| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
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Aptus Capital Advisors' Q2 2026 newsletter emphasizes that beneath market noise and change, foundational drivers remain strong: growing earnings and increasing corporate profitability. The S&P 500 gained 15.2% in Q2, recovering from geopolitical shocks after the Iran ceasefire, pushing YTD returns to 10.2%. Q1 2026 delivered one of the strongest earnings seasons ever with 27% S&P 500 earnings growth, marking the sixth consecutive quarter of double-digit expansion. The breadth was notable with smaller companies flourishing alongside large-cap peers. Kevin Warsh's Fed transition brings significant changes including reduced communication and balance sheet reduction, representing a shift toward letting markets play a bigger role. AI-driven earnings continued exceeding expectations though markets are scrutinizing hyperscaler capex deployment. Market participation is broadening beyond mega-cap technology with equal-weighted S&P 500 up 12.1% YTD. The manager maintains conviction that as long as earnings grow at exceptional pace, the bull market remains intact, with fiscal stimulus, supportive monetary policy, and accelerating AI capital spending as key supports.
Corporate earnings growth and expanding profitability remain the foundational drivers of market performance, with Q1 2026 delivering one of the strongest earnings seasons ever at 27% growth marking six consecutive quarters of double-digit expansion.
The manager expects the bull market to remain intact as long as earnings continue growing at historically exceptional pace, with the burden of proof remaining with bears. The three key tenets supporting the market remain: fiscal policy is stimulative, monetary policy under new leadership remains supportive despite transition, and private capital spending on AI continues to accelerate. The tone is constructive and optimistic while acknowledging that change is constant and adaptation is essential.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 1 2026 | 2026 Q2 | - | AI, earnings, Federal Reserve, geopolitics, market breadth, monetary policy, technology | - | Q2 2026 delivered exceptional market performance with S&P 500 up 15.2% following Iran ceasefire resolution. Corporate earnings grew 27% in Q1 marking six consecutive quarters of double-digit expansion with notable breadth beyond technology. New Fed leadership under Warsh brings policy changes but core mandate unchanged. AI infrastructure spending drives growth while market participation broadens. Bull market intact as long as earnings momentum continues. |
| Apr 1 2026 | 2026 Q1 | - | AI, Geopolitical, oil, private credit, Resilience, technology, valuation | - | Aptus maintains conviction in risk assets despite Q1 volatility from Iran conflict and AI disruption. Strong earnings fundamentals with S&P 500 posting record 5th straight quarter of double-digit growth and attractive valuations below historical averages support the investment case. Markets historically recover from geopolitical shocks, making current weakness a buying opportunity for patient investors. |
| Jan 2 2026 | 2025 Q4 | - | AI, Bull Market, consumer spending, Fed policy, inflation, liquidity, Market Volatility | - | Aptus maintains bullish stance on continued bull market supported by massive liquidity from fiscal, monetary, and private spending. Views AI as productive boom with strong fundamentals, not speculative bubble. Recommends balanced allocation with more equity exposure while hedging concentration risk. Expects Goldilocks period ahead despite near-term volatility from elections and inflation concerns. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI-driven earnings continued to exceed expectations, with hyperscalers deploying close to 100% of operating cash flow into capex. The AI trade has rotated through distinct phases including semiconductors, power and hyperscalers, and most recently memory names. Markets are drawing a sharp line between companies receiving AI infrastructure spending checks versus those writing them. |
Hyperscalers Semiconductors Memory Infrastructure Capex |
EarningsQ1 2026 delivered one of the strongest earnings seasons ever with S&P 500 earnings growing nearly 27%, marking the sixth consecutive quarter of double-digit growth. The breadth was particularly notable with smaller companies flourishing alongside large-cap peers, signaling earnings recovery is expanding beyond technology. Forward EPS expectations are up 8% with 85% of firms beating estimates. |
EPS Growth Profitability Margins Revenue | |
Federal ReserveKevin Warsh took over as Fed Chairman in May 2026, bringing significant changes including less communication, balance sheet reduction, and letting markets play a bigger role in driving the economy. Five task forces were created to study Fed communications, balance sheet policy, data sources, AI's impact on productivity, and the inflation framework. The transition represents a shift from Fed captivity to economic supply-driven fundamentals. |
Monetary Policy Balance Sheet Communications Independence | |
OilOil spiked above $113 per barrel during the Iran conflict in March-April 2026 before pulling back sharply following the ceasefire agreement in late May. The oil price retreat removed the biggest near-term threat to inflation expectations and Fed policy. Estimated U.S. oil expenditures for 2026 are projected at $624 billion based on $83 average price per barrel. |
Geopolitics Iran Energy Inflation | |
Market BreadthOne of the more encouraging developments has been the broadening of equity market participation beyond mega-cap technology. Smaller stocks and international equities began contributing more meaningfully, with the equal-weighted S&P 500 up over 12.1% YTD. When mega-cap stocks sold off in June, the equal-weight S&P 500 outperformed, demonstrating that concentration cuts both ways. |
Equal Weight Small Caps Diversification Dispersion | |
| 2026 Q1 |
AIAI is driving valuation compression as markets distinguish between AI winners and losers. Software stocks fell 24% in Q1 despite rising earnings expectations due to AI disintermediation fears. The technology is revolutionary, not evolutionary, fundamentally changing market composition and making historical benchmarks obsolete. |
Software Automation Productivity Valuation Technology |
Private CreditPrivate credit faces volatility laundering issues as public equivalents trade cheaper while private marks remain elevated. Redemption caps create theater fire scenarios, but systemic risk is limited given 90% institutional ownership and healthy coverage ratios. Default rates of 8-12% are manageable for the asset class. |
Shadow Banking Liquidity Marks Redemptions Institutional | |
GeopoliticalIran conflict and Strait of Hormuz closure created oil price spikes and market volatility. Historical data shows markets recover from geopolitical events with 79% positive returns one year later and median gains of 13.8%. Current tensions mirror past conflicts in their temporary market impact. |
Iran Oil Volatility Conflict Recovery | |
| 2025 Q4 |
AIManager views AI as a productive boom rather than a bubble, comparing it favorably to the dot-com era. While acknowledging potential air pockets, believes AI investment is financed by profitable companies with strong balance sheets, unlike past speculative bubbles. Recommends addressing AI exposure at asset allocation level rather than stock picking. |
Artificial Intelligence Technology Innovation Productivity |
Fiscal PolicyManager emphasizes fiscal policy as one of three key market drivers alongside monetary policy and private spending. Notes government fiscal exuberance has always been present and will likely continue at larger scales, mandating investors follow policy direction rather than fight it. |
Government Spending Policy Economic Growth | |
InflationManager notes inflation remains above Fed's 2% target with average of 3.6% since 1950. Emphasizes need to view inflation cumulatively over investment horizon rather than as annualized figure. Questions whether persistently high inflation will finally slow consumer spending across income cohorts. |
Consumer Prices Federal Reserve Purchasing Power | |
EarningsManager states earnings growth will continue to dictate market direction and should remain robust. Emphasizes that as long as earnings are growing and both monetary and fiscal policy support markets, the burden of proof remains with bears. |
Corporate Profits Growth Market Direction |
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