After-Hours % Advancers

After-Hours % Decliners

Position: None

Closing Volume

– NYSE volume 4% above its one-month average 

– NASDAQ volume 16% below its one-month average 

– VIX index: up 9.45% to 16.33

Breadth

Sectors

% Movers

TheFly’s HeatMaps

Position: None

I have moved to large GLD.

Position: Long GLD (L)

I am going to deliver my valuation model discussion (mentioned in my opener) until early tomorrow morning.

A heads up.

Position: None

From Randorama:

“Iranian State TV Confirms Reports Of Blasts Across Southern Regions”

“Reports Of Explosions In Chabahar, Qeshm Island And Bandar Abbas, Iran”

Positions: None.

The following is from Peter Boockvar:

US mfr’g recovery continues but challenges exist/Job openings data helps to lower rates

The August ISM manufacturing index fell 1 pt m/o/m to 54.6 and below the estimate of 55.2 but still continuing the run of above 50 prints and highlighting the recovery in manufacturing that is global.

New orders fell 3 pts but still above 50 at 53.7. Backlogs slipped too by 3.2 pts to 51.8. Inventories were above 50 for a 3rd month but down .6 pts to 50.6. Customer inventories remain low at 42.8 but up 2.1 pts m/o/m. Export orders were little changed at 53.2 but above 50 for the 3rd month in the past 4. I highlighted this morning that exports helped the manufacturing indices overseas as well.

Supply chain issues remain as the Supplier Deliveries component at 59.3 is well above 50. These were some respondent comments highlighting the problem::

“Supply chain situation, especially in the electronics market, is going through another crisis even bigger and more complicated than during and post COVID-19. That’s mainly due to AI infrastructure and uncertainties in the global market (for oil and other critical supplies) due to war in the Middle East and more complication on trade rules.” [Computer & Electronic Products]

“Supply markets are increasingly challenging due to inflation and supply availability. Each month has been more difficult than the previous one. Starting to resemble the post-COVID-19 disruptive period.” [Computer & Electronic Products]

“Photonics, high speed connectors, semiconductors and government orders are expanding significantly. Supply chains domestically and globally are difficult, with increases in lead times and cost.”[Machinery]

“Commentary this month echoes that of recent months: (1) significant availability/price challenges in commodities heavily consumed by AI, (2) great uncertainty over when the Iran conflict will end, and (3) another round of shifting U.S. tariff policy. Despite these tensions, we continue to focus on what we can control, and the market for our products remains strong.” [Miscellaneous Manufacturing]

Prices paid were unchanged but at still elevated 71.1 and 15 of 18 industries reported paying higher prices. No one paid less.

Finally component wise, employment was above 50 for a 2nd straight month at 51.2, down 1.6 pts, after a long stretch below 50. Only 7 of 18 industries though reported an increase in hiring.

Breadth wise, it didn’t change much m/o/m as 15 industries saw growth, the same number seen in July. Two saw a contraction in their business (wood products and chemical products) vs one in July.

Bottom line, the manufacturing recovery is here but it ain’t easy according to what the respondents have said. Here were some more comments:

“The economy is annoying; it is getting in the way of otherwise good business. We are making great new products but struggling to compete when prices escalate due to things like tariffs and the conflict in the Strait of Hormuz. I fear that the inflation caused by these factors will lead to lower sales and lower spending power of our customers. Call it inflation! At some point, it leads to an economic downturn or at least an economic pain for many consumers. It’s an uncertain year, our second in a row.” [Chemical Products]

“For our building products division, profitability is not far off from last year despite economic headwinds, as our specialty products have maintained their market share and sales. Specific to IT, the rising costs in component inputs have caused some budgetary constraints as we plan for the 2027 fiscal year. However, we largely been able to keep costs close to historic consumer price index averages.” [Chemical Products]

“Commentary this month echoes that of recent months: (1) significant availability/price challenges in commodities heavily consumed by AI, (2) great uncertainty over when the Iran conflict will end, and (3) another round of shifting U.S. tariff policy. Despite these tensions, we continue to focus on what we can control, and the market for our products remains strong.” [Miscellaneous Manufacturing]

“This month is a blur: Steel prices continue to climb as supply diminishes, aluminum is rising after dropping, and there are many holes on the plate side. Demand seems to be a seesaw. Our prediction ability continues to diminish, with the exception that the year will remain difficult until the end.” [Primary Metals]

“High steel and aluminum prices (due to Section 232 tariffs) continue to make profitability a challenge. Uncertainty over the U.S.-Mexico-Canada Agreement is at the forefront of many customer conversations. Our industry has also been hit with countervailing and anti-dumping penalties, further raising the cost of equipment.” [Transportation Equipment]

“Volume is consistent. Our main customer is shifting production from U.S. plants to Mexico plants.” [Transportation Equipment]

ISM Mfr’g

Bond yields are falling off their early morning highs maybe in response to the print in job openings in July which were below expectations and with the downward revision to June. In July they totaled 7.27mm vs 7.18mm in June (revised down from 7.36mm).

Of particular note was the drop in the hiring rate to 3.2% from 3.4% and that matches the 2nd lowest print since 2011 not including immediately after the Covid shutdowns. The quit rate fell to 1.9% from 2%, matching the lowest since 2014, also not including Covid.

Job Openings

Hiring Rate

Quit Rate

I added to two shorts:

* JPM (JPM) $359.47
* CRM (CRM) $258.89

Positions: Short JPM S CRM S

– NYSE volume 3% below its one-month average; 

– Nasdaq volume 20% below its one-month average;

– VIX index: up 2.88% to 15.35

With S&P cash -48 handles I am covering my index shorts:

* SPY $762.33

* QQQ $707.31

I plan to reshort strength.

Position: None

The following is from Peter Boockvar:

Are they now going to care?/Manufacturing PMIs

Another global rise in interest rates and do stocks now finally care? I think it’s for sure gaining more attention and 5% for the US 10 yr yield is the level I have major eyes on as we touched it for a day back in October 2023. If I had a dollar for every time I said we must be watching rates in Japan and Europe and not just what US growth and inflation are doing in trying to predict where US long rates go. We’re all in this bond boat together and I’ll say again that I believe the main catalyst, along with others, for the rise in long rates has been the sharp rise in yields in Japan over the past 3 years, ever since they effectively ended yield curve control.

The policies of the BoJ and the multi decade interest rate suppression there had been the anchor keeping global rates low and that basically ended in 2023. Only now it seems to be garnering more focus as multi-decade highs in yields are happening seemingly daily now. I remain a bear on long duration bonds. The only longer duration bonds we own are in TIPS and emerging market local currency bonds.

Back to whether stocks are now going to care, I’ll take this line from the August 24th op-ed from Stan Druckenmiller, “The long-term Treasury yield is the most important price in the world.” Thus, the equity markets need to pay attention.

Today, the UK 10 yr yield is breaking out to the highest since June 2008 up a sharp 16.5 bps to 5.23% joining French rates at 18 yr highs too and the German 10 yr yield at a level last seen in 2011. The 10 yr JGB yield closed at 3% for the first time in 30 years.

The inflation stat of note today came from the Eurozone and its August CPI which rose by 3.3% y/o/y, up from 2.9% in July but as expected and mostly energy and services driven. The core rate though dipped a touch to 2.4% from 2.5% and vs the estimate of no change. Energy prices rebounded for a 2nd month, by 2.9% m/o/m and up by 14.3% y/o/y. Services inflation jumped by 1.1% in July and was up by .1% in August. Versus last year they are up 3% vs 3.3% in July.

The 5 yr 5 yr euro inflation swap in response to the in line figures is unchanged at 2.16%. The ECB next meets on September 10th and they are about fully expected to hike rates by 25 bps to 2.50%.

US 10 yr Yield

UK 10 yr Gilt Yield

10 yr JGB Yield

Eurozone CPI y/o/y

Just an update on ag prices which I’ve stated here my bullishness as I think it will be the last group to join the commodity bull market, which is now seemingly beginning to take place, the Bloomberg Agriculture Index is now at the highest level since November 2023.

Bloomberg Agriculture Index

The August Dallas Fed’s manufacturing index out yesterday rose to 11.6 from 1.3 and much better than the estimate of no change and joins most other regions in seeing a continued manufacturing recovery. This chart stood out to me with the rise in ‘easier’ and was a special question, “Compared to six months ago, how has your firm’s ability to pass price increases on to customers changed?”:

What also stood was this quote from a company in the ‘Computer and Electronic Product Manufacturing’ sector in light of the rise in rates:

“Uncertainty happens in our industry when there is a risk of higher interest rates, contributing to a decrease in confidence among industrial customers and it delays projects tremendously.”

Ahead of the US national ISM manufacturing index today, we got a bunch of PMIs from overseas and some moderated from July, though most remained above 50.

Japan 54.9 vs 54.5

Taiwan 54.7 vs 55.1

South Korea 52.3 vs 53.1

China 51.5 vs 50.9

Thailand 53.8 vs 54.2

Malaysia 50.2 vs 50.7

Philippines 54.9 vs 51.8

Indonesia 49.8 vs 50.2

Australia 52 vs 52

Eurozone 52.7 vs 51.9

UK 51.7 vs 51.9

Specifically with China, RatingDog said “New export business rose at the fastest pace in six months, driven by strong growth in the consumer goods sector.”

With South Korea, S&P Global said “a robust increase in export demand – the strongest recorded since November 2020 – is an encouraging sign that firms are still benefiting from the current AI and semiconductor supercycle.”

For the Eurozone, from S&P Global, “Stronger order book growth, in part owing to a recovery in export demand, should give this expansion legs. Breaking the PMI data down by the three main industrial groupings revealed the intermediate goods sub-sector as the main contributor of manufacturing growth. This includes critical industries such as chemicals and metals, as well as electrical equipment and electronic components, suggesting the euro area can also be a beneficiary from the tech supercycle, even if it’s arriving late to the party.”

On the UK manufacturing sector, “The rate of expansion in the UK manufacturing sector cooled in August, with output and new order growth losing traction. There are still signs for continued optimism, however, as manufacturers reported a positive outlook for the year ahead. Business confidence rose to a six-month high and job creation was the strongest for two years. This suggests that the slowdown was mainly driven by a reduced focus on maintaining precautionary stocks as economic uncertainty eases, especially as domestic and overseas clients continue to show a willingness to spend albeit with a relatively high degree of caution.”

I am adding to GLD (GLD) at $397.21 – making gold medium-sized.

Positions: Long GLD M

The chart (above) of NYSE new highs/new lows is not indicative of what one would expect near an all-time high. 

Positions: None.

Upside:

-GPRO +68% (YouTube creator Markiplier discloses 8.5% stake)

-LIDR +46% (awarded multi-million-dollar Lunar Outpost contract for Apollo lidar on Pegasus lunar vehicle)

-AMBR +26% (announces business transformation ahead of earnings this week)

-FRVO +14% (signs its largest-ever ~400 MW deal to sell geothermal power to Google from 2028)

-YEXT +11% (earnings; expands Scout AI visibility optimization)

-CRK +8.9% (enters $1.65B LOI with SOCAR to sell Haynesville and Pinnacle interests)

-DUOL +7.0% (Evercore ISI Institutional Equities Raised DUOL to Outperform from In Line, price target: $210 from $105)

-CAPR +4.2% (Piper/Sandler Raised CAPR to Overweight from Neutral, price target: $25 from $2)

-MDT +2.1% (earnings, guidance)

-TEM +2.1% (Piper/Sandler Raised TEM to Overweight from Neutral, price target: $76 from $56)

Downside:

-MMED -8.1% (earnings, guidance)

-MYGN -7.8% (Piper/Sandler Cuts MYGN to Underweight from Overweight, price target: $2 from $5.45)

-MU -2.4% (Micron’s labour unions in Taiwan representing two-thirds of its workers said they were moving toward a possible strike unless Micron agrees to overhaul its bonus system and adequately share its profits)

Treasury Auctions

11:00AM: Treasury Announces a 4, 8 and 17 Week Bill Auction;

11:30AM: Treasury hosts a $52B 52-Week Bill Auction; 

11:30AM: Treasury hosts a $85B 6-Week Bill Auction

Fed Speaker

9:05 a.m.: Fed Board Governor Barr speaks on “The Economic Outlook and Financial Inclusion” before the Second Chance Lending Forum, hosted by Prosperity Now and the Collateral Consequences Resource Center, Washington, DC (Text available. Q&A from moderator and audience; Livestream at https://jpmchase.zoom.us/j/95033879625)

Economic Calendar

Positions: None.

* Equities are not broadening out

* Several time-tested valuation models point to downside risk dwarfing upside reward…

Yesterday I quoted from portions of The Divine Ms M’s column in which she delivered an important message that the market WAS NOT BROADENING OUT (contrary to those in the business media who have said the opposite).

Today I will touch on several valuation models (the Gordon, Greenspan and the Equity Risk Premium models) that are being ignored and that highlight the markets’ possible overvaluation.

Divine’s pearls of wisdom (and charts) were important enough to repeat in its entirety:

Mr. Market Is Not Broadening Out

*The McClellan Index (NYSI) is faltering, the Mid Cap Index (MDY) is weakening, the Russell Index (IWM) is not “crowing” nor is the equal weighted S and P Index (RSP) participating in the markets’ recent advance…

Contrary to the near universally bullish narrative of most of the “talking heads” in the business media, the market is not broadening out — at least not as measured by the McClellan Summation Index, the Mid Cap Index, Russell and Equal Weighted S&P Indices. 

Let’s look at the facts and charts, delivered by The Divine Ms M (Helene Meisler) on TheStreetPro this morning:

Stocks Are Sitting at a Crossroads

When we look back at the month of August, you might recall I had been of the mind that the ‘others’ would have a difficult month. It did not pan out as I envisioned. However, indicator-wise, you can see perhaps it has. Look at the McClellan Summation Index, which I think shows us what the majority of stocks are doing. It has been trending down for more than two weeks already, and if you squint hard enough, you can see it has made a lower low than late July and is closing in on the early June low.

If we look at the chart of the Mid Caps, we can see they are pretty much down on the month. The chart shows that rise early in the month that has been leaking without much fanfare for the last two weeks. It is coming into some decent support in the 685 area.

The IWM hasn’t escaped the same type of leakage. It too is back where it was in early August, having given up the gains that got folks so excited early in the month. It is also back where it was in June.

For all the hootin and hollerin about how great small caps were (are?) relative to large caps, the ratio of IWM to SPY says that narrative is wrong. That ratio peaked two months ago and just made a minor lower low. You can see it accelerated in the last week.

And what of everyone’s new favorite ETF, the RSP (equal-weight S&P)? Aside from the fact that the ratio peaked back in late February, notice all that supposed broadening out peaked in late July—exactly when the SOX/tech stocks made their lows. This ratio turned south last week as well.

When you see these charts, you can understand why in the very short term, the market seems oversold. But you can also see that the Either/Or Market remains intact.

BY Doug Kass · Aug 31, 2026, 7:30 AM EDT

Position: None

The S&P Short Range Oscillator remains slightly oversold at -1.27% vs. -1.33%.

Position: Short SPY (S)

Here are Monday’s things:

* I reshorted the indices after the market closed last night — SPY at $767.32 and QQQ at $717.13.

* I added to my MSOS common at $4.94 and call long positions (slightly out of the money for September and October).

* I added to VRNO at $6.12.

* I initiated a very small GLD long at $405.42 (which I added to overnight at $401.28).

* I added to my CRM short at $260.24.

* I reshorted the private equity space — APO at $137.61, BX at $142.94 and KKR at $110.63.

* I reshorted CRWV at $85.02.

* I reshorted JPM at $356.14.

Long MSOS common VL calls S VRNO S GLD VS

Position: Short SPY (S), QQQ (S), CRM (S), CRWV (VS), APO (VS), BX (VS), KKR (VS), JPM (S)