Friday Focus – September 11, 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

Markets Continue to Price the AI Opportunity

• As rising U.S. yields slow the financial system, why is the market sustaining highs? An issue thus far is that AI has largely been a net corporate cost, and economy-wide data have not yet shown abnormal productivity gains since ChatGPT launched in November 2022. As shown in Chart A, labor productivity growth remains close to its long-term historical average despite a massive increase in AI-related investment. Productivity has risen roughly 30% from an early-2022 indexed base, while AI capex has increased four-fold.
• The eventual return on this investment could materially affect U.S. GDP growth, debt dynamics, interest rates, and broader risk assets. Investors appear to be looking beyond today's data and focusing on what productivity could look like several years from now if AI adoption scales throughout the economy.
• We can see AI productivity improving in our daily lives, but are there signs showing up in the data? I think this is a very good sign and similar to what I have been reporting on in the California economy: people are creating. This is the power of capitalism and one of my highest hopes for AI. While we may not yet be fully seeing the productivity benefits in the aggregate economic data, Chart B suggests that entrepreneurs and small businesses are already responding to the opportunity. New U.S. business formation has surged to record highs, suggesting that individuals are experimenting, building, and creating new products and services, many of which may ultimately be powered by AI.

Chart A

Chart B

Housing

Homeownership Stalls While Rentals Rebound

This week the government told us that home sales in August fell to their slowest pace in over a year, despite the highest supply in a decade, mortgage rates are not comfortable, and neither is housing affordability as you can see below.  

Rent

August data from RealPage suggest annual rent growth strengthens as apartment market recovery continues but region continues to matters.

• Northern California's tech-driven markets led the nation in rent growth, with San Francisco posting a 14% annual increase. San Jose followed at 8.7%, while Oakland price increases accelerated to 6.2%.
• The South remains the only U.S. region still seeing annual rent cuts and is the only region with apartment occupancy below 95%. Sun Belt markets, which continue to work through heavy completion volumes, are the drivers behind this decline.
  • San Antonio was the hardest hit among large metros, with rent cuts of 3.7% and occupancy down to 93.1%. Charlotte, Tampa and Houston saw annual rent cuts near 2%.
  • The pressure has begun to ease in Phoenix and Austin, where cuts have narrowed to roughly 1% to 1.4% after far steeper declines earlier in the year.

Private Equity

How Capital Flows Shape Future Returns

Here is a chart from Counterpoint Global highlighting investor commitments to US Buyout and Venture Funds, 1980- June 2026.

• Buyouts became increasingly popular in the mid-1990s, declined during the three-year bear market at the turn of the century, and grew steadily through the first half of 2008. The financial crisis precipitated another drop, only to be followed by strong increases to a record of $340 billion in 2023. Commitments declined in 2024 and 2025.
• What stands out is the substantial inflow into venture capital in the late 1990s, peaking in 2000 at the apex of the dot-com boom. Flows then dropped precipitously, troughing in 2002, and rose steadily from there. They did not exceed the 2000 level until 2021 and peaked again in 2022. Investor commitments in 2025 were roughly one-third of the 2022 level.

During periods of strong investor commitments, there are periods of week fund returns for both buyouts and venture capital.

This is often because large inflows of capital increase competition for deals, driving valuations higher and reducing future return potential. In other words, when too much money chases too few investment opportunities, managers are often forced to invest at elevated prices, which can make it more difficult to generate strong returns in subsequent years.

Economic Calendar: Week Ahead (Eastern Time)

Tues, 9/15 @ 8:30 am: Empire State Manufacturing Survey
@ TBA: U.S. Federal Open Market Committee Meeting

Wed, 9/16 @ 8:30 am: Retail Sales
@ 8:30 am: Import Prices
@ 10:00 am: Manufacturing & Trade: Inventories
@ 10:00 am: NAHB Housing Market Index
@ 2:00 pm: U.S. Interest Rate Decision

Thu, 9/17 @ 8:30 am: Housing Starts
@ 8:30 am: Weekly Jobless Claims
@ 8:30 am: Philadelphia Fed Business Outlook Survey
@ 10:00 am: Pending Home Sales Index, M/M%

Fri, 9/18 @ 9:15 am: Industrial Production, M/M%
@ 9:15 am: Capacity Utilization %
@ 10:00 am: Leading Indicators

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