Economic Commentary
Economic Growth and Inflation Outlook
The economy is showing remarkable strength, with steady growth and inflation moving in the right direction. First-quarter GDP was revised upward to around 1.5%, and second-quarter growth is on track for a healthy 2.5%, backed by strong manufacturing orders and a solid job market. Unemployment claims are down, and job creation has bounced back nicely, with expectations now up over 100,000 new jobs per month.
Crucially, the sudden drop in oil and gasoline prices has lifted a heavy weight off the economy. This decline has essentially reduced the threat of any further interest rate hikes for the rest of the year. Because inflation is cooling, central bankers are shifting their focus away from old, backward-looking data and are paying closer attention to real-time indicators like current commodity prices and actual hiring trends. Meanwhile, the massive wave of business spending on AI technology is boosting today’s economic numbers, but the real test over the long haul will be whether these multi-billion-dollar tech investments eventually lead to lower prices and better everyday products for consumers.
Investment Commentary
Equity and Fixed Income Markets
Global stock markets delivered robust results for the second quarter ending June 30, 2026. In the US, the S&P 500 surged 14.9%, locking in its strongest quarterly gain since 2020 on the back of historic AI infrastructure demand and a broadening out of market leadership from large-cap tech stocks to small and mid-cap stocks as well as emerging markets. European and Japanese equities followed closely with a solid performance, as the pan-European STOXX 600 climbed 10% and the Nikkei average continued to hit new highs. Emerging markets produced the strongest returns globally, outperforming the rest of the world with a spectacular 22% return for the quarter, heavily driven by an intense acceleration in the global technology supply chain and major chip-manufacturing hubs.
As inflation cools and energy prices drop, bond yields are coming down, creating a much more supportive and welcoming environment for investors. Instead of heading toward a major market downturn, the stock market is undergoing a highly encouraging shift in leadership. For the past couple of years, just a handful of massive tech giants—often called the “Magnificent Seven”—did all the heavy lifting. Now, we are seeing investors branch out. Money is actively moving away from those expensive tech stocks and flowing into more traditional, value-focused sectors like financials, industrials, and energy. These sectors are much more reasonably priced and stand to gain the most from lower interest rates. While the long-term story for AI remains incredibly strong, this shift toward a broader mix of winning stocks is actually a great sign. It shows the market is becoming healthier, more balanced, and more sustainable for the long run.
Wealth Planning Commentary
This weekend marks the historic 250th anniversary of the signing of the Declaration of Independence. We hope you enjoy a wonderful, long holiday weekend with family and friends! [1]
Looking ahead to next week, Monday, July 6th marks the first day you can officially fund a new “Trump Account” for anyone under 18 years old. While we have covered this topic twice before, the funding window is finally opening this month.
The Basics
You can think of a Trump Account as a hybrid between a traditional IRA and a 529 College Savings Plan:
- Contributions: Anyone can contribute after-tax dollars—up to $5,000 annually—until the beneficiary (child, grandchild, niece, or nephew) turns 18. Unlike an IRA, the child does not need earned income to qualify.
- Growth & Taxes: Potential earnings grow tax-deferred. Eligible withdrawals are generally taxed at the beneficiary’s lower income tax rate once they turn 18.
- Flexibility: Unlike a 529 plan, there are no restrictions on how the funds are used—educational or otherwise.
- The $1,000 Bonus: Children born between January 1, 2025, and December 31, 2028, automatically qualify for a $1,000 federal seed deposit upon successful registration.
Key Milestones & Rules
- Age 18: Withdrawals are prohibited until the beneficiary reaches age 18, at which point the account must be converted into a traditional IRA.
- Age 23: Financial analysts recommend converting the account into a Roth IRA at age 23. We will break down the exact benefits of this Roth conversion in a future newsletter.
How to Open an Account
A parent or legal guardian must register the child with the IRS using IRS Form 4547. You can submit this form by attaching it to your federal tax return or mailing a paper copy, but we highly recommend submitting it online via the secure IRS Online Account portal for faster processing.
Once the IRS validates the enrollment, the guardian will receive an email from the Treasury Department with instructions to activate the investment profile. From there, you can track compound growth and manage contributions directly through the official mobile app.
What’s Next?
We expect major custodians like Fidelity and Charles Schwab to support these accounts on their platforms soon. As soon as the official IRS guidance is released, we will send you an update.