Q2 2026:
A Historic Crossroads
Brandon Cawley, CFA®
Director of Investment Management
Brandon.Cawley@MWAteam.com
Headwinds that weighed on markets during the first quarter have largely dissipated, giving way to one of the strongest equity rallies in recent history. Following the March 30 market low, the S&P 500 advanced for nine consecutive weeks, finishing the second quarter with a gain of over 15%.
The technology sector, led by the semiconductor supply chain, significantly outperformed the broader market, posting one of the largest periods of relative outperformance on record. Small-cap and emerging market equities also delivered strong returns. Historically, rallies of this magnitude have been constructive for future performance, with the S&P 500 generating positive returns 80% of the time over the subsequent 12 months.
While the speed of the advance, particularly in growth-oriented sectors, has led us to adopt a more cautious stance over the short to intermediate term, we believe the underlying macroeconomic backdrop remains supportive of long-term portfolio performance.
A New Chair at the Federal Reserve
Kevin Warsh assumed the role of Federal Reserve Chair following Jerome Powell’s eight-year tenure. As has been characteristic of the nominating administration, Chairman Warsh moved quickly to outline an ambitious agenda for the Federal Reserve. At his first FOMC meeting as Chair, he announced a five-part task force designed to reassess the Fed’s policy framework and its influence on financial markets and the broader economy.
The task force will focus on five key areas:
- Communication – Reducing the Federal Reserve’s reliance on forward guidance and allowing markets to respond more independently to incoming economic data. Notably, Chairman Warsh omitted his own economic projections from the Fed’s quarterly Summary of Economic Projections.
- Federal Reserve Balance Sheet – Evaluating the composition and size of the Fed’s nearly $7 trillion balance sheet, with the objective of reducing the central bank’s footprint in financial markets.
- Economic Data and Measurement – Reviewing the quality and reliability of economic data following several years of meaningful revisions that have raised concerns about data collection and interpretation.
- Productivity and Labor Market Frameworks – Updating the Fed’s analytical framework to better reflect structural changes in the labor market driven by technological innovation and evolving workforce dynamics.
- Inflation frameworks – Reassessing the Fed’s policy response to the 2022 inflation surge and evaluating whether existing inflation models remain effective amid changing economic conditions, including tariff policy and the latest geopolitical energy shocks
Chairman Warsh emphasized that restoring inflation to target remains a primary objective. More broadly, his vision appears focused on reducing the Federal Reserve’s influence over financial markets while allowing market participants to play a greater role in determining the cost of capital. The task force is expected to complete its review by year-end.
Although markets continue to price in between one and two interest rate hikes by year-end, we remain skeptical that this outcome will materialize given declining breakeven inflation rates (market-based measures of inflation expectations) and Chairman Warsh’s recent policy commentary.
Market Outlook
The outlook for economic growth remains constructive, supported by several powerful secular themes:
- Continued investment in artificial intelligence, including data center construction, energy infrastructure, and productivity-enhancing technologies
- Ongoing industrial re-shoring, particularly within semiconductor manufacturing, pharmaceuticals, and other strategically important industries tied to national security.
- Fiscal stimulus through the One Big Beautiful Bill, including lower household taxes, immediate expensing of business capital expenditures, and increased infrastructure and defense spending.
We continue to expect current inflationary pressures to moderate over time. However, we also believe interest rates are likely to remain elevated as strong demand for credit and persistent fiscal deficits continue to exert upward pressure across the yield curve.
Given the market’s increasing concentration in AI-related companies, one of the key questions over the coming quarters will be the sustainability of the current AI capital expenditure cycle.
Over the past month, hyperscalers (compute infrastructure financiers) such as Google and Meta have raised additional equity capital to finance AI investments, while capital expenditure budgets across tToday, much of the semiconductor industry’s earnings growth, and broader AI investment cycle, is effectively funded by the strong cash flows generated by the hyperscalers. Given the semiconductor industry’s historically cyclical nature, it will be increasingly important for AI investments to begin generating meaningful returns for the hyperscaler companies, if they are to continue spending to this degree. Equity market dynamics are likely to experience a dramatic shift once the infrastructure buildout becomes less of a driver and we move onto the next phase of the AI lifecycle.he “Magnificent Seven” are projected to exceed aggregate free cash flow by year-end. At the same time, semiconductor companies are expected to account for more than 60% of the S&P 500’s projected earnings margin expansion in 2027.
Portfolio Implications
As part of a recent tactical allocation decision, we realized gains in our Asia Innovators Fund after it appreciated approximately 70% year-to-date. We also reduced a portion of our higher-beta U.S. technology exposure and reallocated capital toward core equity and valueoriented sectors within discretionary portfolios.
While we remain constructive on the long-term AI investment theme, we also see attractive opportunities in healthcare, financials, and real estate, where valuations and fundamentals provide the potential to enhance riskadjusted returns while improving portfolio diversification.
Our investment philosophy remains centered on compounding durable, long-term returns through disciplined portfolio management. We will continue to monitor economic and market developments closely and adjust portfolio positioning as conditions evolve in pursuit of our clients’ long-term objectives.
Navigating the Transition to Retirement: More Than a Financial Decision
Zellie Wothers, CFP®, CRPS®
Associate Director, 401k Specialist
Zellie.Wothers@MWAteam.com
After decades of building a career, retirement can feel like the finish line. Yet for many of the clients with whom we work, retirement quickly proves to be less of an ending and more of the beginning of a new chapter—one that brings both opportunities and challenges.
While retirement is often viewed through a financial lens, the reality is that it involves significant emotional and lifestyle adjustments as well. Successfully navigating this transition requires thoughtful financial and lifestyle planning.
Adjusting to Life Without a Paycheck
One of the most significant financial shifts in retirement is moving from earning a paycheck to relying on your accumulated savings and investments. For decades, income may have arrived predictably every month. In retirement, creating that income becomes your responsibility.
Questions such as how much to withdraw, which accounts to draw from, and how to do so tax-efficiently become increasingly important. A well-designed withdrawal strategy can help provide confidence and stability while supporting long-term financial goals.
Managing Market Uncertainty
The early years of retirement can be particularly sensitive to market volatility. When market declines occur while you’re simultaneously withdrawing funds to cover living expenses, the impact on a portfolio can be greater than many people realize.
This challenge, often referred to as sequence-of-returns risk, is one reason we encourage retirees to maintain appropriate cash reserves and diversified portfolios. Having funds set aside for near-term spending needs can help reduce the pressure to sell investments during unfavorable market conditions.
Healthcare: Planning for the Unknown
Healthcare is often one of the largest and most unpredictable expenses in retirement.
For those retiring before Medicare eligibility, health insurance costs can be substantial. Even after Medicare begins, retirees must account for premiums, supplemental coverage, out-of-pocket expenses, and the potential need for long-term care.
Because healthcare costs tend to rise over time, it’s important to build flexibility into retirement projections and prepare for expenses that may exceed expectations. In many cases, Long-Term Care insurance can act as an asset protection tool and provide peace of mind.
The Challenge Many Retirees Don’t Expect
While financial considerations are critical, one of the most common surprises retirees share with me has little to do with money.
Work provides more than income. It offers structure, purpose, social interaction, and a sense of identity. When that routine suddenly disappears, even individuals who are financially secure can find the adjustment more difficult than anticipated.
I’ve had conversations with clients who have spent years carefully preparing for retirement, only to discover that they missed the rhythm of their workday, the relationships they built, and the sense of accomplishment that came from pursuing meaningful goals.
Retirement creates freedom—but freedom without purpose can sometimes feel overwhelming.
Planning for Purpose
This is why we encourage clients to think about retirement planning in two dimensions: the financial plan and the life plan.
What will fill your days? What activities energize you? What relationships do you want to deepen? Are there hobbies, volunteer opportunities, travel experiences, or part-time pursuits you’ve always wanted to explore?
The retirees who seem happiest and most fulfilled often enter retirement with a clear vision of what they are retiring to, not simply what they are retiring from.
Having purpose and structure doesn’t just enhance quality of life—it can also help support better financial decision-making by reducing the likelihood of emotional or reactive choices.
Learning How to Spend
Another adjustment many retirees face is changing their relationship with money.
After spending decades on saving, investing, and preparing for the future, it can feel uncomfortable to begin spending the assets you’ve worked so hard to accumulate. Some retirees struggle to enjoy their money even when their financial plan clearly supports it. Others find themselves spending more freely than expected in the excitement of newfound freedom.
Finding the right balance between enjoying retirement today and maintaining confidence about tomorrow is an important part of the process.
Retirement Is an Ongoing Journey
The good news is that these challenges are manageable with thoughtful planning and ongoing guidance.
Retirement is not a one-time event. It’s a stage of life that evolves over time. Tax strategies, Social Security decisions, investment management, healthcare planning, and spending adjustments all deserve regular attention. Equally important is evaluating how you’re adapting emotionally and whether your retirement lifestyle continues to align with your goals and values.
A successful retirement isn’t measured solely by the size of your portfolio. It’s measured by your ability to live with confidence, purpose, and peace of mind in the years ahead.
Meet our newest team member – Steven Blevins
Tell me a little about yourself.
Growing up, I always knew that business and numbers were what was right for me. I never had a clear path of direction, though, so when I got to Salisbury University, an Economics professor urged me to pursue economics. That advice gave me the direction I needed. After graduation, I spent nearly a decade selling investment research traveling the country talking with investors about their goals, their fears around the market and why they are looking for continued financial freedom. I currently hold my SIE and am also licensed in both the Property and Casualty and Life and Health with my sights set on the Series 7 and 66 in the coming months. What ultimately drew me to MWA as a Planning Analyst is the nature of a client-facing role; the integrity of the fiduciary responsibility, the daily problem solving and the ability to help families and their children in the long term.
What do you do on a typical weekend?
I can be found either on the golf course or on the pavement somewhere going for a long ride with friends. I just recently completed my first century bike ride in May which consisted of a 100-mile loop around the Eastern Shore. My girlfriend Maggie and I like to hike Loch Raven with her dog, check out local food spots and go to stand-up comedy shows when there’s a comedian in town
What is one thing about you that few people know?
Right before college graduation I had a serious interest in Officer Candidate School for the Marine Corps. Both of my grandfathers served in the military (Marine Corps, Army) and my dad is a police officer so between the familial influence and being an Eagle Scout, I had felt a call of service but ended up accepting a full-time position with the company where I had been interning which worked out in the long run.
Three words to describe myself:
Diligent, Extraverted, Systematic
Favorite part about working at Maller:
How connected everyone is in the office. I’ve been warmly welcomed and quickly been brought up to speed on the ins and outs of the role. It’s been a short period of time, but I can tell that serving clients and doing the best job consistently will always be the goal with the team here at MWA.
The Legacy You Leave Beyond Money
John Layug, MBA, CFP®, AEP®
Partner, Financial Planner
John.Layug@MWAteam.com
When people think about legacy, they often think about money. How much will be left behind? Who will inherit it? How can taxes be minimized?
While these are important questions, they only tell part of the story.
After years of working with families, I have found that the most meaningful legacies are rarely measured in dollars, but many families discover that the greatest gifts they pass to future generations are their values, experiences, wisdom…not their investment accounts.
Wealth Is a Tool, Not the Legacy
Financial assets can absolutely provide opportunities, security, and flexibility for future generations. However, money by itself does not teach responsibility, gratitude, resilience, or purpose.
Consider the questions your children or grandchildren might ask years from now:
- What did Mom and Dad stand for?
- What principles guided their decisions?
- How did they treat others?
- What lessons did they want us to remember?
The answers to those questions often become a family’s true inheritance.
The Importance of Family Values
Every family has a set of values, whether they are formally discussed or not. Some families prioritize education while others emphasize faith, entrepreneurship, service, generosity, or hard work.
Unfortunately, many parents spend decades building wealth but very little time communicating the values that helped create it.
One of the most powerful exercises a family can undertake is simply discussing:
- What matters most to us?
- What do we hope future generations will carry forward?
- What does financial success mean beyond money?
These conversations can be far more impactful than any estate planning document.
Passing Down Wisdom
Many of life’s most important lessons are learned through experience. Consider documenting your life story including milestones and traditions in video or recorded video to preserve these memories. It would be tremendous for future generations to hear of your successes and failures directly from you. Years later, these personal messages often become treasured family heirlooms.
Philanthropy as a Family Legacy
Charitable giving can also help transmit values from one generation to the next.
Rather than simply making donations, families can involve children and grandchildren in the decision-making process:
- Which causes matter most?
- How can we make a difference?
- What responsibility comes with financial success?
These discussions help future generations understand that wealth can be used as a force for good.
Preparing Heirs for Wealth
Research has shown that many family fortunes are diminished within a few generations. The problem is often not poor investments—it is a lack of preparation.
Successful wealth transfer requires:
- Financial education
- Open communication
- Shared family values
- A sense of responsibility
Preparing heirs may ultimately be more important than preparing the estate itself.
What Will Be Remembered?
At the end of life, few people are remembered primarily for the size of their portfolio.
They are remembered for:
- The lives they touched
- The opportunities they created
- The values they demonstrated
- The relationships they nurtured
- The example they set
Those are the legacies that endure. As you think about your own estate plan, consider a simple question:
If your loved ones could inherit only one thing from you, what would you want it to be?
The answer may reveal that your most valuable legacy has little to do with money at all.
Preparing the Next Generation: Instilling Financial Stewardship in Your Children
Deletha Chiu
Implementation Specialist
Deletha.Chiu@MWATeam.com
For families who have built significant wealth, one of the most consequential decisions is not an asset allocation, it is how and when to begin educating the next generation about money. Financial literacy, responsibility, and an understanding of stewardship are not inherited; they are taught. And the families who approach this intentionally tend to preserve both their wealth and their values across generations.
Begin Early with Substance
Children absorb financial habits long before they understand formal concepts like interest or investing. Rather than deferring these conversations, thoughtful parents use that awareness as an opening. Discussions about trade-offs, priorities, and the purpose of wealth, framed appropriately for each stage of development, build the foundation for future financial responsibility. The goal at this stage is not to transfer knowledge, but to cultivate curiosity and a healthy relationship with money.
Earned Experience Over Inherited Habit
Practical, hands-on engagement with money, even on a modest scale, builds judgment that abstract lessons cannot. A few approaches that resonate with affluent families:
- Structured allowances tied to real responsibilities, not simply provided, establish a connection between effort and reward.
- Encouraging children to make and learn from small financial mistakes with their own funds, rather than family resources, builds decision-making skills in a low-stakes environment.
- Involving older children in age-appropriate conversations about family giving, philanthropy, or charitable priorities introduces the concept of wealth as responsibility.
- Opening a custodial investment account and walking through portfolio decisions together makes the mechanics of wealth-building tangible and engaging.
A Curriculum That Evolves with Them
Financial education for the next generation is not a single conversation; it is a progression. Each stage builds on the last:
- Young children: Focus on the fundamentals of earning, saving, and generosity. Build a healthy relationship with money from the start.
- Adolescents: Introduce compounding, budgeting, and the long-term cost of debt, making abstract concepts concrete with real examples.
- High school & college: Broaden the conversation to include equity, concentrated positions, estate structures, and the responsibilities that accompany inherited wealth.
Making Wealth Real and Meaningful
Abstract wealth can breed entitlement; understood wealth builds purpose. Helping young adults connect financial concepts to real outcomes (tracking the performance of a position they researched, witnessing the impact of a family foundation grant, or understanding how a business they admire generates returns) turns financial education into something worth engaging with. Roth IRAs for minors with earned income, donor-advised funds, and custodial accounts are tools that bring these lessons to life with meaningful stakes.
How We Can Support Your Family
We work with many families navigating these exact conversations. Whether the focus is establishing custodial accounts, incorporating younger family members into estate planning discussions, or simply having a structured conversation about the values you want to pass alongside your wealth, we are a resource. It may be valuable to include young adults in select portions of the family annual review – an experience that is often as meaningful for parents as it is for the next generation.
The families who preserve wealth across generations share one trait: they are intentional about it. Please contact us at any time to discuss how to approach financial education for your children or grandchildren.
