Friday Focus – August 7, 2026

5 minute read

Smart insight and clear visuals that matter – what we’re watching now and how intention and conviction shape our portfolios.

Markets

When yields climb toward the critical 5.0% range, corporate borrowing costs escalate, while we observe that government bonds become an increasingly attractive alternative to riskier stocks. Driven by inflation concerns and geopolitical energy shocks, recent upward pressure on bond yields is placing equity valuations—which have hovered near historic highs—in a precarious position. Should yields breach these multi-year peaks, the stock market will likely face significant headwinds as investors reallocate capital away from equities and toward safer, higher-yielding fixed-income assets.

bond yields and stocks-1

Earnings

John Hancock points out S&P 500 Q2 earnings are more than halfway complete with numbers continually beating expectations. Earnings growth is tracking at 47% Y/Y. The results are showing further sector broadening with every sector showing double-digit earnings growth except for consumer staples. (Manulife Investments, July 2026)

The initial growth estimates for the year appeared elevated at the time, but earnings have blown past expectations, with nearly an 86% beat rate. (Manulife Investments, July 2026)

At the beginning of the quarter, estimated earnings growth was 18%; today, the states blended at 47%. (Manulife Investments, July 2026)

factset table

Tech

In what Jefferies called “A Shocking Development” datacenters are now on hold in business-friendly Texas. This week Texas Governor Abbott brought forward a quasi-moratorium in the form of a 40-60 day audit. The directive forces data centers to verify power demand, water usage, tax incentives, and community impact before receiving approval to connect. The potential delays raise concern among datacenter developers and investors, also leaving less margin for error. The chart below from Tortoise Capital (Annual Outlook) shows how quickly datacenters have consumed available power capacity, a trend that appears to have prompted Abbott’s shift in approach. However, the new review process may slow the pace of datacenter development and related infrastructure buildout, at least in the near term.

New Mechanism of AI Financing

The AI trade is seeing increased attention toward off-balance-sheet financing arrangements used to fund infrastructure and equipment. Nasdaq companies have generally seen cash balances decline as spending on AI infrastructure and other capital-intensive investments has increased. At the same time, rising capital expenditures have reduced free cash flow for many firms, while wider bond spreads have increased borrowing costs in debt markets. This appears to be much more creative and thus much more interesting, as other sources of financing are squeezed. See the Financial Times graphic below which places Google, Broadcom, Anthropic, Apollo and Blackstone into one financing system where borrowing and lease payments now fund key equipment. (Financial Times, August 2026)

how broadcom got $35bn of chips leased to Anthropic

(Source: Financial Times)

Currency

Rare coordination in the Yen

Japan has been struggling with a weak currency; up at around ¥160, the Japanese Yen recently hit 40-year lows versus the US Dollar. Combined with rising global energy costs, the slump in the Yen made essential imports like oil far more expensive and fueled domestic inflation. While Japan has been tackling the problem on its own by selling dollars to buy up yen, these solo attempts have had limited success. The game seemingly changed last week when the US Treasury unexpectedly stepped in to conduct a joint currency purchase with Tokyo—the first coordinated effort to boost the yen in nearly 30 years—triggering a sharp rebound in Japan's currency.

What makes Washington's intervention so unusual is that the Federal Reserve Bank of New York actually sold euros, rather than dollars, to buy yen. Many analysts believe the US took this rare step primarily to protect its own economy. If Japan had been left to fight the currency collapse alone, it would have needed to dump massive amounts of US Treasury bonds to raise cash. That sudden wave of bond selling would have pushed US interest rates and borrowing costs higher. By stepping in directly, the US stabilized a key financial ally while safeguarding American bond markets from collateral damage. (Financial Times, August 3, 2026)

Economic Calendar: Week Ahead (Eastern Time)

Tues, 8/11 @ 10:00 am: Existing Home Sales
@ 11:00 am: Federal Reserve Bank of New York Q2 Household Debt and Credit Report

Wed, 8/12 @ 8:30 am: CPI, Core CPI, M/M% and Y/Y%
@ 2:00 pm: Monthly Treasury Balance

Thur, 8/13 @ 8:30 am: Weekly Jobless Claims
@ 8:30 am: PPI, Ex-Food & Energy PPI, M/M%

Fri, 8/14 @ 8:30 am: Retail Sales
@ 10:00 am: Manufacturing & Trade: Inventories

The Team Behind Friday Focus

Mary Ahn headshot
Mary Ahn
Investment Research and Portfolio Strategy Manager

Calvin Jones
Cal Jones, CFA
Managing Director of Fixed Income

Eric Speron, CFA
Managing Director of Equities

Alton Tjahyono, CFA
Sr. Investment Strategist

Following our recent merger, we’re expanding our presence across Irvine/Orange County—and we’re actively hiring.

If you’ve been thinking about your next move, visit our careers page to see what's available.

IMPORTANT DISCLOSURE INFORMATION

Investment advisory services offered by First Foundation Advisors [“FFA”], an SEC registered investment adviser. FirstSun Advisors ["FSA"] is a tradename used by First Foundation Advisors as it works to integrate names following its merger into the FirstSun Capital Bancorp family of brands. .

Investment or insurance strategies are not FDIC or any other government agency insured, are not bank guaranteed, and have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s investment portfolio. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark.

This material is provided for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security or other financial instrument. Any references to specific securities, strategies, or performance data are for illustrative purposes only and do not constitute a recommendation or guarantee of future results.

This commentary may contain estimates, projections, or forward‑looking statements, which are based on assumptions and information believed to be reliable, but do not represent a guarantee of future performance. Opinions expressed are as of the date of publication and are subject to change without notice. Information obtained from third‑party sources is believed to be reliable; however, its accuracy and completeness cannot be guaranteed.

Historical performance information for indices, benchmarks, or categories is provided for general informational and comparative purposes only and does not reflect the deduction of advisory fees, transaction costs, custodial charges, or taxes, which would reduce returns. Index performance is not indicative of any FSA client account, and it should not be assumed that any FSA portfolio or account holdings correspond directly to any index, benchmark, or category.

Investing involves risk, and different types of investments involve varying degrees of risk. There can be no assurance that any investment strategy, security, or product discussed will be profitable or suitable for an individual investor’s objectives, financial situation, or needs. Past performance is not indicative of future results.

Nothing contained herein should be construed as personalized investment advice, or as legal, tax, or accounting advice. FSA is not a law firm or a certified public accounting firm. Individuals should consult their financial, legal, and tax professionals before making any investment decisions.

For Existing Clients

You are advised to notify FSA in writing of any changes to your personal or financial situation, or investment objectives, so that we may review and, if appropriate, revise our recommendations or services. You may also provide written instructions if you wish to impose, add, or modify any reasonable restrictions on our investment advisory services. FirstSun Advisors will continue to rely on the accuracy and completeness of the information you have provided unless notified otherwise.

A current copy of our written disclosure brochure and Form CRS, which describe our advisory services and fees, is available upon request or here.

INSIGHTS FROM FIRST FOUNDATION

A First Foundation Blog