Welcome to our July 2026 Viewpoints, a monthly bulletin from PDS Planning to our valued clients and friends. Our goal with each issue of Viewpoints is to provide you with a wide variety of perspectives on life and wealth. Feel free to share with others.
Inflation Hedge
Gold and other metals have been thought of as being a sound hedge against inflation. A way to preserve capital and dollars through periods of higher risk and higher prices. Looking at the chart below from Capital Group, owning stocks – represented by the S&P 500 – since 1985 has proved to be much more valuable as an inflation hedge than gold.
International Stocks Join the Party
After about 8 years of fairly consistent US stock outperformance over international, the tides have finally changed as international continues rallying past the US. Some of the excess international returns in 2025 came as a result of the dollar weakening and a smaller impact from tariffs. The story in 2026 so far has simply been strong earnings. As the US continues to face headwinds with inflation amidst the war in Iran (see below) and a steady or weakening dollar, this trend may continue.
Energy Prices and Inflation
The War in Iran and subsequent closure of the Strait of Hormuz sent oil prices skyward. The blue bar in the chart on the left represents the impact of energy prices in each month’s inflation print. You can see exactly when the conflict began because the blue bar exploded out of nowhere. Then, in the latest June print, energy backed off slightly and brought overall inflation with it during the, albeit brief, ceasefire between the US and Iran. All other main inflation sources have remained steady with energy (gas prices) driving the recent bump and decline.
Unfortunately for the upcoming July inflation reading, we can likely expect another bump to the blue column after the conflict renewed earlier this month. The chart on the right shows how oil and gas prices have moved in relation to when the war began, when the peace deal was tentatively agreed upon, and when it fell through. With oil and gas prices rising again, inflation may remain a nagging constant for months ahead.
The Current Business Cycle
The first half of 2026 was a reminder of why staying invested and maintaining a long-term perspective matters. Markets climbed to new all-time highs, corporate earnings grew at a double-digit pace, and a wide range of asset classes delivered strong returns. This all occurred even as the war in Iran, rising energy prices, and uncertainty around the Federal Reserve created short-term turbulence along the way.
Perhaps the most important context is that the current business cycle is now in its seventh year and is going strong. There have been several moments in recent years when a recession seemed possible, including when inflation peaked in 2022 and when tariffs disrupted trade last year. However, the economy has been resilient throughout these periods and continues to grow.
The first half of 2026 has rewarded investors who remained diversified and focused on the long term, even as geopolitical and economic headlines created short-term uncertainty. As we navigate the second half of the year, it’s important to remember that your portfolio is designed for exactly this kind of environment.
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