The Problem

My schedule today only allows for a quick pre-market note... So just quickly touching base on this morning's CPI report and my thinking around the whole inflation conversation.

Immediately upon the report coming in hotter than expected stocks went from nicely green to notably red in pre-market action... Tech and financials look to be taking the brunt of the hit so far... Precious metals getting pretty well hammered.

Fed funds futures immediately went from essentially pricing in no rate hike at this month's meeting, to a 50/50 chance... A December hike fully priced in.

In terms of the inflation problem itself, while we think higher (than recent years') inflation is a structural reality going forward, at the moment we see it as a supply problem much more so than a demand problem, which, therein, lies the problem.

I.e., the Fed speeding up the tightening of financial conditions by raising short-term interest rates is taking aim at demand (which, btw, is the only target they have -- as they can't print oil, for example, and they can't reduce trade barriers [read tariffs]).

So, while you'll hear commentary aplenty about how the Fed needs to get more aggressive, watch what happens to inflation expectations, and ultimately the near-term numbers, when a durable Middle East solution is found and if/when trade tensions seriously ease.

The former (in terms of safe passage of oil tankers) being an inevitability over coming months, the latter is less certain.. In either case the timing is up in the air.

Stay tuned, I'll have much more for you over the next few days.

Why the Ecoonomy's OK Despite Consumer Surveys & Other Serious Stuff

Definitely a must-watch video for clients!

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Businesses Steady, Households Strained*

Week of October 5, 2026

Unreal That the S&P Hit an All Time High Yesterday, Literally Unreal (video)

Dear Clients, here's another (this one's short) video we'd like you to be sure and take in.

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

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)

Dear Clients, please be sure to take a few minutes and take this one in.  Thanks!

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

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.