Subscribe
Share
Share
Embed
Key Wealth Matters, a podcast series hosted by the experts of the Key Wealth Institute, explores the biggest news of today to determine how these headlines can impact wealth plans, financial strategies, markets, and investments.
Join our team of advisors for unbiased, proactive advice about individual and family finances, estate and legacy planning, family dynamics, investing, as well as trends for business owners, nonprofits, and institutions.
To submit potential topics or questions to our experts, contact us via email at Key_Wealth_Institute@keybank.com.
For more information, articles, or other insights related to wealth management, visit key.com/ourinsights.
_____________________________________________________
We gather data and information from specialized sources and financial databases including but not limited to Bloomberg Finance L.P., Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange (CBOE) Volatility Index (VIX), Dow Jones / Dow Jones Newsplus, FactSet, Federal Reserve and corresponding 12 district banks / Federal Open Market Committee (FOMC), ICE BofA (Bank of America) MOVE Index, Morningstar / Morningstar.com, Standard & Poor’s and Wall Street Journal / WSJ.com.
Key Wealth, Key Private Client, Key Private Bank, Key Family Wealth, and KeyBank Institutional Advisors are brand names used by KeyBank National Association (KeyBank). Key Wealth and Key Private Client are also brand names used by Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor.
The Key Wealth Institute is comprised of financial professionals representing KeyBank National Association (KeyBank) and certain affiliates, such as Key Investment Services LLC (KIS) and KeyCorp Insurance Agency USA Inc. (KIA).
Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual author(s), and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.
This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy.
KeyBank, nor its subsidiaries or affiliates, represent, warrant or guarantee that this material is accurate, complete or suitable for any purpose or any investor and it should not be used as a basis for investment or tax planning decisions. It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal or financial advice.
The summaries, prices, quotes and/or statistics contained herein have been obtained from sources believed to be reliable but are not necessarily complete and cannot be guaranteed. They are provided for informational purposes only and are not intended to replace any confirmations or statements. Past performance does not guarantee future results.
Brokerage and certain investment advisory services are offered through Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor. Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA) and underwritten by third party insurance carriers not affiliated with KIS. KIS and KIA are affiliates under the common control of KeyCorp. To learn more about KIS’s investment business, as well as our relationship with you, please review our KIS Disclosure page. Check the background of KIS on FINRA's BrokerCheck.
Non-Deposit products are:
NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE • NOT A DEPOSIT • NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY
©2026 KeyCorp®. All rights reserved.
Brian Pietrangelo [00:00:00]
Welcome to the Key Wealth Matters weekly podcast, where we casually ramble on about important topics, including the markets, the economy, human ingenuity, and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, July 10th, 2026. I'm Brian Pietrangelo, and welcome to the podcast. And if you're an avid listener, that we were off last week in observation of the July 4th holiday. Happy Independence 250 for the United States of America. We hope you had the opportunity to spend time with family and friends and celebrate with each other and celebrate our country. And in the sports world this week, if you're an avid fan of soccer and tennis, you've got a handful of great competition, including the FIFA World Cup, with the United States men's national team going pretty far this year and ultimately having a good success track record before bowing out in their last game. And across the pond, we've got the Wimbledon tournament in full force. Good luck to all the competitors in that arena. With that, I would like to introduce our panel of investing experts here to share their insights on this week's market activity and more. George Mateyo, Chief Investment Officer, Steve Hoedt, Head of Equities, and Rajeev Sharma, Head of Fixed Income. As a reminder, a lot of great content is available on key.com/wealthinsights, including updates from our Wealth Institute on many different subjects, and especially our Key Questions article series addressing a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at this week's market and economic activity, we're going to pause and go back a week because we were off on the podcast last week for July 4th, so we want to bring you up to speed on that economic data from 2 weeks ago, which included two employment-related reports. So last week both reports were courtesy of the Bureau of Labor Statistics, and we have the JOLTS report, the Job Opening and Labor Turnover Survey report, which includes job openings, which came in at 7.6 million for the month of May, which was essentially unchanged from April, indicating that there's still a decent amount of employers looking to hire talent. And also that week, the second report is the Employment Situation Report, which includes non-farm payrolls, which showed a gain of 57,000 jobs for the month of June, which was half of what was expected. In addition, the number of jobs during the revision process, which is the normal process for the prior two months of April and May, were revised lower by 74,000 jobs. Now this cancels out the positive revisions from the prior month, so basically net net zero, and now we've got 4 consecutive months of declining growth rates in terms of new non-farm payrolls, and we'll talk about that with our panel in terms of what it might mean for the Fed. The second part of that report does include the unemployment rate for June, and it fell to 4.2% from the prior month of 4.3%. Not much movement there, but good news, in fact, that it is continuing to remain fairly stable. Now moving to this week, we've got two reports from the Institute for Supply Management's PMI indices. On the manufacturing side, the index has been in expansion territory for roughly 6 consecutive months, which is great for 2026. And on the services side, even though it was a small decline, that has been an expansion for two years consecutively, almost 48 months, however, on a non-consecutive basis where the services economy has been in expansion. So good news there. Also this week on the employment front, we get the weekly initial unemployment claims report, which continues to show very stable numbers at 215,000 for the week ending July 4th. Again, that has remained very, very stable for almost 2 1/2 years now. In addition, we also received the minutes release from the Federal Open Market Committee meeting back on June 17th, and the key themes there in the minutes were not a surprise. It continued to talk about the elevated concerns around inflation, but also talked about not necessarily tipping the scales for a rate increase yet, and certainly not in the upcoming July meeting. We'll talk about it with Rajeev and George and get the take for the panel. During the podcast, we'll also get Steve's take on what's happening in the stock market and thoughts on preview of Q2 earnings. But before we get to that, let's go to George and get an update on the Iran situation, given that there was some Differences of opinion this week and basically a crack in the peace deal. So George will talk about that in relation to what's going on in that area and also in the economy. George?
George Mateyo [00:04:48]
So Brian, I'm not sure if anybody's got a really clear crystal ball with what's happening in the Middle East, but to put it in context, I guess, for everybody at least level set where we are right now, at least where we think we are as of Friday morning around 10 A.m. Eastern. I think it's fair to say that the ceasefire appears to be collapsing. We all have seen evidence of that in the past few days or so. Rhetoric has actually been increasing. Escalation thus far has been somewhat contained. It hasn't been too widespread, but nonetheless, the conflict does appear to be escalating moderately, I'd say. And I think the key issue, of course, is the overall fate of the Strait of Hormuz and actually what happens there going forward. I think to some extent, the Iranians felt that there was maybe some leverage lost in the sense that You know, once the ceasefire was first announced, of course, the price of oil receded and that kind of took away maybe some of their economic leverage to some extent because that makes things a little bit easier for consumers when prices go down. At the same time, I think some of the hardliners in their country probably were emboldened and probably felt a little bit reinvigorated perhaps. following the funeral of their former leader. At the same time, I think it's fair to say that there's also a lot of ambiguity with respect to the ceasefire and the language over the Strait of Hormuz. I think the Iranians kind of interpreted the comments that both the Iranians and the Omanis would actually get together and determine the future of this rate as kind of a green light to actually kind of legislate actually how commerce flows through this strait. So that ambiguity, some of those other factors I just mentioned, probably suggested them that they felt like they had rights over the control of the state. And of course, that is completely at odds with the administration here in the US and how they see things. So where we go from here, again, as I said earlier, it's far from clear. I think it's probably more likely that, again, we'll probably see some new ceasefire struck in the next few weeks or so, because I think both sides probably have some vulnerabilities that they probably acknowledge internally. around kind of what happens next. I think the Iranians, of course, have still a very fractured leadership structure, of course. And I think here, of course, at home, the administration is getting ready to focus on midterms and the price of oil and inflation probably actually factors largely into that discussion as well. So my best guess is that we'll probably see some type of new ceasefire in the next few weeks or so, some type of formal agreement, perhaps, again, maybe another MOU of some sort. And that probably kind of keeps oil probably in that $60 to $70 range. That being said, I still think there's probably a risk that we actually do see the conflict re-escalated to some extent. Maybe there's another blockade, maybe there's another type of conflict, or maybe some kind of escalation going further. And if that happens, then again, we could probably see oil hover back towards $90 or $100 a barrel. So again, there's a lot to think about. I think it could probably create a lot of volatility, a lot of noise in the near term. I still think, though, that the themes that we were talking about and the overall notion that the US is now more energy independent, meaning, again, most of the energy that we consume is stuff that we actually make here. So that's probably a net benefit to some extent. We actually are probably less immune-- actually, sorry, more immune to some of the pressures there. And at the same time, much of the world is still less energy-reliant than they were in the past, meaning we use less energy than we have in the future. So that's not to say that we have to be cavalier about this, but nonetheless, I don't think it's going to be quite the shock that it was, say, several decades ago when oil was at the center of geopolitics and economic discussions. Well, for us as allocators, though, I think it's kind of fair to say that the Fed is probably going to be kind of chewing this for quite some time. Of course, we have a new Fed share, and he's already kind of signaled that maybe inflation is something to be concerned about. So I think, I guess, Rajeev, for you, I think, I'm kind of curious to know how you think the Fed is processing this. Of course, they've kind of shifted their stance from Perhaps some easing or some cuts this year and maybe a hike later this year. But again, as far as I see, a pretty fuzzy outlook going forward. But what's your best guess in terms of what the Fed is doing with respect to their outlook on energy and inflation more broadly?
Rajeev Sharma [00:09:01]
Well, fuzzy is a good word to use with the Fed right now. We did get a glimpse into the Fed's thinking this week, actually, when we saw the release of the FOMC minutes from the June meeting. And just to recap for everybody, the Fed held the federal funds rate at 3.5% to 3.75%, but it was also the first Fed meeting chaired by Kevin Warsh. And what we saw in the minutes was a hawkish tilt, a divided Fed. Some officials saw a case for hiking rates at the June meeting itself, but they ended up going along with the rest of the members of the Fed. who mostly called to keep rates where they are. Overall, though, the dominant theme was price stability, or in other words, inflation. Several members said that inflation was becoming more broad-based and higher costs are going to eventually come down to final goods prices. The committee marked up their inflation forecast for the year, as we all know, raising headline and poor PCE projections. Now, you did have some committee members calling out AI, some called out energy. as inflation drivers due to the demand on electricity and prices. But most committee members were okay with the labor market, and they kept those projections pretty close to current levels. Now, the committee did remove some of the easing bias in the statement, and the statement itself was notably reduced. That is the Warsh effect, reduced forward guidance. With less forward guidance, we have a market that's not going to be focused entirely on each and every economic data report that we see. And with the minutes, the market reaction was pretty swift. The market started feeling that the minutes were released, the market realized how much the Fed is focused on inflation. Inflation is stubbornly sticky. The market started pricing in about 38 basis points of rate hikes for the year. And I think there was about a 36% probability of a July hike in rates. Now, we did treasury yields move higher because of this. We saw the two-year move up to a yield of 4.22%, and the 10-year broke through that psychological level of 4.5% and ended up around 4.6% midweek. So overall, the market views the minutes as hawkish, and that's really the only glimpse we're getting from the Fed right now. I think there's going to be reduced communications. The case for rate cuts is off the table, and the Fed under Warsh is a little less predictable, in my opinion. It's all going to be about data going forward. And another thing we heard about from Kevin Warsh this week was the appointment of these task force. He has five task forces that he has announced, Kevin Warsh has announced. This is communications, balance sheet policy, data sources, productivity and jobs. and an inflation framework. These are all task forces that will be co-led by three external experts and supported by the Fed staff. So they are really going to be providing findings to the FOMC. And again, the market is viewing this as Warsh's bet on a couple of different things. One, Warsh's bet on AI as a key economic force, and that's going to be the Productivity and Jobs Task Force. He's included Marc Andreessen and Xbox CEO Asha Sharma. Also, the group of appointees also in different task forces suggest that there might be some effort here to maintain a standing with the Trump administration, as Warsh is kind of drawing individuals that have knowledge about the markets, about economic signals. So I think that's something important to keep an eye on. This is a new Fed. This is not a passing of the baton, really. It's a completely new framework for the Fed, and the market's going to have to get adjusted to it. And the near-term volatility is obviously going to be expected because we're not going to get the kind of guidance that we used to get. We know that Fed Chair Warsh doesn't really like to talk about dot plots and stuff like that. So there's going to be some differences, I think, with the Fed going forward. And again, as I mentioned, every single data report, economic data report, is extremely important. We did get the June non-farm payrolls numbers. They kind of came below expectations that did drive the two-year yields lower by about 10 basis points right on the release of the data. And they did take down the July rate hike expectations. As I mentioned, they had gone to 38% that we couldn't get a rate hike in July. Now they're down to around 18% after the release of that data. So we are going to be seeing each and every data report dictate where the market thinks the Fed is going to move next. And I do think that this is going to be very important. Data has always been important for the markets, but even more so now if we start seeing a Fed that's departing from forward guidance.
George Mateyo [00:13:44]
So I'm glad you mentioned AI is part of the overall focus of the Fed, not only in terms of the productivity benefits that could accrue down the road, which I think is still significant and probably to be determined, frankly. But at the same time, they're also mindful of inflation and the impact that AI spending is having on some of the inflation numbers that we also look at as well. Steve, if I think about what you might be thinking about with respect to equity prices and kind of what's happening inside the equity market, it's curious to me that we've probably seen now at least a few months of rotation from some of the companies that initially were building out this infrastructure, spending gobs of money, frankly, on AI-related stuff, we'll say. And now the companies that are probably-- those companies now are betting that there are some price pressures there, right? They've actually started to raise prices. They're seeing their margins erode. They're seeing their cash flow erode. And now other companies like the semiconductor companies we talked about in prior conversations are really kind of taking some of that market share, if you will. So how are you thinking about AI as relates to the equity market and portfolio positioning within your portfolios?
Steve Hoedt [00:14:49]
Well, really, it's come down to that whole game of who are you investing in? Are you investing in the hyperscalers who are spending on this to be able to provide services or are you investing in the infrastructure? We've had kind of a couple of different phases to this so far. And what's been interesting to me is that after seeing semiconductor stocks basically be the be-all end-all for the market over the first six months of the year, but really accelerating in earnest in Q2, since June 25th, we've seen actually the MAG 7 outperform the market by 1,000 basis points, so that's 10%. So we've seen a bit of a rotation back. So it seems like this earnings season is going to be quite interesting. I think that the... Semiconductor stocks are likely going to beat expectations, but will they beat expectations by enough? We saw Micron beat expectations here a couple of weeks ago, and the stock actually reversed off of that. So you're starting to get to a point where the market maybe has marked up the expectations of how great this is going to be. And when we're seeing a company like Meta say, hey, we're going to build a business like Amazon Web Services to sell excess cloud capacity, it starts to make you wonder, are these guys overinvest? Have they overinvested in the in the infrastructure? So and there's a whole host of things going on. I'll tell you, George, the thing that keeps coming back to me about the market is we have seen this this idea that the market's broadening out, that it's more than just the tech stocks here lately, which is the pet has been a theme that we've been harping on for a while, that that would be healthy for the market. And we have seen that we've got earnings that are going to start to come out next week. You've got the large financial concerns that will be out toward the end of next week. The earnings for the S&P 500 came into 2026 on a forward 12 month basis at 310. We're at 371 right now. Our forecast is that we exit the year around $400 for the S&P. And the thing that we've talked about on this call and in every other forum that we have is that when that red line for the S&P 500 is going up and to the right, meaning the earnings line on the chart that we use. Over and over and over again, that it's really hard to bet against the market. And when you look at where the earnings line is likely to go over the last six months of the year, it's going to be up and to the right. So I think that we're likely going to see some backing and filling as we get some rotation maybe out of the hot semiconductor stocks, maybe a little bit back into the MAG 7. But I'll tell you, if people rotate weight into the MAG 7 and out of semis a little bit, that'll help drive the market higher too, because those MAG 7 names are 40% of the S&P 500. So we've got this broadening out theme that has been good. And we've seen the equal-weighted market moving higher. We've seen small-cap stocks moving higher. I think as we head in the back half of the year, we think things are likely going to continue to play out favorably for equity investors.
George Mateyo [00:18:16]
To what extent, though, Steve, do you think that earnings might be a little bit overextended, too? I mean, we can talk about valuations being extended, but is there a concern that maybe earnings themselves are overextended to some extent?
Steve Hoedt [00:18:28]
I think that's the truth, George. So when you look at valuation, valuation has come back in on the forward multiple. Late last year, in the fourth quarter, we were up around 23 times forward earnings. And right now, we're hanging out right around 20. So we've taken three turns out of the market multiple. The long-term average on forward earnings is not much further south from where we're at. It's around 19, 19 and a half. So we're around a normal multiple, frankly. And When you look at earnings, it does feel like, you know, when people talk about a bubble, where's the bubble? Well, maybe the bubble is in earnings. It's not maybe in stock prices right now. And when you look at some of the AI driven earnings numbers and, you know, you've pointed out before, you know, when you go start to go under the hood of the mag seven earnings numbers and you look at the other line and all these kind of things, it does kind of give you some pause that maybe the earnings numbers are not as sustainable as what people think they are. So, we'll have to see how that plays out over the course of the year. I don't disagree with your premise that that it does feel like the earnings numbers are not just pure earnings numbers that are coming straight from companies selling a product like there's other stuff that's kind of under the hood where you've got gains because of public offerings and other things like this.
Brian Pietrangelo [00:19:59]
So speaking of public offering, Steve, how about a comment or two before we close the podcast on today's?
Steve Hoedt [00:20:05]
Yeah, so SK Hynix has listed some ADRs here in the US. SK Hynix is one of the two largest memory makers in South Korea. If you've taken a gander at the KOSPI index or the South Korean stock market this year, it's kind of gone crazy. It's been driving the returns in the emerging market indices. because really it is a market that's driven by a couple of stocks that are levered to this memory theme. It's like if you can imagine Micron and those names basically being 50% of the market, that's what South Korea is. I mean, they decided to tap U.S. liquidity by listing some ADRs here. We're seeing that offering be fairly well received today and we are seeing tech stocks in the U.S. sell off a little bit. My guess is that there's some rotation where people are raising some capital in some of these semi-names that they've made a lot of money on here in the U.S. and now accessing SK Hynix because Hynix is probably a better quote unquote pure play than some of these other ones that maybe people have been playing other than Micron. So something to keep an eye on now that that's easier for people to access here. But at the same time, I tell you, we don't recommend that for any of our listeners or our clients at this time.
Brian Pietrangelo [00:21:26]
Thank you for the conversation today, George, Steve, and Rajeev. We appreciate your insights. And thanks to our listeners for joining us today. Be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results, and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up with you next week to see how the world and the markets have changed and provide those keys to help you navigate your financial journey.
Disclosure [00:22:00]
We gather data and information from specialized sources and financial databases including but not limited to Bloomberg Finance L.P., Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange (CBOE) Volatility Index (VIX), Dow Jones / Dow Jones Newsplus, FactSet, Federal Reserve and corresponding 12 district banks / Federal Open Market Committee (FOMC), ICE BofA (Bank of America) MOVE Index, Morningstar / Morningstar.com, Standard & Poor’s and Wall Street Journal / WSJ.com.
Key Wealth, Key Private Client, Key Private Bank, Key Family Wealth, and KeyBank Institutional Advisors are brand names used by KeyBank National Association (KeyBank). Key Wealth and Key Private Client are also brand names used by Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor.
The Key Wealth Institute is comprised of financial professionals representing KeyBank National Association (KeyBank) and certain affiliates, such as Key Investment Services LLC (KIS) and KeyCorp Insurance Agency USA Inc. (KIA).
Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual author(s), and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.
This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy.
KeyBank, nor its subsidiaries or affiliates, represent, warrant or guarantee that this material is accurate, complete or suitable for any purpose or any investor and it should not be used as a basis for investment or tax planning decisions. It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal or financial advice.
The summaries, prices, quotes and/or statistics contained herein have been obtained from sources believed to be reliable but are not necessarily complete and cannot be guaranteed. They are provided for informational purposes only and are not intended to replace any confirmations or statements. Past performance does not guarantee future results.
Brokerage and certain investment advisory services are offered through Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor. Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA) and underwritten by third party insurance carriers not affiliated with KIS. KIS and KIA are affiliates under the common control of KeyCorp. To learn more about KIS’s investment business, as well as our relationship with you, please review our KIS Disclosure page. Check the background of KIS on FINRA's BrokerCheck.
Non-Deposit products are:
NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE • NOT A DEPOSIT • NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY