The Week in Charts (8/18/26)
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The most important charts and themes in markets and investing…
1) The Biggest Upside Surprise in History
S&P 500 Q2 earnings are now on pace to rise 50% YoY, the highest growth rate since Q2 2021. And the 29% upside surprise in Q2 earnings versus expectations at the start of earnings season is officially the biggest upside surprise on record.
S&P 500 earnings are now expected to surge 32% in 2026, more than double the 15% growth expected at the start of the year.
We’ve never seen earnings growth this strong outside of post-recession rebounds.
This time, there was no recession. Just an unprecedented AI-driven boom.
The question for investors is how much of this growth is sustainable, with the massive mark-ups in SpaceX and Anthropic (“other income”) driving a large share of the upside surprise.
But with talk of an Anthropic IPO coming this fall at a valuation of $2 trillion, there could be further markups to come. Anthropic’s last formal private funding round valued the company at $965 million in May 2026.
And companies are increasingly optimistic about their forward prospects, with the share that are raising versus lowering earnings guidance rising to the highest level in over four years.
2) More All-Time Highs
With earnings hitting new heights, it should come as no surprise that the stock market is following suit. The S&P 500 has now hit 27 all-time highs this year and 470 since the start of 2013.
The S&P 500 crossed above 7,800 last week for the first time, its 9th 100-point milestone of the year. A year ago it was at 6,400. 5 years ago it was at 4,400. 10 years ago it was at 2,200.
The S&P 500’s nearly 15% gain through mid-August is more than double the average return at this point in the year (+7%).
3) Falling Further Behind the Curve
65.
As in 65 consecutive months with US inflation above the Fed’s 2% target.
The Fed spent years telling us 2% inflation was the goal.
But since January 2020, CPI has risen at a 4.0% annualized rate and is now 13% above a 2% inflation trend.
That’s not “price stability.” It’s a massive failure of monetary policy.
Here are the cumulative price increases over last 7 years…
Surging commodity prices due to the ongoing War in Iran will keep CPI above 3% YoY in August. That will be the 66th consecutive month with US inflation above the Fed’s 2% target. The market is now betting that the Fed will not hike rates in September (65% probability). If that is the case, they will fall even further behind the curve.
4) When Will the Chickens Come Home to Roost?
In July, the US Federal Government took in $334 billion and spent $766 billion.
That’s a $432 billion deficit in just one month.
Needless to say, don’t try this at home.
Over the last 10 years, US Federal Government Tax Revenue has increased 65% to $5.3 Trillion while Government Spending has increased 96% to $7.3 Trillion.
The result: a more than doubling of the US National Debt from $19 trillion to $39 trillion.
The combination of more debt at higher interest rates has caused the interest expense on US Public Debt to hit $1.37 trillion over the last 12 months, another record high. If it continues to increase at the current pace it will soon be the largest line item in the Federal budget, surpassing Social Security.
When will the chickens come home to roost?
There’s no precise “breaking point.” But we’ll likely see the repercussions in the bond market.
On that point, the 30-Year Treasury yield is now at its highest level since June 2007, crossing above 5.3%. And a recent bond auction saw the highest borrowing costs since 2001.
5) No Tariff Dividends. Just Higher Prices.
Tariffs went up and companies raised prices.
Tariffs are now being refunded and companies are keeping the price increases.
Funny how that works.
In the end, there were no tariff dividends for working families. Just higher prices.
6) The Shrinking Labor Force
The US Unemployment Rate moved down to 4.1% in July.
Normally, that would be good news. But it didn’t fall because people who were unemployed found jobs. Instead, 264k people simply left the labor force, pushing the participation rate down to 61.4% (lowest since February 2021).
The US labor force has now declined by over 2.4 million since the peak last November.
One contributing factor: America is aging fast – reshaping the labor market, housing, healthcare, government spending, and the economy itself.
There are now 66 million Americans age 65 or older, more than doubling since 1990. And in just 10 years, that number is projected to reach 78 million.
7) American Consumer: Gone Global
Americans made a record 24 million trips to Europe in 2025, more than double a decade ago.
In 1990, fewer than 5% of Americans had a passport. Today, more than 50% do.
The American consumer has gone global.
8) A Few Interesting Stats…
a) The top 10 stocks in the S&P 500 this year are all beneficiaries of the AI infrastructure boom.
b) The S&P 500’s Dividend Yield has moved down to 1.04%, the lowest level in history.
c) The US Strategic Petroleum Reserve is now at its lowest level since January 1983. Over the past 5 years we’ve seen a drawdown of 322 million barrels, a 52% decline.
d) The US National Debt has increased by over $550 billion since July 1st.
e) Different presidents. Different parties. Same direction. More money printing + More debt = Higher prices.
And that’s it for this week. Thanks for reading!
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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.
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