As the world shifts from a U.S. dominated system to a multipolar world, constant geopolitical tension is becoming a feature, not a bug. As long as disruption in the Middle East continues, energy prices will remain volatile. The global and domestic supply chain remains challenged, though with some green shoots appearing. Amid this volatility, U.S. GDP grew an annualized and seasonally adjusted 2.1% in the first quarter, up .5% from the previous quarter and about equal to the average over the previous four years.^[1] Business tax incentives and AI data center buildouts continue to drive U.S. investment and are sending the public markets to new heights.  

Rail freight traffic is a basic measure of the nation’s economic activity. U.S. railroads originated 3.0 million total carloads in Q2 2026, up 2.3% over Q2 2025. In each of the first six months of 2026, U.S. rail freight carloads were up year over year (total carloads were the most since 2019, carloads excluding coal were the most since 2008).^[2] Carloads averaged 231,176 in June 2026, their highest weekly average for any month in more than five years. The AAR Freight Rail Index (carloads excluding coal and grain) reached its second highest monthly level ever in June 2026. Its average in the second quarter of 2026 was the highest ever for a quarter going back to 2008. With inflation^[3] and the direction of the Iranian conflict unknown, first-half results are clear. Broad carload gains indicate the U.S. economy is moving forward at a steady pace.  

The Farnborough Air Show ended with 327 firm orders.^[4] Boeing announced firm and tentative orders for 173 aircraft, compared with 154 for Airbus. The total was nowhere near the more than 1,100 announced at Farnborough in 2018, but demand remains healthy overall. Winning orders are no longer the industry’s challenge as both OEMs continue to struggle to increase production. Labor shortages, engine constraints, and broader supply-chain issues slow deliveries and keep backlogs stretched well into the next decade.  

Each of these signals, persistent geopolitical volatility, rail volumes at multi-year highs, and aircraft demand outrunning OEM output reaches the portfolio at the asset level. There it becomes a question of what you own, what it is worth, and what you were paid to take on. Portfolio risk management can be segregated into three general categories: credit, equipment, and transaction economics driven by interest rates, tax, and after-tax cash flows. Separate the returns, and you’ll be able to determine if you are being paid for risk taken. Equipment valuation is essential. It requires demand analysis, residual valuation, and consideration of alternatives for conversion or part outs (n.b., a modest 2.5% inflation rate over 20 years increases prices 64%). Positioning Aero and Rail capital to benefit from future developments requires insight and unemotional analysis. Invest when the deal is good, the price low, the potential return substantial, and when downside risk can be limited. Volatility and uncertainty are the new ‘normal.’ For help navigating the new normal, Call RESIDCO.            

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^[1] GDP growth in Q2 slowed to 1.5%, U.S. Bureau of Economic Analysis, July 30, 2026.

^[2] Rail Time Indicators, July 8, 2025, Association of American Railroads Policy and Economics.

^[3] With three dissenting votes, the Fed held interest rates steady at its July 29, 2026 meeting.

^[4] Business Traveler, Final Day: Farnborough Air Show, July 23, 2026.