In this solo market commentary, Kenny Polcari opens with a quick weather and dinner preview before diving into the August jobs report, which showed 162,000 new jobs—far above expectations—along with upward revisions for June and July. He interprets the strong labor data as ammunition for Fed hawks, but argues the Fed will likely hold rates steady in September because the bond market has already pushed yields higher, making further tightening unnecessary. He details the recent surge in Treasury yields (2‑year at 4.37%, 10‑year at 4.81%, 30‑year at 5.27%) and the upcoming $58 billion 3‑year note auction, noting the bond market’s role in pricing risk. Oil prices are up due to Middle East supply disruptions, with Brent near $100 and WTI above $94, a situation the Fed cannot directly address. Gold fell 1.2% as higher yields and a stronger dollar reduced its appeal. Global equity markets are under pressure, with Asian and European indices down and US futures pointing to a weaker open. He highlights key upcoming data—PPI on Thursday and CPI on Friday—just before the Fed’s September FOMC meeting and blackout period, and notes expected rate hikes from the ECB and BoE. Polcari closes with a call to action for portfolio reviews and a detailed mahogany chicken recipe, emphasizing the blend of market insight and personal touch.
Chapters
Well, good morning. Yes, it's me, Kenny Polcari, your host of the party. And today is Tuesday, September 8th, 2026. And here are the things you need to know to get your day started. Well, welcome back to reality. Summer's over. We are now into the fall. Oil is up. Bond yields are up. Gold is down. The Middle East tension, well, that remains elevated. And the PPI and CPI are due out later this week, Thursday and Friday to be exact. And what do we have at dinner tonight? We're going to have the mahogany chicken, which is always a great dish, easy to make and so delicious. Well, yes, I am back, and let's see what I missed. Okay then, apparently nobody told the labor market that it was supposed to be slowing down, because while traders, uh, and investors were packing up and heading out to the beach for one final long weekend of the summer, the August jobs report came in on Friday morning and showed that we created 162,000 New jobs, nearly 3 times the expectation. Unemployment held steady at 4.1%. Labor force participation ticked up to 61.6%. Average hourly earnings rose by 0.3% month over month and 3.1% year over year, while the average work week ticked up to 34.4 hours. And then there were the revisions from June and July. June was revised up by 11,000 jobs July was revised up by 44,000 jobs, turning what had been a loss of 23,000 jobs into a gain of 21,000 jobs. So June and July together, we saw 55,000 additional jobs stronger than originally reported. And just like that, the conversation changed, and that gave the bond market another reason to throw a fit while the Fed found itself really stuck between a rock and a hard place. Now recall, the debate was whether or not the economy was slowing enough to allow the Fed to sit tight. Whether inflation remained the bigger problem, and whether Hammock and Schmidt were right to keep warning investors that rates needed to go higher. Well, Friday's job report just gave the hawks another piece of ammunition because 162,000 new jobs, positive revisions, and unemployment holding at 4.1% hardly suggests an economy that's in trouble and an economy that needs to be rescued by the Fed. Doesn't say that at all. And you know where I've been on this. I remain in the camp that the Fed does nothing in September, although the market's now pricing in a 58% chance of a rate hike. And I still think, I still think that there's a very real possibility that they do nothing in September and then the rest of the year either. I think Kevvy's willing to let the bond market do the heavy lifting for now rather than have the Fed hike by 25 basis points, especially when the bond market is already tightened. financial conditions for him. Look, 10-year yields are up 22% since the March 1st low, as we were kind of looking— as the market was looking forward. And remember, the 10-year is the benchmark for the cost of long-term money. So think mortgages, corporate borrowing, and a whole range of other financing costs that take their cue off of this one metric. So if the bond market is already raising the cost of money and slowing things down, does Kevvy really need to pile on? I say no. On Friday, bond vigilantes continued to put the pressure on. They sent prices lower and yields higher. The 2-year shot up to a high of 4.41% before settling the day at 4.36%. The 10-year shot as high as 4.81% before settling at 4.78%. The 30-year traded up to 5.27% before ending the day at 5.24%. Now this morning, yields are up again. The 2-year is yielding 4.37%, the 10-year is yielding 4.81%, and the 30-year is yielding 4.26%. Now, stocks didn't love all this news, and at the end of the day on Friday, the Dow lost 272 points, the S&P lost 30 points, the NASDAQ gave up 78 points while the Russell added 7. The transports added 150, the equal weight lost 45 points while the Mag 7 ended the day flat. And that is important because if investors really believe that Friday's job report was some kind of a, of a disaster, right, because it was so strong, stocks would have gotten punched in the face, but they really didn't. The S&P lost less than half of 1%. So the message wasn't really coming from stocks, it was coming from bonds. Now move on to oil because that ended higher as well, but not because demand is out of control. No, no, no. It's because the Mideast situation is still on fire and the flow of oil remains disrupted. WTI was up 10% on the week while Brent was up 7.6% for the week. Now, while we were all taking the weekend off, the tensions in the Middle East did not. This morning, oil is higher once again because while we were all enjoying the last weekend of summer, US forces struck 3 Iranian tankers on Saturday, including one near Kharg Island. That is Iran's key oil export hub, right? Iran then retaliated, threatened US energy interests across the whole Gulf. And warned that they intend to further restrict shipping through the Strait of Hormuz. And then overnight, last night, Iran-backed Houthi rebels attacked Saudi Arabia, hitting energy facilities in the southern part of the kingdom and forcing some operations to temporarily shut down. So again, this isn't about booming US demand. This is about supply. And that puts Kevi in a very difficult spot because raising rates isn't going to fix the oil problem. The Fed can't produce another barrel of oil. They can't repair a Saudi facility. They can't reopen the Strait of Hormuz, or they can't solve the Iran crisis. But here's what the Fed can do. It can raise rates enough to try to slow the economy in an attempt to destroy demand for oil. And if you destroy enough demand, eventually you can put downward pressure on the price of oil. But think about what that means. How much economic pain do you have to create to destroy enough demand to offset a geopolitical supply shock? Quite a bit, I would imagine. So that's the dilemma. Kenny can't fix the supply side of the equation. He can only attack the demand side, and that comes with a price. And that is why I continue to think the Fed sits tight in September, especially when the bond market has already done most of the work for him. Okay, and this morning, well, Brent is kissing $100 a barrel. WTI is trading above $94. Bonds are being sold and that is sending yields up again this morning. The 2-year is yielding 4.37%, the 10-year is yielding 4.81%, and the 30-year is yielding 5.266%. And by the way, today we kick off another round of, uh, of Treasury issuance with a $58 billion 3-year note auction. followed by both a 10-year and a 30-year offering later this week. So the bond market is about to get tested again as we move through the week. Now, gold got slammed, falling 1.2% to end the day on Friday at $4,419 an ounce because bond yields surged and the dollar rallied by a quarter of a percent to end the day at 99.15. So remember, higher rates and a stronger dollar increase the opportunity cost of owning an asset that doesn't pay you anything. No interest, no dividend. So the markets do what they do— they price risk. And as yields rise, interest-bearing assets like bonds become more attractive relative to gold. So guess what? Gold gets sold. And here's how you have to think about it, right? The song— the strong jobs beat plus the rising rate expectations plus higher yields plus a stronger dollar equals gold gets sold. It's not any more complicated than that. Now, in stock markets around the world, we're under pressure overnight and this morning. Asian stocks lost ground. Japan was down 1.7%, Australia down 1%, South Korea and Taiwan both down 0.5%. We're also expecting a monetary policy announcement out of the Bank of Japan early next week. Now, stocks in Europe, they're lower as well, but not panicky. Markets across the zone are down about between 0.2% and 0.4%. The ECB announces their rate decision on Thursday and the Bank of England announces their decision next week. Both are expected to raise rates. Now, US futures are pointing to a weaker opening as investors and traders return from the holiday weekend. Dow futures are down 390 points, the S&P is down 20, the NASDAQ down 10, while the Russell is also down 10. Key economic indicators this week include PPI on Thursday, which is expected to show some additional inflation pressure, and then CPI on Friday, where the expectations— well, they were a bit more mixed and muted. But let's see how that plays out. And after the strong jobs report and oil kissing $95 a barrel, you can bet that everybody is going to be paying attention to these 2 reports. Now, both of these reports are just days ahead of the FOMC meeting that begins, uh, on Tuesday next week with the rate announcement and Kevvy's press conference on Wednesday, which means we are now officially in the Fed's blackout period, which means no more speeches or interviews or public commentary from any of the FOMC officials about monetary policy ahead of the meeting. And recall, under prior Fed chairs, whenever the Fed appeared to be leaning towards something that the market wasn't expecting, traders would immediately start looking for clues from Goldman Sachs or the Wall Street Journal's Nikki Timiraos, right? I refer to them as the Fed's deep throats because somehow they would always have the inside scoop in the event of a change in psychology ahead of everyone else. Now, whether Kevvy plays the game the same way remains to be seen. My guess is he does not, but let's see. But with the Fed officially quiet, PPI on Thursday and CPI on Friday, and the data gets to do the talking— exactly what Kevvy wants it to do. Remember, September is historically one of the most difficult months of the year for stocks. Since 1950, the S&P has averaged a loss of about 0.7%, right? And it's finished the month higher just 44% of the time. But when September does finish lower, then the average loss has been closer to a 4% loss. Now, so with bonds under pressure and oil kissing $95 a barrel, the Fed is in play and geopolitical tensions on the rise, my gut says that this is not the time to be complacent. If you'd like to discuss your goals and evaluate the risk in your portfolio, simply get a second opinion. Give me a call at 561-931-0190, or better yet, you can go to the website slatestone.com and just click on the connect link and the email will come straight to me. I'm always happy to provide you a complimentary portfolio review and risk assessment of your portfolio. Okay, great. So now, what are we having for dinner tonight? This is a great dish and one that, you know, I don't think about often, but when I think about it, I think, why don't I make this more often? It's called mahogany chicken, and it's mahogany because we use balsamic vinegar at the very end, gives it a kind of brown mahogany color. So for this, you're going to need chicken parts on the bone, so you use thighs and breasts, skin on, right? I use mostly thighs because that's what I like. Uh, olive oil. You need, uh, garlic. You need 1 whole head, but more depending on how much chicken you're making, right? You need fresh rosemary, fresh sage, fresh thyme. You need bay leaves, onion. You need olives, green or black. I always use the black. You need salt and pepper, and you need a good quality, thick balsamic vinegar. Now, you're going to start by soaking and cleaning the chicken, right? Pat it dry with paper towels, then arrange it in a roasting pan. Drizzle it with some olive oil, rub it into each piece, massage it in, then season it with salt and pepper. Now, peel the garlic and arrange it all. Don't slice it all, just leave them in whole cloves all around and under the parts of the chicken, right? Add the rosemary, the thyme, the sage, and the bay leaves as well. Put the herbs all around and under the chicken. Add 2 cut-up large onions and spread it around the chicken. I use Vidalia onions if I can, if you have them. If you don't, any onion will really work, but you should try Vidalia onions because they're really sweet and delicious. Now you're going to roast the chicken in the middle of a— in the middle of the oven at 400 degrees for about 45 minutes, right? Uncovered. You're going to check the pan every 15 minutes or so and remove any excess liquid with a turkey baster, right? Because the object is for the chicken to roast, not to braise. Now save the juice on the side. You put it in a bowl just in case someone wants some juice with their meal when they're eating it. After 45 minutes, you're going to drizzle the chicken with the balsamic vinegar. You're going to add the olives. You're going to turn the heat up to 450 and roast it for another 15 minutes. 15 minutes. Then take it out of the oven, let it rest for a minute. You can serve this with, you know, roasted vegetables, roasted potatoes, and rice, always including a fresh tossed mixed green salad that you've dressed in just simple olive oil and lemon, salt and pepper, and oregano. It is perfect for that meal. In any event, it is Tuesday. It is gorgeous here in South Florida. It's probably going to be 85 degrees out and sunny. Until tomorrow, take good care.
