FinTech TV : Why Inflation Could Keep Rates Higher for Longer

October 6, 2026

The Narrowing Rally: Why Growth Still Works, but Diversification Has to Get Smarter

Markets are entering the fourth quarter with an unusual combination of forces.

Economic growth remains strong, corporate earnings continue to expand, and technology stocks have pushed benchmark indexes toward record levels. At the same time, inflation remains above the Federal Reserve’s target, Treasury yields have moved higher, and the U.S. dollar has strengthened.

During a recent appearance on FinTech TV, Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management, said that combination deserves attention.

“Inflation driving higher, rates driving higher, and then the dollar driving higher are areas that we have to be concerned with.”

Michael remains constructive on growth, but he believes the environment is becoming increasingly selective. Some areas of the market continue to benefit from strong earnings, while others are struggling under the weight of higher borrowing costs.

That makes the fourth-quarter challenge less about whether investors should be bullish or bearish and more about which sources of growth can continue to overcome a more difficult rate environment.

The Inflation Risk: Higher Oil Prices Could Keep Pressure on the Fed

Michael believes inflation remains one of the more important risks heading into the final months of the year.

Higher energy prices have contributed to renewed price pressures, and he expects inflation readings to remain elevated in the near term.

That could complicate the Federal Reserve’s policy decisions.

Michael does not expect another rate increase in October, partly because recent employment data may give policymakers room to wait. However, he sees the possibility of another increase in December if inflation remains persistent.

“I think you’re not going to see one in October… but I do think you’re going to get one in December.”

The larger question is what happens after that.

Michael believes some of the inflation pressure associated with oil could begin easing next year as year-over-year comparisons become less difficult. Until then, however, higher inflation can keep interest rates elevated and continue influencing which parts of the market perform strongest.

The Rate Divide: Higher Yields Are Creating Winners and Losers

Michael pointed to a growing performance gap between sectors.

Technology has remained strong, while areas such as financials, utilities, and real estate have faced greater pressure as rates moved higher.

That divergence is important because higher interest rates do not affect every business equally.

Companies with stronger earnings growth and less dependence on borrowing may be better positioned to absorb higher rates. Businesses that rely heavily on financing or offer bond-like income characteristics can face more competition from elevated Treasury yields.

Michael’s current preference is therefore clear:

“We want to be very pro-growth.”

But that does not mean buying growth indiscriminately.

The quality, sustainability, and financing requirements behind that growth matter more as capital becomes increasingly expensive.

The Breadth Problem: Fewer Stocks Are Carrying More of the Market

One of Michael’s concerns is that the rally has become less broad.

Earlier in the year, participation had begun expanding across more areas of the market. More recently, a smaller number of growth-oriented stocks have again been responsible for a greater share of the advance.

“You’re starting to see this breadth go away, where only a handful of names are kind of leading this rally.”

A narrowing market does not automatically mean the rally is ending.

But it can increase portfolio risk because performance becomes increasingly dependent on a limited number of companies and investment themes.

That becomes especially important when one theme is responsible for much of the growth.

The AI Paradox: Investors May Need It, but They Can Still Own Too Much

Michael remains strongly constructive on artificial intelligence.

He described AI as Landsberg Bennett’s primary investment theme and said the portfolios he manages have meaningful exposure to the area.

His concern is not whether investors should participate. It is how that exposure is constructed.

“You can’t have it in a few names because of the volatility. You’ve got to spread it out.”

Michael approaches AI across different sectors, countries, and company sizes rather than concentrating exposure in only a handful of large technology businesses.

That distinction matters because AI has expanded well beyond traditional technology companies. Semiconductors, infrastructure, industrial businesses, energy providers, software companies, and other areas can all participate in the same underlying trend.

A portfolio containing several sectors can therefore still be heavily dependent on one theme.

Michael summarized the risk simply:

“Too much of a good thing is definitely a possibility here.”

The Quality Question: Higher Rates Could Expose Weaker AI Businesses

The AI investment cycle has attracted businesses of different sizes and financial strength.

Michael believes persistently high rates could increasingly separate higher-quality companies from businesses that rely heavily on borrowed money.

“If rates stay high for some of these lower-quality AI companies, borrowing money is going to be real tough.”

That creates an important distinction within the AI trade.

The long-term theme may remain intact even while weaker participants struggle. Investors therefore need to evaluate balance sheets, earnings, cash flow, and financing requirements rather than assuming every company connected to artificial intelligence will benefit equally.

The next stage of the AI cycle may increasingly reward selectivity.

The Second-Order Opportunity: Cybersecurity Grows Alongside AI

Michael also highlighted cybersecurity as another long-term investment theme that could benefit from the rapid adoption of artificial intelligence.

His reasoning is straightforward.

As AI tools become more capable, businesses can use them to improve productivity and automate processes. Criminals can also use the same technology to make cyberattacks faster and more sophisticated.

That increases the importance of protecting networks, identities, data, and digital infrastructure.

Michael described cybersecurity as one of Landsberg Bennett’s most important themes behind AI itself.

“The more AI gets smarter, the more you’re going to need security to keep the criminals out of your business.”

This represents a different way of approaching the AI boom.

Instead of focusing only on businesses building AI infrastructure, investors can also consider industries that may become more important because AI adoption creates new risks and requirements.

The Fourth-Quarter Anchor: Earnings Return to Center Stage

Michael said he prefers periods when investors have earnings results to evaluate rather than stretches dominated primarily by speculation about interest rates, politics, and economic reports.

That becomes particularly relevant as the next earnings season begins.

Corporate earnings have posted seven consecutive quarters of double-digit growth, according to the figures Michael discussed, with the most recent quarter being the strongest of that stretch.

Economic growth has also remained strong.

For Michael, those fundamentals continue to support the market.

“If you’re getting growth in your stocks, that’s where you want to stay.”

He continues to favor areas such as technology and healthcare where earnings growth remains supportive.

The Election Factor: Politics May Affect Sectors Differently

The approaching midterm elections introduce another source of uncertainty.

Michael believes different election outcomes could influence expectations for regulation and infrastructure spending in areas such as financials, utilities, and AI-related development.

Rather than attempting to position an entire portfolio around one political outcome, his broader message was to recognize where policy changes could affect individual sectors.

The investment case should still begin with earnings and growth rather than predictions about the election.

Growth Still Matters, but Concentration Matters Too

We believe the fourth quarter presents an environment where strong economic and corporate fundamentals coexist with meaningful portfolio risks.

Earnings remain supportive, but inflation and higher interest rates have created greater differences between sectors. Technology and other growth-oriented areas continue to perform well, while businesses more sensitive to financing costs may face additional pressure.

Artificial intelligence remains an important long-term investment theme, but the strength of that theme makes diversification increasingly important. Exposure can extend across sectors, countries, and company sizes while still becoming too concentrated if the same underlying economic driver supports too many holdings.

We also believe investors should distinguish between companies benefiting from genuine earnings growth and those that may struggle if financing remains expensive.

Cybersecurity, healthcare, and other growth themes can provide additional sources of opportunity without relying entirely on the same AI trade.

The fourth-quarter opportunity may not come from moving away from growth. It may come from owning growth more carefully, spreading exposure more intelligently, and making sure one successful theme does not become the entire portfolio.