The Morning Call
8/28/26
The
Market
Technical
Thursday in the
charts.
Thursday 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
The Market has never
lost this trade after the mid-terms.
Gold increasingly
sensitive to the dollar.
The gold chase is
back.
Software just
broke out.
Friday morning
setup: US stock futures are flat and rates rise ahead of today's main event:
Fed chief Kevin Warsh’s Jackson Hole speech at 10am ET (full
preview here) as traders seek clarity on his economic outlook and his
strategy for lowering inflation back to the Fed's 2% target. As of 8:00am ET,
S&P futures are little changed and Nasdaq 100 futures are lower following
the Nvidia-driven rally for the index in the prior session, when
however only 30% of the S&P and 1 of 11 sectors closed green as the
index continues to be carried by a handful of AI names while the median stock
goes nowhere. Pre-market, Mag 7 stocks are mostly higher led by TSLA (+0.6%)
and AMZN (+0.3%); NVDA is the laggard (-0.5%). PayPal slumped 16% in premarket
trading after Advent and Stripe abandoned their pursuit of the firm. Overnight,
headlines were largely quiet with WTI dropping further as the Iran conflict
remains quiet. Bond yields are 1-2bps higher (10Y 4.69% and 3Y rates up two basis
points to 5.21%) while the dollar and gold barely budged. Brent crude
fluctuated. Copper headed for a ninth weekly gain, the longest run
since 2020. USD is flat. Commodities are all modestly higher across base
metals, precious metals (silver +1.5%) and ags. Today's US economic data
calendar includes August MNI Chicago PMI (9:45 a.m. New York time, several
minutes earlier for subscribers), August final University of Michigan sentiment
(10 a.m.) and August Kansas City Fed services activity (11 a.m.).
Fundamental
Headlines
The
Economy
US
The August Kansas
City Fed manufacturing index was 17 versus forecasts of 14.
International
The July Japanese
unemployment rate was 2.4% versus projections of 2.5%; the August YoY CPI was up
1.9% versus +2.0%; the August core CPI was up 1.8% versus +1.7%.
The August German
unemployment rate was 6.4%, in line.
The August EU
economic sentiment index was 98.4 versus estimates of 97.5; the August
industrial sentiment index was -5.3 versus -5.2; the August services sentiment
index was 5.8 versus 4.9; the August consumer confidence index was -15.5, in
line.
Other
Update on business cycle indicators.
https://econbrowser.com/archives/2026/08/business-cycle-indicators-real-consumption-is-flat
Core GDP revised upward.
https://econbrowser.com/archives/2026/08/core-gdp-upwardly-revised
The economic bear
case. I appreciate the risks pointed out
by the author. I am less certain of the outcome.
https://talkmarkets.com/article/convulsion-in-credit-markets-1787600299
A reason why.
https://bonddad.blogspot.com/2026/08/heavy-truck-sales-and-durable-goods.html
Iran
Qatar and Kuwait restore 70% of pre-war oil shipments
through Strait of Hormuz.
https://www.zerohedge.com/markets/qatar-and-kuwait-restore-70-pre-war-oil-exports-through-hormuz
Monetary
Policy
The Fed’s margin for error just got thinner.
https://www.capitalspectator.com/disinflation-stalls-and-the-feds-margin-for-error-just-got-thinner/
Fiscal
Policy
Should
interest rates be even higher?
https://www.carsongroup.com/insights/blog/should-interest-rates-be-even-higher/
The interest rate picture is even uglier
abroad.
Bessent needs a
reset.
Summary:
Treasury Secretary Scott Bessent has had a disappointing month with his use of
public funds and attempts to manipulate the bond market being called into
question. Bessent is considering financing buybacks of long-term government
bonds with funds from the Treasury General Account, which could diminish the
Treasury Department's credibility. Bessent needs a reset, including pledging
not to run down the TGA, adhering to the original goals of the Treasury buyback
program, and priming the bond market for a necessary increase in the issuance
of longer-term bonds.
Inflation
Inflation refuses to go back into the
bottle.
AI
This is how the AI debt binge sinks the
economy.
Bill Gates on AI.
https://www.aei.org/economics/are-we-on-the-cusp-of-ai-turbulence/
One of the touted
negatives about data centers is their excessive use of water. This articles puts that complaint to bed.
https://www.nationalreview.com/2026/08/data-centers-use-little-water-so-where-does-it-all-go/
Investor concerns about Nvidia’s balance
sheet.
Nvidia pauses revenue sharing deals.
Tariffs
Tariffs
are erasing America’s credibility (I have argued that tariffs used to correct
foreign abuses---Chinese theft of US intellectual property, Europe not spending
enough for its own security---made a lot of sense. But they have become ‘too much of a good
thing’.
Investing
Ten stocks top
fund managers are selling.
https://www.morningstar.com/stocks/10-stocks-top-fund-managers-are-selling-jittery-market
This is the kind of thing that historically occurs
near Market highs.
https://www.etf.com/sections/news/nhl-etf-power-play
News (but not a Buy recommendation) on
Stocks in Our Portfolios
Oracle.
Apple.
https://talkmarkets.com/article/apples-first-post-cook-iphone-1787843429
What
I am reading today
The
impact of AI on education.
https://braddelong.substack.com/p/here-in-academia-ai-has-arrived-for
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