After a strong 2025 performance, the current year has so far unfolded in an environment marked by geopolitical tension and episodes of war—conditions that might typically undermine confidence. Yet both the global economy and equity markets have demonstrated notable resilience. This strength has been anchored in two closely connected forces: continued expectations for corporate earnings growth and the rapid integration of artificial intelligence into the broader economy.
Economic conditions have proven steadier than anticipated. Inflation has moderated, allowing for a more measured stance from central banks, while labor markets and consumer spending have remained supportive. Growth is not robust, but it is positive and sufficiently stable to underpin financial markets.
Equities, as reflected in benchmarks such as the S&P 500 and the Nasdaq Composite, have delivered solid year-to-date performance. Importantly, this has been supported by fundamentals. Earnings expectations have stabilized and, in many cases, improved, reinforcing valuations even as markets navigate uncertainty.
Artificial Intelligence represents an additional and increasingly important pillar of support. Its influence is already visible in revenue growth, efficiency gains, and a renewed cycle of corporate investment. More broadly, AI has the potential to enhance productivity and raise long-term economic growth, making it a defining feature of this market cycle rather than a passing theme.
Against this backdrop, geopolitical risks have produced volatility but not lasting damage. History suggests that unless such events materially impair global growth, markets tend to move past them and re-anchor on fundamentals—a pattern that has largely held true this year.
The broader lesson remains unchanged: equities trend upward over time, though not all the time. Periods of volatility are inevitable, but they are also the mechanism through which long-term returns are achieved. For investors, maintaining focus on disciplined, diversified and strategic portfolio construction remains the most reliable path forward.
WHAT THE BANKS ARE SAYING
“The U.S. economy remained resilient in the quarter, with consumers still earning and spending and businesses still healthy. Several tailwinds are supporting this resiliency, including increased fiscal stimulus, the benefits of deregulation, AI-driven capital investment and the Fed’s asset purchases. At the same time, there is an increasingly complex set of risks—such as geopolitical tensions and wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices – Jamie Dimon, CEO of JPMorgan Chase
“While markets have been volatile, we still see continued resiliency in the underlying economy and the financial health of the consumers and businesses we serve remains strong, though the impact of higher oil prices will likely take some time to materialize.”- Charlie Scharf, CEO of Wells Fargo
“U.S. Consumer Cards saw 4% revenue growth, with spend up 5%, and delivered a 19% ROTCE as American consumers remained resilient.” – Jane Fraser, CEO of Citigroup
“We remain watchful of evolving risks. However, we saw healthy client activity, including solid consumer spending and stable asset quality, indicating a resilient American economy.” – Brian Moynihan, CEO of Bank of America
PUTTING THE WAR INTO HISTORICAL CONTEXT
EVERY CRISIS-DRIVEN DECLINE IN EQUITY MARKETS HAS BEEN FOLLOWED BY A SOLID UPSURGE
HISTORY IS SOLIDLY ON THE SIDE OF THE PERMABULLS AND CORPORATE PROFITS ARE EXPECTED TO GROW
THE K-SHAPED ECONOMY EXPLAINED
A PICTURE TELLS A THOUSAND WORDS–AND A CHART TELLS THE STORY
CORPORATE PROFITS ARE STRONG
THERE ARE EARLY SIGNS OF PRESSURE ON THE WORKING CLASS IN TERMS OF AUTO REPOSSESSIONS AND THE SLOWDOWN IN JOB CREATION
INFLATION IS RETURNING
THE ANTICIPATED REPRICING HAS OCCURRED
SPENDING ON AI INFRASTRUCTURE IS BOTH A REFLECTION OF AND A DRIVER OF ECONOMIC GROWTH
MORGAN HOUSEL: THE WEALTH SECRETS NO ONE TEACHES YOU
Sincerely,
Your RVW Wealth Team:
Selwyn Gerber, Jonathan Gerber, Loren Gesas, Mary Ann Moe, Simon Liu, Jesse Picunko, Dylan Scott, Simmons Allen, Kelly Sueoka, Shuey Wyne, Joseph Woods, Doug LaCombe, Jeffry Niedermeyer, April Taylor, Donovan Schafer, Emma Peitzer, Logan Wurm, and Kelly Richardson