Morning Note

Given this week's calendar one might surmise that this morning's notable selloff in equities reflects worries that the Fed will lean hawkish (though they won't raise rates today), and that key tech earnings after the bell perhaps won't live up to historically-high expectations.

Well, sure, no doubt those are doubts worth mulling, but, clearly, the culprit today is yesterday's surprise attacks delivered by Iran, alongside this morning's news that oil inventories took a massive hit the last week of July... Make no mistake, strategic reserves are virtually spent at this point -- oil's up 7% as I type!

We're having a private session this morning with the head of the geopolitical team we consult with, which will likely give us more texture/context to share later in the week.

In the meantime, here's your morning macro rundown*... Clients take note of the final section titled "How We're Positioned."

Morning Note — Wednesday, July 29, 2026

Two Stories Colliding

Markets are lower this morning, and it's worth separating the noise from the signal, because today two very different stories are arriving at the same moment.

The first is energy. Overnight, hostilities in the Middle East escalated again. U.S. forces intercepted a surprise attack on personnel stationed across the region, and the response from Washington was immediate and unambiguous. Crude oil jumped roughly 7% on the news, with the international benchmark pushing back toward $90 a barrel. Just as importantly, the physical picture has deteriorated: tanker traffic through the region's two critical chokepoints remains sharply depressed, with shipping still reluctant to transit despite the diplomatic proposals that have been floated in recent weeks.

I've written before that I care far more about barrels actually moving than about announcements. That distinction is doing real work right now.

The second story is the Federal Reserve. The policy decision lands at 11:00 a.m. Pacific, followed by Chairman Warsh's press conference. The consensus expectation is no change, but the honest characterization is that this is a genuinely uncertain meeting — futures markets have been assigning meaningful odds to a rate increase, which is not something we've had occasion to write in some time. Inflation actually cooled last month, its first decline in five. Then oil went up 20% in three weeks. The Committee is being asked to decide whether that's a temporary supply shock to look through or the beginning of something more durable.

What the Tape Is Telling Us

The sector dispersion underneath this morning's decline is more informative than the headline numbers.

Energy is meaningfully higher — the only sector doing real work today. Healthcare and consumer staples are modestly positive, the classic defensive bid. Technology is lower, continuing a pullback that's been building for a week as investors reassess the pace of spending on artificial intelligence infrastructure.

The hardest hit are industrials, materials, and infrastructure. That deserves an explanation, because it runs against a common intuition. Investors often assume that an inflationary shock is good for "real economy" companies. This morning is a useful reminder that it isn't automatic. An oil spike raises input costs and transportation costs for industrial businesses — it's a tax on their margins. And because it simultaneously pushes interest rates higher, it raises the discount rate applied to their future earnings. Two headwinds, arriving together.

Gold is also lower, which surprises people. It shouldn't. Gold is not primarily a geopolitical hedge; it's a monetary asset that responds to real interest rates. When conflict pushes oil up, which pushes inflation expectations up, which pushes yields up, gold typically struggles. It has behaved exactly as we'd expect it to.

Treasury yields are higher across the curve, with the short end leading. That's the market pricing in a more determined central bank rather than a more indebted government — a distinction I'll be watching closely this afternoon.

How We're Positioned

We are not making changes today.

Our allocation carries a meaningful cash reserve, which is currently earning a competitive short-term yield and is the primary reason our accounts are absorbing this morning's move with less impact than the broad market. We hold defined-risk hedges against several of our larger positions, and those hedges are doing their job. We are diversified well beyond U.S. large-cap technology, and while that diversification has cost us something on certain days this year, it is providing ballast on days like this one.

None of this morning's news changes our base case, which has been consistent for months: a slower-growth, stickier-inflation environment that rewards patience and punishes concentration. Today is that thesis expressing itself, uncomfortably but not unexpectedly.

A final note on process. There is a cluster of consequential events between now and Friday — the Fed this afternoon, the Bank of Japan overnight, major corporate earnings this evening, and month-end rebalancing flows. Markets tend to move more, and more erratically, during these windows. Short-horizon volatility around scheduled events is not information about the next three years.

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This commentary is provided for informational and educational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation regarding any security, sector, or investment strategy. The views expressed reflect the opinions of Private Wealth Advisors as of the date written and are subject to change without notice. Information has been obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. Past performance is not indicative of future results, and all investing involves risk, including the possible loss of principal. Nothing contained herein should be construed as personalized investment, tax, or legal advice. 

*The section titled "Morning Note" was drafted with the assistance of artificial intelligence tools under the direction and editorial review of Marty Mazorra, Chief Investment Officer of Private Wealth Advisors. All analysis, conclusions, and final content are his own.