U.S. equity market investors underwrite a big push into the next frontier  

So far, so good. We’re impressed and wish this venture and its bold investors godspeed. Friday’s launch might be the most important “liftoff” in the history of space exploration. The industry and its ambitious visionaries have accomplished a feat never achieved at this scale and scope, attracting private capital from the vast publicly listed U.S. equity market, which is the deepest, most competitive and efficient capital pool on earth. While the risks are significant, no market is better suited to price and bear such risk as U.S. equity markets. June 12, 2026 marks space exploration pivoting from state sponsorship to capitalism. This is an important leap, similar to Columbus sailing for Spain to the Dutch East India Company. What’s next for this industry is likely to come faster and bigger than ever; with ups and downs.

Come in ground control: All signals green for S&P EPS at $90-120/barrel oil

The Artificial intelligence (AI) datacenter capital expenditure (capex) boom continues to feed the profit machine at Tech Hardware and Semiconductors. S&P 500 Software firms are still delivering good growth and guidance. All thrusters are firing at Capital Markets and big Banks. Industrials are now key suppliers to datacenter builders, supporting many electrical and mechanical needs. Aerospace & Defense is strong and space-related capex will be a new growth engine. Even Transports are doing just fine now, both surface and sky after curbing supply. Health Care earnings slowed, but mostly from acquisition transition costs. The large Consumer companies indicate that gasoline prices have no discernable impact yet to their customer demand. Bottom-up 2026 estimated S&P earnings per share (EPS) continues drifting higher in past weeks making $340+ credible. Yet, given fluid global conflicts and risks from elevated longer-term Treasury yields, we maintain our $335 estimate, but see potential upside to our $365 estimate for 2027 if trends continue.

Countdown to Warsh: Rates altitude likely maintained until fuel runs out

To more earthly matters, this week new Federal Reserve (Fed) Chairman Warsh led the June Federal Open Market Committee (FOMC) meeting and post-meeting press conference. Warsh acknowledged that inflation has been well above the Fed’s target for far too long at 5+ years and that this is an unacceptable monetary policy performance in continuance. Yet, we expect no hikes on the forecast horizon, but perhaps a coalescing committee view that the Fed Funds rate is at an appropriate altitude intermediate term, given many different macro conditions of this cycle vs. last, such as high fiscal deficits, booming private non-res investment and capital markets and wealth, global trade frictions, and conflicts. Boosting Treasury bond investor confidence is likely key to Warsh’s early days to earn trust when accommodation is needed.

Last days of Style: Allocating to Value vs. Growth is outdated and flawed

Growth stock Initial public offerings (IPOs) and the substantial outperformance of Tech year-to-date (YTD) and past 3, 5,10 years make some investors think Tech or Growth investing is the future. Yet, others might point to Value outperforming Growth YTD, despite its substantial underperformance past 3,5,10 years, suggesting a rotation underway or a better balance. We think now is a good time to offer different thoughts on this matter and for shifting asset allocation frameworks from style to other equity market segmentations and properly separating style from active strategies.

Recent years show the importance of getting sector/industry preferences right. Identifying big themes beyond typical cyclical views of gross domestic product (GDP) and inflation. Themes like extraordinary AI capex vs. muted housing capex and slow consumer durables demand, i.e., big sub-cycle macro themes. Since the 1990s, Value vs. Growth regimes had ties to cycle life stage (Value best at recovery and early, Growth best mid and late in long-lasting cycles provided reasonable valuations), thus making Value vs. Growth mostly a cycle stage and valuation call. We navigated style preference mostly on views of current cycle stage, normalized earnings by sector, valuations vs. the EPS growth we thought companies could deliver in the cycle.

Today, Value vs. Growth is more complicated than judging cycle stage and fairness of valuations, which is certainly difficult now too. Instead, we evaluate sectors and industries distinct from their style classification. When big sub-cycle trends emerge it can change which industries offer the most EPS growth with some from Value. We have long believed that Value requires redefinition from simplistic current price-to-earnings (P/E) and Price-to-book (P/B) multiples if it is to help predict performance of the high Return on equity (ROE) and intangible assets nature of large U.S. companies. It also concerns us how concentrated large cap Growth has become by both stocks and industries in Growth, Tech and now Semiconductors. This is a significant risk vs. the past.

Balanced strategies have more flexibility to pursue true alpha factors 

Core or balanced strategies help avoid today’s concentrated Growth indices and simplistic valuation metrics of Value indices, which struggle to navigate mid-cycle yet seek risk factor compensation over cycles long term. Active core strategies have more flexibility to pursue pure alpha factors or use discretionary criteria, but beware of momentum. Momentum is the new beta hidden in active returns. Alpha is without persistent beta, style or momentum tilts.