Rockets, War, and a New Sheriff at the Fed

Humanity has always looked to the stars as a symbol of what is possible. They are an expansive frontier, one that challenges our limitations and demands our highest level of innovation. Throughout history, looking upward has been our instinct whenever we sought to map out a grander future or chart a course through the unknown. The stars remain the ultimate reminder that the most audacious breakthroughs require patience, precision, and an unyielding commitment to a long-term horizon. In the second quarter of 2026, that same visionary spirit reached Wall Street, with the historic public debut of SpaceX capturing the market’s imagination.

Yet, even as capital looked toward the horizon, immediate earthly realities brought macro risks back to the forefront. Conflict in the Middle East rattled global energy markets, inflationary pressures refused to yield, and a newly appointed Federal Reserve Chairman stepped onto the world’s most consequential stage. For investors, it was a quarter that demanded both discipline and perspective.

Here’s what happened, what it means, and what you should keep in mind.

SpaceX Goes Public: The Largest IPO In History

On June 12, SpaceX completed its long-awaited public listing on the Nasdaq under ticker SPCX, pricing at $135 per share and raising approximately $75 billion, which is the largest IPO ever completed. The offering was structured with unusual democratization: roughly 30% of available shares were directed to retail investors. This appeared to be a deliberate signal from Elon Musk that he wanted everyday investors to own a piece of the company taking humanity to space.

The stock opened well above its offer price and, in the sessions that followed, briefly pushed SpaceX’s market capitalization above $2.6 trillion, surpassing Amazon and placing it among the handful of most valuable public companies in the world, before cooling to a still-substantial range in the $150s-to-$165s by late June.

The investment case rests on three distinct businesses trading as one stock: Starlink, the profitable and fast-growing satellite internet segment that generated roughly 61% of 2025 revenue and over 10 million subscribers; the Falcon/Starship launch business, which continues to absorb heavy R&D spending as Starship’s next-generation vehicle approaches key milestones; and a newly consolidated AI segment built around February’s all-stock merger with xAI, which posted meaningful revenue but a substantial operating loss in 2025. At roughly 90-plus times trailing revenue, the market is pricing SpaceX closer to a high-growth AI infrastructure story than a traditional aerospace or telecom company.

SpaceX’s debut is a useful reminder of a principle that guides our approach at Trajan Wealth: even outstanding businesses can carry outstanding risk when priced at historic premiums. Valuation discipline remains central to our investment philosophy, regardless of how compelling a company’s story may be. As with any high-profile, richly-valued offering, we believe the more important question for investors isn’t the quality of the business, but whether the price paid today leaves adequate room for error.

The Iran Conflict: An Energy Shock With Global Reach

The quarter’s most destabilizing event began in late February, when U.S. and Israeli military operations against Iran escalated into a sustained regional conflict. The economic consequences were immediate and severe. Iran’s closure of the Strait of Hormuz, through which roughly 20% of global oil and liquefied natural gas supplies flow, triggered what the International Energy Agency called the “largest supply disruption in the history of the global oil market.”

Brent crude, which started the year near $60 per barrel, surged to above $80 within days of the conflict’s onset and ultimately breached $100 per barrel in March. By the end of April, prices peaked above $126 per barrel, as ceasefire talks repeatedly frayed. The turning point came in mid-June as the U.S. and Iran reached a framework to extend the ceasefire and reopen the Strait of Hormuz, causing oil prices to retreat back towards pre-war levels.

The energy shock cascaded broadly and ultimately caused inflation to spike. Airlines faced jet fuel shortages and raised fares. Manufacturers absorbed higher input costs. Consumers felt the squeeze at the pump. While Brent crude oil prices ended the quarter at $73 per barrel, the underlying uncertainty around energy supplies and inflation has not fully dissipated as we head into the second half of the year.

That said, peace remains an interim arrangement and not a settled outcome. Headline risk around the strait, Lebanon, and Iran’s nuclear program will likely persist through the balance of 2026. While geopolitical risks remain elevated, history shows that markets digest these events far more efficiently than the frantic pace of the 24-hour news cycle suggests. During periods of heightened headline volatility, the greatest risk to an investor’s wealth is rarely the event itself, but rather the emotional impulse to make reactive, unnecessary changes to a well-structured portfolio. In environments like this, true sophistication lies in patience, focusing on long-term capital preservation, and allowing a diversified strategy to absorb the noise.

Persistent Inflation: Still The Fed’s Primary Concern

Heading into 2026, the consensus view was that inflation was largely under control. The Federal Reserve had cut rates three times in 2025, and markets were pricing in two to three additional cuts in 2026. That narrative unraveled quickly.

The Iran conflict injected a powerful energy price shock into an economy that was already running warmer than the Fed’s 2% inflation target. By May, the Consumer Price Index had climbed 4.2% year-over-year, driven primarily by energy, oil, and gas prices. Core CPI, which strips out food and energy, came in at 2.9% year-over-year in May, which is more manageable but still above target. The Fed’s preferred gauge, the Core PCE Price Index, rose 3.4% year-over-year in June.

The critical question for the second half of the year is whether elevated inflation is transitory or structural. The divergence between hotter headline inflation and cooler core inflation is the crux of the current policy debate: it explains why the Fed under new leadership has kept rates on hold rather than easing further, while simultaneously refusing to rule out a hike should energy-driven price pressure broaden into services and wages.

For investors, the persistence of inflation means that the economic baseline has structurally shifted. Managing wealth in an economy driven by energy shocks and stubborn inflation data requires tactical discipline. Portfolios positioned for a prolonged period of above-target inflation may be better equipped for the volatility of the second half of 2026. At Trajan Wealth, we continue to look past short-term data noise, focusing instead on building durable, multi-asset frameworks that seek to protect long-term purchasing power without exposing clients to unnecessary concentration risk.

Kevin Warsh Takes The Helm: A New Era At The Federal Reserve

On May 22, 2026, Kevin Warsh was sworn in as the 17th Chair of the Federal Reserve, succeeding Jerome Powell, who remains on the Board as a governor. Warsh’s first FOMC meeting as Chair, held June 16–17, was one of the most closely watched central bank events in years, not only for its policy implications, but as a test of his independence amid significant political pressure from the White House for lower rates.

The verdict: Warsh delivered a clear, confident, and distinctly hawkish signal. The FOMC voted unanimously to hold the federal funds rate at 3.50%–3.75%, as widely expected. But the substance of the meeting went considerably beyond the rate decision itself.

Warsh delivered on his promise to overhaul Fed communications. The post-meeting policy statement was slashed to just 130 words, down from the 300-plus word statements that characterized the Powell era, and the Fed explicitly dropped forward guidance. Warsh made his philosophical position plain, stating that forward guidance is not “the business we should be in,” and that financial markets “perform best when they react to incoming data.”

The dot plot carried a notably hawkish tilt. The FOMC split 9-9 between members projecting steady rates or one cut, and those seeing at least one hike. The median dot now points to a quarter-point rate increase, rather than the cuts that markets had been pricing earlier in the year. Warsh himself notably abstained from submitting a dot, consistent with his long-held skepticism of the Summary of Economic Projections framework.

Warsh also announced the formation of five task forces to study: Fed communications, the balance sheet, data sources, the impact of AI and transformative technologies, and the Fed’s inflation framework. These signal an institution undergoing genuine reform under new leadership.

While investors often prefer certainty, history suggests markets ultimately benefit from central bank credibility. A disciplined inflation-fighting Federal Reserve can help anchor long-term inflation expectations, even if the path is occasionally uncomfortable.

History is a patient teacher. Markets have faced oil shocks, geopolitical crises, and monetary policy transitions before, sometimes simultaneously, but long-term investors who maintained disciplined and diversified portfolios have been rewarded over time. Q2 2026 is another reminder that volatility is not the enemy of long-term wealth creation. It is the price of admission. If your plan has been sitting in pieces this quarter, now is a good time to bring it together with a free financial assessment.

Plan Smarter. Dream Bigger.