In this August 14, 2026 market‑update, Kenny Polcari delivers a rapid‑fire briefing from his Florida office. He opens with the July PPI report – headline PPI flat MoM, YoY +4.7% – and explains how the surprisingly cool headline sparked a brief rally in equities while underlying services inflation remains sticky. He notes the S&P 500 closed at a record high, details sector‑by‑sector performance (communications +2%, real estate +1.4%, etc.), and highlights standout stocks: SanDisk (+13.6% on AI‑driven storage outlook) versus Cisco (‑8% after missing revenue). Polcari then assesses Fed policy, citing the September rate‑hike odds falling to 31.8% and the positions of Fed members Hammock, Logan, and Kashkari. He reviews the bond market – 2‑year at 4.14%, 10‑year 4.65%, 30‑year 5.23% after a $25 bn 30‑yr auction priced at 5.21% – and argues that high yields already price in needed tightening. The oil segment covers WTI’s dip to $81.25 on a 17.4 mn‑bbl inventory build and weakened demand forecasts, then a rebound to $82.10 after Houthi attacks, with a note on continued Gulf flow (13‑16 mn bbl/d). Gold’s breakout to $4,450 and subsequent pull‑back to $4,350 is described. He previews upcoming economic data (retail sales, UMich sentiment) and earnings season, emphasizing strong Q2 earnings growth (~26% core) and the looming Nvidia report on Aug 26. Technical outlook points to S&P support at 7,700‑7,500 and resistance near 7,900‑8,000, with a warning of thinner volumes and potential September drawdown ahead of the midterms. Polcari offers a complimentary portfolio review (phone 561‑931‑0190, website slatestone.com). The segment ends with a personal touch: a step‑by‑step bucatini all’amatriciana recipe, a sunny South‑Florida weather note, and weekend well‑wishes.
Chapters
Well, good morning. Yes, it's me, Kenny Polcari, your host of the party. And yes, I am back. Here I am back in Florida in my office, and today is Friday, August 14th, 2026. And here are the things you need to know to get your day started. Well, yesterday's PPI report, it said 2 things. Bonds rallied, but yields remain elevated. Issuance, well, that might become an issue. Oil falls on a supply glut? Really? Well, try the bucatini alla matriciana for dinner tonight. We'll talk about that in a moment. Okay, well, the S&P closed at another record high on Thursday as the algos celebrated a PPI headline that appeared to say inflation is cooling, and that caused markets to once again focus on Kevvy and the Fed. And that September rate hike that has been on and off the table multiple times over the past month? Well, It got just taken off the table again yesterday. The odds now, 31.8%. Remember, that number was as high as 70% just 2 weeks ago. So at the end of the day, the Dow gained 70 points. The S&P was up 50 points. The NASDAQ added 215 points. The Russell added 7 points. The transports gained 323 points or 1.5%. The Eagle 8 SP gained 66 points while the Mag 7 added 420 points or 1.2%. 8 of the 11 S&P sectors finished higher, led by communications up 2%, real estate up 1.4%, tech up 1%, consumer staples up 1.1%, financials up 0.6%, utilities up 0.5%, consumer discretionary up 0.5%, and energy was up 0.1%. It was healthcare, basic materials, and industrials that finished the day slightly lower. Not, not a disaster, just slightly lower. Other areas of strength: Homebuilders up 1%, retail's up 6/10, airlines up 8/10, disruptive tech was up 1.5%, cybersecurity up 1.8%, semis up 8/10, software up 3%. The value trade up 6/10 while the growth trade gained 8/10. SanDisk surged by 13.6% after wowing the Street, leaving it up 530% year to date after they took advantage of their Investor Day to lay out a very bullish long-term outlook. All driven by AI infrastructure buildout and demand for storage. Add in the multi-year customer agreements and it was off to the races. As you can imagine, it dragged the whole sector higher. The DRAM ETF gained 3.8%, MU was up 4%, Storage Technologies up 5%, and Western Digital up 7%. Costco, on the other hand— excuse me, Cisco, on the other hand, failed to live up to its revenue forecast and elevated expectations, so it got slammed. falling 8%, taking the other names in the industry lower as well. Anet down 3%, ONDS lost 8%. The message is the same. The AI infrastructure buildout continues, the spending continues, and investors remain willing to pay for companies that can show real demand, real revenue, and real earnings. Expectations are sky high. So if you fail to clear the bar, well, you better watch out. Okay, away from that, the PPI, which measures inflation at the producer level, was the real catalyst for the action yesterday. Headline PPI was unchanged month over month versus the expectation of up 0.2%. That was down from a revised decline of 0.1% in June. On a year-over-year basis, headline PPI rose 4.7%, down from 5.5% in June and below the expected increase of 4.9%. Core PPI, which excludes food and energy, rose 0.2% month over month, Versus the expectations of a 0.3% increase. So on the surface, the report looks better than expected. So the algos immediately decided that inflation was behaving and that the Fed would remain on hold. Okay, slow down, big boy, because the internals tell a little bit of a different story. Final demand for goods prices fell 0.7%, driven by a 3% drop in energy prices and a 0.9% decline in food prices. Gasoline prices also fell by 5.7%, accounting for more than half of the decline in the goods prices. But services, well, that's where it gets interesting because final demand for services prices rose 0.2%. Construction prices jumped 2%. Portfolio management fees surged 6%. And services excluding trade, transportation, and warehousing rose 0.6%. And the PPI measure that excludes food, energy, and trade services rose by 0.4% month over month. and 4.7% year over year. So yes, the headline was cool, but the underlying services data remains sticky, and that has been the issue. In other words, energy and gasoline were mostly responsible for the decline. But remember, that was the July report. The latest surge in oil that we've seen in August, that's going to start to show up in the, in the August CPI, which we'll get in September, just days ahead of the FOMC meeting. Either way, I'm still in the camp that the Fed does absolutely nothing— no cuts, no hikes— in September or for the balance of the year. Recall though that there are 3 members, Hammock, Logan, and Kashkari, that all wanted to raise rates last month. And Hammock yesterday took the opportunity to remind us, right, saying that she is not ready to give up as long as inflation remains decisively above the 2% target. Okay, great. Now, the bond market rallied a bit. The TLT and TLH both gained about 6 cents, and that caused bond yields to decline just a bit. And I emphasize it was just a bit. The 2-year is now yielding 4.14%, the 10-year is at 4.65%, still elevated, and the 30-year is yielding 5.23%. And then came the $25 billion 30-year bond auction. It was priced at 5.21%, the highest borrowing cost at a 30-year auction since 2001. Demand was considered steady because the result was close to where bond was already trading, so it wasn't a failed auction by any definition. But that's not the point. The point is that the U.S. government had to pay more than 5.2% to borrow money for 30 years. Now, just go back and remember when Janet Yellen had the opportunity to refinance a major part of our debt at 1.8% for 30 years, but she chose not to. How's that working for you? In any event, this is the bond market's response to the massive $40 trillion in national debt, massive expected Treasury issuance, right, that's coming, a $432 billion federal trade deficit, and inflation that remains above target. Which brings us back to the point that I've been making. The Fed may not have to raise rates Because the bond market is already doing it for them. Next up, oil finally broke a 5-day run higher. WTI fell $2 or 2.4% yesterday to settle at $81.25. Why? Not because the geopolitical crisis is over. It fell because inventories rose and global demand forecasts weakened. US commercial crude inventories surged by 17.4 million barrels. The largest weekly increase since January of '23, as exports declined. That brought total inventories to 424.4 million barrels. Then OPEC lowered its forecast for 2026 global oil demand growth to just 580,000 barrels per day, while the IEA said global consumption could contract by 1.6 million barrels per day per year, worse than the previous forecast of 1 million barrels. So the oil market was suddenly forced to confront a weaker demand narrative at the same time that the US inventories rose. Now I'm not sure I completely believe that, but that's what they want us to believe. So that's the story that they told us, right? I don't believe demand is waning at all, but we'll see. This morning oil's on the rise again. It's up 1% at $82.10 overnight because the Houthis attacked a Saudi Aramco refinery. Trump and the Ayatollah continue to argue about who's in control, and the UAE accused Iran of attacking 2 of their container ships navigating the strait. Now, here's the important side note. An estimated 7 to 9 million barrels per day are still moving through the Strait of Hormuz, while another 5.7 million barrels are being redirected through regional pipelines, including Saudi Arabia's east-west pipeline to the Red Sea port of Yanbu. Now, that means it's approximately 13 to 16 million barrels per day that are still making their way out of the Gulf region compared with the roughly 20 million barrels a day before the conflict. So the idea that the Gulf oil shipments have completely stalled is wrong. Yes, the flow has been disrupted, but it has not stopped. And that helps explain why oil is trading in the low $80s instead of closer to $100 a barrel. Now let's move on to gold, because that did exactly as we have been discussing. It broke out of the trading range last week, that $4,160, $4,200 range, and it made a run for $4,500. Yesterday it kissed $4,450. It was up 11% since August 1st before hitting the wall. Buyers became exhausted, so the sellers wasted no time in taking profits off the table, leaving gold to end the day at $4,350. This morning it's trading unchanged. Eco data today includes retail sales month over month expected to be up 0.1%, ex-holders and gas of up 0.3%. University of Michigan surveys are expected to be in line, so don't expect any surprises there. Earnings season is mostly over. The results have been stunning— strong revenues, powerful earnings growth, and historically high profit margins. And importantly, the strength extends beyond just one or two companies. Tech, financials, communications, AI infrastructure, memory, and energy all delivered this season. The headline number will tell you that 2nd quarter S&P earnings growth was roughly running at 50% year over year, but that headline is distorted by the enormous one-time investment gains at Alphabet and Amazon. So you strip out those gains and underlying earnings growth is closer to 26%, which by the way is still outstanding and strong enough, more than strong enough to support the broader market rally. Right now, but there's one more announcement that's going to take the market—that's going to hold the market hostage—and that is Nvidia's reports. And they report on August 26th. So expect the excitement to build next week as everyone positions themselves and opines on what they think those results will say about the market. Remember, Nvidia is up 20% year to date. This morning, European markets are mixed. U.S. futures are mixed as well. Dow futures down 61. The S&P's are up 3. The NASDAQ is up 42 while the Russell is flat. The S&P closed at 7,798 last night, up 50 points. Don't be surprised if we take a little bit of a breather today. Near-term support is down at 7,700. Trendline support is down at 7,500. Resistance is somewhere up at 7,900, 8,000. We're now at the end of August. Expect trading volumes to decline over the next 2 weeks, which means that moves can be exaggerated in either direction. I'm still in the camp that we could see another drawdown as we move into September ahead of the midterms because valuations are stretched a little bit, volumes are thinning out, and the midterms is only going to add another layer of uncertainty. If you'd like, uh, if you'd like to discuss your goals or evaluate the risk in your portfolio, simply just get a second opinion, give me a call at 561-931-0190, or better yet, you can go to our website and click on the Connect page at slatestone.com. I'm always happy to provide a complimentary portfolio review and risk assessment for you and your portfolio. Okay, so what do we have for dinner tonight? Well, considering the, considering the atmosphere, it's a little bit spicy, it's a little bit hot, uh, we're gonna have the bucatini all'amatriciana. Now this is a classic Roman pasta dish with a little bit of heat depending on how much red pepper Crushed red pepper you use. So for this, you need olive oil, you need guanciale or pancetta. You cut that into small strips or dice it up. You need red pepper flakes. You need dry white wine. You know me, Pinot Grigio, Santa Margherita. You need a can of San Marzano tomatoes that you're gonna hand crush, salt and pepper, a pound of bucatini pasta, and freshly grated Pecorino Romano cheese. You're gonna bring a pot of salted water to a rolling boil on the back burner so it's ready when you need it. In a large sauté pan, you're gonna heat up the olive oil on like medium-high heat. You're gonna add the guanciale and the red pepper flakes, stirring it occasionally until the guanciale is lightly browned and crispy. Might take about 5 minutes. Then you're gonna deglaze the pan with the white wine, scraping up any of the brown bits off the bottom of the pan. Let it cook until the wine is almost completely evaporated. Now you're gonna add in the hand-crushed San Marzano tomatoes, season it with salt and pepper, bring that to a boil. Then lower the heat and let it simmer for about 15 minutes. You want to stir it occasionally, right? Just like you always do. Now you're going to add the bucatini to the boiling water. You're going to cook that until it's al dente, 8 minutes or so, but you'll taste it to see. Don't overcook it. Then you're going to use the tongs. You're going to take the pasta right out of, right out of that pot, put it directly into the sauce. You're going to add a ladle of the pasta water, or tears of the gods as we say, to help emulsify the sauce. Now turn the heat up slightly and toss everything together until the sauce thickens and it coats the pasta. Take it off the heat now. Add a handful or 2 of Pecorino Romano cheese and stir it rapidly to combine it, make it all nice and creamy and delicious. You're going to serve this in warm bowls with extra cheese on the side, on the table, because there's no such thing as too much Pecorino Romano cheese. Oh my God! Anyway, it is Friday in the summertime. It looks like it's going to be a glorious day here in South Florida. The sun is out, the sky is blue, there are no clouds, or at least not yet. I think it's supposed to be about 90 degrees here today. And have a great weekend, and until Monday, take good care.
