HPWG Market Update Podcast September 2026: Rates, Inflation, AI, and Portfolio Positioning

JENNA:

Welcome to the September edition of the Hoffman Private Wealth Group Podcast. I am Jenna Makras, Wealth Advisor with Hoffman Private Wealth Group, and I’m joined by Todd Hoffman, our Founding Partner, and Portfolio Manager.

Each month, we take a few minutes to discuss what is moving the markets, what we are watching, and how we are positioning portfolios. Before we get into the markets, Todd, it is hard to believe summer is already winding down.

TODD:

Thanks for joining us today. Jenna, you’re right, it’s almost Labor Day and summer is coming to an end—It sure doesn’t feel like it though, I golfed this past weekend and wow, I thought I was going to have a heat stroke. So, how was your summer, and what are you looking forward to this fall?

JENNA:

It was definitely a full summer for me, a lot of family time and a lot of change. We just wrapped up summer with a really fun weekend at Disney celebrating Chloe’s 8th birthday, so that was a pretty special way to end it. Now that school is back in session, I’m looking forward to getting back into a routine and everything we have coming up this fall. And, of course, I’m looking forward to some cooler Florida weather… whenever that decides to show up!

How was your summer?

TODD:

My summer was great! I enjoyed spending some time in Colorado. I had some nice bike rides, a few hikes, played a few rounds of golf and just enjoyed the change of scenery and cooler weather. I like working in my office there but it’s nice to be back in the office with everyone.

JENNA:

Turning to the markets, August gave investors plenty to process. Where would you like to begin?

TODD:

I think we should begin with the Federal Reserve because interest rates have quickly returned to the center of the market conversation.

According to the Federal Reserve’s July meeting statement and subsequently released minutes, the Fed left the federal funds rate unchanged at 3.50% to 3.75%.

Earlier in August, cooling inflation increased expectations that the Fed would remain on hold in September. However, the tone changed following Federal Reserve Chairman Kevin Warsh’s speech at the Jackson Hole Economic Symposium.

Chairman Warsh emphasized that inflation remains too high and indicated that the Fed still has work to do if inflation does not continue moving convincingly toward its 2% target.

According to the CME FedWatch Tool and market data reported by Reuters following the speech, investors began pricing in a 55% to 60% probability of a quarter-point rate increase at the Fed’s September meeting. That represents an important change from just a few weeks ago.

JENNA:

Why would the Fed consider raising rates when some inflation reports have shown improvement?

TODD:

Because the Fed is looking at the entire economy, not simply one inflation report.

The Fed’s recent statements have highlighted the continued resilience of economic activity and the labor market. At the same time, energy prices remain elevated because of the conflict with Iran and the disruption in the Strait of Hormuz.

If the economy continues growing and inflation remains above target, the Fed may conclude that current interest rates are not restrictive enough.

However, I believe the September rate increase is still a coin flip.  The decision will depend heavily on the inflation and employment reports released before the September 16 meeting.

JENNA:

How is that affecting the bond market and the portfolios?

TODD:

According to Treasury-market data reported by Reuters following the Jackson Hole speech, the two-year Treasury yield moved above 4.3%, while the 10-year Treasury yield was approximately 4.7%.

That creates attractive income opportunities, but it can also create volatility in longer-maturity bonds.

We continue to favor bonds with shorter and intermediate maturities, where investors can earn meaningful income without assuming as much interest-rate risk. We are cautious about extending too far out on the yield curve because longer-term bonds could experience additional price pressure if inflation remains elevated or the Fed raises rates.

Concerns of higher rates is also creating added volatility to the stocks in the portfolios.

JENNA:

What should investors watch between now and the Federal Reserve’s September meeting?

TODD:

The three things I am watching in front of the meeting are the price of oil, the Labor reports and the CPI. I guess I would also say the news coming out of IRAN in front of the Fed meeting.

JENNA:

Let’s turn to Iran. Where does the situation stand today?

TODD:

It seems like even with the headlines saying a resolution is near, the longer this goes on the further away they are from reaching one.   

According to reporting from Reuters on August 28, U.S. Central Command reported that Iranian sea mines have been cleared from the primary international shipping lanes and it is open.

That is important, unfortunately, commercial shipping activity remains low due to the high risk in the region and according to market data reported by Reuters, West Texas Intermediate crude is trading near $83 per barrel, while Brent crude is approximately $89.

JENNA:

Despite those concerns, the stock market has continued to perform well. Where do the major indexes stand?

TODD:

According to Factset, the S&P 500 is up approximately 13%, Nasdaq is up about 14%, and the Dow Jones Industrial Average has gained roughly 12% so far this year.

One of the more important developments is that the strength has broadened beyond the largest technology companies. The Russell 2000 small-cap index is up approximately 21% so far this year.

JENNA:

Which sectors are currently working?

TODD:

Technology continues to work, particularly the parts of technology connected to artificial intelligence infrastructure since the end of June have become very volatile from day to day. Also, the swings in individual stocks have been far more volatile than the indexes, both during up and down days.  

According to State Street Global Advisors, recent earnings growth has broadened across the market, but technology has remained the major source of market leadership and earnings growth with strong demand for semiconductors, networking equipment, memory, data storage, cybersecurity, data centers, power generation, cooling, and the electrical equipment needed to support the AI buildout.

Industrials have also been one of the stronger sectors this year. According to S&P Dow Jones Indices sector data, industrials have benefited from spending on power infrastructure, data centers, aerospace and defense, automation, and manufacturing.

Energy has benefited from higher oil and natural-gas prices.

JENNA:

What areas are not working as well?

TODD:

According to Schwab’s most recent sector outlook, consumer discretionary and real estate were among its least-favored sectors. We have done ok with our consumer picks, but we have been very selective, and we have also added to this area buying a couple of high-quality companies while they are on sale.  

Surprisingly, utilities have also been under pressure, which I believe is because many income-oriented investors are finding other alternatives now that interest rates are higher.

JENNA:

We continue to hear that the economy and consumers are resilient. Why are so many consumer stocks struggling?

TODD:

Many consumer discretionary companies are hurt by consumers struggling with higher costs in energy, housing, insurance, and higher interest rates.

The headline consumer numbers do not tell the entire story. Higher-income households have generally remained resilient, supported by employment, rising financial assets, and home equity. Lower- and middle-income consumers are facing much greater pressure from the day-to-day higher cost of living just mentioned.

That is creating a divided consumer economy. Luxury travel, premium services, and selected higher-end companies continue to perform well, while more price-sensitive retailers and discretionary businesses face pressure on sales and profit margins.

JENNA:

You have discussed the enormous amount of money being invested in AI. We have discussed that the news media has been highlighting concerns about the financing needed to support the increased spending, is that a concern?

TODD:

The AI companies, with increasing sales for the most part, have very strong balance sheets and train loads of cash flow.  According to Reuters, AI-related hyperscalers issued approximately $220 billion in new debt so far in 2026, compared with about $12.5 billion during the comparable period last year, which rightfully has raised a lot of eyebrows. A lot of these companies have also issued more stock. Because these companies are so profitable most maintained high credit ratings, with some still being upgraded, but we are continuing to monitor the situation. On the stock side, when there is new stock being offered, we do have concerns about dilution, but in most cases according to FactSet, the PE ratios are still so low it hasn’t been a problem.   

JENNA:

Todd, do you have anything to add about the portfolio positioning?

TODD:

We have continued to manage risk while maintaining exposure to the strongest areas of the market.

We have trimmed some positions following large gains, raised cash selectively, and exited companies when their fundamentals or price action no longer supported our original thesis.

We have exposure to AI infrastructure, semiconductors, data storage, power, industrials, and added diversification in financials, healthcare, energy, and added to small-cap companies and international markets.

We have also been hedging with our strategies to mitigate downside exposure. The objective is not to predict every short-term market move. It is to allow us to participate in the strongest opportunities while having a plan in place should market conditions deteriorate.

JENNA:

What would make you more cautious during September?

TODD:

According to FactSet, September can be one of the most volatile months, but generally at the end of the month it ends up being a good month.

JENNA:

What is the constructive case for the market?

TODD:

The constructive case is that diplomacy continues to improve, energy prices gradually normalize, inflation resumes its downward trend, and the Federal Reserve leaves rates unchanged.

State Street’s third-quarter sector outlook noted a majority of S&P 500 sectors are expected to generate double-digit earnings growth during 2026. With the assistance of the broadening of earnings, I expect a good third and fourth quarter. I think the portfolios look great and as a client if I had the funds available I would take advantage of buying any dips along the way.  

JENNA:

What is the main message you want clients to take away this month?

TODD:

The main message is that the market remains constructive, and I believe we will have a strong finish to the year, even if we see some bumps along the way.

We are also being defensive, monitoring interest rates, inflation, Iran, and corporate earnings.

Our job is to identify businesses producing strong earnings growth, to manage risk, and help our clients avoid being whipsawed by short-term headlines and we take this very seriously.

Thank you for listening to the Hoffman Private Wealth Group Market Update Podcast and if you have questions, comments, or concerns, let us know.

JENNA:

Thank you for listening to the September edition of the Hoffman Private Wealth Group Podcast. If you find this conversation helpful, please share it with someone who might benefit from a thoughtful, research-driven perspective on today’s markets. Also, we are still taking on new clients and if you would like to talk with us, or you know someone to recommend us to, we look for to hearing from you. Thank you!

Source References

Sources referenced verbally in the podcast include:

• Federal Reserve: July 2026 FOMC statement and meeting minutes
• CME Group: FedWatch Tool
• Reuters: Global markets and Federal Reserve coverage, August 28, 2026
• Reuters: Iran and Strait of Hormuz coverage, August 28, 2026
• Associated Press: U.S. market index recap through August 27, 2026
• S. Energy Information Administration: Strait of Hormuz oil-transit data
• S&P Dow Jones Indices: U.S. sector performance data
• State Street Global Advisors: Third-quarter 2026 sector outlook
• Charles Schwab: July 31, 2026 sector outlook
• BlackRock: 2026 investment outlook
• Bureau of Labor Statistics: September 2026 employment and CPI release calendar
• Reuters: U.S. corporate AI debt issuance, August 21, 2026
• Reuters: Transportation fuel surcharges, August 28, 2026
• Reuters: Gold and Federal Reserve rate expectations, August 28, 2026

Important: This script is intended for general informational and educational purposes. It should not be treated as individualized investment advice. Market conditions, prices, yields, and probabilities can change without notice.

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