Delta Wealth Solutions Strategy Lab
Welcome to the Strategy Lab. The Delta Wealth Solutions Strategy Lab focuses on providing the necessary insights to help clients achieve optimal investment and planning outcomes. Please check back regularly for our quarterly market newsletter along with commentary on the stories that move markets.
October 2026
Delta Strategy Lab - Market Update
The Right Pieces in the Right Places
It’s becoming tradition around Delta Wealth Solutions to use our October newsletter intro to create a parallel to football season. This year, let’s take a look at the different positions that create a football team. The offense carries offensive linemen, wide receivers, tight ends, running backs, and quarter backs. The defense carries defensive linemen, linebackers, and defensive backs. Many different position groups have to work together towards a common goal, and most importantly they have to do their job. Coaches wouldn't move a cornerback to play defensive end, nor would one place a running back at tight end. For those that might follow our hometown Chiefs, what if Travis Kelce and Patrick Mahomes swapped positions? Travis Kelce is many things but I don’t get the impression that Andy Reid would want him throwing the ball, and I think there would be plenty of injury concerns if Patrick Mahomes attempted to go over the middle of the defense to make a contested catch. The key is that every player has a position, and when all those players work together they create a team.
Investors are wise to create a portfolio in much the same manner. Large cap growth stocks might score the majority of the touchdowns in the investment world, but they would be nothing without a defensive bond position to cover in the event of poor market conditions. What about small cap stocks or international allocations? When the main receiver is covered, we have to look to players with different skill sets and that’s when we expect these outlier market segments to outperform. All things considered, a football team is a collection of all its players, and all its players serve a very specific and important purpose, just like diversified positions within an asset allocation portfolio.
Where do I stand with my financial plan?
The investment landscape throughout 2026 has been very interesting. The tailwinds from robust earnings growth have been met with increased energy prices. Furthermore economic growth has run into the wall of worry surrounding the build out of the artificial intelligence sector. Finally, midterm elections being right around the corner give market participants plenty to be on the fence about. It appears agreeable that we’re in a time of significant unknowns in both equity and fixed income markets. Will earnings growth continue? Will interest rates flatten? Will the price of oil normalize? All valid questions. Investors, when faced with unknowns, should focus on factors which remain in our control at all times such as diversification. Just like our metaphor of the football team needing different types of players, investors must retain equity allocations across both large to small and growth to value market segments. Fixed income investors need to balance rate movements on both long and short ends of the yield curve. In doing this, investors give themselves the greatest probability of having something in their portfolio performing admirable at all times, and having sufficient market segments to be able to rebalance with when necessary.
"Bull Markets are like a cruise ship. Once they get moving, they are hard to slow down, hard to stop, and very hard to turn around." Ryan Detrick
The Team is Doing Well, but Players Underperforming
The stock market continues to climb the wall of worry. Apologies if you have heard that before, but it is never the less still true. The S&P sits up 12% on the year and up 2% during the third quarter. The last three months have seen the war in Iran re-escalate sending gas and diesel prices to new 2026 highs. AI spending has driven global interest rates to multi decade highs as nominal GPD is expected to reach 8% for the 3rd quarter1. All the while US consumer sentiment has plummeted near new lows2. One may ask themselves, how is this possible? In times of uncertainty it’s helpful to remember the market (both stocks and bond) is a forward looking mechanism. The market turns to the upside often before there are clear signals to do so. For example, the S&P 500 bottomed on March 23rd 2020 during the Covid-19 pandemic. This was nearly a full two years before the entirety of the world fully reopened an rescinded mask mandates. Similarly, during the 2022 bear market when stocks fell 27% and bonds fell 14%, both assets began their correction near the first trading day of 2022. Inflation wouldn’t peak at 9.1% for another 6-months and the Federal Reserve would go on to increase interest rates from 0% to 4.5% by year end. We share these stories not because we know how 2026 is going to end, but to illustrate one don’t necessarily need to know. While everything isn’t rosy for every family out there, for investors there are a number of good things to hang your metaphorical hat on. Corporate earnings are expected to finish the year up 32%, the unemployment rate remains steady around 4.1%, and energy markets are finally stabilizing, albeit at a higher level. One should expect more volatility and more sensationalized media reporting as the mid-terms get closer, but the key to successful investing is avoiding the noise and following the plan. Portfolio performance and financial success is a long season, not a short-term trade.
Though stocks have mostly seen positive appreciation across the cap and style spectrum, the fixed income side of the team continues their multi-year struggle. To use a football analogy, fixed income should largely operate as the offensive line for any portfolio. Fixed income should be boring, steady, and durable providing a platform for others to do what they excel at. Unfortunately similar to the Chiefs’ left tackle situation fixed income hasn’t been the star performer this year. The Barclay’s aggregate bond index is down 2.9% on the year mostly due to key rate increases across the yield curve. More simply the 10-year treasury has increased 1.25% year-to-date and this has caused fixed income to reprice downward. Fortunately for Delta Wealth Solutions client portfolios have generally been positioned shorter duration, insulating most fixed income positions from material drawdowns. Additionally, higher coupon payments as bonds mature should increase portfolio performance over the long-term, creating a net benefit for investors holding significant fixed income positions in their portfolio. Similar to a football team, there will always be outperformers and underperformers—but what truly matters is how players function as a team, and so far through 2026 diversification is working for investors and delivering attractive investment results.
AI Boom Continues
AI is everywhere. Super Bowl commercials, iPhone integration, self driving cars. More and more often we are seeing the impacts of the AI buildout in real time in our daily lives. While the technology is starting to become more prevalent, it’s still extremely difficult to fathom just how large the movement is and the knock on impacts across the world. A local anecdote for those familiar with the Kansas City area. Meta recently opened their first Data center in the metro. The buildout featured a $1 billion investment, employing ~1,500 stilled trade workers throughout the project and will support 100 operational jobs in perpetuity3. Recently Port KC announced the addition of 5 more data centers coming, with the next one featuring Google spending $10billion for the first phase. According to some estimates, there are up to 2,200 of these projects currently under construction across the country. Using some creative liberties this amounts to approximately 2% of US GDP, roughly the equivalent of what the United States spends on education or defense spending every year and as of now, there aren’t any signs of slowing. According to Carson Investment Research (not affiliated with Delta wealth solutions) US non-defense capital spending has accelerated 16% this year. This acceleration is pushing corporate earnings and US GDP estimates to highs few expected at the start of the year. According to the Atlanta Fed GDP Nowcast they’re expecting real GDP growth of ~4% for the third quarter4. Analysts are expecting corporate profits to grow 32% in 2026 and another 15% in 20275. While none of these statistics directly impact American’s at the micro level—they’re significantly bullish trends for investors that have exposure to stocks.
Sources: Duality Research - dualityresearch.substack.com 4 July 2026
High Growth, Not High Inflation Likely the Cause of High Rates
In September the Federal Reserve announced its first interest rate hike in nearly three years. If you listen to the media, most will proclaim the hike was necessary due to higher energy prices from the war in Iran. In our view, the Federal Reserve embarking on yet another interest rate hiking cycle largely misses the mark. There is no doubt energy prices are higher due to the war in Iran and lesser discussed, but still consequential, the war between Russia and Ukraine. During the peak of the war in Iran, the Strait of Hormuz took as much as 20% of the worlds’ oil temporarily offline. The good news is recent reports have shown transit through the Strait is nearly back to pre-war levels6. The problem now is refining capacity, more specifically the ability to turn petroleum based products into finished goods for use still sits at lesser capacity due to targeted strikes against Russian refining and policy choices by governments around the world. Pivoting back to the Federal Reserve hike last month, a higher fed funds rate doesn't solve a supply shock problem. In our view, a higher fed funds rate does virtually nothing to solve the core inflation problem and largely hurts the least affluent households the most.
On the flip side, a one time interest rate hike on the short-end of the yield curve does virtually nothing to slow down the AI buildout. Across the world there is always competition for capital. That is true between stocks and bonds. That is also true between all fixed income. Right now, across the globe sovereign governments, municipalities and corporations are all seeing borrowing costs rise. In our view, most of this rise isn’t due to inflation—if it was interest rates would have been higher in 2022 when inflation was at 9%, today CPI sits slightly below 3%. The rise in rates is due to competition for capital and the rise of the AI buildout.
We don’t anticipate minor rate hikes from the Fed to be enough to slow this trend, and most likely all it will do is hurt consumers at the lowest end of the income ladder. Similarly, companies outside of the AI space and lowest on the credit rating spectrum are seeing their borrowing costs increase materially faster than other companies. In our view, what is most likely to happen from the current inflation/interest rate mix is the AI buildout will continue, and higher rates will only hurt low end consumers and legacy value companies.
Typically Profits Drive Stocks More than Politics
The calendar is coming down the home stretch, and in a mid-term election year that means commercials are becoming unwatchable. This candidate took special interest money. That candidate has been in office forever and accomplished nothing. It’s very easy to get opinionated and make less than optimal financial decisions during a very emotional time. Our message in year seven is no different than any previous election year. Politics don’t often have long-term impacts on the stock market. If your team wins, that may be great for your preferred policy mix, but it doesn’t mean the stock market or investment portfolios are going to experience better or worse results. Recently, Bank of America completed a study going back to 1936 looking at S&P 500 positive return years. The distribution between republicans and democrats was about evenly split at 46% and 54% respectively. However, if you split the years into positive earnings growth and negative earnings growth, investors were much more likely to have a positive stock market year if earnings were growing than if earnings were contracting. Today, corporate earnings continue to grow rapidly. Next year the trend is expected to continue. The corporate profit environment is likely going to be more consequential than any election outcome in November, and in our view things continue to look strong.
Winning a Championship is a Process
Winning a Super Bowl in the NFL isn’t an easy process. No team in the last 50 years has ever managed to go through a season undefeated and win the championship. Most teams experience ups and downs over a tumultuous season. Injuries, trades, losses all at certain points seem insurmountable. Financial planning and financial success often can be viewed through the same lens. Successful investing includes down years. Months where fixed income returns are negative. Sometimes certain market segments underperform for decades. But each market segment in a diversified portfolio plays a role to achieve complete team success, or financial security. There will always be uncertainty, but investors that stick to a process and follow a plan have the highest probability of crossing the threshold to financial independence.
Disclosure: Indexes shown: S&P 500 Value, S&P 500 Growth, S&P Mid Cap 400, S&P SmallCap 600 Growth, S&P SmallCap 600 Value, ICE BofA High Yield Bond Index ETF, Bar-clay's Aggregate Bond Index, MSCI World Index ex. US, S&P 500 Real Estate, and Morgan Stanley Capital Index Emerging Markets. This is not an official representation of your asset allocation. The percentages shown were calculated manually and could be subject to transcription error. Your official record of your asset allocation is shown on your official statement from Charles Schwab. Past Performance isn’t indicative of future results. *Performance Date as of 09/30/2026.
1“Gross Domestic Product, 3rd Quarter 2025 (Updated Estimate), GDP by Industry, and Corporate Profits (Revised).” Bureau of Economic Analysis, www.bea.gov/news/2026/gross-domestic-product-3rd-quarter-2025-updated-estimate-gdp-industry-and-corporate. Accessed 7 Oct. 2026.
2. “University of Michigan September Consumer Sentiment.” Surveys of Consumers - University of Michigan , 2025, www.sca.isr.umich.edu/.
3. Patricio, Roulier Pazos. “Kansas City, We Are Online!” Meta Data Centers, 28 Aug. 2025, datacenters.atmeta.com/2025/08/kansas-city-we-are-online/.
4. “GDPNow.” Federal Reserve Bank of Atlanta, 2026, www.atlantafed.org/research-and-data/data/gdpnow.
5. Kelly, Dr. David JP Morgan Guide to the Markets Earnings Growth 7 October 2026
6. Mideast Oil Exports Rebound Even as Prices Remain Elevated - the New York Times, www.nytimes.com/2026/09/29/business/oil-exports-strait-of-hormuz.html. Accessed 7 Oct. 2026.
This commentary on this newsletter reflects the personal opinions, viewpoints and analyses of the Delta Wealth Solutions, LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Delta Wealth Solutions, LLC or performance returns of any Delta Wealth Solutions, LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website/newsletter constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Delta Wealth Solutions, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Delta Wealth Solutions, LLC a Registered Investment Adviser. This newsletter is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Delta Wealth Solutions, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Delta Wealth Solutions, LLC unless a client service agreement is in place.
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