The Morning Call---The Market's judgment of fiscal policy is getting harsher

 

The Morning Call

 

9/11/26

 

The Market

         

    Technical

 

            Thursday in the charts.

https://www.zerohedge.com/markets/bonds-bitcoin-bullion-big-tech-battered-black-gold-ppi-spike-rate-hike-odds-ahead-cpi?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI0NTkzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4OTA3MjAzOSwiZXhwIjoxNzkxNjY0MDM5LCJhdWQiOiJ6aC1naWZ0In0.7H_1sJsLqfgiYmLz1jP-IJM_gTmZewsqiv23kZctwuw

 

 

Note: the fall continues.  Yesterday, the S&P ended below (1) its former all time high and (2) its 50 DMA (now support; if it stays there through the close today, it will revert to resistance).   The latter, of course, is the first serious challenge to the longer term momentum, though admittedly not a disaster.  Still, it leaves me comfortable sitting on my hands.  To be sure, it is not time to run for the hills; so, if this decline continues, there will be buying opportunities.  In my opinion, not just yet. There is one point of good news---both Wednesday and Thursday experienced gap down opens which should provide some near term upward pull.

https://www.zerohedge.com/the-market-ear/who-stopped-motor?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI0NjQ3Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4OTEzMTQzMywiZXhwIjoxNzkxNzIzNDMzLCJhdWQiOiJ6aC1naWZ0In0.qPDa1kB9HuettkaYq_imEZn3SHqiTPYhwf76ElQwqvg

 

            Thursday in the techincial 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 50 DMA has been above the 200 DMA for 300 days.  Is that a sign of potential trouble?

https://www.stockmarketmedia.com/2026-09-10/300-days-trend-really-old

 

            Nonfundamental headwinds.

https://www.zerohedge.com/markets/goldman-derivatives-head-spots-multiple-non-fundamental-headwinds-stocks-near-term?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI0NTgxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4OTA2Mzc0OCwiZXhwIjoxNzkxNjU1NzQ4LCJhdWQiOiJ6aC1naWZ0In0.vAJhgXFDtmPNPjG0c-88kEdhk2NBwr7XjHn-0pIpRAM

 

            Widening gap between macro stress and risk premiums.

https://www.zerohedge.com/markets/widening-gap-between-macro-stress-risk-premium-calls-repricing?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI0NTg4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4OTA2OTc2NCwiZXhwIjoxNzkxNjYxNzY0LCJhdWQiOiJ6aC1naWZ0In0.-6OTgXNW_BVTHapmVo8oqY35gJ3A_rmj4pNr1KlL0pY

 

                        Gold at important juncture.

https://www.zerohedge.com/the-market-ear/gold-neckline-breakdown-or-400-squeeze?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI0NjU0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4OTEzMTc4MiwiZXhwIjoxNzkxNzIzNzgyLCJhdWQiOiJ6aC1naWZ0In0.XPoM-xHbs8jhXBiwxubBE8YDzoyAwHEIlP7FUzp-elI

 

           

Friday morning setup (written before news of the attack on the Saudi pipeline and the CPI report): Futures are higher thanks to an overnight retreat in oil prices (which is unlikely to hold now that Houthi rebels effectively control the entire Red Sea) and bond yields which track oil tick for tick, but the tone could quickly shift with the week’s biggest catalyst, August CPI data, due before the cash open. As of 8:00am ET, S&P and Nasdaq futures gain 0.6% with Mag 7 stocks are mostly higher, led by AMZN (+0.6%) and META (+0.7%). In premarket trading, ORCL rose 7% as its AI cloud backlog beat estimates. MSFT is planning to more than triple its data center capacity to ease computing shortages. WTI crude fell 3% overnight amid the report that Gulf states are weighing a meeting with Iranian officials to discuss the future of the Strait, the first gathering since the war began more than six months ago. Oil is on track for a 8% jump since Monday, and the International Energy Agency warned higher prices would hit consumption. Bond yields are 1-3bp lower although they remain sticky near 3 year highs: 2Y and 10Y yields are 3.2bp and 2.4bp lower, respectively. While the meeting itself was net positive for risk assets, the situation in the Middle East remains uncertain, particularly regarding renewed developments in Yemen, as Houthi rebels seize a key Yemeni port city and struck Saudi oil infrastructure. US retail diesel prices topped $6 a gallon for the first time. Commodities are mostly lower except for precious metals. All eyes are on CPI at 8:30 am ET. We also get the September preliminary UMich sentiment (10 a.m.), 2Q household change in net worth (12 p.m.) and August federal budget balance (2 p.m.). Fed speakers remain in external communications blackout period ahead of Sept. 15-16 FOMC meeting

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                       

                          August existing home sales fell 2.0% versus estimates of -0.2%.

                          https://bonddad.blogspot.com/2026/09/the-same-suboptimal-stagnant-existing.html

 

                                  August CPI was up 0.4%, in line; core CPI was up 0.3% versus +0.2%.

                                  https://www.zerohedge.com/markets/rate-hike-odds-soar-despite-lowest-core-consumer-price-inflation-2021

 

                        International

 

July UK GDP grew 0.4% versus projections of 0.0%; the July trade balance was -L3.5 billion versus -L4.0 billion; July YoY construction output fell 2.5% versus -2.3%; July YoY industrial production was up 0.6% versus +0.2%.

 

August Japanese PPI came in at -0.2% versus consensus of 0.0%.

 

                        Other

 

                          Is the middle class disappearing?

                          https://www.kiteandkeymedia.com/videos/american-middle-class-shrinking-housing-healthcare-college-costs/

 

                          Update on US/China trade.

                          https://politicalcalculations.blogspot.com/2026/09/us-china-trade-rises-for-third.html

 

            Iran

 

              Overnight news.

                  https://www.zerohedge.com/energy/brent-tops-102-mideast-escalation-threatens-hormuz-flows-hsbc-hike-oil-forecast

 

            Fiscal Policy

 

              The budget math.

              https://www.foxnews.com/opinion/congress-spends-7-trillion-heres-math-works-100

 

              The Market’s judgment on fiscal policy is getting harsher.

              https://www.capitalspectator.com/bond-markets-verdict-on-washington-is-turning-harsher/

 

              America is losing its captive creditors.

              https://giftarticle.ft.com/giftarticle/actions/redeem/e00cf669-7eee-4b71-b266-5756b24fbb41

 

              On the other hand, yesterday’s auction saw huge demand.

                          https://www.zerohedge.com/markets/record-breaking-30y-auction-sees-huge-stop-through-2nd-highest-foreign-demand-record

 

              But then, Bessent’s buyback turned sour.

  https://www.zerohedge.com/markets/yields-jump-3-year-high-after-treasury-takes-less-expected-buyback-amid-flood-lowball?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI0NTk3Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4OTA2OTA4MCwiZXhwIjoxNzkxNjYxMDgwLCJhdWQiOiJ6aC1naWZ0In0.syVk7aBcsV0-UhEtmBaZiNso2Ma0kqTUKb5-tT7CK48

 

 

            Inflation

 

              The next food price surge.

  https://www.zerohedge.com/the-market-ear/hormuz-el-nino-and-next-food-price-surge?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI0NTQ1Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4OTA0NzcyMCwiZXhwIjoxNzkxNjM5NzIwLCJhdWQiOiJ6aC1naWZ0In0.wXoIlUjS5DKuniJoUJJ5BFbnf8YlQpwH4eQTCqdz4Zc

 

 

            AI

 

              Congress could kill AI before it kills us.

                          https://quoththeraven.substack.com/p/congress-could-kill-ai-stocks-before?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

 

              A more balanced evaluation of the risks AI could pose.

              https://calnewport.com/anthropic-just-threatened-to-kill-billions-of-people-this-is-not-okay/

 

              The growing risk of air pockets in AI buildout.

  https://www.zerohedge.com/markets/theres-no-spreadsheet-goldmans-pasquariello-warns-ai-payoff-may-defy-calculation-air?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI0NTY2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4OTA2MzUxNiwiZXhwIjoxNzkxNjU1NTE2LCJhdWQiOiJ6aC1naWZ0In0.GZ08ya8d4tCZPERTf3F0SQaLpYf7z0vdvUgBN9QJ_dE

 

 

     Investing

 

            The bull market’s biggest enemy?

                        https://www.marketwatch.com/story/the-bull-markets-biggest-enemy-right-now-could-be-bessents-interventions-134bbe78?st=pVznbd

 

    News (but not a buy recommendation) on Stocks in Our Portfolios

 

            Intuit

            ResMed

                https://www.morningstar.com/stocks/4-undervalued-stocks-that-just-raised-dividends-3

 

What I am reading today

 

            Americans are losing faith in capitalism.

https://finance.yahoo.com/economy/policy/articles/americans-losing-faith-capitalism-problem-093000814.html?utm_source=fark&utm_medium=website&utm_content=link&utm_campaign=fark&ICID=ref_fark&guccounter=1

 

 

 

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