Market Insights Recap — Week of September 14, 2026

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

Hey, halfway through September, stocks are basically flat. I'll take it. Now, Wednesday is Fed day. So let's set the stage. Big picture, we're in a reflation era. The ultra low interest rate and low growth period from 2009's GFC? That's over. We're returning to a healthy 5 to 7% nominal growth rate for our economy. 

Now the AI buildout/boom is a definite driver. But it's not the only one. Part of every up cycle is inflation, and as demand for goods and services increases around the globe, prices do react. We're in the midst of a crude oil and diesel supply shock also. That temporarily pushes up prices.

Inflation is on Wall Street's worry list thanks to persistent mid- to high-3% readings on the official government measures. I think the reality is a bit worse. Somehow, the BLS reports that healthcare costs have dropped by one-third over the last four years. My healthcare costs haven't dropped at all. 

Milton Friedman was right. Inflation is always and everywhere a monetary problem. So in College Station words, that means that the price of money is more dependent on the supply of money than anything else. M2, or the amount of money in checking and savings accounts, is the biggest driver of long-term inflation. Its rate of growth was above 20% when the Biden administration was showering checking accounts with virus shutdown checks. As this happened time and time again, shortly after the helicopter money hit, inflation rose to 9% in June of 2022. M2 growth has been slowing recently, suggesting that inflation over the next year or so will moderate. 

Now various components of CPI and PPI have been going up and down. Readings over the last few months, though, have held steady. The diesel fuel shortage is going to drive, no pun intended, just about all goods prices higher over the next year. Russia exported about one-third of global diesel supply, and thanks to those Ukrainian drone strikes, that supply has been cut to near zero. 

Regardless, markets are pressuring the Fed to increase short-term interest rates after Wednesday's FOMC meeting. We think it's a close call whether the Fed goes or not. Steady employment numbers, low inflation expectations, declining money supply growth. Argue to stand pat. Nervous Wall Street, rising fuel prices demand something be done. Whether it's the right thing or not, stocks have been taking rising interest rates and oil prices in stride, especially considering it's September, one of the two worst months of the year for stock returns. Interest rates will continue to grind higher, thanks to inflation and that Congress deficit spending habit. So patience with our stock positions, low bond exposure, moderate commodity exposure and cash is doing well for us; 'til next time.