September 1, 2026
After a strong August, markets entered September facing a combination of higher oil prices, elevated Treasury yields, geopolitical uncertainty, and renewed inflation concerns.
In an Investing.com article covering Wednesday’s market rebound, Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management, argued that investors should continue separating short-term geopolitical noise from the corporate earnings picture.
“August was a very strong month for stocks, and after this run, investors are now looking to stress test it and figure out what could derail it.”
His comments also raised a second portfolio question. What happens when the traditional relationship between stocks and bonds stops working as investors expect?
Recent volatility has largely centered on oil prices, geopolitical developments, inflation expectations, and rising borrowing costs.
Michael believes those issues deserve attention, but he continues to view corporate earnings growth as the more important foundation for equity markets.
“While the stock market is currently focused on Iran and the oil price spike, we would ignore this geopolitical and manmade noise and continue to focus attention on the corporate earnings growth picture, which is what ultimately drives stocks higher.”
That distinction becomes particularly important after a strong market advance.
A headline can quickly change sentiment, but the longer-term effect on stocks depends on whether it alters revenues, margins, financing costs, consumer activity, or future earnings expectations.
For Michael, stress-testing the rally therefore means asking whether the earnings story remains intact rather than reacting to every change in oil prices or geopolitical developments.
Rising Treasury yields create a different challenge because they can affect both sides of a traditional stock-and-bond portfolio.
Michael explained:
“The rise in bond yields is a reminder that stocks and bond prices can go down together during environments where rates are rising at a fast pace.”
When interest rates increase, existing bond prices can decline as newly issued securities offer higher yields.
Stocks can also face pressure. Higher borrowing costs can affect businesses, while higher government bond yields can make investors reassess how much they are willing to pay for future corporate earnings.
This can create periods when stocks and bonds decline at the same time.
Bonds are commonly used to help reduce portfolio volatility, particularly when equity markets struggle.
But Michael cautioned that the relationship does not function the same way in every environment.
“Bonds are traditionally thought of as a diversifier for stock volatility, and that can work, but it doesn’t always work.”
The source of market stress matters.
If investors are concerned about weaker economic growth, certain bonds may react differently from stocks. But when rapidly rising interest rates are causing the stress, both asset classes may respond negatively.
That means investors may need to evaluate diversification based on how different holdings respond to specific economic conditions, rather than assuming one asset class will automatically offset another.
Michael also pointed to other asset classes as potential sources of diversification when stocks and bonds are being affected by the same rate environment.
“Investors should make sure they have other asset classes that do diversify, such as commodities, in case rates continue to go higher and ultimately take stocks with them.”
The point is not that commodities will rise whenever stocks and bonds decline.
Rather, different asset classes can respond to inflation, interest rates, economic growth, and geopolitical developments in different ways.
Adding exposures with different economic drivers may help reduce the extent to which a portfolio depends on one particular market outcome.
The recent rise in oil prices illustrates the complexity of diversification.
Higher energy prices can contribute to inflation concerns, push bond yields higher, and increase costs for businesses and consumers. In that sense, oil can create pressure elsewhere in a portfolio.
At the same time, commodities themselves may respond positively to some of the forces hurting stocks and bonds.
This does not make them a perfect hedge. It demonstrates why portfolio construction requires looking at how different investments interact under changing economic conditions.
Diversification is less about finding one asset that moves opposite another every day and more about avoiding excessive dependence on the same underlying risks.
Wednesday’s easing in Treasury yields helped stocks recover, but longer-term borrowing costs remain elevated.
That places additional emphasis on corporate earnings.
When investors can earn higher yields from government securities, stocks face a higher hurdle. Businesses may need to demonstrate sufficient earnings growth to justify the additional risk investors accept by owning equities.
That reinforces Michael’s focus on fundamentals.
If earnings continue growing, markets may be better positioned to absorb periods of rate volatility. If earnings weaken while yields remain elevated, valuations may face greater pressure.
We believe the recent combination of rising yields, higher oil prices, and equity volatility provides a useful reminder that diversification should not be evaluated solely by the number of asset classes in a portfolio.
Stocks and bonds can play different roles over time, but there are environments in which both may react negatively to the same economic force.
That is why we believe investors should consider what is actually driving each component of their portfolio. Interest-rate sensitivity, inflation exposure, earnings growth, duration, and other economic factors can be as important as the asset-class label itself.
Other investments, including commodities in appropriate circumstances, may introduce different sources of return and risk. Their role should still be considered within the investor’s objectives, time horizon, and broader financial plan.
Diversification is not about finding an asset that rises every time another falls. It is about reducing the number of ways one economic event can affect the entire portfolio at once.
Source: Wall Street ends higher on Dell, Nvidia boost and a let up in oil prices, yields (subscription required)
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