Your Centsational Market Update - July 2, 2026

Hi love,

This Centsational Market Update is something I share almost every Thursday, except when I'm travelling or on holiday. It's sent exclusively to our Elite students and to Investing School graduates who chose to extend their support through the Wealth Membership.

It's a space where I slow things down and help you make sense of what's happening in the world and in the markets.

Today I want to start with a quick look at where markets stand at the halfway point of the year, and then walk you through something bigger: why the American market keeps pulling ahead of the European one and a shift underneath it all that ties the whole picture together.

First, a quick market check.

We've now closed the first six months of 2026, and it's been a strong start. The NASDAQ (the US index most crowded with technology companies) is up around 20% since January. Most other major indexes are positive too. The one exception is gold, which is slightly down.

After a run like that, markets are now in what we call a lateral consolidation phase. That's a way of saying prices are moving sideways rather than sharply up or down: a pause to catch breath after a fast climb. It's completely normal and healthy. A market that only ever goes straight up is a market building up fragility. We still lean bullish from here to the end of the year, but a period of reflection like this one is to be expected.

The biggest technology names (like Google, Meta, Amazon and Microsoft…) have actually underperformed the broader NASDAQ recently. Investors have been trimming their positions in technology, and the valuations of those four have fallen more than the market as a whole.

Quick word on that term. A valuation is simply how expensive a stock is compared to the profits it's expected to earn. When a valuation falls, it doesn't necessarily mean the company got worse often, it just means the price got cheaper relative to those expected profits. When that happens to strong, dominant companies, it's the kind of setup where an opportunity can start to form for the second half of the year. I'm not telling you to do anything with that I'm showing you what the picture looks like so you can read it yourself.

Now to the bigger theme: Europe.

For a long time now, the US stock market has grown faster than the European one.

When you compare the size of the two economies, the American economy has been growing faster than the European one. And when an economy grows faster, its stock market tends to grow faster too because a stock market, in the end, is just a reflection of the companies inside that economy. Faster economy, faster market. Slower economy, slower market. That's the link.

So the real question becomes: why is Europe growing so slowly?

A few reasons stack on top of each other.

The first is under-investment. Spending on research and development (the money that keeps an economy modern and competitive) has lagged badly in Europe. Since 2020, Europe has been investing about half of what the United States and China invest in R&D. When you stop investing in the future, the future arrives more slowly. You can see the effect of that in productivity which simply means how much value a worker produces in an hour. Since 2015, US productivity has climbed while the eurozone's has stayed comparatively flat. More investment leads to more productivity, and more productivity leads to more growth. Europe has been caught on the wrong end of that chain.

Underneath all of this sits a deeper problem: Europe lacks a strategic vision. Without a shared plan, it has drifted into acting mostly as an accountant for its member states focused on balancing budgets rather than building for the future.

You might think, "well, at least all that austerity paid down the debt." Austerity means cutting spending and raising taxes to try to shrink debt. But it didn't work as promised. Even after years of austerity, and despite the ratio having come down from its 2020 peak, Greece's debt is still nowhere near pre-crisis levels. The same is true for the eurozone as a whole despite years of sacrifice and higher taxes, the debt relative to the economy hasn't really come down. Great pain, little to show for it.

Then come the side effects. Energy is one of the sharpest. Electricity for European businesses costs more than double what companies pay in China or the United States, and much of Europe's power grid is aging; nearly half of the distribution equipment is over twenty years old. Expensive, unreliable energy is a quiet tax on every factory and every product. And to make matters stranger, several European countries effectively act as tax havens, which drains money that could have supported public budgets elsewhere on the continent.

The shift underneath it all.

You'll remember that in a recent update I wrote about how technology, and artificial intelligence in particular, is letting companies produce more while needing fewer workers. That story is now moving out of the digital world and into the physical one.

For about 40 years, the whole logic of global trade rested on one simple idea: make things wherever workers are cheapest. Factories moved to wherever labour cost the least. Economists call this labour arbitrage arbitrage just means profiting from a price difference, in this case the difference in the cost of workers from one country to the next.

But something is changing that logic at its root. Robots not the clumsy machines of old, but general-purpose ones that can work in spaces built for humans are starting to do real, paid work on real factory floors. This isn't a demonstration in a lab anymore. At a BMW plant in South Carolina, humanoid robots worked full shifts for over ten months, handling more than 90,000 parts. Tesla is doing something even more striking: it's converting car production lines to build its own robots, and it has redesigned how a car is made so that far fewer human hands are needed at all casting a whole section of the car in one 90-second step instead of welding together dozens of pieces.

Now, a note in the spirit of keeping us honest: this is still early. The robots are, for now, mostly learning rather than fully replacing people. The headlines that say factories are already "fully automated" have run ahead of reality. But the direction is real.

Here's why it connects to Europe. When a worker no longer needs to be cheap because the worker is a machine the decisive cost is no longer wages. It becomes electricity, because machines run on power, around the clock. The world is moving from labour arbitrage to what we might call electron arbitrage: the winning question shifts from "where can I find the cheapest hands?" to "where can I find the cheapest, most reliable power?"

And this is the trap Europe finds itself in. It can't win the old game of cheap labour its workers are expensive. But it also struggles to win the new game of cheap energy because its electricity is among the most expensive in the developed world. Squeezed from both sides at once. That single fact about energy costs, which might have looked like a footnote a few years ago, is now close to the center of the story.

So what are markets really reacting to?

Step back and the thread is consistent. Markets are rewarding efficiency and scale companies that can grow output without growing their costs. That's what the technology giants represent, and it's why, even after a pause, the market's underlying preference hasn't changed. The consolidation we're seeing right now is a normal breather.

The bigger picture remains this:

We are living through a moment where the source of economic advantage is moving from cheap hands to cheap power, from where people are to where energy is. That environment continues to favour large, efficient, technology-driven companies, and it raises hard questions for regions like Europe that haven't yet found their strategic footing.

My role here is not to tell you what to do. It's to help you understand why markets behave the way they do, so you don't feel lost or shaken when the headlines feel contradictory or the story feels too big to hold.

This is exactly why staying globally diversified (not overweighting Europe or the US based on a narrative) matters, rather than trying to time which region wins. We'll keep watching this together not to react, but to understand. That's the real edge.

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 🤍