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Range Takeaway: Warsh struck a hawkish tone at his second press conference, but talk is cheap. After the Fed held the benchmark rate steady again, long-term rates rose and stocks fell as investors questioned the central bank’s resolve on inflation. With solid growth, strong earnings, and low unemployment, the real threat may not be a 25-basis-point hike; it’s runaway inflation. Markets now want action, not patience. Paradoxically, a decisive Fed hike this fall may be the fastest route to cooling inflation expectations and pushing mortgage rates lower.

Last week we called it a live test: four megacap tech companies would report, and boardrooms would learn which AI approach the market rewards. With big tech earnings mostly done, the answer is more nuanced than "spend on AI" or "don't."

Two lessons stand out.

First, don't miss. With stocks near record highs, investors show little tolerance for results that fall short. Tesla, Meta, and Apple proved the point. There is no grading on a curve.

Second, have a tight story on capex. Microsoft beat estimates, held spending flat, and got a record stock move for it. Amazon raised its capex forecast but clearly spelled out how it will moderate spending going forward. Shares rose 16%. Alphabet delivered monster numbers, then spooked investors by hiking capex with no clear ceiling.

After seeing results from AI's biggest spenders, July's sharp tech pullback looks less like a breakdown in AI fundamentals and more like an unwind of leverage and crowded positioning. According to Bespoke Investment Group, the 25 best-performing Russell 1000 stocks from the first half (mostly semiconductors and AI infrastructure) fell an average of 36% in July. The 25 worst performers rebounded 14% on average as momentum trades unraveled.

Tech earnings suggest the AI cycle still has room to run. July was a reminder that the right thesis can become the wrong trade when leverage and positioning get stretched.

We’re continuing our series breaking down the strategies we use to manage your portfolio, in plain English. This week: “strategic asset location.”

Here’s the idea: You’d never store ice cream in the pantry. Your accounts work the same way. A taxable brokerage account, a 401(k), and a Roth are three shelves with three different tax “temperatures”: taxed now, taxed later, or, if qualified, not at all. Asset location is simply putting each holding on the shelf where it keeps best.

Why does the shelf matter? Because different investments get taxed very differently. Holdings that return ordinary income each year, like bonds and REITs, generally belong in tax-deferred accounts, like a pre-tax 401(k), where that income isn’t taxed annually. High-growth holdings often work hardest in a tax-free account, such as a Roth IRA, where qualified growth can come out tax-free. And tax-efficient investments (like direct indexing and municipal bonds) tend to be a fit for taxable accounts, like a traditional brokerage account.

The goal is to build a wealth plan that optimizes where different assets are held while maintaining your desired overall exposure. Range coordinates asset location across all of your household’s accounts. That way, you can confidently be the chef of your investment kitchen, with all ingredients exactly where you want them.¹

We broke down the week’s wildest money stories on Instagram:

Follow us on Instagram @rangefinance to catch our videos next week.

Not sure whether your portfolio is sitting on the right shelves?

Ask Rai: “Are my investments held in the most tax-efficient accounts for their asset class?” and our AI wealth advisor will look across every account in your household, flag holdings that may be generating avoidable annual tax drag, and suggest where they might sit better.²

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