| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
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| - | - | - |
Anchor Capital Advisors maintains a constructive but selective view on global markets in Q2 2026. The most important macro shift was the easing of Middle East energy risk through the U.S.-Iran memorandum, though hostilities resumed in early July. AI infrastructure has evolved into a global physical buildout requiring substantial investment in power, cooling, labor, and financing, broadening opportunities across Asian supply chains, power infrastructure, and commodities. U.S. equities benefit from strong earnings growth of 28.8% year-over-year and direct AI exposure, but semiconductor valuations near post-tech-bubble highs warrant caution. International markets offer selective opportunities in Japan through corporate reform and in emerging markets through AI supply chains and commodity demand. The Fed's hawkish tone and removal of forward guidance, combined with fiscal deficits and AI-related borrowing, keep upward pressure on long-term rates. Private credit faces concentrated stress in weaker borrowers. The manager favors earnings durability, free cash flow visibility, infrastructure beneficiaries, and real assets including gold for diversification, while maintaining discipline around valuations and credit selection as the cycle matures.
Global markets remain constructive but require greater selectivity as returns shift from broad multiple expansion to earnings growth and cash flow durability, with AI infrastructure buildout creating opportunities across regions while elevated valuations and persistent inflation risks demand disciplined positioning.
The manager remains constructive but not complacent, expecting returns to depend less on broad valuation expansion and more on earnings growth and valuation discipline. Global growth is still positive, earnings are holding up, and AI-related capital spending remains an important source of demand across regions and asset classes. However, elevated valuations, long-term interest rates, tighter financing conditions, and concentrated leadership leave less room for disappointment. The practical implication is that diversification, cash flow quality, valuation discipline, and active selection matter more as the cycle matures. The better approach is to stay invested, stay diversified, and be selective about where investors are being paid to take risk.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 1 2026 | 2026 Q2 | - | AI, Dollar, earnings, emerging markets, energy, inflation, infrastructure, rates | - | Anchor Capital sees global markets supported by strong earnings and AI infrastructure spending but requiring greater selectivity as valuations leave less room for error. U.S. equities lead on earnings strength while international markets offer targeted opportunities in Japan and emerging market AI supply chains. Persistent inflation, hawkish Fed communication, and elevated long-term rates demand focus on cash flow quality, balance sheet strength, and valuation discipline over broad beta exposure. |
| Apr 30 2026 | 2026 Q1 | - | AI, energy, Geopolitical, global, inflation, infrastructure, positioning, rates | - | Anchor Capital sees markets pricing a contained Middle East outcome but warns of asymmetric risk if energy inflation persists. Strong earnings from AI and infrastructure investment continue, but rising yields pressure long-duration assets. Portfolio strategy emphasizes equity selectivity, shorter duration, and real asset diversification as policy flexibility narrows and margin for error tightens. |
| Jan 15 2026 | 2025 Q4 | IWM, SPY | AI, defense, earnings, equities, global, infrastructure, monetary policy, Trade Policy | - | Anchor Capital sees markets shifting from macro-driven to fundamentals-based performance, with earnings growth driving 79% of S&P 500 returns in 2025. Despite policy uncertainty and trade tensions, AI infrastructure investment, defense spending increases, and international outperformance signal a multipolar investment environment. The firm favors diversified portfolios emphasizing quality earnings and real assets over broad market exposure. |
| Oct 9 2025 | 2025 Q3 | NVDA | AI, Dollar, emerging markets, Fed Cuts, rates, small caps, technology, value | - | Anchor Capital maintains constructive risk asset outlook despite elevated valuations and global headwinds. Favors U.S. markets with small-cap and value positioning for Fed easing cycle benefits. Emerging markets attractive on accommodative policy and weaker dollar. Expects economic slowdown without recession, emphasizing disciplined risk management and selective opportunities across undervalued regions and asset classes. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI infrastructure buildout is now a global physical infrastructure cycle requiring substantial investment in power grid capacity, cooling, labor, and financing. The market debate has moved beyond model development and semiconductor leadership to whether the buildout can keep pace with real-world constraints around power, sites, labor, permitting, and financing. This broadens the opportunity set across regions and sectors, including Asian supply chains, power infrastructure, industrial equipment, and commodities. |
Infrastructure Data Centers Power Semiconductors Capital Spending |
EnergyThe most important macro shift during the quarter was the easing of Middle East energy risk. The U.S.-Iran memorandum and gradual reopening of the Strait of Hormuz reduced the probability of a sustained oil-driven global inflation shock. However, the post-quarter update notes that hostilities between the United States and Iran have resumed with renewed U.S. strikes, a reimposed naval blockade, and fresh disruption to shipping through the Strait of Hormuz, reversing the quarter's trend. |
Oil Middle East Iran Inflation Geopolitics | |
EarningsFirst-quarter S&P 500 earnings growth was 28.8% year-over-year, the highest earnings growth rate for the index since the fourth quarter of 2021. Technology remained the largest contributor, accounting for 54.8% of year-over-year EPS growth. The median stock in the broad Russell 3000 index is seeing its strongest EPS growth in four years, with improvement showing up in more cyclical areas including capital goods, transportation, and industrial demand. |
EPS Growth Technology Cyclicals Breadth | |
RatesThe Fed held the fed funds range at 3.50% to 3.75% with a hawkish tone emphasizing solid growth, productivity, capital investment, and price stability. New Fed Chair Warsh delivered a materially shorter statement, removed much of the prior forward guidance, and announced task forces on Fed communication, the balance sheet, data reliance, productivity and jobs, and inflation frameworks. Long-term interest rates face upward pressure from fiscal deficits, Treasury issuance, AI-related corporate borrowing, and persistent inflation. |
Fed Long-term Yields Fiscal Deficits Forward Guidance | |
InflationLower oil prices reduce near-term pressure, but tariffs, fiscal spending, housing lags, labor constraints, and AI-related demand for power, equipment, and skilled labor all argue against a quick return to the prior decade's inflation regime. Inflation also has a behavioral component, as companies and workers that have lived through repeated price increases may respond more quickly to new cost pressure. The manager expects inflation to stay above target for longer than markets would prefer. |
Oil Prices Tariffs Labor Behavioral | |
DollarThe manager is less constructive on the U.S. dollar. Fiscal deficits, gradual diversification by global reserve managers, reduced policy divergence, and valuation concerns around U.S. assets all limit upside. A modest cyclical dollar decline is reasonable if oil risk continues to fade, global risk appetite improves, and the Fed does not move into a sustained hiking cycle. The main risk to the weaker-dollar view is a more hawkish Fed. |
Reserve Currency Fiscal Deficits Policy Divergence | |
Private CreditPrivate credit is one of the funding channels likely to finance parts of the data-center and infrastructure buildout. The concern is that private credit has grown quickly, and much of that lending now sits with weaker borrowers and harder to sell loans. Defaults are expected to be more concentrated in software-heavy direct lending and weaker leveraged structures. The risk appears more concentrated for now, but weaker borrowers make underwriting quality more important. |
Data Centers Defaults Underwriting Leverage | |
GoldGold has a useful diversifying function supported by central bank demand, reserve diversification, fiscal pressure, and potential dollar weakness. Gold does not generate income, so it becomes less attractive when investors can earn higher real yields on cash or bonds, meaning it can be volatile when the Fed is hawkish or real rates move higher. The manager still views it as a strategic diversifier because it can help when confidence in currencies, fiscal policy, or traditional hedges weakens. |
Central Banks Reserve Diversification Fiscal Pressure Real Yields | |
| 2026 Q1 |
InflationEnergy-driven inflation pressures are creating stagflationary impulses, though structural differences from the 1970s reduce systemic risk. Near-term inflation expectations have risen while longer-term expectations remain anchored, creating bifurcated market dynamics. |
Energy Stagflation Policy |
Energy TransitionHigher energy prices are acting as a tax on consumers and businesses, compressing real incomes and margins. The US benefits as a net energy exporter, while energy-importing regions face more pronounced pressure from higher import costs. |
Oil Supply Geopolitical | |
AICorporate earnings remain strong, supported by continued investment in artificial intelligence and infrastructure. AI and data center investments have been disproportionately concentrated drivers of aggregate growth over the past several years. |
Data Centers Infrastructure Investment | |
Infrastructure SpendingOngoing capital investment cycles are supporting earnings growth and creating renewed investor interest in businesses with tangible assets and exposure to infrastructure demand. This represents a broader shift in market leadership toward companies benefiting from capital investment cycles. |
Capital Investment Tangible Assets Leadership | |
RatesRising yields driven by inflation concerns are pressuring valuation multiples, particularly for long-duration assets. Central banks face a more constrained environment with limited ability to ease preemptively, reinforcing a higher-for-longer rate environment. |
Duration Valuation Policy | |
| 2025 Q4 |
AIAI enthusiasm supported large-cap growth companies and drove technology earnings. Long-term capital investment in AI, energy, and infrastructure reflects demographic pressures and labor scarcity. AI-related investment pace expected to slow from exceptionally fast levels. |
Artificial Intelligence Technology Investment Growth Infrastructure |
ValuationsS&P 500 trading at 23x forward earnings, well above long-term average of 15.6x. Elevated valuations reflect premium for expected growth but constrain longer-term returns and increase market sensitivity to earnings disappointments. |
Multiples Premium Risk Earnings Market | |
EarningsStrong corporate earnings drove market gains, particularly in technology and communication services. Consensus expects continued earnings growth in low-double-digit range. Much of technology-led earnings growth supported by long-term capital investment rather than leverage. |
Corporate Growth Technology Investment Capital | |
RatesFederal Reserve cut rates three times in 2025, bringing policy rate to 3.5%-3.75%. Fed expects one more cut in 2026 while markets price in roughly two additional cuts. Return to near-zero rates unlikely. |
Federal Reserve Policy Cuts Monetary Treasury | |
| 2025 Q3 |
AIThe quarter highlighted outsized gains concentrated in AI-related themes, with NVIDIA Corporation being a dominant growth leader. AI adoption is accelerating and contributing to potential tax benefits from policy initiatives. Data centers and AI-related businesses have remained resilient, masking broader weakness in other sectors. |
NVIDIA Data Centers Technology Growth Semiconductors |
Small CapsSmall-cap equities are well positioned for more durable outperformance as the Fed's cutting cycle unfolds. They outperformed large caps in the third quarter and remain less concentrated and more reasonably valued, positioning them for potentially attractive future returns as financing conditions improve. |
Fed Cuts Valuation Outperformance Interest Rates Rotation | |
ValueValue indices remain less concentrated and more reasonably valued compared to growth stocks, positioning them for potentially attractive future returns. Following historical patterns like the dot-com peak, value stocks could benefit from a recovery in earnings across lagging areas of the economy. |
Valuation Concentration Earnings Outperformance Historical | |
RatesThe Federal Reserve cut rates by 25 basis points to 4.00%-4.25% in September, marking the first reduction since December 2024. The potential restart of the Fed's easing cycle, combined with economic headwinds, could push yields even lower, with bond yields historically declining before and after Fed easing begins. |
Fed Cuts Treasury Yields Monetary Policy Economic Outlook Easing Cycle |
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