Executive Summary The S&P 500 finished down 0.1% at 6,460.26 last week The S&P is up 9.8% on the year. Industrials and Communication Services are leading the way Personal income rose in line with expectations for July, climbing 0.4% up from 0.3% the prior month A weak payroll number on 5 September means a Fed rate cut on 17 September Unemployment is expected to rise, but it is still low relative to history Wage growth close to 4% will make it hard for inflation to fall to 2% The predictions market has the odds of a recession at 8% The ICE BofA US High Yield Index spread is near all-time lows A bear steepener is increasingly likely. A bear steepener is when the yield curve falls at the short end but rises at the long end

Executive Summary The S&P 500 rose 0.3% last week to close at 6466.91 The CME FedWatch tool initially raised the chances of a September rate cut to 84.7% The stock and bond markets opted to buy Fed Chairman Powell’s Friday morning speech Investors now seem certain that the Fed will start cutting again The current five-year breakeven is 2.48% The 10-year breakeven is 2.41% The core Consumer Price Index (CPI) is 3.1% Disinflation appears to be over as the inflation rate is no longer falling The St Louis Fed’s Financial Stress Index is negative 0.8153. A negative number means below-average financial market stress The real 10-year interest rate is falling. Money is getting cheaper. The Fed’s balance sheet is shrinking, but is still 22% of GDP An indebted economy can’t withstand high interest rates  The Stock Market