It's days like today where stock-watchers bemoan diversification... I.e., it's been my observation over the past 40+ years of doing what I do that folks tend to see their long-term portfolios as extensions of the US equity market.
For many, if not most, US investors, I do believe that's a reasonable impulse... But for today's PWA client, well, no... In our view, particularly late in the cycle (i.e., now), broad sector, regional and asset class diversification is the definition of responsible portfolio construction.
Now, of course that's not simply shot-gunning your money across everything that moves, we do have theses that we "work" every day across different time frames... Meaning, we'll have a near-term view that may inspire the hedging of -- or the leaning into -- a position that happens to jibe perfectly with our long-term thesis, yet we see high odds of meaningful short-term turbulence... Consequently, as you clients have noticed, we'll see days, or stretches of days/weeks, where our strategy deviates -- in either direction -- from the moves in the ever-watched US stock market.
Today could be viewed as one of those days, although even the US stock market itself is all over the place.
As I type the S&P 500 is, albeit slightly, red on the session while the Dow is up nearly 400 points... Yet the Nasdaq 100 is getting slammed, down 1.5% (the equivalent of 750 Dow points).
Commodities, including precious metals, are going the way of the Nasdaq, down notably (save for ag) nearly across the board.
Consequently, if your portfolio is the size that gets the full complement of our globally-diversified core allocation, it's basically flat as I type... So I guess you can say it's going the way of the stock market, but only if you're looking at the S&P 500.
There's lots to unpack this week in terms of data, earnings and central bank decisions, so expect to hear from me aplenty as it all unfolds.
In the meantime, here's your morning rundown*... Definitely click the link and take this one in, it's an important read for clients:
The Index Is Flat. The Market Isn't*.
July 28, 2026
If you glanced at the S&P 500 this morning, you'd have seen a decline of less than two-tenths of one percent and reasonably concluded that nothing much happened.
Almost nothing about that conclusion would be right.
Underneath that quiet surface, nine of the eleven sectors that make up the index were higher — several of them sharply. Consumer staples gained close to four percent. Healthcare gained nearly three. Materials and financials were solidly positive. The equal-weighted version of the S&P 500 — which treats the smallest company in the index the same as the largest — was up a full percent. The Dow was up eight-tenths.
And at the same moment, technology was down hard, with semiconductor shares taking the brunt of it.
Two very different things happened today. They pointed in opposite directions, and the headline index number is simply the average of the two. That average tells you nothing useful, which is a reasonable summary of why we spend so little time looking at it.
The first thing: the Middle East got quieter
Over the weekend the United States paused its strikes on Iran, and Tehran indicated it would hold off on retaliation as long as that pause holds. There has been public talk of negotiations. There has also been an explicit warning that strikes resume if those negotiations fail.
The oil market took the news seriously. Crude fell roughly seven percent, with the international benchmark dropping back below ninety dollars a barrel — though it remains up more than fifty percent for the year.
That decline matters well beyond the energy sector. Energy is an input cost for nearly everything, and a seven percent move in crude flows fairly directly into the inflation outlook. Falling oil eases the pressure on the Federal Reserve. It relieves margin pressure on manufacturers, transporters, and consumer goods companies. It leaves households with more disposable income.
This is the primary reason the broad market rallied today. It is a genuinely constructive development.
It is also, so far, a pause rather than a settlement. We would remind clients — as we've said consistently since February — that a diplomatic headline and a normalized shipping lane are two different things. We continue to measure the latter using physical cargo flow data rather than press conferences, and we have not yet seen that data confirm what the oil market appears to be pricing. We are not repositioning the portfolio on a two-day-old ceasefire.
The second thing: a question got asked about semiconductors
Separately, and unrelatedly, a report emerged that a state-backed Chinese consortium has begun producing advanced chipmaking equipment domestically — tools that until now have been available almost exclusively from a small handful of Western and Japanese suppliers.
The volumes involved are small. A handful of machines this year, perhaps twenty next. Nothing about this changes any company's earnings in the near term.
What it changes is a long-term assumption. For roughly a decade, the investment case for semiconductor equipment companies has rested partly on the belief that China would remain a dependent customer. If that dependence has a shorter shelf life than assumed, the value of those future revenues is worth less than the market thought last Friday.
Markets do not process that kind of question gradually. They reprice it in a day and then spend the following several quarters figuring out whether the repricing was right. Asian markets took it hardest overnight — Japanese equities fell nearly four percent and Korean equities fell more than ten at one point, triggering circuit breakers.
We have exposure to this area, deliberately sized. We have no interest in adding to it here. When a selloff is driven by a question about the durability of a business model rather than by a temporary earnings disappointment, buying the dip is a bet that the question has an obvious answer. It does not.
An honest note on gold
Something happened today that is worth explaining, because it runs against most people's intuition.
Geopolitical tensions eased — and gold fell. It has now given back a substantial portion of the gains it made since the conflict began in February.
The common view holds gold as a fear asset that rises when the world looks dangerous. Our view, which we've held for some time, is, for the time being, that gold is better understood as a monetary asset. It responds primarily to inflation-adjusted interest rates: when the return on safe assets after inflation is falling, gold does well; when it is rising, gold struggles.
Today's move is a clean illustration. Interest rates fell modestly. But inflation expectations fell further, because oil collapsed. When expected inflation drops faster than the interest rate does, the inflation-adjusted return on holding cash and bonds goes up — and gold, which pays no interest, becomes less attractive by comparison.
We hold gold for the structural case, not the headline case, and we maintain a protective floor beneath the position. We are leaving that floor where it is.
The detail nobody is discussing
Here is the observation we find most interesting, and it is a quiet one.
Crude oil fell seven percent today. On a day like that, long-dated government bonds should rally meaningfully — falling inflation is precisely what long bonds want. Instead, they rose only a quarter of a percent.
Short-term rates fell more, on rising expectations of Fed easing. Long-term rates barely moved.
That gap tells us something we've been writing about for over a year: the long end of the bond market is carrying a persistent risk premium that has little to do with the near-term inflation picture and a great deal to do with the sustained scale of federal borrowing. Today's oil decline is a cyclical improvement. The structural issue underneath it did not move.
We think this distinction is the single most important thing to hold onto right now, because it shapes how much of today's good news we should be willing to extrapolate. The cyclical inflation impulse from the Middle East may well be fading. The longer-term pressures on interest rates are not.
Where this leaves us
Our internal conditions gauge has now sat at neutral for five consecutive weeks — an unusually long stretch, and one where the individual components have grown more scattered rather than more aligned. That scattering is exactly what today's tape looked like: a market where the average conceals genuine disagreement about the direction of travel.
The portfolio is built for precisely this. Our defensive and value-oriented sectors — healthcare, staples, financials, materials — did the heavy lifting today, and they were there because we deliberately reduced concentration in the largest technology names earlier this year. Our protective positions functioned as designed. Our meaningful cash and short-duration reserve costs us something on days when everything rallies, and buys us optionality on days when it doesn't.
The Federal Reserve announces its decision tomorrow. Japan's central bank follows later in the week. We'll have more to say once we've seen both.
For now, the message is a simple one: today was a better day for the broad market than the headline suggests, and a more complicated one than the rally implies. Both things are true, and we're positioned for both.
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. Please consult your advisor regarding your individual circumstances.
*The section titled "The Index Is Flat. The Market Isn't" 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.
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