June analysis: Resilient economy and nervous markets
July 14, 2026
As I am writing this post, the U.S. and Iran are back to fighting, and market volatility is once again in play. It is impossible to predict where this will lead, but the vague language of the memorandum of understanding between the two countries virtually guaranteed that we would be back in this position sooner rather than later. Having a small amount of experience with contract negotiation, I can tell you that without specific language, contracts are worthless pieces of paper and are open to each side’s interpretation. This is sometimes a strategy to move things along and allow vague sections to be adjudicated later, but that does not seem to be the case here, as there is no body set up to do the adjudicating. Therefore, my crystal ball says to expect more of this back-and-forth, with its accompanying volatility, for some time. (For my opinion on crystal balls and predictions, check out this old blog post.)
A thought I’ve been kicking around:
Having just made my final daycare payment, I decided to do what I had forced myself not to do up to this point: I tallied it all up. We were lucky to be in a relatively low-cost daycare environment in Plymouth, and we were also able to get into a nonprofit daycare. In addition, our two daughters were only in at the same time for four months, so there were not many double payments. The grand total? $165,000. There’s no need for a bake sale here, but it did get me thinking about our daycare system and how it forces so many people to either sacrifice their careers or use high-interest credit cards to make ends meet. This seems similar to paying a tax that exceeds some of our highest tax rates. I know that some of this has been studied (the “mommy tax”), but paying interest to credit card companies as a roundabout tax really hit me...
Tip: Have you tried the RightCapital app yet? I can help you customize it, just ask!
And now for the (lightly edited) Levitate Newsletter:
Last month, growth held firm, and the labor market held stable even as financial conditions quietly tightened beneath the surface. Equity indices were mixed, and inflation stayed unrelenting. The Federal Reserve became more hawkish under new Chair Kevin Warsh, shifting from its earlier tone.
Here’s how it played out across the major indexes and what drove the numbers.
Major U.S. Stock Indices
U.S. stocks diverged in June after an upbeat quarter. Inside technology, the split was stark. AI-driven semiconductors kept surging, while several Magnificent 7 stocks lost steam after last year’s outsized gains.
The Big Picture
Stronger Than It Looks. U.S. growth proved better than first reported. First-quarter Gross Domestic Product (GDP) was revised upward to 2.1% annualized, well above the initial estimate of 1.6%, pointing to stronger momentum heading into mid-year. Manufacturing activity expanded for a sixth straight month despite tariffs and war-driven costs, and consumers kept spending on non-energy goods even as fuel prices rose. This economy has more resilience than markets have been pricing in.
Cooling, Not Cracking. Hiring slowed sharply. Employers added just 57,000 jobs in June, well below expectations. Unemployment fell to a 14-month low of 4.2%, but only because roughly 720,000 people left the labor force, a sign of fading worker confidence rather than strength. ADP’s National Employer Report showed a similar slowdown, with businesses adding 98,000 private-sector jobs, though it did describe labor demand as improving. The market is mending, but not thriving.
The Energy Squeeze. May’s Consumer Price Index (CPI) came out on June 10th, and showed that CPI rose to 4.2% in May, the highest since 2023, as war-driven energy costs jumped nearly 24% year over year. Core inflation (which excludes food and energy) also crept higher, to 2.8%, showing pressures extend beyond energy. Oil offered relief late in the quarter, falling from around $95 to the mid-$70s in June after a U.S.-Iran ceasefire reopened the Strait of Hormuz, though May’s CPI release predates that drop.
A New Chair, A New Tone. Kevin Warsh’s first meeting as Fed Chair in June set the tone for markets. The Fed held rates at 3.50-3.75%, but dropped its easing bias and forward guidance, turning more hawkish. His statement ran just 130 words, a fraction of his predecessor’s. Projections showed inflation revised higher, unemployment lower, and rate forecasts for coming years shifted up, with nearly half of officials expecting another hike this year. Warsh skipped his own forecast, pushing to rely less on lagging data. He has indicated that he would like the board to speak less about monetary policy, in general.
The Road Ahead
Put together, the current story is one of measured, if uneven, progress. Growth and employment are staying firm, inflation remains elevated but contained, and markets are digesting a powerful AI-driven rally.
Throughout July, eyes will turn to fresh inflation and jobs data, corporate earnings, and how the Fed moves at the July 28-29 meeting. The key questions are whether price pressures keep easing and whether profits can support current valuations. From there, it’s a matter of how shifting rate expectations feed through to stocks and bonds.
If you have question, please don't hesitate to reach out.
All the best,
Tim
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