Upward price pressure on oil from an extended Iran War put further upward price pressure on Treasury Bond yields. It also increased, if that is possible, the frenzied speculation for a September rate hike. That raised the specter of an ultimate economic slowdown, or worse, stagflation. The August CPI Report showed an uptick in monthly headline and core inflation; however, year over year headline remained the same and core ticked down to 2.40%. Overseas, the UK reported a strong increase in business investment. The S&P 500 ended the week at -0.80% with Foreign Developed at-1.38% and Emerging Markets at -0.23%. US Small Caps were down 3 times as much as the S&P 500 as result of the negative economic outlook related to potential rate.... (click for more)

The Fed watching game played out in a frenzy of parsing every word from the new Fed Chairman Warsh. A weak July Jobs Report and a slowdown in July Retail Sales beat back the drum beat for a September rate hike. Then the hawks jumped on Warsh’s speech from Jackson Hole and presto, through tortured reasoning, a rate hike in September was back on the table. With that, in the last week of the month, traders wiped out almost 60% of the gains in US Small Cap Equities for the month. The hard economic news showed a solid growth economy with growth accelerating in the manufacturing and services sectors and the consumer remaining resilient. Housing remains sluggish, constrained by a low supply of existing homes for sale and mortgage rates ..... (click for more)