In this daily market briefing, Kenny Polcari explains how unexpectedly strong economic data on September 24, 2026 turned what seemed like good news into a market sell‑off. He walks through the failed 5‑year Treasury auction that pushed yields higher across the curve, the sharp rise in oil and diesel prices, and the VIX spike that ended a period of complacency. Polcari links these moves to a stronger‑than‑expected S&P Global business activity survey, Fed Governor Michael Barr’s call for more tightening, and rising odds of October and December rate hikes. He also notes the political backdrop of upcoming U.S. midterms and a low‑expectation Gigi meeting in D.C., which add short‑term anxiety. The commentary includes technical analysis of major indices, support levels, and the transport sector’s weakness, as well as a call‑to‑action for a complimentary portfolio review. The video ends with a detailed recipe for penne with sweet sausage and pumpkin cream sauce, tying a personal touch to the market discussion.
Chapters
Well, good morning. Yes, it's me, Kenny Polcari, your host of the party. And today is Thursday, September 24th, 2026. And here are the things you need to know to get your day started. Well, surprise! Just when you think nothing can go wrong, Ecodata comes in stronger than expected. The 5-year Treasury auction failed to impress. Oil spikes, bond yields spike, and guess what else? The VIX spiked. Global bonds this morning are under pressure. Gigi is on the agenda in DC, but I wouldn't hold my breath. And what do we have for dinner tonight? We're gonna have the penne with sweet sausage and a pumpkin cream sauce, getting ready for Thanksgiving. It is delicious. You are going to really enjoy that. You're going to thank me later. Okay, so here we go. On Tuesday, was everything was good in the world, right? Investors were celebrating and the NASDAQ was hitting another record and tech stocks were on fire and Bond yields had retreated to 4.94%. Oil was down. Gold was lower. Supposed talk with Iran pointed to the possibility of a deal. And the VIX, well, that suggested complete complacency, as if nothing could go wrong. In fact, in yesterday's note, I finished it off with the comment about the VIX. And I'll repeat that. The VIX continues to push lower, closing down 6 cents at 14.15. leaving it at levels last seen in December before the whole Middle East conflict began, which is a bit odd to me. But it— what it says is that investors are pushing this conflict just like they did Russia and Ukraine and everything that goes with it onto the back burner. With every tick lower, they become increasingly more complacent. And complacency becomes an issue when the market begins pricing in almost no possibility of a negative surprise. Well, guess what? Surprise! Yesterday, after stronger than expected eco data that we got first thing in the morning, we saw oil turn higher, bond yields spiked, gold got whacked, stocks got punched in the face, and the VIX surged. At the end of the day, well, it was a little less pretty than it was on Tuesday. The Dow lost 352 points or 0.7%. The S&P ended down 58 points or 0.75%. The NASDAQ choked, losing 308 points or 1.2%. The Russell lost 51 points or 1.8%. The Transports sank even further into the black hole, losing 48 points or 0.75%. The equal-weight S&P gave up 58 points or 0.7%, while the Mag 7 in an odd way also gave back 308 points, just like the NASDAQ. Bond yields, which were already higher after the early morning eco data pointed to a stronger economy, Spiked even higher after the Treasury $70 billion 5-year note failed to impress investors, telling Scotty, uh-uh, we want higher yield for loaning you any money. And that only added pressure to the sell-off. The 2-year yield up 14 bps at 4.89%. The 5-year exploded up 23 bps, at one point as high as 5.03%. The 10-year added 18 bps to settle at 5.11 after trading as high as 5.13. The 30-year added 12 bps to end the day at 5.39. And to add more fuel to the fire, oil, right, did a 180 and it rose 2.4% or $2.20 a barrel to end the day at $92.71. Diesel, which is at the core of this inflation issue and all the recent angst, is not helping and is now trading at a national average of $6.52 a gallon, near a record high. And in California, it's trading Closer to 8. And this matters because it puts upward pressure and higher costs on everything— on truckers, on farmers, on construction and construction equipment. And guess what else? Those higher costs do not just disappear. Businesses will pass them along, and the diesel squeeze will keep inflation alive. And even— and the even better than expected eco data did not offer any relief to the bond market either. That's where the good news becomes bad news argument comes into play, right? S&P Global's preliminary S&P September survey showed US businesses' composite activity jumped to 58.4, the strongest reading since July of '21. Yes, hiring picked up, but so did the input costs. Businesses pointing in part to rising fuel prices and transportation costs, right? There's diesel. Manufacturing PMI and services PMI also stronger than expected. And so you ask, but this is good news, why the temper tantrum? Because this is when good news is bad news. Because when the Fed is trying to bring inflation down, strong economic reports and rising demand and rising costs raise the possibility that the Fed is going to have to raise rates. Add in the comments from Fed Governor Michael Barr, you know, who basically said more tightening is needed, and whack. Down we went. And by the way, the VIX shot up 9.1% by 1 PM, taking it right up to kiss the trendline resistance. And we haven't even discussed the tone yet between Iran and the US. And by the way, the rest of the world, never mind the upcoming midterms that are now only weeks away and are suggesting a complete repudiation of anything Trump, adding anxiety to the mix. And while all this does not price stocks in the long term, It absolutely will create plenty of chaos in the short term. It always does. Look, let's say it for what it is. Americans are angry now. What was supposed to be a 6-week Middle East conflict is now turning into a 9-month war with no end in sight. Oil, which was supposed to settle down, has not. The inflation risk is now on center stage, and the bond vigilantes are holding Kevin Warsh's feet to the fire. Fed fund futures are now putting the odds of an October and a December rate hike at 80% apiece, which means the 3 rate cuts that we were pricing in at the beginning of the year are now turning into 3 rate hikes at the end of the year. And the bond sell-off this morning has spread around the globe. Overnight, bonds in Japan, Australia, New Zealand came under pressure. While the swarming bonds in Europe, the German Bund, the French Oats, the Italian and the Greek bond yields, they are all higher. And as you can imagine, that is putting pressure on global stocks as well. And today it's going to be all about Trump and Gigi down in D.C. My gut says it's a big nothing done. I mean, is anyone really expecting anything to come out of this meeting? Let's be honest, right? And even if it does, does— do you really think that it's going to solve the bond market problem? Absolutely not. Or to put it another way, NFW. ECO data today includes initial and continuing jobless claims, new home sales and building permits, and the Kansas City Fed manufacturing activity, right? If they all point to a stronger economy, then we're going to expect more selling pressure on bonds and more selling pressure on stocks. US futures in fact are lower. Now it's 4:30 AM, so a lot can change. But right now Dow futures are down 225, the S&P is down 45, the NASDAQ's down 290, and the Russell is down by 12. Yes, that can and most likely will change as the sun rises over the Atlantic. But for now, it is what it is. European markets, they're all lower this morning too. They're down between 0.3% and 0.8% across the board, right? Gold, which lost $75 yesterday, is down another $20 this morning, now trading at $4,268 An ounce. So I guess the trend line at $4,306, $4,315-ish, which I thought might provide support, didn't provide any support. The chart now suggests that we could see gold trade down to $4,180-ish, unless of course that narrative changes, and it doesn't look like it's going to change anytime soon. The transports, which had broken their long-term trend line last week, have only gotten weaker since we discussed this on Monday, and that's also not helpful. It is now the trend switch at a pivotal point. A failure to hold right here at 19,700 could see us trade down another 6% or so from here to levels last seen in January, February of 2026. And if that happens, we can expect continued weakness in the broader market as well. We discussed it on Monday. Go back and read the note. The S&P closed yesterday at 7,706, down 58 points. Yesterday's action saw a slice right through this near-term support at 7,720. Like a hot knife through butter, like Barbra Streisand says. Short-term trendline support is actually at 7630. It's a 90-point move down 1.2% from here, and I wouldn't be surprised if we tested it today. Now, if you'd like to discuss your goals, evaluate the risk in your portfolio, simply just get a second opinion, feel free to call me at 561-931-0190, or you can go to slatestone.com and click on the Contact Us page, and the email will come straight to me. Because I'm always happy to help you provide a complimentary portfolio review and risk assessment. Okay, here it is. It's fall and this is a classic delicious dish. It's penne with sweet sausage and pumpkin cream sauce. Oh my God, so good. For this, you need a pound of penne. You need 4 links of Italian sweet sausage out of the casings. You're gonna fry that up. You need a cup of— 1 cup of chopped onion, right? A large chopped onion. 2 or 3 cloves of garlic, olive oil, half a cup of white wine, 1 bay leaf, 1 cup of chicken broth, 3/4 cup of canned pumpkin— not pie filling. You need a 1/4 cup of fresh sage, salt and pepper, ground cinnamon to taste, and a dash of nutmeg. You need a 1/4 cup of heavy cream and fresh grated Parmigiano cheese. Start by bringing a pot of salted water to a rolling boil. Now in a sauté pan, brown the sausage, right? Once it's brown, remove it. Now to that same pan, add the onion and the garlic and a splash of olive oil. Sauté that around for 5 to 6 minutes. Now you're going to add the wine and the bay leaf. Bring it to a boil, cook it till the wine is reduced by half. Now add in the chicken stock, stir in the pumpkin, half of the sage, dust it with cinnamon and nutmeg. Cook that for about 2 or 3 minutes. Now add the cream and all the cooked sausage. Heat that through, take the bay leaf out. Now you're going to add the pasta to the pasta water. You're going to cook it for 8 minutes until it's al dente. You're going to use a slotted spoon, take the pasta out, add it directly to the sauté pan with the pumpkin and sausage, toss it to coat. You're going to take a ladle of the pasta water— don't throw it out, the tears of the gods— you're going to put that into the sauce. You're going to mix it to emulsify, get it all nice and creamy and delicious. Now you're going to take a handful of grated Parmigiano cheese, toss it in there, toss it, serve it in warm bowls immediately, always having extra cheese on the table. For your guests. Look, it's early. I think it's going to be another kind of rocky day. This is not surprising. We talked about this. We talked about the volatility going into the fall and into ahead of midterms, and it's exactly what we're seeing. Until tomorrow, take good care.
