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: 

Quick Morning Note

Per yesterday's message herein, the very recent action in markets has been virtually across-the-board risk-off... Although, while this morning we're once again seeing weakness in the major global equity averages, in commodities (including precious metals), and bigly in bonds, our US healthcare, communications and of course energy (as oil continues its ascent) are offsetting a bit of the pain so far this morning.

Suffice to say, September is thus far fulfilling its historical role as the worst month of the year for markets, reflected in the broader equity averages (such as the S&P 500 equal weight) in particular.

Today's Chart Pack: Oil Runs the Show!

Rough day for markets today, pretty much across the board... I.e., your most diversified portfolio took an outsized one-day hit as everything from global equities, to bonds, to precious metals got escorted to the woodshed:

What We're Watching -- And Your Weekly Macro Wrap

Clients and regular readers will note that as recently as, say, a month (or less) ago, I was firmly of the mind that the Fed would not hike rates anytime soon... A view that markets demanded that I reconsider just ahead of this week's Fed meeting.

Here's from my commentary on Tuesday, where I referenced my commentary from the previous Friday:

A Tough One For the Fed

From last Friday's note:

"...this is the environment where a hike actually could lead to lower 10 and 30-year yields... If that's the case the Fed may be comfortable hiking next week, which may have me sympathizing with the consensus after all... Although there's still the mid-term election and federal debt issues I mentioned yesterday for the Fed to contend with."

Suffice to say that a hike is what's needed to bring down longer-term rates has become the consensus view... But only if it's followed by a statement and/or press conference that implies there'll be zero hesitation to hike again should conditions dictate... I.e., the language has to be sufficiently hawkish.

Quick Market Note

Heading out for a week’s vacation, but, again, I’ll stay connected enough to comment herein if I think readers could use some perspective on anything that crops up

In the meantime, here’s my note to our team after seeing this morning’s market reaction to CPI:

Oil Prices and Interest Rates

With oil at $100/barrel and producer prices not remotely letting up, fed funds futures are pricing in a 70% chance of a rate hike come next Wednesday.

While the Fed, under previous leadership, is known for not bucking market expectations, if there was ever a time for it to do so, it's now.

The Coulds That Could Happen

I said in last week's video that "the economy could help out the Fed by slowing."  Meaning, if the jobs data were to weaken, and if CPI next week were to soften, pressure to raise the fed funds rate would abate markedly, and of course risk markets would love it.

Well, Friday's jobs number -- coming in much better than expected -- indeed did not help, and markets -- albeit not terribly -- sold off accordingly.. Although I suspect the "not terribly" had to do with the fact that under the hood the jobs data really wasn't all that stellar.

Here's from the macro wrap below:

Chart of the Day

Internal log entry this morning:

9/5/2026:

I've been telling clients that China (huge oil inventory) largely explains how oil has remained contained relative to expectations given the Iran War... That may be ending:

Different Ballgame For Bessent (video)

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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.