Futures are up modestly this morning as equities settle back down following the Sep 21 spike.

The Aug 14 highs remain unbroken, though, suggesting that the Sep 21 spike was a headfake.

The drivers remain the same: oil prices, which are closely following our forecast…

…and VIX, which continues to be smacked down with every attempt to break up a trend line or its SMA200.

My expectation continues to be that oil will spend the month leading up to the midterms on a tear to 120-130/bbl – driven by whatever Iran has to do to prevent Trump from prevailing.

Meanwhile, Trump will do/say whatever necessary to bring oil/gas prices way down by late October.  Two opposing forces, each with a great deal on the line. However it turns out, it promised to be epic.

WTI has almost reached our next upside target of 106.78-108.23 as things continue to heat up in the Middle East.

The upshot is that inflation remains elevated, forcing the Fed’s to hike interest rates on Wednesday.

The latest odds for a quarter-point rate hike are indicated at 80%. The impact is already being felt in both equity…

…and currency markets, as the yen carry trade threatens to unwind.

It’s horrible timing for Trump, with the midterms just around the corner. This, of course, is the goal of Iran’s refusal to buckle under increasing military and economic pressure.

As much as Fed chair Warsh would like to accommodate Trump, a failure to hike rates at this point would result in a significant loss of credibility.

Stay tuned…

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.

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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.

 

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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

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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.