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July 2026 Commentary and Economic Outlook

JULY 2026 EDITION:

Commentary and Economic Outlook


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MARKET & ECONOMIC OUTLOOK WEBINAR

Be sure to register and attend our Monthly Market & Economic Outlook Webinar scheduled for Thursday, July 16th 2026 @ 1:30PM EDT. In the webinar, Jay Hatfield, Infrastructure Capital Advisors CEO and Portfolio Manager, will walk you through updated market commentary, and economic outlook for the coming months. SIGN UP!



Economic Market Outlook Jay Hatfield InfraCap Infrastructure ETF

Strategy Updates:

  • We recently launched the Infrastructure Capital Nasdaq Option Income ETF, QVOL. The objective of the fund is to seek high income and outperform the Nasdaq 100 on a total return basis by screening for reasonable valuation based on PEG ratios (Price Earnings ÷ Growth).


  • We seek to eliminate the “Dogs of the Daq”, which are companies held in the index that we believe are overvalued such as Tesla, Comcast, Charter, Kraft Heinz, Mondelez, Walmart and Costco.

Economic Market Outlook Jay Hatfield InfraCap Infrastructure ETF

Economy:

  • June CPI printed negative as we had predicted, coming in at -0.4% with core coming flat vs. expectations of 0.2%. The headline inflation drop was driven by a 9.5% plunge in energy prices. The decline in core services included a drop in shelter to 0.1% as the deeply flawed imputed shelter component finally started to reflect declines in market rents.

  • We estimate that June PCE core will print at 0.1 - 0.2% at the end of the month depending on the financial services component of PPI which is an imputed number disconnected from reality that is up 9.7% year over year. Real-time market inflation, CPI-R, is 1.1% Y/Y and we project PCE- R will be 2.5% year over year. The decline in shelter inflation is critical since it is likely to persist as a 6-month delayed average and is further lagged by utilizing renewing rates. After the Strait is reopened and oil drops below $60/barrel, we project that Core PCE will decline to below 2.5% over the next year as shelter continues to decline and the effect of tariffs roll off.

  • The current Fed continues its track record of incompetence by continuing to call for rate increases. Rate increases act to slow the interest rate sensitive sectors of the economy. However, the Fed’s tight monetary policy has already caused the interest sensitive sectors of the economy to enter recession with negative Y/Y growth. Higher inflation has been caused by high energy prices and to a lesser extent higher medical insurance cost. Higher interest rates have absolutely no effect on energy prices or medical care costs. In addition, higher inflation expectations are actually deflationary as higher interest rates further slow the economy and businesses and consumers in the US have almost no market power to raise prices based on their expectations. Historically, inflation has been exclusively caused by excessive monetary growth and oil prices. Money supply growth is negative and oil prices have stabilized indicating we are heading into a deflationary period that should result in rate cuts.

  • The key driver of economic growth, employment, wages, consumption and growth is business investment.  We forecast that the economy will grow at a robust 3.3% in 2026 with growth driven by a boom in tech investment, which was up 15% in the first quarter and a gradual improvement in housing investment as interest rates decline during the second half of the year.

Economic Market Outlook Jay Hatfield InfraCap Infrastructure ETF

Stock Market:


  • We are increasing our S&P 500 target to 9,000 due to continued strength in AI related company earnings. S&P 2027 earnings estimates have risen 14% since we established our 8,000 year-end 2026 target in December and we are using the same 23x fair value multiple that we used in our original target.  We are currently not experiencing a stock price bubble but rather an earnings estimate surge as the AI boom causes a dramatic increase in long term earnings estimates. The biggest risk to our target is to the upside as 2027 earnings estimates continue to rise rapidly.


Economic Market Outlook Jay Hatfield InfraCap Infrastructure ETF

Bond Market:

  • It was critical that Warsh softened up the arbitrary 2% target by stating he is focused on the target “left of the decimal” which implies inflation in the 2-2.5% area would be acceptable.

  • We publish a Realflation measure of PCE core that uses market rents and market financial services inflation to estimate what the real market inflation rate.  PCE-R for the last twelve months was less than 2%, which indicates the Fed should cut the Fed Funds rate to the neutral rate of 2.75% as soon as we get clarity on oil prices post resolution of the Iran war.  The Fed should also create a more flexible inflation target of 2-3% to reflect the fact that the US has been most prosperous historically when inflation was in this range, that it is impossible to princely hit a 2% target and the measurement of inflation is highly inaccurate.

  • Assuming oil prices drop below $70/barrel, we remain optimistic that PCE core approaches the Feds arbitrary 2% target by year end as the shelter component continues to gradually reflect market prices and tariff impacts roll off later in the year.  The money supply (monetary base) is down almost 6% YoY. The expected decline in inflation supports our view that the 10-year declines to 3.75% and the S&P hits 8,000 by the end of the year.


  • We are also hopeful that the Warsh task force will reform the price indices to reflect real-time market prices.  If that occurs, the revised indices will show that Core PCE is already below the Fed’s arbitrary 2% target.  We publish PCE-R, which is our estimate of real-time market inflation and it shows that inflation is already at the Fed’s target.

  • We interpreted Warsh’s press conference as very bullish due to the potential for reforming the Fed.  Specifically, Warsh softened up the arbitrary 2% target by focusing on the “left side of the decimal” target of 2.0%.  This implies the Fed’s de facto absolute ceiling for inflation is 2.9%.  This is a critical update to policy as during the 2000’s the Fed treated the 2.0% target as a hard ceiling resulting in 17 rate increases in a row despite inflation never significantly exceeding 2.0%.  This ultra hawkish policy resulted in the money supply growth being flat for 3 years and precipitated the Great Financial Crisis.

  • Rising inflation expectations are, contrary to popular opinion, deflationary as rising bond yields cause the economy to decelerate as mortgage rates rise.  Oil prices do become unanchored as occurred during the 70s, but inflationary expectations do not.  If expectations caused inflation, Democrats would be getting 9% wage increases and Republicans 1%.  Tanking the US economy will not lower global oil prices.


DISCLOSURE

This information is not an offer to sell, or solicitation of an offer to buy any investment product, security, or services offered by Jay Hatfield, or Infrastructure Capital Advisors, LLC, (”ICA”) or its affiliates. ICA, will only conduct such solicitation of an offer to buy any investment product or service offered by ICA, if at all, by (1) purported definitive documentation (which will include disclosures relating to investment objective, policies, risk factors, fees, tax implications and relevant qualifications), (2) to qualified participants, if applicable, and (3) only in those jurisdictions where permitted by law. Jay Hatfield or ICA may have a beneficial long or short position in securities discussed either through stock ownership, options, or other derivatives; nonetheless, under no circumstances does any article or interview represent a recommendation to buy or sell these securities. This discussion is intended to provide insight into stocks and the market for entertainment and information purposes only and is not a solicitation of any kind. ICA buys and sells securities on behalf of its fund investors and may do so, before and after any particular article herein is published, with respect to the securities discussed in any article posted. ICA’s appraisal of a company (price target) is only one factor that affects its decision whether to buy or sell shares in that company. Other factors might include, but are not limited to, the presence of mandatory limits on individual positions, decisions regarding portfolio exposures, and general market conditions and liquidity needs. As such, there may not always be consistency between the views expressed here and ICA’s trading or holdings on behalf of its fund investors. There may be conflicts between the content posted or discussed and the interests of ICA. Please reach out to the ICA for more information. Investors should make their own decisions regarding any investments mentioned, and their prospects based on their independent research, and not on any subjective opinion(s) made either by ICA, ICA employees or affiliates. The information presented should not be construed as legal, tax or accounting advice or as a recommendation to invest in any of the products or strategies described, and may not be appropriate for individual investors. Such persons are urged to consult their own legal, tax and investment counsel before making any investment decision.This material must be preceded or accompanied by a prospectus. The information contained herein represents our subjective belief and opinions and should not be construed as investment, tax, legal, or financial advice. For a prospectus with this and other information about the Funds, please visit www.infracapfunds.com. Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. Please read the prospectus carefully before investing. For more information about the Funds, Fund strategies or Infrastructure Capital, please reach out to Craig Starr at 212-763-8336 (Craig.Starr@icmllc.com). The Funds are distributed either by Quasar Distributors, LLC or by VP Distributors, LLC, an affiliate of Virtus ETF Advisers, LLC. QVOL, ICAP, SCAP, and BNDS ETFs are distributed by Quasar Distributors LLC. PFFA, PFFR, and AMZA ETFs are distributed by VP Distributors, LLC an affiliated of Virtus ETF Advisers, LLC.

 
 
 

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DISCLOSURE

Opinions represented on this website are subject to change and should not be considered investment advice. Past performance is not indicative of future results. This data was prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. For more information about the Funds, Fund strategies or Infrastructure Capital, please reach out to Craig Starr at 212-763-8336 (Craig.Starr@icmllc.com).

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Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. For a prospectus with this and other information about the InfraCap Small Cap Income ETF, please click here. Please read the prospectus carefully before investing. For more information, please reach out to William Heffernan at 212-763-8326 or icap-operations@infracap-funds.com.

 

The Funds are distributed either by Quasar Distributors, LLC or by VP Distributors, LLC, an affiliate of Virtus ETF Advisers, LLC. ICAP and SCAP ETFs are distributed by Quasar Distributors LLC. PFFA, PFFR, and AMZA ETFs are distributed by VP Distributors, LLC an affiliated of Virtus ETF Advisers, LLC.

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Current income is a primary objective in most, but not all, of ICA's investing activities. Consequently, the focus is generally on companies that generate and distribute substantial streams of free cash flow. This approach is based on the belief that tangible assets that produce free cash flow have intrinsic values that are unlikely to deteriorate over time. For more information, please visit infracapfunds.com.

 

The Russell 2000 Index is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. It is not possible to invest directly in an index. In addition, there is a highly liquid option market according to total option volumes, as of December 8, 2023 *Morningstar ratings are based on risk-adjusted returns. Strong ratings are not indicative of positive fund performance. Morningstar Rating: Five star ranking awards for three year performance was prepared by Morningstar, an independent third party. As of 09/30/2023, PFFA was rated 5 stars out of 64 funds, 1 stars out of 58 funds and has no rating out of 38 funds within the US Fund Preferred Stock category for the 3-, 5- and 10 year periods, respectively. As of 09/30/2023, AMZA was rated 5 stars out of 100 funds, 1 stars out of 91 funds and no rating out of 0 funds within the Energy Limited Partnership category for the 3-, 5- and 10 year periods, respectively. These ratings are not indicative of a fund's future results or the future success of the adviser in managing its other funds. Approximately 10% of funds received 5 star award (top ten) in these categories. These category rankings only reflects two category rankings produced by Morningstar. The Adviser did not pay a fee to participate in the in Morningstar’s rating system. Morningstar ratings do not represent the entire universe of Preferred Stock or Energy limited Partnership funds offered to investors, rather this rating represents a subset of Preferred Stock and Energy Limited Partnership funds. For more information about the ranking and rating process, please contact Morningstar at 1-312-384-4000, or visit https://bit.ly/440AjUT.

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A word about SCAP risk:  Investing involves risk, including possible loss of principal. An investment in the Fund may be subject to risks which include, among others, investing in equities securities, dividend paying securities, utilities, small-, mid- and large-capitalization companies, real estate investment trusts, master limited partnerships, foreign investments and emerging, debt securities, depositary receipts, market events, operational, high portfolio turnover, trading issues, active management, fund shares trading, premium/discount risk and liquidity of fund shares, which may make these investments volatile in price. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund’s returns. Small and Medium-capitalization companies, foreign investments and high yielding equity and debt securities may be subject to elevated risks. The Fund is a recently organized investment company with no operating history. Please see prospectus for discussion of risks. Diversification cannot assure a profit or protect against loss in a down market.  SCAP is distributed by Quasar Distributors, LLC.

 

A word about ICAP Risk: Investing involves risk, including possible loss of principal. An investment in the Fund may be subject to risks which include, among others, investing in equities securities, dividend paying securities, utilities, preferred stocks, leverage, short sales, small-, mid- and large-capitalization companies, real estate investment trusts, master limited partnerships, foreign investments and emerging, debt securities, depositary receipts, market events, operational, high portfolio turnover, trading issues, options, active management, fund shares trading, premium/discount risk and liquidity of fund shares, which may make these investments volatile in price. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund's returns. Small and Medium-capitalization companies, foreign investments, options, leverage, short sales, and high yielding equity and debt securities may be subject to elevated risks. The Fund is a recently organized investment company with no operating history. Please see prospectus for discussion of risks. ICAP fund distributor, Quasar Distributors, LLC.

 

Virtus InfraCap U.S. Preferred Stock ETF (NYSE: PFFA): Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities. Preferred Stock: Preferred stocks may decline in price, fail to pay dividends, or be illiquid. Non-Diversified: The Fund is non-diversified and may be more susceptible to factors negatively impacting its holdings to the extent that each security represents a larger portion of the Fund’s assets. Short Sales: The Fund may engage in short sales, and may experience a loss if the price of a borrowed security increases before the date on which the Fund replaces the security. Leverage: When a Fund leverages its portfolio, the value of its shares may be more volatile and all other risks may be compounded. Derivatives: Investments in derivatives such as futures, options, forwards, and swaps may increase volatility or cause a loss greater than the principal investment. No Guarantee: There is no guarantee that the portfolio will meet its objective. Prospectus: For additional information on risks, please see the Fund’s prospectus. 

 

InfraCap REIT Preferred ETF (NYSE: PFFR): Exchange-Traded Funds (ETF): The value of an ETF may be more volatile than the underlying portfolio of securities it is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities. Preferred Stocks: Preferred stocks may decline in price, fail to pay dividends, or be illiquid. Real Estate Investments: The Fund may be negatively affected by factors specific to the real estate market, including interest rates, leverage, property, and management. Industry/Sector Concentration: A Fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated Fund. Passive Strategy/Index Risk: A passive investment strategy seeking to track the performance of the underlying index may result in the Fund holding securities regardless of market conditions or their current or projected performance. This could cause the Fund’s returns to be lower than if the Fund employed an active strategy. Correlation to Index: The performance of the Fund and its index may vary somewhat due to factors such as Fund flows, transaction costs, and timing differences associated with additions to and deletions from its index. Market Volatility: Securities in the Fund may go up or down in response to the prospects of individual companies and general economic conditions. Price changes may be short or long-term. Prospectus: For additional information on risks, please see the Fund’s prospectus.

 

InfraCap MLP ETF (NYSE: AMZA): Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities. MLP Interest Rates: As yield-based investments, MLPs carry interest rate risk and may underperform in rising interest rate environments. Additionally, when investors have heightened fears about the economy, the risk spread between MLPs and competing investment options can widen, which may have an adverse effect on the stock price of MLPs. Rising interest rates may increase the potential cost of MLPs financing projects or cost of operations, and may affect the demand for MLP investments, either of which may result in lower performance by or distributions from the Fund’s MLP investments. Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund. Short Sales: The fund may engage in short sales, and may experience a loss if the price of a borrowed security increases before the date on which the fund replaces the security. Leverage: When a fund leverages its portfolio, the value of its shares may be more volatile and all other risks may be compounded. Derivatives: Investments in derivatives such as futures, options, forwards, and swaps may increase volatility or cause a loss greater than the principal investment. MLPs: Investments in Master Limited Partnerships may be adversely impacted by tax law changes, regulations, or factors affecting underlying assets. No Guarantee: There is no guarantee that the portfolio will meet its objective. Prospectus: For additional information on risks, please see the fund’s prospectus.

 

Performance Data: Performance data quoted backtested results. Backtested Performance was derived from the retroactive application of a model developed with the benefit of hindsight. Backtested performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit www.virtusetfs.com for performance data current to the most recent month-end and the Fund’s standard performance information. Past performance is not indicative of future results.

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Indices / Performance Terminology Used: For more information regarding the underlying data, calculations, or terminology used, please reach out to us. Please CLICK HERE to see a glossary of terminology and indices used.

 

Privacy Policy:  Protecting your privacy and personal information is important to us. Go to www.infracapfunds.com/privacy-policy to view our full policy.

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Past performance is not indicative of future results.

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