As we head into the Fourth of July weekend, it's worth taking a moment to appreciate more than fireworks, cookouts, and a long weekend.
This year marks America's 250th birthday—a remarkable milestone for a nation that has weathered wars, recessions, inflation, technological revolutions, political disagreements, and countless predictions of its demise. Through it all, the United States has continued to innovate, adapt, and grow.
As investors, that's an important reminder.
Markets, much like countries, rarely move in straight lines. They experience setbacks, periods of uncertainty, and moments that feel overwhelming. But history consistently rewards those who maintain perspective instead of reacting to every headline.
And this week certainly gave us plenty of headlines.
A Week That Looked Chaotic...But Wasn't
At first glance, investors had every reason to be nervous.
The ceasefire between Iran and Israel remains fragile, with renewed attacks around the Strait of Hormuz reminding markets that geopolitical risks haven't disappeared. Oil prices continue to react to every new development, and no one knows exactly how the next chapter unfolds.
At the same time, investors are debating everything from inflation to Federal Reserve policy to the health of the labor market.
Yet beneath all of that noise, something much more important continues to unfold.
The U.S. economy keeps proving more resilient than many expected.
Consumers Continue to Surprise
For nearly two years, many economists predicted that higher interest rates, elevated gasoline prices, and inflation would eventually force consumers to pull back.
That simply hasn't happened.
Gasoline prices climbed well above where they stood before the Middle East conflict. Consumer confidence remains historically low. Yet consumers continue spending.
Retail sales have remained surprisingly strong, even after removing the impact of higher fuel prices.
Why?
Because actions matter more than emotions.
We've talked before about the K-shaped economy, where higher-income households have benefited from rising home values, stock market gains, and wage growth while many lower-income families have struggled with affordability.
This year, however, there's been a subtle but important shift.
Tax relief from the One Big Beautiful Bill is beginning to reach households through lower withholding and refunds, providing over $100 billion of additional support. Combined with continued job growth and rising incomes, even lower-income consumers are starting to receive some relief.
That doesn't eliminate affordability concerns.
It simply means the consumer has more resilience than many forecasts assumed.
Corporate America Is Still Investing
Consumers aren't carrying the economy alone.
Businesses continue spending aggressively.
Artificial intelligence is no longer just a stock market story.
Data centers, electrical infrastructure, cooling systems, semiconductors, networking equipment, cybersecurity, and software investment now account for roughly 1% of U.S. GDP, an astonishing figure considering how quickly AI adoption has accelerated.
Beyond AI, manufacturing data continues improving.
New orders remain healthy.
Industrial production has strengthened.
Capital spending continues expanding.
Corporate America isn't behaving like it expects a recession.
Instead, businesses continue preparing for future growth.
Earnings Matter More Than Headlines
One of the healthiest developments in today's market is something that rarely becomes a headline.
Corporate earnings continue improving.
That's important because bull markets built on earnings tend to be far healthier than bull markets built solely on investor optimism.
Even after the market's impressive rally off the March lows, valuations have actually become slightly more reasonable because earnings have risen faster than stock prices.
That isn't what happened during the dot-com bubble.
It's a much healthier foundation.
History also offers an encouraging reminder.
The S&P 500 just completed one of its strongest two-month rallies since 1950.
While sharp rallies sometimes occur during recessions, many have also occurred during healthy economic expansions—including 1997, 1998, 2019, and 2025.
Historically, when those rallies happened outside of recessions, markets often continued moving higher over the following three to six months.
History never guarantees outcomes.
But it does remind us that strength alone isn't something investors should automatically fear.
The Fed Enters a New Chapter
One development that received less attention than it deserved came from new Federal Reserve Chair Kevin Warsh.
Rather than offering detailed forecasts about future interest rate decisions, Warsh acknowledged that the Fed's confidence around long-term forecasting is relatively low.
That's refreshingly honest.
Instead of relying heavily on forward guidance, he's announced multiple task forces to evaluate areas where the Federal Reserve believes it has fallen short over recent years.
For investors, this represents an important philosophical shift.
Rather than pretending policymakers know exactly where inflation, employment, or growth will be six or twelve months from now, the Fed appears willing to become more data dependent and less committed to predetermined policy paths.
Markets may experience more short-term uncertainty as a result.
Ironically, that may produce better long-term decisions.
Housing May Quietly Help Inflation
One story receiving far less attention than artificial intelligence or geopolitics is housing.
Housing affordability remains difficult for many families.
But underneath the surface, conditions are gradually improving.
Home prices have largely stopped accelerating.
Rent growth has slowed dramatically.
Builders continue adding supply while population growth has slowed meaningfully.
That combination matters because shelter represents roughly one-third of the Consumer Price Index.
If housing inflation continues cooling, it could become one of the largest contributors to lower overall inflation during the next year.
Sometimes the biggest economic stories aren't the loudest ones.
What I'm Watching Next Week
The market's attention now shifts back toward employment.
We'll receive:
- The monthly jobs report
- JOLTS job openings
- Weekly unemployment claims
- ISM manufacturing and employment data
- Factory orders and durable goods
- PMI reports from China
- European inflation data and remarks from global central bankers
Collectively, these reports should provide a clearer picture of whether the economy continues threading the needle between slowing inflation and steady growth.
My Take
It's easy to become consumed by the daily headlines.
Iran.
Oil.
The Fed.
Artificial intelligence.
Inflation.
Politics.
Every week offers a new reason to believe the future has suddenly become impossible to predict.
But stepping back tells a different story.
Consumers continue spending.
Businesses continue investing.
Corporate earnings continue growing.
Inflation appears to be gradually cooling in several important areas.
None of that eliminates risk.
Markets will always experience volatility.
But successful investing has never been about predicting every headline.
It's about recognizing the difference between temporary uncertainty and long-term opportunity.
As we celebrate 250 years of American independence, I'm reminded that the country's greatest strength has never been avoiding challenges.
It's been adapting to them.
The same principle applies to successful investing.
Stay disciplined.
Stay diversified.
Keep your eyes on your long-term goals.
Everything else is mostly noise.
From my family to yours, I wish you a safe, relaxing, and meaningful Fourth of July weekend. Enjoy the time with family and friends, celebrate the freedoms we often take for granted, and take a moment to appreciate just how far this country has come over the past 250 years.
Happy Independence Day!