging savings rates are very real, tangible economic realities.

The above table breaks out various timeline returns for the equity and fixed income benchmarks that we monitor. The trailing 1-month, 3-months, and YTD show that the post-Iran period has not derailed the very strong equity markets. The semiconductor and AI ecosystem and infrastructure subsectors have dwarfed the setbacks in the software and SaaS-based services operators as we cover below in the charts.

In contrast, debt markets have felt the sting of duration but not credit risk pricing in high grade corporates or HY bonds. The world of private credit is a different story. The negative returns in UST markets over 3 months and YTD highlight the inflation worries and the spiraling UST deficits and supply scenarios.

The weekly UST deltas above show a rally week as oil declined and investors looked past the May CPI and PPI numbers. Those inflation metrics posted trends that were decidedly unfavorable (see Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26, CPI May 2026: The 4% Rubicon 6-10-26). The tough call is the question of “Where does oil go from here?” after the immediate dip we are seeing now. The proclamation of a done deal (in theory) subject to a final signature and process is getting a lot of qualifiers and caveats from experts outside the partisan theme spinners on each side. WTI is posting an $80 handle as we go to print down from $90+ to close last Friday (6-5-26).

The above UST deltas cover the post-Iran period from 2-26-26 (the bombing started 2-28) through the end of the past week. A bear flattener was framed by +67 bps in the 2Y and +46 bps in the 10Y. We see the 30Y at +4.97%.

The YTD UST deltas posted above have been a headwind for bonds YTD. As we cover in other charts below, all 7 bond ETFs were positive but 5 of the 7 were below 1% returns YTD. The two above 1% were HYG at +1.65% and EMB at 2.29%.

The tech bellwether table highlights the major divide of recent weeks between the semiconductor names and ETFs and software and SaaS names. The AI ecosystem in general has made winners of those attached to data centers and what goes in the data centers. On the negative side, the business model threats from AI to software-related products and services have put some companies in the badly out of favor bucket. We have been covering that in the weekly tech check commentaries and in various charts below where we break out more single names.

The above chart highlights the tale of two product subsectors again with Oracle on the bottom for the week at -13.83% and the Semiconductor ETF (SOXX) at #1 with 10.46%. The Software ETF (IGV) was 3 off the bottom at -5.37%. Microsoft is sitting in 2^nd to last place for the week at -6.22%.

The Mag 7 weighed in with 2 positive in Tesla (TSLA) at +3.95% but NVIDIA (NVDA) was barely positive at 0.04%. The rest of the Mag 7 were negative.

The following is a cut and paste from a Saturday LinkedIn post with some edits and updates:

The chart updates the weekly total returns for the 32 benchmarks and ETFs we monitor. The week was obviously a winner with a score of 28-4 with 3 of the 4 lines in the red comprised of energy ETFs with the Midstream ETF (AMLP) in last place and the E&P ETF (XOP) joining the broader Energy ETF (XLC) in the bottom 3. The Communications Services ETF (XLC) was very slightly negative.

Notable winners this week included Regional Banks (KRE), Transports (XTN), and curve-sensitive Homebuilders (XHB) in the top 3. It is easy enough to point at the hopes for long-end curve relief if the Iran-Trump mind games finalize a solution with the skeletal detail from Sunday. WTI ending Friday quoted at $84.88 vs. $90.54 the prior Friday and $80+ as of Sunday with the Trump announcements on the “deal being done” (as he describes it). Lower oil can flow into mortgage relief via the curve. For Transports, lower oil is intrinsically favorable for jet fuel, diesel, and gasoline.

Duration was a winner this week on a favorable UST curve shift as detailed earlier despite some ugly inflation data in both the CPI and PPI releases. We covered inflation metrics on those release days in separate commentaries (see Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26, CPI May 2026: The 4% Rubicon 6-10-26). We see all 7 fixed income ETFs in positive range.

There were some very important CPI lines near and dear to the consumer that got minimal focus in the headlines – or for that matter in the text below the headlines. The FedWatch odds are not promising easy times for Warsh. The FOMC as a group will be hard to convince. Payroll trends have been a “good news, bad news” item but do not help the easing odds.

As we go to print, there has been some notable realignment from earlier in the weekend (Saturday). The highest odds now are for fed funds unchanged by the Dec 2026 FOMC meeting at 49.4%. The prior reading on the weekend showed 1 hike leading at 42.3%. The 1-hike odds have now declined to 38.2%. The odds of a single fed funds cut by the Dec 2026 FOMC meeting is still quite low but have risen to 1.7% after posting a 1.0% probability late morning Saturday. The odds of 2 hikes have declined to 9.7% from 14.9% earlier in the weekend while 3 hikes are now 0.9% after 2.1% on Saturday. These will be rapidly moving around as the week kicks off and as the Iran news gets handicapped.

The S&P 500 showed a favorable sector return profile this week with 9 of 11 sectors positive. Of the 11 sectors, only Communications Services and Energy were in the red. The S&P 500 was still only in the 3rd quartile. The Equal Weight S&P 500 ETF (RSP) beat the broad benchmark and was in the upper half of the 2nd quartile vs. the lower half of the 3rd quartile for the S&P 500 index.

NASDAQ was also in the third quartile, joining the tech-heavy S&P 500 with a weekly return below 1.0%. The small cap Russell 2000 made the top 4 in the high quartile with Midcaps (MDY) a few more slots below in the top tier.

As we cover separately in the Tech Check weekly return chart, the tech equity mix was very divided with semiconductors rallying back impressively but software taking a beating. The Semiconductor ETF (SOXX) ranked at #4 with +10.5% on the week while the Software ETF (IGV) was at the bottom of the 3rd quartile at -5.4%.

The following is a cut and paste from a Saturday LinkedIn post with some edits and updates:

The Tech Check return chart this week shows the tech mix overall still having a rough time even with some major semiconductor names generating solid rebounds on the week. The price return score was 14-18 in this mix and shows a general theme of positive trends for semiconductor and critical AI ecosystem names. Meanwhile, software and SaaS-based services names were back in the tank.

We see 4 semiconductor names with positive double-digit returns on the week but with 3 software/SaaS names with negative double-digit returns. The Semiconductor ETF (SOXX) ranked #4 at 10.46% behind 3 major semi-based names in Intel (INTC) at #1, Applied Materials (AMAT) at #2, and Micron (MU) at #3. AMAT is wagged by global capex expansion and equipment demand.

The Software ETF (IGV) was at the bottom of the third quartile at -5.37%. That is a return differential for SOXX vs. IGV of 15.8 points in a single week. Adobe (-18.86%) and Oracle (-13.83%) earnings reports this week did not bring joy as those two names held down the bottom two positions.

The Mag 7 were once again spread out with MSFT in the bottom quartile, 4 in the 3rd quartile (AAPL, META, AMZN, GOOGL), NVDA in the 2nd quartile, and TSLA in the top tier. The “Mag 7 + 3” got little extra support from “the 3” with Oracle deep in the red, Broadcom (AVGO) at -0.95% and Taiwan Semi (TSM) a more muted +2.1%.

The CBOE uses a “Mag 10” mix on options (MGTN) that includes Broadcom, Advanced Micro (AMD), and Palantir (PLTR). PLTR posted -5.56% this week in the bottom quartile. Another broad frame of reference is the Tech ETF (XLK) at +2.50% at the top of the 2nd quartile. Not shown above is the Equal Weight NASDAQ 100 ETF (QQEW), which posted +1.24% on the week.

The 1-month score of 24-8 was still solid for the broader group of 32 benchmarks and ETFs. For the names in the red, we see 3 of the 8 from energy ETFs (XOP, AMLP, XLE) with the NASDAQ in the red and Communications Services ETF (XLC) in the bottom. With some hope for reduced supply shock out of the Gulf, we also see Base Metals ETF (DBB) in the bottom quartile. Consumer Discretionary (XLY) as a major S&P 500 sector was in the bottom tier, so that needs to be watched.

Among the big winners was Transports (XTN) way out in front at #1. XTN saw airlines soar on jet fuel relief and a range of freight and logistics operators saw major, healthy double-digit rallies for the month. Homebuilders (XHB) get wagged by mortgage rates and the Tech ETF (XLK) is heavy on the major semi names.

Of the major indexes, Russell 2000 was the winner in the top quartile with Midcaps (MDY) in the second quartile, S&P 500 in the 3^rd quartile, and NASDAQ in the bottom quartile. The Equal Weight S&P 500 managed to end up in the top quartile just ahead of the Russell 2000.

The 1-month Tech Check follows the pattern discussed earlier and across the recent weekly updates. The 17-15 score mirrors the trend of semiconductors performing impressively and the software and SaaS-based services companies taking a beating. The big difference has been a few more bouts of downside for semis and AI ecosystem names, but the running results are still stellar.

For the Mag 7, we see 5 of the 7 in the bottom quartile with only Microsoft (MSFT) and Apple (AAPL) making it into the 3^rd quartile. All 7 were negative. That was notably the case even with NVDA. The Semiconductor ETF (SOXX) posted 15.5% in the top quartile. Dell was the outlier on its sudden and dramatic surge this past month as addressed in earlier commentaries.

The 3-month return chart is entirely within the post-Iran period with all the big swings along the way. The score of 27-5 is a reminder that the bull market will not bend for now. The bond ETFs were not hit too hard with only 2 in the red with the long duration UST ETF (TLT) and UST ETF (GOVT).

The big winners show some cyclical diversity with Tech (XLK), Transports (XTN), Russell 2000, Equal Weight NASDAQ 100 (QQEW), and Regional Banks (KRE) comprising the top 5. The NASDAQ, Midcaps (MDY), and S&P 500 all made the top quartile with the Equal Weight S&P 500 ETF (RSP) just one notch below the top quartile.

The YTD returns are impressive even with the warm inflation and supply shocks. We see a score of 27-5 with the 5 in the red zone putting up very small negative numbers. The BDCs (BIZD) sit on the bottom at only -6.8% with 8 asset lines in the top quartile posting double-digit positive returns.

It took 11.7% to make the top quartile over only around 5 ½ months. The median return was only slightly below 10% YTD. On a positive note, all the bond ETFs are positive even if only slightly so straddling the 3^rd and 4^th quartile.

The top quartile includes 3 energy ETFs (XOP, XLE, AMLP) with Tech (XLK), Transports (XTN) and the Russell 2000 in the top 5. Materials (XLB) and Midcaps (MDY) rounded out the top tier. NASDAQ was down in the 2^nd quartile with the S&P 500 in the 3^rd quartile.

The YTD Tech Check mix continues the theme of a major split between the semiconductors and “data center contents” and AI ecosystem beneficiaries on one side. On the other side was negative returns for software and “AI displacement risks.” The SaaS-based service operators dominate the worst returns.

We see 9 asset lines with double digit negative returns, but the magnitude of the returns for the winners are in some cases off the charts (+243.9% Micron, +237.6% Intel, +214.2% Dell) with a 39.5% return required to make the top quartile.

The 31-1 score for the trailing year has been steady with only BDCs (BIZD) sitting in last place at -11.6%. The median return in the mix of 32 asset lines is in the mid-14% range, which comfortably beats the historical long-term return on equities. We see 6 bond ETFs in the bottom quartile with only EM Sovereigns (EMB) in the third quartile.

Producer Price Index May 2026: Too Many “Since 2022” References 6-11-26

Market Commentary: Asset Returns 6-8-26

Employment May 2026: Big Rebound, Low Multiplier Bias 6-5-26

The Fall of CBS 6-3-26

Market Commentary: Asset Returns 5-31-26

New Home Sales April 2026: Slow Start to Spring 5-28-26

PCE Inflation: Income and Outlays April 2026 5-28-26

GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26

Housing Starts April 2026: Soft Starts in Single Family 5-22-26

D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26

Geopolitical risk: Trump's Nuclear Saber Rattling?

Glenn Reynolds, CFA — Sun, 14 Jun 2026 16:33:01 GMT

Dr Strangelove: “I love this guy.”

Trump: “Hopefully, this process will all work out quickly, easily, and smoothly. If it doesn’t, we have the ultimate alternative, hopefully never to be used again.” (Yes, a direct quote from Trump’s Truth Social 6-13-26 post below.)

Much of the posturing is to be expected and especially the attack on the Obama plan. Then Trump takes another dark turn that reflects his state of mind. The threat of the “ultimate alternative” crosses into the realm of the apocalyptic even if it comes with the asterisk of the bluster and “mentality” of the guy it came from.

This is not the first time in this circumstance that nuke imagery was waved around (remember the whole “obliterate civilization” thing?), but this time the media barely addressed it. The media is truly cowed or simply exhausted (or both). The CBS events of late may become the norm.

For markets, they will get a vote if the deal does not happen. The earlier threats of “taking the oil” and full destruction of infrastructure, power plants, and water are easy enough to believe. What shocks us is the lack of weekend media focus on the implied nuke threat.

For now, this language goes under the heading of geopolitical risk at a time when Russia threatens NATO and China will most certainly look to consolidate control of Taiwan under the long established One China policy at some point.

Being the first nation to go nuclear since the US did it the first two times in WWII is sending a bad signal to Russia as they are busy losing the war with Ukraine. It also signals China to jack up the nuke and missile arms race even more or even to move more quickly in Taiwan. Words have meaning even if a lot less when spewed by this character.

Excess in threats could someday be taken seriously. It also offers Europe another reason to revamp their security plans and how to position a nuclear umbrella. Some might say it is the most extreme version of distracting from the Epstein files. It is also safe to say “Reichstag Mushroom Cloud” has a bad ring to it.

The refuge of the weak and cowardly (e.g., GOP Senators) is “he does not mean it” and “he would never do it.” They say that about him canceling or nullifying elections also. He has already pursued a path of “constitutional amendment by executive order.” Dangerous times.

Market Commentary: Asset Returns 6-8-26

Glenn Reynolds, CFA — Mon, 08 Jun 2026 18:19:31 GMT

Pick one for this week, but they are both ceasefires.

We enter the week with a fresh wave of missiles in the US-Israel-Iran War (we mean “ceasefire” per Trump and “war is over” per Rubio). The oil experts continue to weigh in on what the supply shock will look like as the Strait disruptions continue. How that will impact the chain from oil to refined products is a material risk with EU and Asia on the ropes. China inevitably will step back in to buy and push the demand side at some point. Meanwhile, the fertilizer shock is a “brace for impact” X factor Washington does not discuss much.
Trump also is now launching his latest tariff gambit to recover the tariff revenue stream using “forced labor” as his angle (see USTR release on Section 301 tariffs). The USTR is worth a read how all the major (and minor) trade partners are guilty of violations. The USTR rationalization is worth a read while the White House tries to keep a straight face on how they care for the plight of oppressed workers in developing nations. The substance of the grounds is a lot like the Section 232 National Security grounds for upholstered furniture (seriously?!). The risk again now is whether trade partners respond.
As we cover in the charts below, the scale of the moves for tech on the downside are mitigated by the even more stunning recent spikes higher. The Semiconductor ETF (SOXX) at over a +79% return YTD and single names such as Dell (+213%) and Micron (+208%) along with Intel (+169%) are showing supernatural returns YTD even after this week’s sell-off.

The above table updates various timeline returns for the major fixed income and equity asset class benchmarks we watch. The duration setbacks are evident in the UST index and the weak returns for the longer duration IG Corporate index. Credit spreads have remained quite compressed with HY and IG spreads signaling resilient credit risk appetites in bonds (private credit loans a different story).

Equities had a setback this week as we detail below, but the running time horizons are still impressive looking back YTD and 1 year. Even just for the 1-month period with all of this week’s “noise,” only the Russell 2000 small caps was in the red. The running 3-month and YTD numbers annualize to results well in excess (in some cases a multiple) of the long-term returns on the equity asset class.

Another week of bad news for UST deltas undermined bond funds as we detail below. With Iran deal uncertainty, oil price swings, and the supply of numerous critical commodities from the strait looking questionable, the CPI and PPI data this week could complicate life for Warsh in his sales pitch to the FOMC to ease. Warsh is looking to pitch his new focus on modified data benchmarks. He may come across as more “axed” than analytical to his very seasoned and analytically oriented audience.

The above UST deltas basically cover the post-Iran moves. We start the timeline two days before the bombing began. The results are obvious enough. The economic talking heads can get into discussions of the economic definition of inflation (monetary only, yada, yada, etc.), but the big question for household economics is the erosion of purchasing power for the “household basket” and what adjustment they need to make in the face of a weaker household cash flow position. The plunge in savings rates may hold a clue (see PCE Inflation: Income and Outlays April 2026 5-28-26).

The Magnificent 7 heavy ETFs…

The “Mag 7+3” can be considered a key part of the tech drivers when Broadcom (AVGO), Oracle (ORCL) and Taiwan Semiconductor (TSM) are added to the mix. Those market cap rankings have been moving around across the months, and the growth in names such as Micron ($974 bn market cap 6-5-26) may require some new grouping and tag lines as 2026 proceeds. Oracle is more a software and systems company that has been volatile and has fallen off the pace (ORCL is a holding in the Software ETF, IGV). Taiwan Semi has been consistent, and Broadcom also is in “the trillion plus club” at this point.

The above table updates the bellwether tech names and some key benchmarks and ETFs for the week. We see a shutout this week with all lines negative. Broadcom sitting on the bottom with -13.7%. We see the Semiconductor ETF (SOXX) at -5.15% and the Software ETF (IGV) at -5.72%. This week Oracle reports earnings as does Adobe.

The attached text was already posted on LinkedIn on Saturday. We update with some edits:

The broader mix of 32 benchmarks and ETFs show some broad-based pain with a positive-negative score of 11-21 that included carnage in tech and all the bond ETFs in the red this past week. The S&P 500, NASDAQ, Russell 2000 small caps and midcaps (MDY) were all negative. We can throw in the Dow as well, but we don’t include that in our checklist of 32 asset lines (30 companies makes it a low value indicator in our view with the Dow more about tradition).

We see the energy ETFs (XLE, AMLP, and XOP) back in the top quartile joined by Health Care (XLV). In a counterintuitive trend when the UST curve was not happy and UST deltas made adverse moves, we saw Financials (XLF), Regional Banks (KRE), Homebuilders (XHB) and Real Estate (XLRE) back in the top quartile. KRE and XHB made the top tier with minimal sub-1% returns, so the bar was low.

The S&P 500 saw its 11 sectors post a 6-5 positive to negative score, but larger sectors took a major hit with Consumer Discretionary at -6.2%, Info Tech at -5.4%, and Communications Services at -3.9%. Those 3 sectors are over half the S&P 500. NASDAQ was blitzed with a -4.7% return on the week with the Friday bloodbath cited as the worst “point drop” (not % drop) in its history.

The problem was clearly not just tech even if tech usually bogarts all the headlines. For example, we saw Ford Motor drop -14.6% on the week after its recent sharp rally that saw it partially close the 1Y return gap with GM. For Ford, it was more idiosyncratic with a major recall on some very popular nameplates (Bronco, Maverick).

More broadly for consumers, the worries around credit card debt total and quality trends have been picking up along with all the fears around Iran fallout. There is also the question of what the FOMC might need to say at its June meeting after this coming week’s CPI and PPI data on top of the solid jobs report.

Iran realities (vs. headline mis/dis-information) are not going as most had hoped. The further we get into the summer, the more the scenarios of oil supply disruptions and oil shock risk will get tested. Questions like “When will China start buying in scale again?” among others keep showing up in the oil trade rags.

Across the 32 asset lines above, we see the Tech ETF (XLK) in dead last and Consumer Discretionary ETF (XLY) just ahead with the NASDAQ 3 off the bottom and Communication Services (XLC) just ahead of EM Equities (VWO) in the bottom 5. The small cap Russell 2000, the Equal Weight NASDAQ 100 ETF (QQEW) and increasingly tech heavy S&P 500 are in the bottom tier. Among some other changes (POOL out, FLEX in), bumping Campbell’s out of the S&P 500 this month for an AI play in Marvell Technology was the end of an era.

The attached text was already posted on LinkedIn on Saturday. We update with some edits:

This week’s Tech Check mix was a contest for who would turn in the worst numbers as financial journalists scrambled for synonyms and other ways to say, “worst since.” The positive vs. negative return score in our Tech Check mix shown in the chart was 3-29 with all the broader benchmarks in the red as covered in a separate post. Beyond the NASDAQ and increasingly tech-heavy S&P 500, we see Russell 2000 also negative on the week. Note: We replaced Zillow with Dell since the Saturday LinkedIn post.

Friday was a brutal day as the headlines covered with the NASDAQ dropping 1,121.5 points for the worst single day in points in its history. For the decline in percentage terms of 4.2%, the drop was the highest since April 2025 in the aftermath of Trump’s reciprocal tariff pitch and ensuing chaos (including the UST market).

Disturbances along the UST curve can serve to undermine the growth stock valuation math, so the broader risk picture (massive, growing deficits, inflation, oil uncertainty, etc.) can weigh on portfolio decisions for those sitting on outsized unrealized gains built into positions.

All the Mag 7 names were in the red spread across each quartile with Apple (AAPL) in the top quartile while NVIDIA (NVDA) and Alphabet (GOOGL) were in the second quartile. Meta (META), Microsoft (MSFT), and Amazon (AMZN) were in the third quartile with Tesla (TSLA) bringing up the rear in the bottom quartile.

The 3 assets in positive range show a mild rally by FactSet (FDS) at #1 after the SaaS-based services equities have been beaten down YTD on fears of AI displacement. Legacy tech stalwarts Cisco (CSCO) and Applied Materials (AMAT) joined the small group of 3 posting positive returns. Of those in the top quartile, we see Midcaps (MDY) and S&P 500. Only Taiwan Semi (TSM) of the major semi names made the top quartile - but with a negative return. Salesforce (CRM) climbed back into the #8 position.

The Semiconductor ETF (SOXX) was at the bottom of the second quartile and Software ETF (IGV) was down in the third quartile. The bottom quartile is heavier on the semiconductor names than usual this past week with some of the usual underperforming software/SaaS suspects (Intuit, Palantir) plus Tesla. Oracle reports this coming week (6-10-26) with its fiscal 4Q earnings report.

The overall profile of returns was grim with 7 asset line items posting negative double-digit returns and the #1 performer (FactSet) at only +4.1% and the #2 performer (CSCO) at 1.0%. No joy for tech for the week and ended on a bad note.

The trailing 1-month timeline trimmed a strong May record with the 24-8 score for 1-month returns last week giving way to a 15-17 positive vs. negative tally this week. We see 5 of 7 bond ETFs in the red in the above with two on the positive side but close to zero.

E&P (XOP) and Energy (XLE) dropped into the bottom quartile while Midstream Energy (AMLP) was slightly negative in the third quartile. BDCs had another bad month at second to last. The important Consumer Discretionary ETF (XLY) and Communications Services ETF (XLC) – among the largest of the 11 S&P Sectors – were in the bottom quartile.

The winners include Transports at #1 and followed closely by Tech (XLK) and the Equal Weight NASDAQ 100 (QQEW) as the bad week in tech did not cut too far in the prior banner weeks. Interestingly, the Equal Weight S&P 500 (RSP) ranked #5 and outperformed the 4 broad market indexes.

The tech drama has really picked up in recent weeks with dramatic swings higher and lower, but the semiconductor and AI ecosystem is overwhelmingly biased higher. The software and SaaS-based service providers have been whipsawed around in the “AI displacement” theories and existential threats to business models (or at least threats to growth rates and “price x volume” threats).

We have covered the big movers in past weekly posts on LinkedIn and Substack (see Market Commentary: Asset Returns 5-31-26). With the search for anything with a direct and/or indirect relationship with AI, the results have been stunning with legacy incumbents such as Dell or Intel running off the charts in some weeks.

We will get more color from a megacap this week with Oracle (ORCL) earnings. We will also get a fresh round of explanations from Adobe (ADBE), who is posting a YTD return deep in the red zone (-28%). For the railing 1-month, ADBE was slightly negative at -1.64% and trailed the Software ETF (IGV) with its +8.6% return.

The software and SaaS names are still showing a lot of pain in the 1-month chart. We removed Zillow from our tech check mix to make room for Dell, but Intuit (INTU) on the bottom still highlights the “AI threat” effects on the SaaS front.

The 1-month bottom quartile is more mixed now with 3 Mag 7 names in the bottom tier mix (AMZN, GOOGL, META). We also see Broadcom (AVGO) taking a fall for the 1-month period with Intel (INTC) and Communications Services ETF (XLC). These names have been really swinging around.

The 3-month horizon gives a better visual on the immediate post-Iran period with the reaction to inflation worries and the UST yield curve and consumer reactions that might unfold. The 20-12 score for the broader mix of 32 asset lines shows resilience. That has been supported by the stock market momentum and a stabilization in jobs numbers – even if the occupational mix lacks the optimal multiplier effects in such areas as manufacturing (see Employment May 2026: Big Rebound, Low Multiplier Bias 6-5-26).

We see 5 of 7 bond ETFs in negative return range with only EM Sovereigns (EMB) and HY (HYG) slightly positive at returns below 1%. Among the weaker lines, we see Homebuilding (XHB) feeling mortgage rates with the dividend-heavy story lines such as Consumer Staples ETF (XLP) and Utilities (XLU) underperforming. The XLP and Discretionary Consumer ETF (XLY) also reflects worries around inflation pressures and how core spending items such as gasoline and electricity bills were going to weigh on personal consumption.

The YTD score for the broader 32 benchmarks and ETFs weighed in at 24-8 YTD with duration only sending 3 bond ETFs into the red zone with 4 bond ETFs just across the line. The easy winners were in energy with XOP at #1, XLE at #2 and AMLP at #5. Tech (XLK) at #3 and Transports (XTN) at #4 rounded out the top 5.

The private credit setbacks show BDCs (BIZD) mired in last place on a combination of high profile headline disaster names (including fraud) and the growing awareness of the very unsurprising reality that leveraged, private loans of smaller cap companies are not liquid in the face of redemption requests. Some earnings releases and efforts to improve transparency helped calm some nerves recently. Asset managers have reminded the market of what a large and diverse mix of borrowers (by quality, industry, and alternative funding options) are in the broadly defined market of “private credit.”

The YTD Tech Check return offers a stark reminder that “tech” covers a wide expanse of names going through rapid secular shifts. Some of the names are on a pure growth and expansion curve while others are exposed to slowing growth or “zero sum” syndrome. The score of 20-12 on the chart reflects that reality with many software and SaaS-based service names taking a beating YTD.

Semiconductors were big winners and “anything AI” and “anything inside the data center” took off with the market suddenly loving Dell in recent weeks. The YTD return of 79.2% on the Semi ETF (SOXX) is in stark contrast with the -9.3% on the Software ETF (IGV). The recent swings in legacy names with more business line diversity such as IBM show investors spreading their exposures across more product subsectors.

The bottom quartile runs from -11.9% for FactSet (FDS) to -55.2% for Intuit (INTU). We had bumped Zillow from our Tech Check list to make room for Dell, but Z is running around -48.6% YTD or modestly better than Intuit.

At 31-1 positive vs. negative is clear enough with the Tech ETF at #1 posting a +53.6% return and BDCs (BIZD) sitting in last place with -11.8%. The median return in the mix is around 16.3%. It took 27% to make the top tier.

The bottom tier shows bond ETFs comprising 5 of 8 joined by BIZD, Financials (XLF), and dividend-heavy Consumer Staples (XLP). Financials have been a mixed bag with the struggles of private credit and software exposure as well as potential setbacks in interest margin on cost of funds expectations with FOMC policy now more likely exposed to tightening.

The winners LTM include a mix of tech (XLK, NASDAQ) and Energy (XLE, XOP) with Base Metals (DBB) riding the commodity price wave from Gulf supplier chain disruptions – notably for Aluminum and Copper (via sulfur). Transports (XTN), Russell 2000, and Regional Banks (KRE) rounded out the top tier as we have covered along the way.

The above chart provides a visual of the positive vs. negative symmetry across the various time horizons. As time marches on, results are arguably going in the wrong direction for breadth despite the dazzling tech numbers.

The Fall of CBS 6-3-26

Market Commentary: Asset Returns 5-31-26

New Home Sales April 2026: Slow Start to Spring 5-28-26

PCE Inflation: Income and Outlays April 2026 5-28-26

GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26

Housing Starts April 2026: Soft Starts in Single Family 5-22-26

D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26

Taiwan: Stakes are High, US Awareness is Low 5-17-26

Industrial Production April 2026: Bringing a Lift 5-15-26

Existing Home Sales April 2026: Steady or Clinging? 5-14-26

Producer Price Index April 2026: Heat Rising on Cost Inputs 5-13-26

CPI April 2026: 4.1% All Items Less Shelter, 30Y UST 5% 5-12-26

Remembering D-Day: June 6, 1944

Glenn Reynolds, CFA — Sat, 06 Jun 2026 21:29:56 GMT

The Fall of CBS

Glenn Reynolds, CFA — Wed, 03 Jun 2026 17:27:43 GMT

CBS: You will be visited by three ghosts - Murrow, Sevareid, and Cronkite.

It will not go well.

Market Commentary: Asset Returns 5-31-26

Glenn Reynolds, CFA — Sun, 31 May 2026 20:47:34 GMT

What do you mean it is canceled!? I thought Trump loves ICE?

May wraps up a month for the ages in tech but at a time when risks show a wide range of potential outcomes that include some wildly unpredictable flow-through effects.
Tech returns were stunning on a weekly and monthly basis with even the SaaS services names climbing out of the pit. Oil prices dropping from $105 handle WTI to $87 in two weeks helps on a numerous fronts even if the odds of easing by the Dec 2026 FOMC meeting have faded to essentially zero with the odds of 3 hikes higher than 1 cut.
Domestic political instability in the US and a basic lack of analytical factual focus in Washington on major economic risks (micro, macro, geopolitical) make the chaos hard to price. Iran could escalate dramatically or simply go away as the market would then look past the readjustment process for energy and commodities into 2027. Partisan distortions (aka lies) often rule the dialogue.
The good news is that Vanilla Ice and half of Milli Vinilli may fade as a discussion point except on Truth Social posts in the middle of the night. Even Morris Day gave Trump The Bird.

The above table updates returns for the debt and equity benchmarks we track. Debt is back to all positive for the trailing 1-month but negative for 3-months in three of the four most exposed to duration risk. HY is still holding in at positive for 3-months even if at a subpar positive YTD run rate featuring compressed spreads.

Equities have obviously been a very different world than fixed income with especially impressive run rates in tech heavy benchmarks. The 1-month and 3-month timeline for growth benchmarks have been dazzling even with software and SaaS-based services operators taking a beating as we review in the “Tech Check” charts below. Some SaaS and Software names are back in rally mode.

Breadth has no bragging rights at this point for the large caps but the subsector allocators and stock pickers can still excel outside of tech. Energy has been an obvious winner YTD subject to volatility, but the small cap Russell 2000 and Midcaps also have been strong performers. In the industry mix, the YTD chart further below shows Industrials (XLI), Base Metals (DBB), and Materials (XLB) in double digits YTD on the very high fixed investment that we see in the GDP lines. Some have also been direct beneficiaries of the Gulf supply disruptions (e.g. aluminum, petrochemicals).

The above chart updates the UST deltas in a week when oil was lower and hope for an Iran deal was rising. WTI was at an $87 handle Friday after $96 last Friday and $105 the prior Friday.

As we go to print Sunday, CME FedWatch shows odds of 1 cut by the Dec 2026 FOMC meeting stood at 0.2% while the odds of 3 hikes was 0.9%. The probability of unchanged leads the odds at 51.8% while 1 hike stands at 37.9% and 2 hikes at 9.2%.

Those probabilities whip around, and the UST market is anxiously awaiting new on a deal with Iran. That outcome will set off a fresh round of handicapping on where that will take crude oil and gasoline during peak driving season. The inflation anxiety is high with peak refinery runs for gasoline, diesel, and jet fuel facing high feedstock prices now. That flows into surcharges and operating costs for the food chain from farmers to delivery and freight costs.

The above table updates the UST deltas from the period just before the bombing started in Iran. This past week brought the rate deltas down but credit card financing costs, durables financing (e.g. retail financing), and certainly mortgage rates are more headwinds hitting household cash flow flexibility.

The tech bellwether update showed only 2 lines in the red this week with two Mag 7 names – NVIDIA and Alphabet. The top tier had blowout weeks in this mix with Oracle (ORCL) at +17.5%. We look at a wider range of tech names in the “Tech Check” list further below, where ORCL was an “also ran” relative to the +42.6% for Dell and over +29% for Micron (MU).

A notable move on the above list was the Software ETF (IGV) and its position as #2 this week. IGV beat out the Semiconductor ETF (SOXX). As we detail below in the “Tech Check” chart below, we see some beaten-down software and SaaS names making a comeback with ServiceNow (NOW) at +21.8% and Palantir (PLTR) at +14.4%. Oracle is also a major holding in IGV as is Microsoft (MSFT) and Salesforce (CRM) that all posted solid weeks.

The following is an edited and updated cut-and-paste from our weekend LinkeIn post on the weekly asset returns:

We update weekly total returns for the mix of 32 benchmarks and ETFs. The obvious themes are tech is still booming, oil is lower, and rates are lower. Only the Russell 2000 joined the NASDAQ in the top tier with the S&P 500 and Midcaps (MDY) in the second tier. The S&P 500 saw 6 of 11 sectors positive with Information Tech and Consumer Discretionary carrying the week partially offset by Financials and Energy.

Iran handicapping flows into numerous rate-sensitive sectors but factors into consumer sector handicapping. We looked at retailer performances last week in a separate commentary and will update that later. Retail results were mixed overall but no red flags. We see general concerns around price sensitive shoppers and value brands but not a case of broad gloom based on traffic and sales trends.

Another banner week for tech keeps the record index streak going for the market benchmarks. The Tech ETF (XLK) weighed in at #1 with the Equal Weight NASDAQ 100 ETF (QQEW) at #3 and NASDAQ at #5. Lower oil gave an immediate lift to airlines and the Transport ETF (XTN).

Homebuilders also felt tailwinds with mortgages declining from the recent 6.75% peak now slightly under 6.6%. The news from builders has generally been unfavorable but a monthly rebound in the Census “New Home Sales” release was impressive. We cover that in our Macro4Micro Substack.

For the UST curve effects, all bond ETFs are positive this week with 4 bond ETFs in the third quartile and 3 in the second quartile, where bond ETF returns are led by the EM Bond ETF (EMB). The next move on Iran will be a critical risk-reward variable this coming week (if Trump decides or counters). Trump is learning that Iran is not like Congressional GOP game theory where all orders and ultimatums lead to surrender. The memo on the “martyrdom thing” never got to him. SCOTUS is not his refuge from Iran’s fanaticism.

As noted earlier, the odds of the Fed easing by the Dec 2026 FOMC meeting remain negligible even though the probability of a cut rose from 0% in recent weeks to 0.2% this week. By comparison, the odds of 3 hikes stand at 0.9% (as of Sunday mornin). The high probabilities still favor no action (51.8%) with the odds of 1 hike at 37.9% and 2 hikes at 9.2%.

The low potential for easing has weighed on Financials (XLF) in the bottom quartile and Regional Banks (KRE) in the third quartile with interest margins a question and asset quality a mix of private credit concerns (notably for KRE) and consumer worries that are only slowly surfacing (credit cards).

The BDC ETF (BIZD) popped up into the top quartile with more of the big players making efforts to beef up disclosure and tackle the worries head on with clear statements and transparency. Otherwise, extrapolation will run amok with each new blowup in the private credit sector and gets mapped onto the entire, highly diverse asset class.

The bottom 3 asset lines in the low quartile cut across diversified Energy (XLE), Midstream (AMLP), and E&P (XOP). Some interest rate sensitive (and dividend reliant) sectors will need more good news from Iran to break out of the inflation worry bucket. We see Consumer Staples (XLP), Utilities (XLU), and Real Estate (XLRE) in the bottom quartile despite the brief favorable move in rates.

The following is an edited and updated cut-and-paste from our weekend LinkeIn post on the weekly asset returns:

The week brought another banner performance for the “Tech Check” list except this time the software and SaaS-based service names stepped up the comeback pace. We see a score of 29-3. We note that the score was 28-4 before we dropped Zillow from the mix and added Dell to the group. Dell burst back into the headlines with a daily price move on Friday of 32.8% for +42.6% on the week and a 104.7% month.

We dropped Zillow from the mix to make room for Dell in our group of 32. Zillow just does not seem like it is going to be as interesting as Dell for a while (then again, in tech you never know). At least we have plenty of other SaaS-based services examples. Zillow put up a -3.7% return for the past week and is cruising along at an ugly -48.7% YTD. We will drop that one for now from the collection among the services companies that have been tagged as AI displacement risks.

Besides Dell, a big story for the week was the material rebound in some SaaS names led by ServiceNow (NOW), who placed #3 at +21.8%. Software also played catchup. The top tier saw IBM have another good week at #5, Palantir (PLTR) at #6, and Software ETF (IGV) at #8.

IBM, which is more of a multiline hybrid tech legacy leader, posted +17.3% for the week at #5 but only just broke back into YTD positive return range at +0.54%. PLTR remains negative YTD at -11.9% despite a +14.4% week. With a +8.1% week, IGV is still in the third quartile with a negative YTD price return of -3.8%. The bottom quartile YTD returns are still bracketed between Meta at -4.2% and last place Intuit (INTU) at -50.0%.

The top quartile in the Tech Check is heavily about semiconductors and the AI ecosystem effects with Micron (MU) at #2 after steamrolling the month of May at +87.3% with a weekly return of +29.3%. MU was #2 for the month behind Dell. Oracle (ORCL) weighed in at #4 for the week with +17.5% and placed #6 for the month of May with +37.8%.

The 1-month score for the broader mix of 32 benchmarks and ETFs weighed in at 24-8 in a banner month for the broad benchmarks with the NASDAQ, S&P 500, and the small cap Russell 2000 in the top quartile. We see the Equal Weight S&P 500 (RSP) just below the top quartile with Midcaps (MDY).

We see the 3 energy ETFs (XOP, XLE, and AMLP) dropping into the bottom quartile for the 1-month number after a run into the top tier YTD where they remain as of this week. Interest rate sensitive sectors have had their share of headwinds even with the rally in the UST curve this past week with Homebuilding (XHB) in negative range and Financials (XLF) feeling the concerns over net interest margins and asset quality.

We see BDCs (BIZD) coming off a good recent week but still in the red for the month. The BDC journey this year has been an interesting one as the market had been framing rapid asset growth against some high-profile meltdowns and fraud. That was another excuse to look back to past periods of excess in “new” credit asset classes launched in past cycles whether it was HY excess in the late 1980s (notably 1987-1988), the tech borrowing boom of the late 1990s, or the structured credit lunacy of the 2004-2007 stretch.

Private loans are not a new asset class at all (I started my credit career in insurance private placements in the early 1980s). What is new is the nature of the origination wave and the scale of disintermediation. Risky credit already did that dance in the transition from the thrift crisis into CBOs and then into the CLOs of the 1990s before the onslaught of credit derivative structures and counterparty exposure in the new millennium.

The private credit story and “hyper-origination wave” to maximize fees and AUM is arguably more like the rise of the HY bond markets. That excess eventually highlighted the questionable secondary liquidity of the asset class as sharp repricing hit the headlines and refinancing alternatives dried up outside restructurings.

Life got spooky in 1990 when the securities shops faced hung bridge loans and Drexel filed Chapter 11. As we highlight in the 3-month return chart below, BIZD climbed back into the middle of the second quartile. The private credit asset class saw more earnings reports and more extensive originator and manager commentary coming into the market. It also helps when newer or more aggressive lenders back off from the “anything with a pulse” mentality of lending.

As the 1-month Tech Check timeline shows, May was a spectacular month for tech with all the “best since” and “best ever” accolades seen in the headlines. It took 31% to make the top quartile that was led by Dell at +104.7% and bracketed on the low end by IBM at over 31% in the #8 position. The score of 30-2 shows Intuit still in the red with Meta also in negative range.

The median across the 32 was just under 12% (for 1 month!). We see 3 Mag 7 names in the bottom quartile (META, NVDA, AMZN), 2 Mag 7’s in the third quartile (MSFT, GOOGL) and 2 more in the lower end of the second quartile (AAPL, TSLA). The semiconductor-heavy rankings and the AI capex boom themes include an array of other tech products and services offerings as driven home by Dell this past week. We see the Software ETF (IGV) closing the gap with the Semiconductor ETF (SOXX).

For the month, we see the software and SaaS names making a comeback with ServiceNow (NOW) at +39.9% and the Software ETF (IGV) at +20.3%. Oracle is in IGV and weighed in with +37.8%.

The 3-month timeline is like a post-Iran horizon that includes a mix of consumer and cyclical anxiety, an oil price spike and partial retrenchment in energy, and a strong run by other commodities as Base Metals (DBB) rose in the face of Gulf disruptions.

The score of 19-13 shows the period was no picnic with 6 of 7 bond ETFs in the red and the HY ETF (HYG) just under 1% with resilient spreads and decent coupons mitigating the more limited duration damage. HY was still just under 1% for the period.

We see the Tech ETF (XLK) almost 2x NASDAQ returns (the #2 line) followed by the Equal Weight NASDAQ 100 ETF (QQEW). The small cap Russell 2000 and tech heavy S&P 500 round out the top 5. It only took 7.1% to make the top quartile while it took over 13.3% to make the top quartile YTD.

The YTD numbers show a strong market that ran alongside the tech boom and good corporate sector earnings. The consumer sector’s resilience is a reminder that it takes a lot to make PCE contract (as in almost never does but it can slow down). GDP has been held up by the fixed investment while Personal Consumption Expenditures (PCE) at 68% of GDP have been weak in context but at least growing.

A secular shift such as the AI capex boom can make a big difference in multiplier effects. The same is true for easy credit markets. The test will be whether credit risk and equity valuation end up as “too much too soon.” Iran has to get put to bed. The other big topic is that AI multiplier effects already has cost a lot of jobs in tech and could cost a lot more from here and extend somewhat more brutally to service jobs in what is a “service economy.”

For fixed income, we see only 1 bond ETF in the red with the rest posting minimal returns with only two over 1% (EMB and HYG). The long duration UST ETF (TLT) was the only bond ETF in the red YTD. Iran’s side effects could jeopardize some of the good news in the consumer sector on household budgets. For interest rate sensitive sectors, the Iran risk is high. The worry is that Iran is not dealt with more intelligently than it has been to date (a very low bar).

The Tech Check YTD is impressive for the big winner returns but perhaps less so than one might guess at 21-11. The struggles of software and SaaS services names underscore that radical change brings its share of risks, costs, and victims (corporate and human).

It took a spectacular 46.8% (QCOM) for around 5 months to make the top quartile. The median for the 32 lines has a 15% return handle, and that already is 50% ahead of the long-term annual returns of the equity asset class in a single year.

The cluster of negative returns in the bottom tier includes 6 lines in double-digit negative returns, and that is after the recent rally. Intuit at -50.0% (-49.95%), Salesforce at -27.9%, and Adobe at -25.9% are sobering for owners of assets in these highly successful, branded tech service businesses.

The 1-year returns show a score of 31-1 with only BDCs (BIZD) in the red. All the bond ETFs are positive, but we see Financials (XLF) and dividend-centric Consumer Staples (XLP) in the bottom quartile on the uncertain curve outlook among other reasons (cyclical worry, bottom half of the “K” craters, mixed payroll trends).

For the overall return profiles, the returns are very strong. It took +29.8% to make the top quartile and the median across the 32 is a 16% handle for the LTM period. For the full period, we see impressive breadth and diversity of returns at the 20% line or above. That said, the latest trends have highlighted the absence of breadth as a recurring theme.

For the LTM period, we see sectors such as Industrials (XLI) and Materials (XLB) above the 20% line. Midcaps (MDY) with 20% handles and small caps (RUT) with 40% handles tell a very good story for corporate performance. Even Transports (XTN) at #2 with 45% returns has been reassuring and the same for the Base Metals (DBB), who were riding solid demand but also the distortions of the Gulf.

Where we go from here will turn very heavily on Trump’s Iran moonwalk, the potential for a major clash in trade on the USMCA review, and fallout from the dramatic erosion of relations with Europe.

PCE Inflation: Income and Outlays April 2026 5-28-26

GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26

Market Commentary: Asset Returns 5-26-26