Market Commentary
Credit Is Still Flowing, and Businesses Are Borrowing
October 12, 2026 | LPL Research
Bank lending rarely commands the attention that payrolls, inflation, or consumer spending do. But it helps determine how much momentum the economy can sustain. Commercial and industrial (C&I) loans, the workhorse of corporate finance, pay for everything from working capital to machinery and software. When banks are willing to lend and companies are eager to borrow, it suggests executives see enough opportunity ahead to put money to work.
The Debt Math, Explained
October 5, 2026 | LPL Research
At roughly $1.0 trillion this fiscal year, interest costs now exceed what the government spends on defense or Medicaid. The Congressional Budget Office (CBO) expects net interest to climb from 3.3% of GDP to 4.6% over the next decade. That projection was built on a 10-year yield averaging 4.1% this year and settling around 4.4% longer term, and we are above that path. By the CBO's own estimate, rates one percentage point above its baseline would push debt to 222% of GDP by 2056 instead of 175%.
Stock Market’s Wall of Worry Gets Taller
September 28, 2026 | LPL Research
The latest developments in the Iran conflict have shaken the fragile consensus view that disruptions to the Strait of Hormuz and the Red Sea would soon be cleared. U.S. military bases and naval escorts in the region have been fired upon. The critical East-West pipeline in Saudi Arabia that had been providing a partial bypass for the bottlenecked Strait of Hormuz is not yet fully operational and faces continued attacks. Energy stockpiles are dwindling in the U.S. and around the globe. Despite reports coming out of last week’s UN summit that the U.S. and Iran are exploring a deal to open Hormuz (which President Trump rejected over the weekend), WTI crude remains very elevated at $93 per barrel (as of September 25).
What's Holding Up Record Margins?
September 21, 2026 | LPL Research
For decades, operating margins (earnings before interest and taxes, or EBIT, divided by sales) behaved like a cyclical series. When margins rose well above trend, the forces of competition, input costs, capacity additions, and customer pushback eventually compressed profitability. As Jeremy Grantham, investor and co-founder of asset manager GMO, famously said, “Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism.”
What History Says About Fed Hikes and Stocks
September 14, 2026 | LPL Research
The key lesson from these prior cycles is that rate hikes do not typically derail bull markets. When rate increases coincide with rising recession risks, that’s a different story. Today, recession risks are low by all accounts. Economic growth remains solid, labor markets remain healthy (as reinforced by last week’s jobs report), and inflation, though high, is far below the peaks reached in 2022. Meanwhile, interest rates are already much higher than they were at the start of the last tightening cycle, reducing the shock value for bond portfolios in the case of modest additional increases in market-based rates like the 10-year Treasury.
Signs Point to a Normalization, Not a Crisis
September 8, 2026 | LPL Research
The concerns underneath the move are legitimate, and dismissing them would be the wrong kind of contrarianism. We want to acknowledge them properly before explaining why we still think the market is functioning as designed. But, like Aesop’s fable about a boy who cried wolf, calling every orderly sell-off a crisis is unhelpful. We don’t think we are there yet, but debt and deficit trajectories are unsustainable on this current path. Something will need to be done. The good news is that we were in a similar situation in the 1990s, and Congress acted. There are some similarities, but differences as well.
Moats vs. Inertia: Unpacking the Personal AI Agent Threat
October 19, 2026 | LPL Research
Meta’s September launch of Muse, a personal artificial intelligence (AI) agent designed to act on a user’s behalf across digital workflows, crystallized the market’s latest disruption narrative. If AI can make consumer switching easier, which business models are truly protected by moats and which are merely monetizing friction? While we are skeptical that AI agents will disrupt businesses whose moats were earned through differentiated products, services, or brands, we do see potential disruption risk for businesses that largely benefit from consumer inertia, like forgetting to cancel subscriptions or not wanting to spend time on price comparisons.
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