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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"U.S. equities gained 10% year-to-date through mid-2026 with the S&P 500 posting a 9-week winning streak, driven by profit growth exceeding 20% across all sectors. Persistent inflation above the Fed's 2% target for 65 months and cooling employment create headwinds, while AI investment drives GDP growth but faces mounting pressure to justify over $1 trillion in debt-financed spending."
U.S. equities have appreciated roughly 10% year-to-date through mid-2026, with the S&P 500 achieving a 9-week winning streak during Q2 despite heightened volatility from geopolitical tensions, inflation concerns, and shifting monetary policy expectations. Second quarter profit growth is expected to exceed 20%, with gains enjoyed across all sectors including healthcare, banking, and industrials beyond the AI and technology sphere. AI-related business investment contributed 1.5 percentage points to 2.1% real GDP growth, though the largest technology companies face mounting pressure to demonstrate returns on over $1 trillion in debt-financed data center spending. Rising prices have eclipsed the Fed's 2% inflation target for 65 straight months, prompting new Fed Chair Kevin Warsh to pivot toward reigning in inflation. The U.S. job market shows signs of cooling with unemployment at 4.2%. While traditional valuation metrics suggest the broader market appears expensive, the investment case remains sound thanks to growing revenues, profit margin discipline, and continued innovation. Diversification has rewarded investors, with international equities and small-cap funds generating leading returns. The US-Iran war has removed one billion barrels of oil from the market, prompting defensive positioning to secure energy supplies.
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