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$Q2 2026 Market Commentary CHARLES W. FISH, CEO/CIO/FOUNDER July 2, 2026 “Intelligence is the ability to adapt to change. ” – Stephen Hawking Two hundred and fifty years ago, fifty-six men signed a document that turned thirteen quarreling colonies into a nation. There were roughly 2.5 million of us then. Today we are 347 million, and the intervening two and a half centuries have carried our country through more wars than most of us could name from memory. Some ended in victory, others in stalemate or bitter regret. This Fourth of July finds us in another one: the war we opened with Iran a little over four months ago, which we are now trying to bring to a close. Nevertheless, it is worth pausing, amid the fireworks, to appreciate how much foresight our founders had so long ago. The brittleness of the current Memorandum of Understanding with Iran persists despite violations occurring daily. No doubt this 60-day ceasefire agreement will need to be extended several times. Actual elimination of Iran’s potential nuclear menace will be extremely difficult to bring about and very hard to police. Should we succeed in this endeavor, our markets should react with a significant rally. Despite the adversity surrounding Iran, the U.S. securities markets have been relatively well-behaved. Equities continue to set new highs while municipal bond yields, despite record volume, have been falling from their recent peak on May 12. The Dow Jones Industrial Average, which started the year at 48,063, climbed to a new record of 52,319 at quarter’s end. Municipal bonds, on the other hand, remain available at compelling yields. This is primarily due to the heavy volume of new issues, which is on track to reach a record $600 billion by year’s end. That would make it the third record volume year in a row. This trend should continue for some time to come as municipalities race to fund the construction of the infrastructure projects AI requires. Inflation continues to plague our economy. The soaring cost of everything from gas and food to memory and storage chips shows no sign of abating. The problems have been compounded by President Trump’s erratic tariff policies. The so-called OBBBA has had a crushing effect on our healthcare system. Our rural hospitals are especially hard hit. No doubt the Democrats, should they prevail as expected in taking control of the House in November, will pursue restorative legislation. Of the estimated 150,000 jobs lost in the first six months of this year, one need look no further than Oracle, Dell, or Amazon to point the finger directly at AI-driven automation as the primary culprit. The displacements are real, and they are accelerating. Company after company has announced layoffs, not because businesses were failing, but because artificial intelligence was succeeding. We need to recognize that this is not a mere transition; surely, it is a revolution just as profound as the Industrial Revolution, only due to occur in a fraction of the time. The Federal Reserve held rates unchanged at its June 17 meeting. The talk of further rate cuts earlier this year has been replaced by the expectation of one or two rate hikes before year-end. The structural forces driving inflation show little sign of normalizing. The most recent year-over-year CPI reading in May was 4.2%. Core inflation stands at 2.9%, nearly a full percentage point above the Fed’s target. Hope remains that a conclusion to the Iran conflict will bring about an easing of inflation pressure and the corresponding decline in interest rates. The jury is still out on when that may occur, but for now, earning a 5% return on a 20-year municipal bond seems very compelling to us. For the record, that’s the taxable equivalent return of 10.9% for a California resident in the maximum tax bracket. 20-year Treasury bonds, while exempt from state tax, are subject to federal tax and only yield about 4.9%. Effectively, Munis are providing nearly double the after-tax returns. Footnote: For the record, the founding of the United States Marine Corps took place eight months before our Declaration of Independence. On November 10, 1775, the Second Continental Congress passed the resolution providing for two battalions of Marines to serve as Naval infantry during the Revolutionary War. Just trying to keep the record straight.$

This commentary reflects the views of Charles Fish Investments, a wholly owned subsidiary of Brentview Investment Management, LLC. The contents herein are provided for informational purposes only and are subject to change without notice. They are not a solicitation or endorsement of any sector, security, or index. Past performance is not a guarantee of future results.

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CHARLES FISH INVESTMENTS, INC. (CFI), founded in l984, is a Registered Investment Adviser with the Securities and Exchange Commission under the Investment Act of l940. CFI is an affiliated subsidiary of Brentview Investment Management, LLC. CFI’s revenues are derived exclusively from the fees received for the investment advisory and/or management services provided.