Q3 2026 Client Letter

Q3 2026 Client Letter – October 5, 2026

Market Recap

Common Themes Of 2026 So Far

• The equity market has held up really well for the year so far given what’s going on in the world

• Company earnings and projected earnings have been very strong

• The Fed has been forced to increase rates but future increases are uncertain as of now

  • This is actually slightly a good sign that the economy and market are doing well

  • This is when rates tend to go up

  • Persistent inflation is also causing this

• Diversified investors are seeing solid returns this year

  • Returns have largely been consistent with risk tolerance

• The Equity market sits very close to all time highs

• The top performing area of the market has been Growth equities

  • Value, small cap, and mid caps have also done well so far

• Rising interest rates have hurt fixed income values BUT future income looks very strong

Market Outlook

Equity Market

• Earnings/Valuation

• The S&P 500 is currently trading around 7,700 (WSJ) and the estimated earnings are around $415/share for 2027(Goldman Sachs).

• If we use $415/share and divide that by 7,700 price we come to about a 5.38% earnings yield on the S&P 500. 

• The 10-year treasury is currently sitting around 5.23% (Bloomberg).

• What does this tell us?

• It tells us that fixed income may have some opportunities relative to stocks

• That’s because the “risk free rate” is derived from US Treasuries

• The risk free rate is very high and the expected return on equities isn’t high enough to justify equity values

• How Do We Position Ourselves With This Information?

  • This depends on your particular situation and what you are trying to accomplish

  • We are looking to make sure that we have appropriate fixed income allocations which are client dependent

  • Most clients with long-time horizons are due for no change

• What Areas Do We Like?

  • Given high valuations, it’s hard to find “bargains”

  • There may be opportunities in Small Cap, Mid Cap and International equities

• What Are We Looking For?

  • We’re looking for opportunities to buy areas of the market at attractive prices

  • More Value companies have seen their earnings grow at solid rates but are not near their Growth counterparts

  • These Growth companies have very high valuations and can continue to increase as long as earnings and expectations to meet

    • If earnings and expectations aren’t met, we believe these the most susceptible in a market decline

Fixed Income

• Where Are We Now?

• The Fed Funds rate (short term rate) sits around 4%, the same from a year earlier (Bloomberg)

• The 10 Year Treasury sits around 5.23%, up from about 4.09% a year ago (Bloomberg)

• The 30 Year Treasury sits around 5.6%, which is up from about 4.51.% a year ago (Bloomberg)

• We are in a more normal interest rate environment which is a good thing overall

  • This is because if the economy weakens the Federal Reserve could reduce interest rates/buyback bonds to provide stimulus to the economy

  • When rates are low it’s hard for them to do this or for this measure to have much impact

• What Areas Do We Like?

  • Fixed income has become more attractive overall just given how high yields are now

  • We like to see a mix of government, investment grade, and high yield in tax favored accounts

  • After a review of your account, tax free municipal bonds may be suitable

  • Values have been hurt because of their inverse relationship with interest rates BUT future yields may have value on a go forward basis

Economy

• Growth

• The US economy grew by 2.2% in Q2 2026 (US Bureau of Economic Analysis)

• The S&P 500 is up in the low double digits so far in 2026 (WSJ)

• Stock market growth has outpaced the broader economy but this is normal

• Unemployment

• The unemployment rate stands at around 4.1% as of August 2026 (Bureau of Labor Statistics)

  • Employment data has been very strong

  • Too strong to not justify rates decreases

• Politics/Geopolitics

  • The conflict in Iran and issues with oil have spooked the market here and there but earnings stringy and outlook have kept the market strong

• The Fed and Interest Rates / Inflation

  • The Fed increased kept its overnight rate/short term rate to 4% from 3.75% this past month

  • Core PCE Inflation came in at 3% in August 2026

    • This is the Fed’s preferred measure

    • Lower than the last reading but still too high

  • There are more reasons to increase rates than decrease them in our view

Tax

• Reminder to notify us of any major income changes for the year so that we can mitigate negative tax effects, if possible, it is time for year-end tax planning
• There is new tax legislation that was just passed by the Senate and has moved on to the House.  If it is passed into law, we will provide an update on its impact to our clients

• Clients that haven’t been in are strongly encouraged to setup an annual review

• Annual reviews are a great way to stay on track to hit your individual goals

• Please contact our office to do so 

• Our team continues to grow here

• We started the year with 14 team members are up to 18 to support our firm’s continued growth

• We are very happy with our team’s effort to support you and continue to look to grow our team over time

• As always, thank you for your continued trust in us

• None of this would be possible without you

• We are accepting new wealth management clients

• Your referrals and introductions are greatly appreciated

• We wish you a very enjoyable fall!

Sincerely,

Oujo Wealth Strategies

1540 Highway 138, Suite 106, Wall, NJ 07719

Main | 732-556-4200

Fax | 732-681-4479 

OujoWealthStrategies.com

The views stated in this letter are not necessarily the opinion of Cetera Wealth Services, LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. 

Although Cetera does not provide tax or legal advice, or supervise tax, accounting or legal services, Cetera representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice.

Tax Free Municipal Bond: Income may be subject to local, state and/or the alternative minimum tax

All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.

Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards.

The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value.

The return and principal value of stocks fluctuate with changes in market conditions.  Shares when sold may be worth more or less than their original cost.

S&P 500 – A capitalization -weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

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