Market Insights Recap — Week of July 13, 2026

Hello, I’m Steve Orr, Chief Investment Officer for Texas Capital’s Private Bank. 

Wow, we’re almost halfway through July; the fun fireworks start this week as second quarter earnings season starts on Tuesday. What drives earnings? Spending — retail sales continue to impress. Johnson Redbook weekly sales, they’re at their highest level since September of 2022. Folks are rightly becoming more price sensitive though, as inflation continues to creep towards 4%. And this week, we get June’s estimate of consumer prices — should come in around 3.8%. 

Producer prices are running north of 6% annual growth thanks to supply problems from the Iran versus Everybody war. Now remember, the late great Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon.” In other words, too much money chasing too few goods. Now simplified: Congress spends, the Treasury gets loans to fund the spending, the Fed creates electronic dollars in the banking system to pay for the spending and maybe someday pay off that loan.

Stocks are shrugging off inflation focusing instead on AI build-out and hoped for productivity gains. The whole “AI is going to cut jobs” narrative we think is a bit off base. We’re seeing some productivity improvements among our clients, but they, and we, have a little different problem. AI presents so many research opportunities that we need to hire people, not cut. 

Second quarter earnings season starts Tuesday with the big banks, and there’s going to be plenty of questions from analysts about how firms are using AI. We do know of firms using customer service chat bots that actually have LinkedIn profiles. Now, earnings for the S&P 500 are projected to grow 23% over last year’s second quarter. Tech’s going to lead the way with profits rising 50% or better, but energy also had a big quarter thanks to the Iran war. Strip out text booming earnings, my Claude AI tool tells me the rest of the S&P 500 earnings should be about 11% higher than 2025 second quarter. I’ll take 11% growth any day, thank you very much. 

A steady economy, 4.2% unemployment and earnings growing double digits — hard to do much better. Certainly, no recession on the horizon. So, stay invested; until next time.