The Morning Call
9/17/26
The
Market
Technical
Wednesday in the
charts.
Note: the S&P apparently
didn’t like the results of the FOMC meeting. At the close, it has now spent
four trading days below its former all-time high, has reset its 50 DMA to
resistance, is now challenging its 100 DMA (the Dow blew through its 100 DMA) and
has made a fourth lower high and fourth lower low---clearly gaining some
momentum to the downside. And, of
course, this pin action fits with the seasonal pattern. That aside, whether this turns into a rout is
open to question (the overnight recovery suggests investors are reconsidering their
take on Fed policy). In my mind the
answer hinges on whether the economy/corporate earnings will continue in an
uptrend or are about to roll over---about which there is serious disagreement
among the experts. For the moment,
sitting on the sidelines is working. But
ascertaining who is correct in the aforementioned debate is critical to what to
do next. Right now, I don’t know.
Wednesday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Thursday morning
setup: Stocks look set to recover from Wednesday afternoon’s selloff as markets
digest the rate hike from the Federal Reserve with Warsh (in
retrospect) calming markets with a rate hike and tough talk on
curbing inflation. A second day of dropping oil prices (no overnight news from
Iran is helping) is also helping. Meanwhile, the debate around AI pacing and
safety is rumbling on. As of 8:00am ET, S&P 500 futures are up 0.8%
with Nasdaq 100 contracts +1% as tech leads with Mag7, semis, memory, and
software all higher; look for momentum to continue its rebound today. According
to JPM "today is setting up to be an Everything Rally led by
the AI and Debasement themes; in Tech seeing Semis, Software, and Mag7 all
rallying is intriguing and something to watch to see if fundamental buyers are
returning to Mag7 / Software and if so, then what becomes the funding
short for Semis?" Bond yields are down 2-4bp; the curve
is bull steepening with USD flat. Bond seem to be reacting positively more so
to oil than to Warsh. Commodities are mixed with crude lower, precious and base
metals higher, but Ags lower. Today’s macro data focus is on jobless
data though do not expect the data to be market moving.
Fundamental
Headlines
The
Economy
US
Weekly jobless claims
totaled 196,000 versus forecasts of 208,000.
https://www.zerohedge.com/markets/jobless-claims-tumble-57-year-lows
August
retail sales were up 1.2% versus expectations of up 0.8%; ex autos, they were
up 1.4% versus +0.5%.
August housing
starts fell 2.6% while permits were down 2.7%.
The September
housing index came in at 32 versus consensus of 34.
The September
Philadelphia Fed manufacturing index was 37.8 versus predictions of 30.5.
International
August EU CPI was reported at 0.4%, in line.
Other
Thoughts on the latest Treasury bond auction.
Overnight
News
Trump told
reporters that Fed Chair Warsh has a tough board and that he was standing by Warsh,
and that he spoke to him just before the central bank unanimously voted to
raise interest rates. “I’m relying on Kevin. But he has a very tough
board"; he stated that interest rates are too high and not
appropriate. Trump said they should be paying the lowest interest rates in the
world and noted that inflation is too high. Furthermore, Trump stated he told
Warsh to do what he wants and that he wants Warsh to be independent.
Oil prices fell on
Wednesday after reports that Saudi Arabia was offering additional crude cargoes
through Oman eased some concerns about Middle East supply disruptions, while a
smaller-than-expected draw in U.S. crude inventories added further downward pressure.
Saudi Arabia is
seeking to return about half the capacity of its cross-country oil pipeline
within days after the link was halted last week following drone attacks. BBG
Iran
CBO on the Iran war costs to date.
https://econbrowser.com/archives/2026/09/cbo-on-iran-war-costs
Tucker Carlson reveals new US strategy (and
his opinion of such).
https://x.com/TuckerCarlson/status/2099906095905165701
China presses Iran to reign in Houthis.
https://www.zerohedge.com/energy/crude-eases-china-reportedly-presses-iran-rein-houthis
Monetary
Policy
FOMC
hikes rates. Dot plot suggests more
hikes to come.
https://www.zerohedge.com/markets/fomc-41
Note: the Market
didn’t react particularly well to the rate hike. And it really didn’t like the après meeting
presser whose tone was more hawkish than many expected. That upset not only those looking for a hike
but those who thought a hike was unwarranted. Given the overnight pin action,
it appears investors appear to be reconsidering their initial reaction.
Can the Fed really fix inflation?
A declaration of independence from Basel III.
Why the future course of rates is more
important than the current level.
https://www.capitalspectator.com/the-feds-next-chapter-may-decide-the-fate-of-the-bull-market/
Bank of England leaves rates unchanged.
https://www.zerohedge.com/markets/uk-gilt-yields-tumble-boe-scraps-bond-sales-holds-rates-expected
AI
Don’t let fear drive AI policy.
https://www.nationalreview.com/2026/09/dont-let-fear-drive-ai-policy/
Investing
The problem with duration.
https://www.cnbc.com/2026/09/16/10-year-treasury-yeilds-rise-impact-markets.html
Why are valuations
falling?
https://awealthofcommonsense.com/2026/09/why-are-valuations-falling-in-a-bull-market/
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