5 minute read
Smart insight and clear visuals that matter – what we’re watching now and how intention and conviction shape our portfolios.
Markets
The market is back at cruising speed, with rotation underway since the MOU announcement, while absolute index levels have climbed back toward their previous highs.
International Economies
Across major economies, Japan’s economic surprise index remains the strongest, followed by the U.S., then Europe, and finally China.
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It remains to be seen whether the recent Bank of Japan rate hike will slow growth, but for now, Japan has one of the best economic backdrops.
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Eurozone data appears to be bottoming, which lifted its surprise index.
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Europe benefits from lower oil prices as of late but lacks technology exposure, making it unlikely to match growth seen elsewhere.
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AI is the key economic engine. It is benefiting segments in Asia such as South Korea, Taiwan, and Japan, but less so China
- China's Retail sales were negative month-over-month in May, and fixed investment declined.
Rates
The new Fed Chairman Warsh started his tenure with much more of a focus on the inflation mandate. While not wanting to provide forward guidance, the FOMC Summary of Economic Projections indicated that the bond market was right to think about a rate hike before year-end.
- The “dots” showed a median projection of 3.8% on the Fed funds rate by year-end, up from the 3.50% to 3.75% range currently set. (Source: Federal Reserve Summary of Economic Projections, June 17, 2026)
- In subsequent years, they expect to cut, but by less than previously anticipated.
- The bond market has now priced in two rate hikes by year-end, with one in September and another at the December meeting.
Tech
Whether you are looking at stocks, bonds, or international markets, tech's dominance is impossible to ignore. It is no longer just a high-growth sector within the global economy - it has become a defining drive of cross-asset portfolio construction for investors fixated on market performance and tracking error.
- Dominating U.S. Stocks: The tech sector now makes up roughly 38% of the broader U.S. stock market. That is a significant 15-percentage-point jump in just four years. (Source: S&P Dow Jones Indices, sector weights; Bloomberg, 2026)
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Taking Over Emerging Markets: The trend is stronger overseas. Tech now accounts for 44% of the emerging markets index, more than doubling its footprint since 2022. (Source: MSCI Emerging Markets Index breakdown; Bloomberg, 2026)
- Expanding Beyond Stocks: It is not just about the stock market anymore. Tech now accounts for 44% of the emerging markets index, more than doubling its footprint since 2022. (Source: MSCI Emerging Markets Index breakdown; Bloomberg, 2026)
A need for a new approach to Diversification
Index Concentration is making Index investing, AI investing. The S&P 500 where the top ten stocks now constitute 40% of the index's weight (Source: Goldman Sachs; Bloomberg; S&P Global, 2025–2026), raises concerns about the diminishing benefits of broad index investing. Diversification benefits from traditional assets such as Global Equities, Bonds, and Gold are diminishing amid rising inflation and the global AI buildout. There are however a number of “Negative Beta” Stocks trading inversely with the S&P 500.
Source: Bloomberg, Evercore ISI Research
Jobs
While markets have reordered with expediency, the economy has not shown as many changes. One of the more noticeable areas, however, is the rising share of job cuts attributed to AI, as shown in the ChartR graph below.
Real Estate
Charts for Goldman and Costar show Sunbelt demand finally outpacing supply in 2Q26.
- 2Q26 absorption data gives hope for possible improvement in absorption volumes
- Sunbelt demand finally outpaced supply in 2Q26 resulting in lower vacancies.
- Absorption exceeding supply in multiple key markets in Sunbelt and Coastal such as:
- Orange County, Charlotte, Tampa, Miami, Orlando, Los Angeles
Private Equity
Private equity has entered a much more difficult and competitive era—one defined by higher interest rates, stubbornly high asset prices, and less of the multiple expansion that powered so many deals in the past. Steep purchase multiples and elevated capital costs are making buyouts as expensive as they’ve ever been. Uncertainty about what companies are worth today has caused tech deal value to drop 70% from the fourth quarter of 2025 to the first quarter of 2026, according to Bain & Company’s Private Equity Midyear Report 2026, with fewer large software deals getting done.
Distributions as a percentage of NAV are well below average and imply a seven-year capital cycle for the buyout industry - which is well beyond historical norms. In this challenging environment, the traditional metrics of paper wealth have lost their luster, turning the spotlight squarely onto funds with robust distributed to paid-in capital (DPI). Amidst an increasingly bifurcated fundraising landscape, realized cash-on-cash returns have become one of the single greatest areas of attractiveness for investors.
Economic Calendar: Week Ahead (Eastern Time)
Tues, 6/30 @ 9:00 am: Case-Shiller Home Price Index
@ 9:45 am: ISM Chicago Business Survey – Chicago PM
@ 10:00 am: Consumer Confidence
@ 10:00 am: Job Openings and Labor Turnover Survey
Wed, 7/1 @ 8:15 am: ADP National Employment Report
@ 9:45 am: U.S. Manufacturing PMI
@ 10:00 am: ISM Report on Business Manufacturing PMI
@ 10:00 am: Construction Spending
Thur, 7/2 @ 8:30 am: Weekly Jobless Claims
@ 8:30 am: Employment Report
@ 8:30 am: Unemployment Rate
@ 8:30 am: Avg Hourly Earnings, M/M% and Y/Y%
@ 10:00 am: Factory Orders
The Team Behind Friday Focus
Mary Ahn
Investment Research and Portfolio Strategy Manager
Cal Jones, CFA
Managing Director of Fixed Income
Eric Speron, CFA
Managing Director of Equities
Alton Tjahyono, CFA
Sr. Investment Strategist
