Twists and Turns

Per yesterday's video, September was the first truly ugly month for markets since March... But now we enter a period that, even during past mid-term election years, tends to be a very good stretch for asset prices.

Of course this year's setup has more to contend with than simply domestic politicking!

For the moment, save for a yet-unconfirmed attack on an Aramco oil facility, the latest (weekend) news flow has been notably tame, relatively-speaking.

As I've pointed out, the US administration is in the eleventh hour if it intends to pull a few market levers to catch a wealth-effect edge heading into election day.

Scott Bessent taking the treasury bond buyback to its stated upside limit last week, plus Europe's giving the nod to the US's request to unleash a meaningful amount of diesel (in particular) reserves suggests that they've yet to give up on juicing market forces to perhaps sway the on-the-fence voter come early November.

Perspective on September's Swoon (video)

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We Remain Uber-Bullish On Gold (Long-Term)

Gold has been interesting to track of late... It's a not-small position for us that, since we added it, has been very profitable to own -- until this year, that is, and certainly until the past month or so.

GLD YTD:

Turbulence

Per Sunday's video, there's notable turbulence occurring just below the equity market surface.

Along with the concerning breadth readings we covered, as I type nearly 2/3rds of S&P 500 constituents are experiencing a technical bear market (down 20%+ from previous highs)... I.e., stocks -- save for the tech sector -- are struggling mightily as we enter Q4.

So what's going on?

Well, as I illustrated in my 9/23 chart pack, oil is largely running the show.

Here's Bloomberg:

"Global Equity Weakness — Late September into October 2026

The Common Thread: Oil Amplifying a Bond Market Rout

Two forces are working in tandem to pressure equities globally: a relentless rise in sovereign bond yields and an oil price that is flirting with $100/bbl. Brent crude is up ~2.5% today to around $100.49, having risen for a third consecutive month, driven by Middle East supply disruptions tied to the US-Iran conflict. Critically, oil is not just a cost headache — it is actively feeding the bond selloff by stoking inflation fears, which in turn pushes yields higher and compresses equity valuations. US 10-year Treasury yields have touched their highest since 2002 at ~5.30%, while 30-year Gilt yields have surged to 6% for the first time since 1998."

As for this morning specifically:

"US: Oil Erasing the AI Rally

The dynamic in US equities is stark. S&P 500 futures wiped out an advance of as much as 0.7% — driven by an upbeat Micron forecast — as the renewed oil climb deepened the bond selloff. (1) ISM manufacturing data this morning showed a gauge of raw-material prices jumping to its highest since May, amplifying inflation anxiety and sending the S&P 500 on track for its worst week since August. (2) A gauge of big banks lost 2%. (3) Beneath the surface, the equal-weighted S&P 500 is eyeing its seventh consecutive weekly loss — a streak seen only twice before in history — even as AI-linked megacaps hold up. (4) Oil is a key reason for the divergence: energy costs squeeze the broad market while tech remains relatively insulated."

I'll have lots to share on the topic over the weekend. 

Quick Note: Volatility notwithstanding

Just thought I'd pop in with a quick note, given the pain markets are feeling pretty much across the board this morning.

I say "pretty much" because of course anything tied to the culprit of late is catching a bid... I.e., oil-related stocks, in the aggregate, are up 2/3rds of a percent, while the likes of industrials, materials, tech, communication, financials and utilities are all seeing drawdowns of between 1 and 1.5% as I type.

Long-term bonds (which we do not own, but are a tell on conditions) are getting hammered this morning as well... As are precious metals (which we do own) to the tune of minus 4-5%.

This is a stark reversal of the rallies we experienced on Friday, which essentially tells you all you need to know for now.

That is, on Friday there were high hopes of a near-term respite that would open the straight of Hormuz... While today, those hopes have -- for the moment -- been dashed.

Make no mistake, the US/Iran affair is something that cannot persist indefinitely, at least to the extent that it chokes oil supply sufficient to -- for one example -- keep gasoline prices double what they were to start the year... And of course this is all doing a major number on the Iranian economy.

I.e., an oil-emphasized resolution is in the offing, but the market is pleading for it sooner than later.

We'll keep you posted on these short-term developments (lots of it noise), while prudently and painstakingly keeping our focus on the structural dynamics that when properly understood -- short-term volatility notwithstanding -- make for long-term investment success.

PS: Dear clients, if the recent volatility -- or, say, the latest news headlines -- are at all getting under your skin, and our next review meeting is farther out than you'd like, don't hesitate to drop me an email, there's always room to schedule a call.

Good News Has a Price

Our weekly macro report below gives the interested reader plenty to digest... And while all of it is important, well... imperative (for us), to forever monitor and assess, if I were inclined to nutshell it for you, at present I'd say you can sum up what's sustaining the US economy's strength at this late-cycle juncture as simply AI datacenter capital expenditure/investment plus the general wealth effect that has those with means spending like the good times will never end.

Headlines and Charts of The Day

As I noted yesterday:

"As for the Iran situation, while both sides have engaged in negotiations over the past week, and during the UN session, their respective speeches at said session did anything but assure markets that a deal is close at hand... Although that -- in terms of agreeing to at least a short-term respite -- can change in a heartbeat, as we've experienced."

Headlines a few minutes ago: