Sep 4, 2026

We’ve been hammering the same point ever since Trump first bombed Iran: rather than shrink from the conflict, Iran would exact as much retribution as possible. Since their military isn’t of the same caliber, they would use their strategic position as gatekeeper to the world’s oil supply to hit Trump where it hurts: oil prices and inflation.

While the Fed and the Treasury have done a pretty decent job at times of keeping a lid on oil prices, WTI has broken out of the flag pattern we identified several month ago. It has also completed an inverted H&S pattern. Both suggest much higher prices that will test or best the March highs – presumably around the time of the November midterms.

Note also that the 10Y has nearly reached our next upside target at 4.84% – only slightly below 20 year highs.

Suffice it to say things are about to get very interesting in the markets.

 *   *   *

As I mentioned last week, I will on a vacation schedule during the month of September. I will post roughly once a week or more often if circumstances dictate.

I also want to announce that I will be transitioning the website to retirement mode at the end of the year. After 15 years, 4,528 posts, 50,000+ charts, and waking up at 4am every day, I’m going to try resuming civilian life. It might not stick, and God might have other plans, but I’d like to give it a try.

Still noodling on it, but I’ll probably transition to a weekly missive of some sort.  Stay tuned…

 

 

Futures are slightly higher ahead of Kevin Warsh’s Jackson Hole speech at 10am ET. Fed watchers will be focused on his inflation comments. He has been quite hawkish in his past comments, but rates have been stuck at 3.50-3.75% since last December. Will he finally signal a rate hike to deal with stubborn inflation?  We’ll see.

Much of what determines the market’s action between now and the midterms will rest on the outcome of the pennant pattern in WTI. It must either break out or break down in the next week. I suspect a breakout, but the administration has been pretty effective in suppressing prices so far.

 

 *   *   *

Note that pebblewriter.com will be on a vacation schedule during most of September. Posts will be made once per week or as conditions warrant.

NVDA delivered an impressive earnings report. But, its outlook was even more impressive. Significantly, though, it didn’t drive the stock to new highs, The day is young. But, a failure to make new highs would be a red flag for the overall market.

Futures are already backing off their overnight highs as a bearish 10/20 cross unfolds on ES…

…but not yet on SPX.

While VIX/VX are slumping…

CL has conspicuously not broken down.

So, interest rates are still elevated.

 

 

continuing…

Futures are modestly lower as the algos weigh mixed economic news in the lead up to NVDA earnings after the bell and a muddled FOMC picture.

PCE and core PCE are both still well above the Fed’s target.

 

 

Required reading in the WSJ from investing sage Stan Druckenmiller:

The Treasury Department announced on Aug. 19 that it would double the size of its long-dated bond buybacks, from $2 billion to at least $4 billion per operation, aimed at the 10- to 30-year sector and running from Sept. 9 through Nov. 4. The announcement came after the 30-year yield touched a 19-year high. Yields fell within minutes. By the next afternoon they had round-tripped to levels above where they started. The market’s verdict was swift and correct: This wasn’t liquidity management, it was price management—and a mistake far larger than $4 billion suggests.

Read more at WSJ.com

   *.  *.  *

Futures are modestly higher on the latest effort to suppress oil prices.

There are still plenty of gaps to fill down below.

But, the slump in WTI has taken some of the pressure off of yields.

Following last week’s weak price action, markets face several hurdles this week.

In addition to NVDA’s earnings and the Fed’s Jackson Hole symposium, WTI is about to break out again…

…and the bond market is still acting up. While the 10Y is flirting with new highs, the DXY is probing new lows.

As a net importer, the US pays a penalty in the form of higher inflation when the DXY sinks. Higher inflation means higher interest rates. And, higher interest rates mean lower stock prices.

Stay tuned.

Futures are slightly higher as ES approaches our 1.272 Fib extension target.

Just a reminder…I will be out all next week – though if markets go crazy and a special notice is warranted, I’ll try to do a late night post or two.

Stay tuned.

Futures are up slightly on a PPI print, a modest dip in WTI futures and the continuing VIX smackdown that all satisfied the algos.

July CPI came in on target again, aided by the administration’s efforts to suppress oil and gas prices. Headline CPI was 3.4%, down slightly from June’s 3.5%. As always, take these data with a huge grain of salt. It means next to nothing when Trump/Bessent dictate what the number should be. But, at least it provides some insight into their thinking.

The key continues to be oil and (especially) gas prices, which our charts indicate are heading higher over the next month.

But, the algos are happy, and the campaign to protect the early June highs is succeeding…so far. Timing for a potential down leg has moved out to Sep 11 (ominous, to say the least…might be a good day to decline that ride on Air Force One.)

Of course, much credit goes to VIX, which is threatening new lows.

And, the DXY remains subdued.

I continue to expect Iran to do what it can to ensure that Trump has a very bad day on November 3. Contrary to Trump’s assertion that the US has “total control over the Hormuz Strait” the ships that try to navigate the strait are being fired upon and are thus not even risking it. Eight crossings were reported last week, down from 130/wk prior to Trump’s bombing campaign which began Feb 28.

 

Futures are up slightly in advance of this morning’s existing home sales, tomorrow’s CPI and Thursday’s PPI.

BTW, posts next week will be few and far between due to a heavy travel schedule.