Good morning,
Welcome to the final Morning Note of Summer 2026—which is difficult to comprehend, frankly. Life seems to be moving faster than ever. Tomorrow marks two years for us in Florida, and I still feel like a newbie.
Last week, U.S. equities finished modestly higher, with the S&P 500 gaining +0.48% and the Nasdaq leading with a +0.85% advance. The defining story was Nvidia’s Q2 earnings report, which showed revenue doubling year-over-year. The company also guided to roughly 70% revenue growth for its next fiscal year (ending February 2028), almost double what Wall Street had been expecting. The AI trade received another clear vote of confidence.
From a macroeconomic perspective, the Jackson Hole symposium dominated the narrative. Fed Chair Kevin Warsh delivered a hawkish inaugural speech, vowing to bring inflation back to target and signaling that the Fed still has “work to do.” Expectations for a September rate hike moved up a little, short-term yields moved up a lot, and equities handled the hawkish tilt comfortably—with the exception of rate-sensitive small caps, which fell -1.49% on the week.
Little news came out of Iran. International markets were quiet as well, with International Developed gaining +0.11% and Emerging Markets +0.05% for the week.
Next week, the marquee event will be Friday’s August nonfarm payrolls report. Consensus expects a rebound of roughly 58,000 jobs following July’s surprise contraction of -23,000. Given the Fed Chair’s hawkish Jackson Hole remarks, a strong number would likely cement expectations for a September rate hike, while another miss could complicate the Fed’s calculus.
So, we end the summer with the market’s message still leaning bullish. The Tape remains range-bound in the middle of its neutral zone, while sentiment is still not overly positive. The third leg of our market-message stool—the Fed—is also, in my view, too early to call restrictive. All three legs, therefore, are neutral at worst.
We remain just slightly overweight equities heading into September—and maybe a little nervous about it given the seasonal weakness ahead. But nervousness isn’t a signal. We’ll wait for a firm change in the market’s message before making any allocation changes.
See you next Tuesday. Have a good week and an even better holiday weekend.
Be well,
Mike