MID-TERM ELECTION MARKET UPDATE

Markets and economy are two different areas of function. The markets are impacted by the companies that elect to issue bonds or stock to a population of investors for purposes of gaining capital to fund their operations. The underlying role of these investors is to supply capital to the company, and the company provides profits and returns dividends and/or interest to the investors. The investors of these funds expect reasonable returns based on an acceptable level of risk they are willing to accept.

Our economy is a different approach. The economy impacts all of us. Inflation has caused medical care, groceries, gasoline, and other necessary goods to rise to much higher costs than earnings have risen. We learned during the COVID era that rising costs would be paid for those goods that are in demand. For example, one would think with gasoline at its highest since the Carter Administration, Americans would be traveling far less, but that is the opposite of what we have found in experience.

The following broad-market indices reflect a rather robust economy (as reported through August 31, 2026) on a global basis:

• S&P 500 Index is 13.51% YTD
• Dow Jones 30 Index is 12.58% YTD
• NASDAQ Index is 14.03% YTD
• Russell 2000 Index is 20.65% YTD
• MSCI EAFE Index is 15.19% YTD
• MSCI Emerging Market Index is 23.99% YTD

Most recently, the United States imposed a tariff of 50% on $20 billion worth of Canadian goods, which was then responded to by the Canadian government with retaliatory tariffs that would match the U.S. measures dollar for dollar. This continued battle of tariffs between trading partners will continue to sustain inflation in the U.S. for a protracted period of time. The current wage rate increase in the U.S. is substantially lower than the inflationary pressure that is being faced by families.

Fed Chairman Kevin Warsh continues to desire that the Fed maintain its course since inflation is above the Fed’s 2% objective target and that the Fed would not provide so much forward guidance that it creates issues in the marketplace.

The takeaway from the above information is [i]that it is critical for you to review your current allocation of investments based on your risk tolerance as an investor. Further, it is vital that you understand the volatility will remain in the markets for the foreseeable future and that emotions must play a lesser role in our decisions to invest for a long-term perspective. An account to maintain your liquidity for current needs, despite market volatility, will provide you with the support, emotionally as well as fiscally, that you require during times of increasing prices as well as market fluctuations.

We are honored to review or provide a complimentary consultation of your current investments to determine if you should make changes so that your family is comfortable in its approach to lifetime financial security.