The Federal Reserve may be downplaying inflation risk, but financial markets are less confident. The central bank left interest rates unchanged on Wednesday, implying that it could remain patient in deciding whether there’s a threat to price stability — a commitment Chair Kevin Warsh has vowed to deliver multiple times since taking the helm in May. Market sentiment, by contrast, is somewhat less convinced that monetary policy is fine as is.
The Fed’s Patience Strategy Faces Its First Real Test
Federal Reserve Chairman Kevin Warsh is playing a dangerous game. Explaining the central bank’s decision to leave its target interest rate unchanged yesterday amid mounting inflation concerns, he tried to walk a fine line, saying that price stability remained the goal. But the bond market is skeptical and Treasury yields rose yesterday.
Tech’s Wild Ride: Semis Sink, Software Rallies, and Nerves Fray
The rout in semiconductor stocks is rattling nerves on Wall Street, but it’s premature to label this as something more than a correction after a white-hot rally that arguably lifted chip stocks too high too fast.
Iran Tensions Ease, But Markets Still Looking For Fed Rate Hikes
The US–Iran conflict has entered a new lull again, animating fresh hopes that the Middle East crisis will go into remission and allow “normal” business‑cycle factors to dominate the outlook for the economy and monetary policy decisions at the Federal Reserve. But as the world has learned since the war started on Feb. 28, looking more than a few days (if not hours) ahead on this topic tends to resemble a coin flip for estimating probabilities.
Resilient Q2 GDP Nowcast Masks Risk For the Rest of the Year
The Iran conflict continues to unsettle the outlook for the US economy, but the effects of the Middle East crisis may be hard to spot in this week’s second‑quarter GDP report. The government’s initial estimate is expected to roughly match Q1’s moderate 2.1% real annualized gain, based on the median of nowcasts compiled by The Capital Spectator, with the Bureau of Economic Analysis set to publish the official data on July 30.
Research Review | 24 July 2026 | Strategy Analytics
The CAPE that Cried Wolf
Dino Palazzo (Board of Governors of the Federal Reserve System)
May 2026
The Capital Spectator’s Takeaway
The paper reports that traditional CAPE ratio’s false warnings of market overvaluation since the 1990s are an accounting illusion caused by mandatory R&D expensing and volatile special-item write-downs. By stripping out these regulatory distortions, CAPE-H eliminates the apparent structural break and restores CAPE’s ability to accurately predict long-term price appreciation and excess stock market returns.
Oil Refiners Catch Fire as Iran Conflict Drags Nuclear Sector Lower
The war with Iran is bad news for the global economy, but it’s lifting the fortunes of most energy stocks, led by oil refiners, according to a set of ETFs. The world has had a painful reminder that fossil fuels from the Middle East can’t be ignored. At the same time, some corners of energy have taken a hit — the nuclear power industry is the major downside outlier since the conflict began on Feb. 28.
Iran Tensions Revive Worries Over Inflation and Rising Yields
In late February, the US 10-year Treasury yield was trending lower, dipping below 4.0% on the final trading day of the month. The macro outlook at the time suggested the benchmark yield would dip even lower in the coming weeks, a view supported by the downside trending behavior that month. But on Feb. 28, the bombs started falling on Iran, an event that reversed the 10-year yield’s slide—a turnaround that has strengthened in July.
Small Caps Challenge Momentum Factor’s Throne
The momentum risk factor has been leading the field in recent history, but there are signs that a rotation may be underway, based on a set of ETFs through yesterday’s close (July 20).
Diversified Portfolios Show Resilience Amid Escalating Iran War
With the Iran war escalating, the conflict is again getting harder to ignore, which strengthens the case for maintaining a globally diversified portfolio. The reasoning isn’t based on assuming that a broad approach to asset allocation will outperform other strategies or deliver superior risk management. Although one or both outcomes are possible, the stronger case for leaning into global diversification is that it rests on the idea that markets can, and often will, deliver surprising results.