U.S. Indexes closed the final trading session of the week mixed, as the tech-heavy NASDAQ 100 outperformed and saw gains, while the S&P finished in the red. The main event on Friday was the US jobs report, which was strong and saw a hawkish reaction across markets as it increased the likelihood of a Fed rate hike at the September confab. For that, the clear catalysts come this week via the US inflation reports, which will likely dictate what the central bank does; if the inflation numbers are hotter-than-expected, it is widely expected to make a Fed hike more likely. Following the dataset, and as mentioned, it was a broad-based hawkish reaction as Treasuries and spot gold saw pressure, while the Dollar gained. Thereafter, the Dollar pared some of its strength, and the Japanese Yen ended up being the G10 underperformer in the wake of choppy price action post-US jobs report. The crude complex eked out gains in a lack of US/Iran newsflow heading into the weekend. Trump said they may hit Pickaxe Mountain very soon. Lastly, sectors were predominantly in the red with Consumer Discretionary and Health lagging, with just Industrials and Tech sitting in positive territory. The US jobs report was strong, and heightened traders’ bets for a September Fed rate hike, with an implied probability of a 25 basis point hike now priced at 65% probability (versus 50% pre-release). The headline was strong and saw 162k jobs added to the US economy in August, above the expected 55k and the prior revised-up 21k. The Unemployment Rate was unchanged at 4.1%, as expected, while the participation rate lifted to 61.6% from 61.4%; the U6 unemployment rate declined to 7.7% from 7.9%. For the headline, private payrolls contributed 127k jobs (exp. 45k, prev. 71k), manufacturing 16k (exp. 5k, prev. 14k), and Government 35k (prev. -50k). Wages ticked higher by 0.3% M/M (from 0.2% prior), while the annual rate slightly cooled to 3.1% from 3.2%, but still above the consensus of 3.0%. All in all, Money Markets have moved more hawkish as it continues to show the labour market is in good health and steady. As such, and although it was already the case, it places paramount importance on next week’s inflation reports as they will highly likely determine what the Federal Reserve does at its 16th September confab; if inflation is hotter than the Wall St. consensus, a hike will get even more baked-in. Some of the recent comments from Fed members include the influential Waller supporting a hold at the September FOMC meeting if August inflation data shows continued progress. In most recent remarks from Fed Chair Warsh, he said he has work to do unless underlying inflation is moving clearly towards the 2% objective at sufficient speed. Elsewhere, Oil closed higher by 0.2% while Gold ended Friday’s session with a 1% fall following a volatile two-way trading session.
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For anyone following my Platinum Service it made 100 points on Friday and is now ahead by 810 points for September after ending the month of August with a gain of 2645 points after closing July with a gain of 8031 points, after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a previous record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.38% lower at a price of 7718.
The Dow Jones Industrial Average closed 271 points lower for a 0.51% loss at a price of 53,414.
The NASDAQ 100 closed 0.21% higher at a price of 29,544.
The Stoxx Europe 600 Index closed 0.24% lower.
This Morning, the MSCI Asia Pacific closed 0.5% higher.
This Morning, the Nikkei closed 1.79% higher at 66,184.
Currencies
The Bloomberg Dollar Spot Index closed 0.24% higher.
The Euro closed 0.16% lower at $1.1613.
The British Pound closed 0.09% lower at $1.3515.
The Japanese Yen fell 0.16% closing at $156.11.
Bonds
U.K.’s 10-Year Gilt closed 10 basis points lower at 5.06%.
Germany’s 10-Year Bund Yield closed 4 basis points higher at 3.34%
U.S.10 Year Treasury closed 2 basis points lower at 4.78%.
Commodities
West Texas Intermediate crude closed 0.20% higher at $91.48 a barrel.
Gold closed 1.01% higher at $4430.10 an ounce.
This morning on the Economic front we already had the release of German Industrial Production which fell 1.1% versus -0.1% expected. Next, we have Euro-Zone Sentix Investor Confidence at 9.30 am, followed by GDP and Employment Change at 10.00 am. With U.S. Markets closed today for the Labour Day Holiday we have no American data.
Cash S&P 500
For months, we have been told the Fed will not be in the business of giving forward guidance, with Fed Chair Warsh using Jackson Hole to explain the Fed’s thinking while leaving the market to play ball. Then Fed Governor Chris Waller came out last week and said the coming CPI report will be super important in determining whether there should be a September rate hike. Oddly, PPI comes out before CPI this week, on Thursday, followed by CPI on Friday, and we rarely get CPI on a Friday at all. Core CPI is expected to rise 0.2%, with the year-over-year rate slipping to 2.4% from 2.5%, while headline CPI is expected to rise 0.4% from 0.1%, for a 3.4% year-over-year increase. Kalshi and the swap market are in line with those numbers, so nothing on the surface suggests a super-hot reading. Core CPI has also felt screwed up since the October government shutdown, when a lot of data was missing; November should give us a better idea of the real inflation rate. However, the ISM Services Prices Index climbed to around 72 this past week, its highest since September 2022, and it has diverged from CPI since 2024; prices paid tend to lead CPI year-over-year. Services inflation is the piece the Fed has not been able to get down for five years, with goods prices becoming a problem more recently. Energy, diesel, and gasoline prices are also up this month, providing a potential positive impulse to CPI, with spillover into PPI, and it all eventually feeds through to core PCE. Factor in the energy move along with rates rising at the front of the curve, and there is a risk we get a hotter-than-expected report. That would leave the Fed in a box, because not raising rates puts things in the market’s hands, which would then have to adjust to a Fed that is not responding to hotter inflation, especially with a Governor saying just before the blackout period that a hot reading would push him toward hiking. They would need a lot of good evidence not to hike, since most members seem to think rates probably need to start going up, and after a really strong jobs report, labor-market softness is no longer an excuse to lean on. Pointing in the same direction is the 2-year rate, which tends to lead the effective funds rate. It turned higher in March 2004, October 2016, and September 2021, with the Fed hiking within months each time. The 2-year has now been rising for about six months, so we are in the window where the Fed should be starting to hike, and the longer it runs, the more it will weigh on them. The administration wants rates lower, but the market is dictating higher rates, and if the Fed does not go along, I think 10-year rates go significantly higher, with the market punishing the Fed. The 10-year closed the week at 4.78%, its highest weekly close since October 2023, suggesting we are getting closer to the 5% area. The 30-year did not make a new weekly closing high, but at about 5.25%, it remains well above its October 2023 close. I think the market is repricing the neutral rate and the economy’s longer-term growth rate. A derivative of the 5-year, 5-year forward real rate has been climbing and looks just like the 30-year Treasury rate—essentially the same chart for years. The market is pricing in a higher neutral rate to keep inflation at bay, which is ultimately the driving force and potentially a big problem if the Fed does not start raising rates. Rates are rising around the world, too, though Japanese yields fell last week as the market began to expect more aggressive Bank of Japan rate hikes, which notably strengthened the Japanese Yen against the Dollar. The Yen has not broken the important level around 155 yet; if it does, things get more interesting. The Korean Won also continued to strengthen, closing at its strongest level since October 2024. I watch it because of its relationship with semiconductor implied volatility, and it probably represents the foreign inflows from Asia that chased the AI trade here, with South Korea running its own AI bubble in SK Hynix and Samsung. The strengthening could be a sign of repatriation, with capital allocated to the U.S., perhaps played through options, going back home, and the SMH shows a similar picture. It suggests a lot of that capital has left with no sign of returning, which may weigh on semiconductors, since new buying would have to come from a different part of the market, and software is already beaten down. Outside of that, the week is about the CPI report and a Fed that is in a box if the number comes in hot. Given the ISM readings and the energy move this month, I think there is a reasonable chance that happens. My S&P plan worked well as after the market traded the whole of Thursday’s sell range for a 7735 average short position the market fell 30 Handles on Friday. This move lower saw my revised 7725 T/P level triggered and I am now flat. Today, I will be a seller from 7735/7760 with a 7781 ‘Closing Stop’. Meanwhile, I will continue to be an aggressive buyer on any dip lower to 7610/7635 with a higher 7595 ‘Closing Stop’. If I am taken short, I will have a T/P level at 7711. If I am taken long, I will have a T/P level at 7665
EUR/USD
The boring sideways price action for the Euro continues making it extremely difficult to make points on this contract. The Euro has short-term support from 1.1410/1.1490 where I will continue to be a small buyer with the same 1.1345 ‘Closing Stop’. Today, I will leave my Euro sell level unchanged from 1.1660/1.1730 with the same 1.1805 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1560. If I am taken short, I will have a T/P level at 1.1590.
Dollar Index
No Change: I am still long from last Friday at a price of 99.40. I will add to this position at 98.70 while leaving my 96.95 ‘Closing Stop’ unchanged. I will now lower my T/P level to 99.80. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still flat as the Russell never came close to Thursday’s buy range. The Russell has short-term support below from 2780/2860 where I will continue to be a buyer with the same 2715 ‘Closing Stop’. I no longer want to be short the Russell at this time.
FTSE 100
Just like the Euro above the FTSE continues to trade in narrow ranges and I am still flat. Today, I will continue to be a strong buyer on any further dip lower to 10620/10700 with a higher 10535 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10760.
Dow Rolling Contract
I am still flat the Dow and reluctant to chase the market higher especially as we are now in September which traditionally is the weakest month of the year. Therefore, I will leave my buy level unchanged at 52300/52600 with the same 52055 ‘Closing Stop’. If I am taken long, I will have a T/P level at 52880.
Cash NASDAQ 100
The NDX never came close to Thursday’s buy range and I am still flat. I still believe that higher Interest Rates will eventually affect tech stocks. TBD. However, I am afraid to go short as every dip no matter what the news is consistently bought. Therefore, I will continue to be a buyer from 28900/29100 with a higher 28795 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 29310. I still do not want to be short the NDX at this time.
December BUND
The Bund traded in a narrow range over the past two trading sessions and I am still flat. The Bund has support from 120.80/121.50 where I will be an aggressive buyer with a higher 119.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 122.15.
Gold Rolling Contract
Gold fell shy of Thursday’s buy range before again attracting buying below $4400. Today, I will continue to be a buyer from 4250/4330 with the same 4195 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4395. I still believe that lower prices are ahead. TBD. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat. Today, I will raise my buy level to 60.90/63.90 with a higher 58.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 64.90.
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