In this September 9, 2026 morning‑market commentary, Kenny Polcari opens with a personal greeting and a birthday shout‑out before diving into a rapid‑fire market update. He notes that WTI crude is hovering around $95 / bbl and Brent near $100 / bbl, while diesel has surged to $6 / gal – a 56 % rise since February – and argues that diesel, not gasoline, is the hidden driver of upcoming inflation. He links the energy price spike to geopolitical tension in the Middle East, citing recent U.S. strikes on Iranian tankers and Iranian missile launches at Jordan, which keep the risk premium alive. Polcari then shifts to the bond market, highlighting a 10‑year Treasury yield of 4.81 % (the highest since 2023) and a $39 bn 10‑year auction scheduled for 1 PM, with additional 30‑year issuance the next day. He warns that a weak auction could push yields above 4.85 % and further pressure equities. He reiterates his view that the Fed will likely hold rates, despite a >61 % probability of a September hike priced in futures, and notes the limited impact of recent Treasury buy‑backs. Equity market performance is summarized: the Dow fell 630 points, S&P down 45, Nasdaq down 85, with the “Mag 7” losing 4.5 %. European indices are also down, lagging behind U.S. moves. He previews upcoming economic data – PPI (expected +0.4 % MoM) and CPI (expected modest rise) – and explains how higher producer‑price pressures could bleed into consumer prices. Gold is briefly covered, having slipped 1.1 % to $4,355 but rebounding to $4,395. He cautions that a bond‑market “spasm” could reverse the bounce. The segment ends with a personal touch: a recipe for Puerto‑Rican “cremita de maíz,” a weather note, and a call‑to‑action inviting listeners to request a complimentary portfolio review via phone or the Slatestone website.
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Well, good morning. Yes, it's me. I'm back. Kenny Polcari, your host of the party. And today is Wednesday, September 9th, 2026. And shout out to my mother who's 89 years old today. Anyway, here are the things that you need to know to get your day started. Well, yes, it's happening. Oil is now— WTI is kissing $95 a barrel and likely looking like it wants to test higher. Diesel, diesel is now $6 a gallon. It's up 56% since February. Bond yields, well, they're pushing further into the danger zone. The 10-year this morning is at 4.81%, right? And there's a 10-year, $39 billion bond auction at 1 PM today. The Street is certainly going to be watching. We get PPI and CPI later on in the weekend. What do we have for dinner tonight? We're going to have the cremita de maíz, which is actually a breakfast dish, but you can have it for dinner, lunch, whenever. Okay, so yesterday I told you that oil was the story. Well, guess what? It still is. Stocks got sold yesterday. The Dow lost 630 points, or 1.2%. The S&P lost 45 points, or 0.6%. The NASDAQ gave back 85 points, or 0.3%. The Russell lost 15 points, or 0.5%. The transports gave up 211 points, or 1%. The equal-weighted S&P gave back 95 points, or 1.1%. While the Mag 7 lost 126 points or 4/10. Overnight, Brent crude pierced $100 a barrel as the Middle East situation continues to escalate while WTI kisses $95. Oil is now up 39% from July when we were told that we had a deal. Remember that? And you know what that means? The inflation fight just got a whole lot more complicated. And here's something that you don't hear many of the talking heads discussing. Yes, oil is grabbing the headlines, but diesel may be in fact the bigger inflation story. The national average for diesel has now hit $6 a gallon, an all-time record. It's up nearly 56% since February. And why does it matter? Because gasoline moves you and me, but diesel moves everything else. The trucks that deliver your groceries, the farm equipment that harvests the food, the trains that move goods across the country, the equipment on construction sites, all need diesel. So when diesel goes to $5.90 or $6 a gallon, the increased cost doesn't stay at the pump. It works its way through the supply chain, and ultimately it shows up in the price of the stuff that we buy, which brings us right back to the inflation story. Now, yesterday, US forces reportedly destroyed 5 Iranian tankers that were carrying crude after 2 attempts by the Iranians to hit a US Navy warship, with ballistic missiles. Iran responded by firing missiles at Jordan. This follows yesterday's attacks on parts of the Saudi Arabia energy complex and the growing concern over disruptions to production and shipping in the total region. So the temperature, well, they just turned it up again. The risk premium is alive and well, and the risk to energy supplies coming out of the Gulf continues to be real. $95 WTI, $100 Brent, and $6 diesel just amplified the inflation narrative. And here's the problem. Oil doesn't need to go to $150 tomorrow to matter. It just needs to stay here long enough for the second round effects to start showing up. And that's why oil matters, because energy prices can't keep rising without eventually showing up somewhere else. Now the question is, what happens next? Well, we're about to find out when we get the latest read on both the PPI and CPI reports, right? Producer price and consumer price inflation. Both of those eco data points are gonna be reported this week on Thursday and then on Friday. And that's got the bond market's attention. This morning, the 10-year is up 2 bps at 4.81%, levels last seen in 2023. Fed fund futures are now pricing in a better than 61% chance of a September rate hike. And that decision comes next Wednesday. Now, just a reminder, you know me, I'm still in the camp that the Fed sits still. Yes, there's going to be dissension amongst the ranks, but I think the majority continues to vote to hold. And remember Scotty Bessen telling us that he expanded the Treasury buyback program a couple of weeks ago because he was trying to break the fever in the bond market? Well, how's that working? It doesn't seem to be really working too much. And remember, you can't You can artificially hold it for a while, but not long term. And if we haven't had enough, uh, if we haven't had enough, yesterday the Treasury auctioned off $58 billion of 3-year notes at 4.474%. It was pretty solid. Today we have $39 billion of 10-year, followed by $22 billion of 30 years tomorrow. That's $61 billion of long-duration paper, right? Industry lingo. The market has to swallow. And remember, the 10-year is already yielding 4.81%. Oil at 95, Brent at 100, inflation anxiety is rising. So yes, expect the Street to be watching. A sloppy 10-year auction, meaning demand was weaker than expected, could be mark— could be a market-moving event today. If demand is weak, investors will demand a higher yield than the market was expecting, and dealers will get stuck holding more of the bonds. And that's the risk with $95 oil, inflation concerns, and a loaded Treasury supply already hanging over the market, a weak 10-year auction could push yields towards 4.85% or higher, putting even more pressure on stocks. Conversely, a strong auction at these levels sends a very different message. Buyers are essentially saying, okay, 4.80%, that's good enough. So pay attention at 1:00 PM because the bond market is going to speak. Now, gold got slapped yesterday, falling 1.1% to end the day at $4,355. landing right on the intermediate-term trend line as it remains caught between the geopolitical safe haven bid and the rising yields. This morning, gold is up $42 at $4,395 after bouncing off the trend line, something I think is gonna prove to be short-lived if, if the bond market goes into spasm mode at 1:00 PM. Eco data today is about mortgage apps, but it is tomorrow's PPI and Friday's CPI that the markets are waiting for. As discussed, PPI is expected to be higher, +0.4% month over month, up from 0 last month, and a 5.3% year over year, up from 4.7% last month. Core PPI of 0.3% and +4.6%, both higher than they were last month. CPI though is not expected to show a dramatic increase in August, something I find a little bit confusing. But if PPI comes in hot and energy prices remain elevated, then the risk is that some of those producer price pressures are gonna begin Bleeding into the consumer prices in the months ahead. So next month and a month after that. The Fed now is in blackout mode, right? Do not expect to hear anything from any of the FOMC members. But the other Fed members, the ones that are not on the FOMC, are free to speak. The question is, will Kevvy allow them to? My gut says, nah, not so much. Okay, so today's pretty simple. We need to watch oil. We need to watch the bond auction because that is the focus. Recall, I think the danger zone for bonds started at 4.7%. We're now at 4.81% and likely going higher. So the danger zone is getting more dangerous. US futures this morning, as you might expect, are weaker. Dow futures down 300 points. The S&P's down 27. NASDAQ's down 150. And the Russell is down 17 points. European markets are also lower. They're playing catch-up, right? Spain was down 2.4%. Euro Stoxx down 2%. France down 1.8%. Italy down 1.6. Germany down 1.5 while the UK is down 9/10. Yesterday they weren't really off that much, not as much as we were. That's why I'm saying they're playing catch-up. The ECB announces their rate decision tomorrow. Now remember, September is historically one of the most difficult months of the year for stocks, and it appears, at least for now, that history may be repeating itself. So it's time to return to your seats and make sure your seatbelts are fastened. Now, if you'd like to discuss your goals, evaluate the risk of your portfolio, simply get a second opinion. Give me a call at 561-931-0190. Or better yet, go to the website slatestone.com and just click on the Connect to Us page and the email will come right to me. I'm always happy to provide you a complimentary portfolio review and risk assessment because it's times like this that make that very, very real and maybe necessary. Okay, so what are we having for breakfast or dinner or even for lunch? For lunch, cremita de maíz. It's cream of cornmeal. Oh my God, this is a Puerto Rican love in a bowl. A delicious breakfast or lunch or dinner that my kids grew up on. My mother-in-law, who was from Guaynabo, Puerto Rico, would make this for them every time she came to visit, and she visited a lot. I mean a lot. That's one of their fondest memories of her, and actually mine too. For this, you need the cornmeal, you need 1 can of evaporated milk, those small cans, you need whole milk, you need, uh, white sugar, butter, a pinch of salt, vanilla extract, and a little bit of dusting of cinnamon. Begin by heating up on medium-high the 1 can of evaporated milk, and then take that same can and add some water. You're going to add in about 1/2 cup of cornmeal. You're going to whisk it completely so it's smooth. Use a, use a whisk. Make it smooth, no lumps, right? Then when that happens, you're going to add in 3 tablespoons or so of white sugar, a pinch of salt, a half a stick of butter, and a teaspoon of vanilla extract. Turn the heat to medium-low. Stir it constantly with the spoon or a wooden spoon or the whisk. Do not walk away as the cornmeal thickens quickly and it can clump and burn at the bottom if you're not careful. After about 5 minutes at most, it's going to thicken into this smooth, creamy deliciousness. At this point, you're going to add in half a cup of whole milk. Whole is better. You can use 2% if you want. Do you want to thin it out? You can add a little bit more if you need to. You want an oatmeal-like consistency. You want to taste it and adjust by adding more sugar if needed. When served, add a dollop of butter in the bowl first, then add the ladle or 2 or 3 into the bowl, and then dust it with the cinnamon. That's optional, but it is delicious. It is so good. I think I'm going to make it on Saturday morning now because now I'm craving it. In any event, it was a stormy night last night here in Florida, but the sky looks blue today. There's some clouds out there, so I'm not sure what kind of a day it's going to be. We'll probably end up with— we'll probably end up with some rain at some point today, but for the most part right now, it's all clear. Until tomorrow, take good care.
