Dancing In The Dark.

Following Trump’s latest flip-flop over the weekend as he continued to desperately search in vain for an off-ramp to the highly unpopular war that he started over five months ago, Iran accused him of “psychological warfare”. An exasperated Wall Street would probably agree. Traders are dancing in the dark. Trying to get a handle on what the plans are, if any, for bringing this conflict (and the resulting energy price volatility) to a suitable and sustainable conclusion is proving impossible and traders are forced to spend their time these days reacting to raging social media posts as well as fantastical press releases and impromptu news conferences that are often jam-packed with utter nonsense and shameless lies. Oil prices tanked and interest rates eased after Trump’s climbdown from his frenzied apocalyptic threats which had included promises of “decapitation”, offering support for both stocks and bonds which both rallied hard when Wall Street opened on Monday and kept up a positive momentum all day. Big Tech stocks enjoyed a particularly dazzling session with dip-buyers going all-in. The orgy of tech stock bargain-hunting intensified on Tuesday, boosted by sensational pre-market earnings reports from Palantir and giant AI beneficiary, Caterpillar and the indexes, especially the tech-heavy NASDAQ-100, experienced another fabulous session with the S&P 500 index notching a new all-time record high for the first time since June 2nd. After the close SpaceX, thus far a total dumpster fire of an investment that has essentially been in free-fall for almost its entire existence as a publicly-traded stock, reported almost half a billion dollars in losses in Q2 and colossal AI spending plans and AMD surprised Wall Street with a weak outlook. Both stocks got slammed. Trump assured us of a deal with Iran “within hours” , but Wall Street wasn’t going to fall for that again and when markets opened on Wednesday, the dip-buyers took a breather and stocks cooled off despite solid earnings and bright outlooks from heavyweights Eli Lilly and Disney. The indexes all pulled back a bit by the close. After all of Trump’s bombastic fanfare, for the umpteenth time a promised resolution failed to materialize, indeed in the end the US was not even party to the only announced deal of the day as Iran and Oman agreed on a proposed Strait of Hormuz toll-based shipping route which excludes US and Israeli vessels. 2026’s best-performing stock, Sandisk (up 350%), missed lofty earnings estimates after the bell and got spanked. The effect was felt in Asia where the tech-heavy South Korean market crashed again. Also on Wall Street’s mind on Thursday was upcoming employment data and the fallout and attempted damage control from the badly-botched start to the reign of Fed chairman Kevin Warsh (see my report from last week and .. AND I QUOTE .. below), including the rather alarming revelation that Trump has been constantly calling him since his appointment. The early-week monster rally continued to run out of steam and, for the second session in a row, the indexes closed fractionally lower. The Jobs Report on Friday morning was a complicated puzzle, with shockingly negative net job creation in the month of July and wages continuing to lag inflation, but the shrinking overall workforce meant that the unemployment rate actually fell to 4.1%. Bets on a Fed rate hike in September were pared back (see INTEREST RATE EXPECTATIONS below), so interest rates sank and stocks and bonds bounced on the news with the S&P 500 again returning to all-time record high territory to close out a very solid week, the index’s best five-day showing since April. Some other things I’m thinking about .. * Despite last week’s tech recovery, it is large-cap, high quality, high profitability, value-focused stocks and profitable small caps with free cash flow that are currently "paying" investors to take equity risk from a valuation perspective, while tech-heavy, AI-sensitive, growth-focused names, from loss-making small firms to mega-cap companies, are not really "rewarding risk" right now. The biggest portfolio downside risk clearly lies with the NASDAQ, where there is no real cushion left if the AI spending narrative stumbles again or if the 10-year Treasury yield starts threatening to break through 5.00% again. * Meme stock “investors” who still rely on TikTok and YouTube nonsense for their investment advice continue to hemorrhage money with GameStop last week falling to its lowest level in years. If you are not yet a financial planning or investment management client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me. ARTICLE OF THE WEEK .. The really smart people over at Dimensional Fund Advisors (DFA) have produced a goldmine of a video outlining financial planning considerations for those in their 20s, 30s and 40s that very much aligns with my own approach. Definitely worth your time. Anglia Advisors clients are now able to access customized model portfolios, including from Dimensional Fund Advisors, in managed investment accounts - contact me for more details. .. AND I QUOTE .. “[Treasury Secretary] Bessent and [Fed chairman] Warsh are a double whammy to global markets that investors can’t ignore.” Rajeev De Mello at Gama Asset Management, on growing bond market concerns about the recent direction of US central bank policy, Fed independence from political interference and the possible re-emergence of global bond vigilantes. LAST WEEK BY THE NUMBERS: Last week’s S&P 500 market color courtesy of finviz.com * SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. It rose 3.5% last week, is higher by 5.1% over the last three months and is up by 14.0% so far this year. * IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. It rose 3.1% last week, is higher by 6.4% over the last three months and is up by 23.0% so far this year. * VXUS, an International Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. It rose 3.0% last week, is higher by 2.5% over the last three months and is up by 16.2% so far this year. Data shown is total return (including dividends) INTEREST RATES: * FED FUNDS RATE * 3.625% (unchanged from a week ago) * PRIME RATE ** 6.75% (unchanged from a week ago) * 3 MONTH TREASURY 3.87% (3.83% a week ago) * 2 YEAR TREASURY 4.19% (4.28% a week ago) * 5 YEAR TREASURY 4.35% (4.45% a week ago) * 10 YEAR TREASURY *** 4.65% (4.75% a week ago) * 20 YEAR TREASURY 5.20% (5.28% a week ago) * 30 YEAR TREASURY 5.19% (5.27% a week ago) Data courtesy of the Federal Reserve and the Department of the Treasury as of Friday’s market close. * Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates. ** Wall Street Journal Prime Rate as of Friday’s close. Moving in lockstep with the Fed Funds interest rate, this measure is used as a basis for determining certain consumer loan interest rates such as credit cards, auto loans, personal loans, home equity loans/lines of credit and securities-based lending. *** Used as a basis for determining mortgage interest rates. AVERAGE 30-YEAR FIXED MORTGAGE RATE: * 6.69% One week ago: 6.66%, one month ago: 6.47%, one year ago: 6.63% Data courtesy of the Federal Reserve Bank of St. Louis. INTEREST RATE EXPECTATIONS: Where will the Fed Funds interest rate be after the next rate-setting meeting on September 16th? * 0.25% higher than now .. 43% probability (72% a week ago) * Unchanged from now .. 57% probability (28% a week ago) * 0.25% lower than now .. 0% probability (0% a week ago) With three more rate-setting meetings this year, what is the most commonly-expected number of remaining Fed Funds interest rate changes in 2026? * One increase, 45% probability (a week ago: one increase, 41% probability) Data courtesy of the CME FedWatch Tool and is derived from futures market pricing as of Friday’s market close based on the current Fed Funds interest rate of 3.625%. PERCENT OF S&P 500 STOCKS ABOVE THEIR OWN 200-DAY MOVING AVERAGE: * 73% One week ago: 67%, one month ago: 63%, one year ago: 42% Data courtesy of barchart.com as of Friday’s market close. This widely-used technical measure of market breadth is considered to be a very robust indicator of the overall health of the S&P 500 index. A high percentage (above 70%) generally suggests broad market strength and a bullish trend, while a low percentage (below 30%) may indicate market weakness and a bearish trend. FEAR & GREED INDEX: “Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffett. Data courtesy of CNN Business as of Friday’s market close. The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand. Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment. Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rallies in an excessively risk-on environment . This overcrowded positioning leaves the market potentially vulnerable to a sharp downward reversal. WWW.ANGLIAADVISORS.COM | [email protected] | CALL OR TEXT: (646) 286 0290 | FOLLOW ANGLIA ADVISORS ON INSTAGRAM This material represents a highly opinionated, speculative assessment of the financial market environment based on assumptions and prevailing information and data at a specific point in time and is always subject to change at any time. Although the content is believed to be correct at the time of publication, no warranty of its accuracy or completeness is ever given. It is never to be interpreted as an attempt to forecast any future events, nor does it offer any kind of guarantee whatsoever of future results, circumstances or outcomes. The material contained herein is not necessarily complete and is also wholly insufficient to be relied upon as research or investment advice or as a sole basis for any financial determinations, including investment decisions or making any kind of consumer choices, without further consultation with Anglia Advisors or other qualified Registered Investment Advisor. The user assumes the entire risk of any decisions made or actions taken based in whole or in part on any of the information provided in this or any other content published by Anglia Advisors. Under no circumstances is any such content ever intended to constitute tax, legal or medical advice and should never be taken as such. Neither the information contained nor any opinion expressed herein constitutes a solicitation for the purchase of any security or asset class. No formal client advice may be rendered by Anglia Advisors unless and until a properly-executed client engagement agreement is in place. Posts may contain links or references to third party websites or may post data or graphics from them for the convenience and interest of readers. While Anglia Advisors might have reason to believe in the quality of the content provided on these sites, the firm has no control over, and is not in any way responsible for, the accuracy of such content nor for the security or privacy protocols that external sites may or may not employ. By making use of such links, the user assumes, in its entirety, any kind of risk associated with accessing them or making use of any information provided therein. Those associated with Anglia Advisors, including clients with managed or advised investments, may maintain positions in securities and/or asset classes mentioned in this post. Anglia Advisors has updated its Privacy Policy. You can view the latest version here. If you enjoyed this post, why not share it with someone? This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit simonbrady.substack.com