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Markets are experiencing more volatility as we wind down earnings season and move through the end of the summer. Light volume combined with data revisions and tariff volatility may not make for a quiet August, in fact it was some witchy data last year that prompted the Fed to cut in September, and we see that the odds for a rate cut escalated sharply after the last jobs number.
With equity markets making a string of new highs in July it seems reasonable to expect a period of consolidation, but also possible to see a wavering of investor confidence. The valuation picture that needs strong earnings to underpin those valuations seems a bit wobbly as excellent numbers sometimes are greeted with a yawn or a knee jerk drop (looking at you, UBER) at least on the first glance.
Does this mean that great or good is no longer good enough? With stories where valuations are reminiscent of dotcom era multiples of sales are we back to a market where frothy is behind us and frothier surrounds us?
This time of year can often be dramatic, and although we collectively as investors worry about October it is actually August and September into October that has seen quite a bit of downside volatility in the last 4 years.
With the promise of AI being both a blessing and a curse depending on expected ramifications for job creation or destruction, we are finally starting to see real world applications that have been positive for margins, although often at the cost of jobs in industries that are starting to adopt the technology.
The speed of this and the displacement of workers will be a large theme going into 2026, and we collectively are trying to figure out how orderly or disorderly that will be and how fast companies can adjust, but adjust they will.
The risk/reward here does seem to be skewed a bit to the risk side as the moving goal posts on tariffs make the end result both tough to see and further in the future. For equities it will come down to earnings, and we seem to have passed the Q2 test.
The views expressed are those of the Alpine Saxon Woods, LLC management team as of the date indicated, and are subject to change. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Performance data quoted represents past performance and does not guarantee future results. All data referenced are from sources deemed to be reliable but cannot be guaranteed. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.
