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title: "Sept 2026: Q3 Economic & Market Update"
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Earnings are running ahead of prices, the AI thesis is holding up, and portfolios have been fine-tuned. ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­    ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­  

| View in browser September 2026   We are heading into the final stretch of 2026, and there is quite a bit to cover in this quarter's economic and market update. The Fed moved on rates, earnings have continued to surprise to the upside, and we made some targeted adjustments across portfolios. I want to walk you through all of it and explain the thinking behind the decisions we are making. As always, if anything below prompts a question about your specific situation, please reach out directly.     ECONOMIC AND MARKET SUMMARY: SEPT. 2026   The Big Picture: Earnings Are Doing the Heavy Lifting   Corporate profits have continued to grow at a strong pace this year, and one of the more encouraging developments is that earnings growth has outpaced stock price appreciation. This means that valuations have become more attractive over the course of the year, even as markets have moved higher. The price investors are paying for each dollar of future earnings has come down. For anyone who has wondered whether markets have gotten ahead of themselves, this is an important data point in the other direction.   Three years of strong earnings growth in a row is not something to take lightly, and it is a big part of why we continue to maintain a slight overweight position in equities even after trimming stocks with this rebalancing. The economy is growing, companies are profitable, and analyst earnings estimates have been revised upward consistently throughout the year.   The Fed Is Hiking, and That Is Not Necessarily Bad News   The Fed raised interest rates for the first time in this cycle in September, a move that was widely anticipated and largely priced into markets ahead of time. Additional hikes are expected over the coming year. The instinct to be cautious when rates go up is reasonable, and I understand why many are watching this closely. Looking back at hiking cycles over the past several decades, the S&P 500 has on average seen a brief period of volatility in the first month or two after an initial rate increase, followed by a move higher. The Fed raises rates when the economy is strong enough to handle it. Healthy growth and solid corporate earnings on the positive, along with inflation concerns on the negative are what prompt that decision, and those same conditions are what have supported stock market performance. We are seeing that show up clearly in the earnings data right now. Rate increases do add volatility to the bond market, and we have taken that into account in how portfolios are positioned on the fixed income side, which I will cover below.   Equity Positioning: Trimming the Winners, Staying the Course   We continue to have a slight preference for stocks over bonds even as we reduce equity holdings. We are able to do so given the rebound experienced after the pull-back in June.  What this quarter's trade is doing is right-sizing some positions that have appreciated the most, and redistributing that exposure in a way that keeps us positioned for continued growth while reducing concentration in areas that have drifted furthest from target. The primary shift is in the balance between U.S. and international developed market stocks. Coming into this year, we were heavily weighted toward the U.S. and emerging markets, both of which have contributed positively to performance. Europe and other developed markets outside the U.S. have started to show some improvement in their earnings outlook that was not present a year ago. We trimmed our U.S. overweight modestly and brought our international developed markets exposure closer to neutral, reflecting that shift in the picture rather than making a directional call on any one region. Within equities, our overweight to AI and technology remains in place but at a reduced level. This theme has been one of the larger contributors to portfolio performance year to date, alongside emerging markets positioning and the broader momentum tilt we carry. We pulled back on each of these slightly, because positions that have run hard carry more volatility with them, and trimming them periodically is part of managing a portfolio responsibly over time. On AI specifically, our approach runs along two tracks. The first is direct exposure to companies building the infrastructure that AI requires, like semiconductors, data centers, and power producers. The second is companies incorporating AI into their existing businesses to cut costs, expand margins, and gain ground on competitors. Both exposures remain in the portfolio, and we see the opportunity continuing to develop in each.   Fixed Income: Staying Shorter, Adding Diversification   On the bond side, the focus this quarter is on navigating a more volatile rate environment. With the Fed hiking and longer-term rates pushing higher, we are maintaining a shorter duration posture in fixed income, meaning the bonds we own are generally less sensitive to rate increases than a more traditional bond allocation would be. This positioning reduces the drag that rising rates can have on this side of the portfolio. International bonds are a new addition this quarter, and there are two reasons for that. International bonds have shown lower correlation to stocks this year than domestic bonds have, which means they are providing more of the true diversification that fixed income is supposed to offer. Additionally, because U.S. interest rates are currently higher than those in many other developed countries, hedging that foreign currency exposure back to the dollar generates additional positive opportunities in the current environment. We are being compensated for that diversification, which makes it an attractive addition at this point. We are also maintaining exposure to a systematic alternatives strategy, a rules-based fund that generates returns largely independent of what stocks and bonds are doing. This position has been up significantly this year, at a time when bonds have been more challenged, and that is exactly what it is in the portfolio to do. Gold remains in portfolios as well. With ongoing uncertainty around fiscal deficits, a still-elevated rate environment, and the longer-term trend of central banks globally diversifying away from the dollar, we continue to see it earning its place in the portfolio.   A Note on the Deficit   This has come up in a number of client conversations recently, and I want to address it directly. U.S. debt and deficit levels are a legitimate concern, and they have contributed to some of the volatility we have seen in longer-term interest rates. My view is that this is the kind of issue that tends to resolve gradually rather than all at once. It is more likely to be a dial turning slowly than a light switch flipping. Right now, it has not weighed on economic growth or corporate earnings in a way that changes how we want to be positioned.   As We Head Into Year-End   The adjustments made this quarter are about keeping portfolios well-calibrated as conditions evolve. The long-term strategy, built around your specific goals, your timeline, and your individual financial picture, remains on track. Staying diversified, staying patient, and keeping a clear eye on what the underlying data is showing are the things that keep your long-term goals within reach through periods of uncertainty.   I am always happy to talk through any of this with you directly.   Kindly, Joel Certus Wealth Management Joel Van Hofwegen, CFP®, CRPC® Founder / Private Wealth Advisor CERTIFIED FINANCIAL PLANNER™ 650.232.2023 info@certuswealthmanagement.com www.certuswealthmanagement.com Financial Advice is offered through Certus Wealth Management LLC, a Registered Investment Adviser.    This message and any attachments are solely for the intended recipient and may contain confidential or privileged information. If you are not the intended recipient, any disclosure, copying, use, or distribution of the information included in this message and any attachments is prohibited. If you have received this communication in error, please notify us by reply email and immediately and permanently delete this message and any attachments. Thank you.   This material prepared by Certus Wealth Management, LLC (“Certus Wealth”) is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Opinions expressed by Certus Wealth are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Certus Wealth, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Certus Wealth does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice. Certus Wealth Management, 1025 Alameda de las Pulgas, Ste. 102, Belmont, CA 94002, (650) 232-2023 Unsubscribe Manage preferences |
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