Centsational Market Update July 23, 2026

Hi love,

Right now the markets are giving us a strange feeling. For about two months they've been drifting sideways, even leaning slightly downward. Nothing dramatic. But nothing exciting either. And in moments like this, one question always comes up: should we be worried?

My short answer is no. And I want to walk you through exactly why because once you understand what's really going on underneath, the nervousness tends to fade.

Let's start with the short term, because that's where the discomfort is right now: Over the past couple of months there's been real selling pressure meaning more investors choosing to sell than to buy. We can see this clearly in the big banks' data on technology stocks: some of the largest, most sophisticated investors (the hedge funds: professional funds that move enormous amounts of money) have been trimming their positions significantly. On top of that, the leading indicators for the world's major economies (these are early-warning gauges that tend to move before the economy itself does) have ticked slightly lower. And history tells us that when those gauges are pointing down, markets rarely push to brand-new highs.

So yes, in the short term, the mood is cautious. And in cautious moments, the pessimists always get louder. I'm already hearing operators throw out numbers "the market will crash, minus 30, minus 50." Everyone picks whatever figure sounds most dramatic. Our job is to stay calm and rational. So let's look at what the fundamentals are actually saying.

Here's the first thing that reassures me. Company earnings (the actual profits businesses are making) have been rising. But valuations have stayed flat. Let me unpack that. A valuation is simply how expensive a stock is relative to the profit it produces (the price-to-earnings ratio). When valuations balloon while profits stay still, that's a warning sign it means people are paying more and more for the same thing, out of pure excitement. That is not what's happening now. Markets have risen because profits have genuinely grown, not because investors got carried away. In other words, the market still has its feet on the ground.

Now, the pessimists have a comeback: they say those profits themselves are a bubble artificially inflated and bound to collapse. So let's test that idea.

Usually, when company profits are being pumped up artificially, it's because businesses have loaded themselves with debt to make their numbers look bigger. But the data shows the opposite: corporate debt (measured against the size of the overall economy) has actually been falling both in the United States and across the eurozone. And it's not just that companies owe less. The share of their revenue that goes toward paying interest on that debt is sitting at its lowest level in twenty years. So debt isn't weighing these companies down. The profits are real.

There's another layer worth understanding, especially in technology. A big question with any profit is: what does it cost to produce? In artificial intelligence, that cost shows up in what's called tokens think of it as the price of generating a single AI response. And that cost is dropping fast. This matters enormously: if it keeps getting cheaper to produce the same thing, profits don't just hold up they have room to grow further.

A large part of these profits has come from the companies that make semiconductors (the advanced chips that power artificial intelligence). Demand for them has been enormous. And here's a comparison I find helpful: if you line up today's chip boom against the rise of the internet from 1992 to 2000, we appear to be only at the beginning of the curve, not the end. That suggests demand and the profits tied to it can keep climbing.

And then there's inflation, the general rise in the cost of living. When we break it into its main parts everyday goods, housing costs, and services most of it is not pushing prices higher right now. The one real pressure point is energy, tied to oil and the situation in the Middle East. That's hard to predict, and I won't pretend otherwise. But setting that single wildcard aside, inflation doesn't look like a medium-term threat.

So here's where it all lands.

In the short term, we're in a phase of mild stagnation and gentle correction and that's healthy. Markets that pause and catch their breath tend to be steadier than markets that only ever race upward. It doesn't feel exciting, but it isn't something to fear.

In the medium term, the foundations are solid: real profits, low debt, falling production costs, growing demand, and contained inflation.

My role here isn't to tell you what to do. It's to help you see the difference between the two so that when the pessimists get loud, you can hear them without being shaken by them.

If something in this felt unclear, or made you think, just hit reply and tell me. I read every message.

I've got you.

Francesca 🤍