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Let’s dive into this week’s analysis!
A quick breakdown — in case you don’t have the time.
⭐ A new Fed chair usually comes with market turbulence.
⭐ Are these 3 credit myths holding you back?
⭐ Corporate profits are still powering this market.
⭐ The AI boom is becoming a capital spending boom.
⭐ The U.S. and Iran signed an interim peace deal.
Market Overview
As of Market Open 6/18/26
ETF Winners & Losers
Chart of the Week
A new Fed chair usually comes with market turbulence.
Kevin Warsh chaired his first FOMC meeting this week, and history suggests the first few months under a new Fed leader can be bumpy.
Going back nearly a century, every new Fed chair has seen the S&P 500 experience a drawdown during their first 90 days. The average drawdown is roughly -12%, with the worst coming under Alan Greenspan at -33% and the mildest under Ben Bernanke at just -2%.
Jerome Powell’s first 90 days saw a -7% drawdown. Janet Yellen’s saw -4%. Not one new Fed chair has avoided equity weakness during their first three months.
At the start of the year, investors were expecting rate cuts. After this week’s FOMC meeting, the bond market is now pricing in the possibility of rate hikes, while the 2-year Treasury yield has climbed sharply from where it began the year.
The Fed is no longer just debating how quickly it can cut. It is now dealing with sticky inflation, resilient labor data, elevated asset prices, and a bond market that is forcing investors to reconsider the entire rate path.
The message is not that a drawdown is guaranteed. It is that leadership transitions at the Fed tend to create uncertainty — and this one is happening just as the market is being forced to rethink the path of interest rates.
Buckle up and ride the wave! Dollar cost average.
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In Case You Missed It…
In this week’s Monday-morning episode of the Rich Habits Podcast (linked here) — Austin and Robert break down three of the biggest credit myths that are quietly costing Americans money.
Here’s what they covered…
You Don’t Have to Be Rich to Have Great Credit — Your income, net worth, and savings account balance are not part of your credit score. Credit is built through habits — paying on time, keeping utilization low, letting accounts age, and managing the credit you already have responsibly.
Carrying a Balance Does Not Help Your Score — One of the most expensive credit myths is the idea that paying interest somehow improves your score. Credit bureaus care about whether you pay on time and how much of your available credit you use — not whether you carry a balance month to month.
Closing Old Cards Can Hurt You — Closing an old credit card may feel responsible, but it can reduce your total available credit and shorten your credit history. Unless a card has a high annual fee or creates bad spending habits, the better move is usually to keep it open with a small recurring charge and autopay.
The Credit Playbook — The framework is simple: pay your statement balance in full every month, keep utilization below 10%, avoid closing old no-fee cards, and check your credit report regularly for errors. These small habits can lead to better mortgage rates, auto loan rates, insurance premiums, credit card rewards, and more.
Your credit score is one of the most powerful financial tools you can control. The people who build wealth do not just invest well — they borrow well too.
Here’s a link to the Q&A episode that was posted on Thursday.
You can submit questions for these episodes by asking them inside of the Rich Habits Network, replying to this email, or sending us a DM on Instagram.
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Austin’s Callout
Corporate profits are still powering this market.
This is the S&P 500 net profit margins going back to 1991 — the solid line is what companies have actually earned, and the dotted line shooting into the upper right is Wall Street's forecast through 2027.
Trailing margins sit at 14.5%, an all-time high. Wall Street expects 16.7% by end of 2027. That's a 15% increase in profitability on the same revenue base — no top-line growth required.
S&P 500 companies generate roughly $18 trillion in annual revenue. At 14.5% margins, that's $2.6 trillion in profit. At 16.7%, it's $3.0 trillion. An extra $400 billion in aggregate earnings just from margin expansion. That's the engine Wall Street is pricing in, and it's why the market keeps grinding higher even when people say valuations look stretched.
In the early '90s, margins ran 3-5%. Late '90s, 7%. Post-GFC, 8-10%. Post-COVID, 12%. Now 14.5% heading toward 17%. Every recession on this chart — dot-com, GFC, COVID — crushed margins temporarily. And every single time, they recovered to new all-time highs. The dips were temporary. The structural improvement was permanent.
In 1991, the S&P was dominated by capital-intensive industrials and banks with thin margins. Today it's led by Microsoft at 36% net margins, Apple at 26%, Nvidia north of 55%. These businesses convert revenue to profit at rates unimaginable to a 1990s portfolio manager. And AI is accelerating this across every sector — more output, fewer inputs, less overhead.
Of course that dotted line comes with risk. It assumes no recession through 2027, no second-order effects from the Iran oil shock, and that AI efficiency gains actually show up in earnings rather than getting reinvested into capex.
But even if margins just hold at 14.5% and never reach 16.7%, the structural profitability of American corporations is genuinely different than it was a decade ago.
Yes, there's always a reason to be "spooked" about the markets — new Fed chairman, conflict in the Middle East, AI bubbles — but this is the structural momentum driving the markets higher.
More profits = higher stock prices.
Robert’s Callout
The AI boom is becoming a capital spending boom.
For most of the last two years, investors have focused on the obvious winners of AI: Nvidia, Microsoft, Meta, Google, Amazon, and the rest of the mega-cap tech complex. But the next phase of the story is about the scale of investment required to keep the AI boom going.
Technology companies are now spending at a historic pace. The CapEx-to-sales ratio for developed market tech firms has climbed to a record 11.5%, up roughly 4 percentage points in just two years. That is the fastest two-year increase on record and well above the prior peaks from the late 1990s and early 2000s.
AI is not cheap to scale. Data centers, chips, servers, networking equipment, cooling systems, power generation, and grid upgrades all require enormous upfront investment before the revenue fully shows up.
The contrast with the rest of the market is striking. Developed market companies outside of tech have a CapEx-to-sales ratio closer to 7%, which is actually below their long-term average. In other words, this investment boom is not happening everywhere — it is heavily concentrated in the AI ecosystem.
But the ripple effects are spreading. Utilities now have a CapEx-to-sales ratio near 23%, well above their long-term average of roughly 15%, as power demand from data centers forces the energy grid to expand.
This is why we keep saying AI is bigger than just a handful of tech stocks. It is reshaping capital allocation across the entire economy. The risk is that companies overspend and future returns disappoint. But for now, the market is treating AI like the next major infrastructure cycle — and the spending data backs that up.
The Rich Habits Radar
👉 The U.S. and Iran signed an interim peace deal.
👉 Intel jumped after Apple agreed to a U.S. chip partnership.
👉 AI “MANGOS” ETF filings hit Wall Street.
👉 Accenture fell after cutting its revenue outlook.
👉 SpaceX briefly became the 5th most valuable company.
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