Adam Taggart's Thoughtful Money®

Why I Just Bought A House (For The 1st Time In My Life At Age 55) | Adam Taggart & Melody Wright

Adam Taggart — Tue, 01 Sep 2026 16:23:34 GMT

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So, yes, after 55 years on this Earth, I’ve finally become a homeowner for the first time!

Many of you have asked me to share the “why?” behind my decision as well as what the process has been like for me.

And if I’ve learned any valuable lessons to pass along to potential homebuyers.

Housing analyst Melody Wright turns the table in this video and interviews me to reveal those answers.

To hear it all, click here or on the video below

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) AT spot.

If you’d like to take him up on this offer, or talk with him & his staff about any other questions/needs you have regarding buying or storing precious metals, just click on the button below and fill out the short form:

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I’m so grateful to everyone who has kindly supported me by becoming a premium subscriber to this Substack. It makes an important difference in helping me fund the substantial operating costs of running Thoughtful Money.

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Adam’s Notes: Me + Melody Wright (recorded 8.31.26)

EXECUTIVE SUMMARY:

I bought my first home at 55 after a lifetime of renting. The purchase is a new Toll Brothers build on a ridge in South Reno with a scarce mountain view toward Mount Rose and quick access to Lake Tahoe.
The decision was personal more than macroeconomic. I had sat out the mid-2000s bubble, missed the post-GFC rebound after moving to Sonoma, and later left California for Nevada. An unsolicited sale of our rental forced the timeline.
Local market advice from Melody Wright, Nick Gerli, and others was that

The Key Pillars Of Wealth-Building That School Doesn't Teach Us | Dave Rubin

Adam Taggart — Sun, 30 Aug 2026 15:52:29 GMT

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I had the great privilege of being interviewed by Dave Rubin on his popular platform, The Rubin Report.

We had a wide-ranging discussion about the fundamentals of wealth-building that our education system fails to teach us.

For a great overview for how to retire as a millionaire (fyi: this is a great interview to share with your kids), click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) AT spot.

Contact Miles Franklin About This Offer

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Adam’s Notes: Me + Dave Rubin (recorded 7.15.26)

EXECUTIVE SUMMARY:

Adam Taggart appeared on The Rubin Report to talk about why most people never learn practical money skills and what to do instead.
He framed wealth-building as three “muscles”:

More & More Signals Popping Up That Suggest A Pullback Is Near | Lance Roberts

Adam Taggart — Sat, 29 Aug 2026 16:10:19 GMT

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A current sell signal, slowing momentum, retail demand weakening...

These are just some of the recent indicators suggesting the market rally in stocks is losing steam, and more likely than not to experience some sort of pullback in the coming weeks.

Portfolio manager Lance Roberts and I discuss the odds, as well as Kevin Warsh's Jackson Hole speech, the breaking deal for the US to gain access to 65+ billion barrels of Venezuelan oil reserves, Nvidia's blowout earnings & forecast, and of course, his firm's latest trades.

For everything that mattered to markets this week, click here or on the video below:

RECENT VIDEOS

SET YOUR WEALTH UP FOR SUCCESS: Schedule a free, no-commitment consultation with one of Thoughtful Money’s endorsed financial advisors now to identify the right steps to position your portfolio advantageously for the rest of 2026:

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Just a reminder that if you prefer to listen to my interviews on your podcast player, Thoughtful Money is now available on the major podcast platforms:

I’m so grateful to everyone who has kindly supported me by becoming a premium subscriber to this Substack. It’s making an important difference in helping me afford the substantial startup costs of running Thoughtful Money.

Premium supporters now receive my “Adam’s Notes” summaries to the interviews on this channel, plus periodic advance-viewing and/or exclusive content not made available to the public, and now our popular MacroPass™ service.

If you, too, would like to become a premium subscriber to this Substack (it’s only $0.52/day), then sign up now:

Subscribe now

But whether you do or not, get ready for another week of more great content ahead. We have interviews with Dave Rubin, Stephanie Pomboy, Melody Wright and Jason Hartman.

Stay tuned!

cheers,

My sincere thanks to Lance Roberts and his team at Real Investment Advice for kindly making their weekly Bull/Bear market report available to the Thoughtful Money audience below:

Druckenmiller Warning: The Bond Market Already Priced It

By Lance Roberts | Aug 29, 2026

🔎 At a Glance

Druckenmiller Warning: The Bond Market Already Priced It
Market Brief & Technical Review
From Lance’s Desk: Democratic Socialism: A Beautiful Cake With A Bitter Aftertaste – RIA
Market stats, screens, and risk indicators

🏛️ Market Brief – A Bond Scare

If you look at the market headline, the bulls won this week. However, the internals told a different story with the S&P 500 closing Friday at 7,711.76, up 0.5% on the week, while the Nasdaq Composite added 0.9% to 26,402.42. Yet under that placid surface, the average stock lost ground. The equal-weight S&P slipped 0.4% while the cap-weighted index rose, and the Russell 2000 fell roughly 1.4%. Notably, only three of the eleven sectors finished green.

Nvidia did the heavy lifting. Its blowout Wednesday-night report and a forecast for 70% fiscal-2028 revenue growth sent the stock up nearly 9% Thursday and dragged the index to a fresh record before Friday’s fade. The entire tape is now leaning on the AI complex, and the AI complex is now leaning on one earnings call at a time. Communication services, technology, and financials were the only sectors to advance. Health care, industrials, and energy led the laggards.

However, the real story was in Wyoming as Fed Chair Kevin Warsh gave his first Jackson Hole address and refused to blink. He said this summer’s better inflation prints do not tell him underlying trends have “meaningfully improved,” and he committed, in his words, to a discipline rather than a decision. In other words, his rock-solid commitment to “no forward guidance” remained intact and provided no cover for a market pricing in cuts.

Beneath the equity calm, the bond market is anything but. The long end refuses to come down with the 30-year sitting near 5.2%, not far from a 19-year high. This is even after Treasury doubled its long-dated buyback lots to $4 billion to steady the tape, which starts September 4th. As we discuss more below, Stanley Druckenmiller used the pages of the Wall Street Journal this week to call that intervention “price management” and to remind Washington that the long bond is the only fiscal disciplinarian we have left.

Cross-asset performance told the same cautious tale. On Friday, gold fell 2.9% o roughly $4,530 after its strongest month in decades, WTI held near $83, and bitcoin slipped toward $77,700 as its mid-month squeeze unwound. This is a story about uncertainty over whether the Fed can successfully transmit its interest-rate signal back to the bond markets.

As I flagged two weeks ago in Record Highs: Should You Chase The Rally?, our money-flow breadth model had already pushed into extreme overbought territory and was signaling profit-taking, not chasing. Nothing this week changed that message. Watch participation, not the index, as we head into next week’s jobs data.

📈Technical Backdrop – Momentum Rolls Over, What Next?

As noted above, the market remains within a stone’s throw of previous highs, but underlying momentum quietly rolls over. The S&P 500 finished the week at 7,711.76, about 1.1% below the record close of 7,796 set on August 13. The index sits 2.0% above its rising 50-DMA near 7,556 and a healthy 8.4% above its 200-DMA near 7,114, and the golden cross remains firmly intact. When looking solely at the trend, it remains a bull market. However, a look at the underlying momentum shows the cracks are appearing.

Specifically, the 14-day RSI closed at 56.6, down from 58.6 a week ago and well off the overbought readings that accompanied the mid-August record. That reading suggests a more neutral condition, not stretched, and it leaves room in either direction. More telling is the MACD, where the signal line has rolled over; the MACD line at 41 is now sitting below its 51 signal, with a negative histogram. Furthermore, the histogram is narrowing rather than widening, so this is a loss of upside thrust, not the start of a breakdown. Price at the highs on fading momentum is how most short pauses begin, and occasionally how larger ones do.

Overall, participation is the most important tell. As we detailed in Breadth Is Lacking: Is The Rally Sustainable?, a rally led by a shrinking group of names is weaker. This week proved it again. The equal-weight index fell while the cap-weight rose, and small caps dropped 1.4%. When the generals advance without the troops, the advance is on borrowed time.

Heading into next week, this is how we would suggest approaching the market. The record close at 7,796, and the round 7,800 level, are the resistance barriers. If the markets can muster a decisive close above the levels, on strong breadth, that would reopen 7,900 and then 8,000.

Absent that, we will continue to treat rallies into 7,800 as a place to trim winners back to target weight, not to add.

On the downside, the first support is the recent swing low near 7,643, then the 50-DMA at 7,556. Any break of the 50-DMA is the level that begins to turn the recent pause into something worth hedging with index puts or a raised cash buffer. Our money-flow model already trimmed equity exposure toward target weight at the August highs, and we see no reason to reverse that currently.

The base message is to continue keeping risk controls in place, a larger-than-normal cash buffer, and swap risk for safety until the market declares where it is headed next.

🔑 Key Catalysts Next Week

As noted above, this whole week came down to Kevin Warsh’s Jackson Hole speech in which he focused solely on the data. This coming week, the labor market will answer pretty much everything all at once. The August employment report lands on Friday at 8:30 a.m. ET, and it is the week’s fulcrum. After the Fed chair refused to pre-commit to a September cut, a soft payrolls number would hand the doves their ammunition, while a firm print alongside sticky prices would validate the hold and keep pressure on the long end of the curve.

However, it isn’t just Friday that will move the markets. Tuesday brings JOLTS job openings and the ISM Manufacturing index, with a much greater focus on the prices-paid component after it last printed above 70.

Then, on Wednesday, the ADP private payrolls report, which has been running soft, will give us some insight into Friday’s BLS employment report. Thursday brings the ISM Services, weekly jobless claims, the trade balance, and productivity revisions into a single session as September gets underway.

The Fed itself goes dark. The pre-FOMC blackout begins ahead of the September 16 decision, so Warsh’s Jackson Hole remarks are the central bank’s last word until the meeting. That leaves the data to do all the talking.

On the corporate side, one report towers over the rest. Broadcom reports fiscal Q3 after the close midweek, with consensus near $3.24 in EPS and management already guiding to roughly $29.4 billion in revenue, driven by AI strength. Broadcom is the cleanest read we get on whether hyperscaler AI capex is still accelerating, and given how much of this tape rests on that one question, it matters far more than its market cap suggests.

💰 Druckenmiller Warning: The Bond Market Already Priced It

Recently, Stanley Druckenmiller wrote an opinion piece for the Wall Street Journal. The “Druckenmiller warning” hit on August 24, and within a day, the financial press turned it into a soap opera. Some of the headlines were “Mentor scolds protégé,” and “Billionaire slams the Treasury Secretary.” Then, the revelation that he wrote it with the help of AI somehow became its own headline.

However, while the media was busy making headlines, the argument was lost. Stanley Druckenmiller did not forecast a debt crisis, nor pitch a trade. What he said was something difficult to fit in a headline, and it was something the bond market has already said for him.

What Actually Happened On August 19

On August 19th, the Treasury said it would double the size of its long-dated buyback operations to at least $4 billion. That operation will run from September 9 through November 4 (it hasn’t started yet) and is aimed at the long end of the curve. The timing of the announcement was the tell, and the heart of the Druckenmiller warning, as the move came right after yields hit their highest level in about 19 years. Yields dropped on the news, but by the next trading day, the bond rally was reversed. The long bond has hovered in the 5.2% range since then.

Treasury Secretary Scott Bessent then told CNBC the operations could run bigger than $4 billion. Days later, senior officials floated the idea of using the department’s nearly $950 billion cash account to help fund the purchases. What is crucial to understand is that these actions are a very different conversation from “liquidity support.”

You do not need to support a market you yourself describe as having strong, consistent sponsorship, and that strong sponsorship is the definition of a healthy market. However, the Treasury intervened anyway right after yields peaked, which is why the market read it as “price management” and shrugged.

What The Druckenmiller Warning Actually Says

I posted the link to Druckenmiller’s warning above, and encourage you to read the piece closely. When you do, you will realize that the popular summary falls apart.

Most notably, the article was not a claim that yields are about to spiral. What Druckenmiller suggests is that a 30-year bond at 5.5% is an “invoice,” not a “crisis,” nor was it a claim that the “bond vigilantes” have finally arrived. He actually described the opposite: a market he called “a pushover that had finally begun to clear its throat,” and the bond market has been too calm, rather than too violent.

However, Druckenmiller’s real target is structural. To wit: the long bond, in his framing, is “the only fiscal disciplinarian the U.S. has left.” He states that if you suppress that signal, you subsidize the one thing Washington does reliably well: “delay.”

While many currently point fingers at the Republicans, particularly as we approach the mid-term elections, the reality is that neither party has the will to touch entitlements with the market applying pressure. But more importantly, without that pressure, neither party has shown the will to touch them either. Such is why entitlements are called the “third rail of politics,” because if you touch them, your political career is toast.

There’s a second layer that most of the media coverage skipped. Historically, yield management has always started as a technical operation. However, as with most things in Government, it tends to end as a more permanent policy commitment. From 1942 to 1951, the Fed capped long Treasury yields to finance the war. Naturally, that cap outlived the war by years before the Treasury-Fed Accord finally killed it. The wall between managing the debt and managing bond prices was built on purpose. Unfortunately, that “wall” gets blurred by this intervention.

The last time this happened, it looked like this.

The gap at the center of the Druckenmiller warning is the space between what he wrote and how it’s being read. That gap is wide enough to matter. The table lays it out.

The Strongest Case Against The Druckenmiller Warning

To be fair, the bond bears have a valid point. Someone will wave the whole thing off as $4 billion against a market north of $30 trillion, a rounding error. So, what is all the fuss about? They are correct about the arithmetic. Four billion dollars cannot set the long end, and the recent round-trip in yields proves it. However, that also exposes the risk in the argument. You can’t call an operation both impotent and dangerous in the same breath without saying which one it is.

(The chart below shows the history and magnitude of previous buybacks. This is not unprecedented by any measure.)

There is a much better version of the pushback, and it comes from people like Jon Hilsenrath. He noted that a move in long yields isn’t purely fiscal information but also reflects dealer balance sheets, hedging flows, and the financing of levered positions. The March 2020 and 2022 gilt crises both showed that liquidity can seize up even when the fundamentals look fine. Furthermore, Bessent’s stated case is that the Treasury sees something about market functioning that outsiders don’t. That probably isn’t as crazy as it sounds on its face.

So where does that leave the Druckenmiller warning? In our opinion, it is much stronger than its critics allow, for one reason. The danger was never the four billion dollars. The mistake is the precedent: the signal that the Treasury will now step in to defend a price. Once the market believes that, every selloff becomes a test of official resolve, and the tests only get bigger. This is the very definition of “moral hazard” that we discussed previously. More notably, the bond market has already ruled on this point.

Bessent’s actions run counter to Kevin Warsh’s recent mandate to remove the “Fed Signal” from the market. For investors, this means we will need to watch the next moves from both Bessent and Warsh.

What The Druckenmiller Warning Means For Bond Investors

The future is currently uncertain. What will happen with oil prices, tariffs, and political policy? The mid-term elections are coming quickly, and there are signs of both economic weaknesses and strengths. The Fed is signaling it is backing away from market support, but the Treasury says it is still there. It’s all confusing, but for investors managing their own portfolio, it suggests several changes to both strategy and holdings.

Do not buy the long bond for the buyback bid. A $4 billion operation is a backstop, not a floor under prices. Supply at the long end is getting heavier as deficits run near 6% of GDP. Furthermore, corporate issuance is competing for the same buyers. The 20- to 30-year part of the curve is now a political football. Political footballs trade with extra volatility.
Own the belly of the curve, the 5- to 10-year part. That is where you capture most of the yield with far less duration risk. You also reduce exposure risk to whatever “policy commitment” the long end gets dragged into. At a 10-year near 4.7%, the coupon does real work as you are paid to wait. Just take that interest rate “carry” where the duration risk is SMALL.
Lastly, it could pay to keep some inflation protection in the mix. If the Treasury escalates its interventions and funds long-bond purchases with bills or its cash account, that’s a quiet form of easing. However, that is occurring while inflation still runs above the Fed’s 2% target. In that environment, TIPS will earn their place in portfolios. But the risk is that you cap your returns if the term premium keeps grinding higher on increasing supply.

Here is an example of the 40% allocation in a 60/40 equity/bond portfolio.

So, here is the question worth asking.

“If there’s no crisis, why not just own the long bond and clip the coupon?”

The answer is the escalation path, so you will want to watch the Treasury General Account. If Treasury actually deploys the $950 billion to defend a yield level, Druckenmiller’s “technical tool becomes policy commitment” line stops being theory, and the trade shifts toward steeper curves, more inflation protection, and shorter nominal duration.

The one thing that would push me to extend into the long end with conviction is the opposite of intervention. A credible plan on the deficit would do more for the long bond than any buyback. This is the real point of the “Druckenmiller Warning,” and it’s mine too. I’ve argued before that the debt problem is a crisis without a calendar. However, that is what the waiting looks like.

🖊️ From Lance’s Desk

This week’s #MacroView blog explores the differences between Democratic Socialism and Capitalism. While capitalism has its flaws, before abandoning it for socialism, understand what you are voting for.

Also Posted This Week:

Productivity On Gilligan’s Island: Episode 2 – RIA – by Michael Lebowitz
Investor Psychology Is Sabotaging Your Returns (Chapter 2 of 5) – RIA – by Lance Roberts

📊 Market Statistics & Analysis

Weekly technical overview across key sectors, risk indicators, and market internals

💸 Market & Sector X-Ray: Market Gains Ground

The market struggled a bit this past week but eeked out a small gain. Technology gained ground with Nvidia’s earnings, but Energy eased a bit with the decline in oil prices. Overall, the market remains well deviated above longer-term moving averages but has reversed some of its previous overbought conditions. Communications is the most overbought sector, and Industrials, Utilities, Small and Mid-cap stocks are the most oversold.

📐 Technical Composite: 74.31 – Overbought Reversing

The technical condition pushed higher this past week with the markets small gain. However, overall, the market remains technically overbought, and sentiment remains bullish for now with no significant technical breaks. Indicator does suggest more struggles for the market next next.

🤑 Fear/Greed Index: 68.07 – Investors Reduce Bullishness

Even though the market posted a positive return last week, the underlying allocation and sentiment to the market reversed somewhat. There was a sharp drop in the Commitment of Traders equity allocations, and sentiment declined over the last two weeks. While not a significant warning yet, as we enter September, the reversal in positioning is worth watching.

🔁 Relative Factor Performance

About 12-weeks ago we noted that Goldminers were the most oversold factor on the list which suggested that a rotation was likely. That rotation has now occurred and Goldminers are extremely overbought. Take profits and rebalance your positioning. Disruptive Tech, US Qualrity, Large Cap Value, and Equal Weight are also very overbought suggesting we could see a bit more of correction in the market over the next few weeks and see a rotation towards lower beta and technically beaten up sectors.

📊 MFBR Index (Money Flow/Breadth Ratio Indicator)

The Money Flow Breadth Ratio (MFBR) model is a rules-based equity allocation framework that uses weekly S&P 500 money flow data to generate buy, sell, and neutral signals. The MFBR systematically adjusts portfolio equity exposure in response to the direction and persistence of institutional capital flows. It aims to reduce drawdowns while capturing the majority of market upside.

“As of August 28, 2026, with the S&P 500 at 7,711.76, the Money Flow Breadth Ratio (MFBR) stands at 75% and declining, versus 75% the prior week – a 5 percentage-point decrease over the last two weeks. This places the indicator in extreme overbought territory (75% or higher). The raw breadth signal still reads BUY, but the MFBR is a contrarian indicator at extremes: readings this stretched have historically been followed by below-average forward returns, so the model treats this as a caution flag rather than a green light to add risk.
The model’s 25-year backtest is the reason for the trim: MFBR readings above 70% have been followed by below-average forward returns, so the grid reduces exposure at these levels rather than adding to it. Breadth this stretched is a profit-taking signal, not a chase signal. The model’s message is to sell into strength, move down to the target weight, and reassess next week.”

📊 Sector Model & Risk Ranges

Two weeks ago we noted that several sectors of the market were hitting extremes which typically denotes a good opportunity to reduce risk and rebalance holdings. As of this week, the overall market, Energy, Communications, Materials, Technology, Healthcare, Emerging Markets, Gold and Gold Miners are all outside normal return ranges on a monthly basis. Continue to rebalance risk as we move into the seasonal weak month of September.

Have a great week.

~ Lance Roberts, CIO, RIA Advisors

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De-Globalization Is Forcing Nations Worldwide To Choose A Side | Michael Every

Adam Taggart — Thu, 27 Aug 2026 17:05:29 GMT

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De-globalization has kicked into a higher gear.

The US is now forcing the nations of the world to choose sides: are you with us, or Iran?

And obviously this pressure further complicates America's relations with China.

Also, stablecoins will soon be used as a form of further economic pressure on countries not aligned with the US.

What will this mean for the global chessboard?

And which assets should fare relatively better in this new era?

To hear the answers Michael Every, head of Global Strategy at Rabobank, has, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) AT spot.

Contact Miles Franklin About This Offer

If you, too, would like to become a premium subscriber to this Substack (it’s only $0.52/day), then sign up now below:

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Adam’s Notes: Michael Every (recorded 8.20.26)

EXECUTIVE SUMMARY:

Michael Every frames recent Treasury moves, stablecoin legislation, Iran pressure, and energy policy as pieces of one unfolding strategy: economic statecraft aimed at neo-mercantilist goals of reshoring, rearming, and splitting the world into camps that accept U.S. financial rails or face exclusion.
Bessent’s “Treasury Operation Twist” (buying longer off-the-run bonds funded by more T-bill issuance) is not textbook yield-curve control, but it is spiritually aligned with it and is being paired with stablecoins that should create structural demand for short-term U.S. debt.
Stablecoins, if they scale, could

Fall Market Swoon, Followed By An End-Of-Year Boom? | Mark Newton, Fundstrat

Adam Taggart — Tue, 25 Aug 2026 16:10:41 GMT

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Mark Newton, Head of Technical Strategy at Fundstrat, expects a rocky ride for the stock market from now until the mid-term elections.

But that doesn't mean he's bearish.

Once the elections are resolved, he then expect the S&P to rise to a new price high of 8000 by the end of the year.

So which assets and portfolio strategy is he recommending right now?

To learn it all, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) AT spot.

Contact Miles Franklin About This Offer

If you, too, would like to become a premium subscriber to this Substack (it’s only $0.52/day), then sign up now below:

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Adam’s Notes: Mark Newton (recorded 8.20.26)

EXECUTIVE SUMMARY:

Mark Newton remains constructive on the S&P 500, raising his year-end target to 8,000 and expecting the market to finish higher, though the path from mid-August through the midterms is likely to be choppy rather than a straight advance.
Near-term headwinds include

It's Crunch Time For Bonds | Bill Fleckenstein

Adam Taggart — Sun, 23 Aug 2026 16:11:33 GMT

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It’s “crunch time” for the bond market.

So says seasoned investor Bill Fleckenstein, given that bond yields have risen so far so quickly that the US Treasury is now stepping in to contain the long end of the curve.

What does he think is most likely to happen next for the markets?

And which assets is he sitting in right now in preparation?

To find out the answers to these important questions & more, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) AT spot.

Contact Miles Franklin About This Offer

If you, too, would like to become a premium subscriber to this Substack (it’s only $0.52/day), then sign up now below:

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Adam’s Notes: Bill Fleckenstein (recorded 8.19.26)

EXECUTIVE SUMMARY:

Bill Fleckenstein views the recent rise in long-term yields, despite Fed rate cuts totaling 175 basis points over roughly two years, as early evidence that the bond market is beginning to constrain monetary and fiscal policy, a risk he has flagged since the zero-rate COVID period.
Treasury Secretary Scott Bessent’s increased purchases of longer-duration Treasuries funded by shorter-term issuance is largely a signaling move of limited immediate size and impact, though it underscores growing official concern.
Rising yields are driven primarily by

Risk Of A 10% Market Correction Now Uncomfortably High | Lance Roberts

Adam Taggart — Sat, 22 Aug 2026 16:32:40 GMT

NOTE: Tickets for the Thoughtful Money Fall online conference are now available at the Early Bird discounted price (our lowest!). Lock yours in now:

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After a rip-roaring rally that began in April, sending the market to new all-time highs, the S&P is now cooling off.

Is this just a short breather before stocks race back to new highs soon?

Probably not, thinks portfolio manager Lance Roberts.

He assesses that the downside risks outweigh the upside ones, and that a correction of about 10% or so is the most likely outcome over coming weeks.

He and I discuss why he thinks so, as well as the US Treasury's version of Operation Twist that launched this week, the future massive potential impact of stablecoins and, as usual, Lance's firm's latest trades.

For everything that mattered to markets this week, click here or on the video below:

RECENT VIDEOS

Adam Taggart’s Thoughtful Money® is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Schedule Your Free Consultation

TM ON PODCAST PLAYERS

Just a reminder that if you prefer to listen to my interviews on your podcast player, Thoughtful Money is now available on the major podcast platforms:

If you, too, would like to become a premium subscriber to this Substack (it’s only $0.52/day), then sign up now:

Subscribe now

But whether you do or not, get ready for another week of more great content ahead. We have interviews with Michael Every, Mark Newton, Art Laffer and Jason Hartman.

Stay tuned!

cheers,

My sincere thanks to Lance Roberts and his team at Real Investment Advice for kindly making their weekly Bull/Bear market report available to the Thoughtful Money audience below:

The Basis Trade: Is The Bond Market Signal Distorted?

By Lance Roberts | Aug 22, 2026

🔎 At a Glance

The Basis Trade: Is The Bond Market Signal Distorted?
Market Brief & Technical Review
From Lance’s Desk: Normal Interest Rates: What The Debt Panic Gets Wrong – RIA
Market stats, screens, and risk indicators

🏛️ Market Brief – A Bond Scare

The week belonged to the bond market. Long-dated Treasury yields spiked to levels not seen in decades, with the 30-year touching a 19-year high above 5.30% mid-week and the 10-year closing Friday at 4.738%, near a 20-month high. Those seem to be really scary numbers, but as discussed on Friday, this is just a return to normalcy after 15 years of abnormally low rates.

Nonetheless, the move forced the Treasury’s hand. On Wednesday, Secretary Bessent doubled the size of the government’s long-bond buybacks to calm the selling. As I flagged a few weeks ago in Are US Treasuries Still A Safe Asset?, the risk in this cycle has migrated out of stocks and into the plumbing of the bond market. This week made that migration impossible to ignore. (We will discuss another risk momentarily).

The reaction told the story. Money did not flee to cash; it fled to hard assets, and the scoreboard was lopsided: bitcoin ripped roughly 23% higher in its best week since 2023 to close in on $79,000, gold added 5.5%, finally reclaiming $4,500, and oil gained more than 6% as the Iran stalemate kept a supply premium in the price.

Equities were the mirror image. The S&P 500 slipped 1.33% on the week to 7,674, the Nasdaq 100 dropped 2.41%, and the Russell 2000 lost 1.63%, while the Dow held up better at down 0.80%. Here is the tell that matters. The equal-weight S&P fell just 0.45%, far less than the cap-weighted index, leaving the damage concentrated in the previous momentum names rather than the average stock. A rising discount rate hits the longest-duration assets first, and right now, that is big tech.

Sector leadership confirmed the rotation. Health care led, up 4.4%, with energy up 2.9% on the oil bid and materials up 1.9%. The laggards were exactly what a rate spike punishes: technology fell 3.5%, rate-sensitive utilities dropped 3.4%, and industrials lost 3.3%.

The thread to follow into next week is to watch the long end of the Treasury curve. As long as the 30-year keeps pressing against multi-decade highs, the pressure on mega-cap equity multiples and the bid under gold and bitcoin both stay in force. The bond market is running this tape now, and what happens next determines a lot.

📈Technical Backdrop – Momentum Rolls Over, What Next?

As noted above, while the overall market was only down mildly this past week, the momentum trade remained under pressure. Despite all the seemingly brutal headlines this past week, the S&P 500 is only down ~1.6% from the record close of 7,796 it set on August 13. However, it still sits about 1.9% above a rising 50-day moving average and a comfortable 8.3% above the 200-day, so nothing about the trend structure is technically broken.

Underneath, though, the momentum picture has quietly deteriorated. The MACD rolled over this week and crossed below its signal line, the first bearish crossover since the spring, with the histogram sliding to negative 9 index points. That is the kind of shift that tends to show up before price, not after it.

The 14-day RSI has cooled to 54, squarely neutral and well off the overbought readings that came with the August run to new highs. In plain terms, the buyers are getting tired even though the tape has not cracked. Volatility stayed notably calm through the decline, with the VIX easing on the week rather than spiking, which suggests the selling has been an orderly rotation rather than panic. This is worth noting because the market “calm” tends to last right up until it does not. September tends to be the weakest trading month of the year.

So, as we head into next week, here are the important levels to watch.

The first resistance level is the 7,700 shelf, then the 7,796 record. Goldman Sachs currently has 8,000 as its year-end target for the market, which doesn’t leave much headroom. On the downside, the 50-DMA near 7,534 is the line that counts. It has held every pullback since April, and a decisive close beneath it would be the first genuine technical warning that the character of this market has changed. Below there, 7,400 is the next shelf, and the 200-DMA at 7,091 is the level that defines the bull market itself. That is a 3-to-1 risk/reward outlook, which should be considered relative to your equity exposure levels.

For positioning, this is a moment for discipline, not heroics. With momentum rolling over into a wall of event risk, we continue to recommend trimming the most extended mega-cap technology winners back toward model weight and letting cash build rather than chasing the tape up here. The place to add is the 50-DMA, not the highs, and a close below 7,534 is the trigger to get more defensive.

The single line to watch is the 50-day at 7,534. Hold it, and this is a routine pullback inside an uptrend. Lose it on a closing basis, especially on a hot inflation print or a soft Nvidia guide, and the momentum divergence flashing right now becomes a great deal more than a footnote.

🔑 Key Catalysts Next Week

After a week driven by the bond market, next week hands the tape three separate stress tests, all stacked on top of one another. Wednesday morning, we get the July PCE report, the Fed’s preferred inflation gauge, alongside the second estimate of Q2 GDP and July durable goods orders. Then, after the close that same day, Nvidia reports earnings.

Next Wednesday will tell us whether inflation is reaccelerating and whether the AI capital-spending engine is still running. Full stop.

The inflation print carries the most macro weight. After this week’s yield spike, a hot PCE number would pour fuel on the fire and validate the bond market’s fear that the Fed is stuck, while a soft print would hand the bulls some relief and take pressure off the long end. Given how the 30-year behaved this week, the risk is asymmetric to the upside on inflation.

Nvidia is the other side of the barbell. Wall Street consensus is looking for roughly $2.07 in earnings on about $92 billion in revenue, a 67% jump from a year ago. With the entire AI trade leaning on this single report, the guidance matters more than the print itself. A strong number could reignite the mega-cap leadership that just took a beating, while a cautious one landing on top of a hot PCE would be a real problem.

Then there is the Fed. On Thursday, new Chair Kevin Warsh delivers his first Jackson Hole keynote since taking over in May. Coming just days after the Treasury had to step into the bond market, whatever he says about the balance sheet, the Fed’s backstop, and the path for rates will be parsed to death. This is the highest-stakes Jackson Hole in years.

The marquee earnings all land on Wednesday after the close.

💰 The Basis Trade: Is The Bond Market Signal Distorted?

The 30-year Treasury just touched 5.34% this week. We have not seen a yield that high in 19 years, and the 10-year sits near 4.64%. The easy read is that the bond market is screaming about deficits, inflation, and a wall of new supply. I don’t disagree, as most of that read is right. As I noted recently in “Are US Treasuries Still A Safe Asset?“, a repricing is not a default. But the Federal Reserve just published research that complicates the story. The culprit is something you may not have heard of, with a dull name: the basis trade.

What The Basis Trade Actually Is

The “basis trade” is simple to describe, but very dangerous to scale. Here is how it works.

A hedge fund buys a cash Treasury and, at the same moment, sells a Treasury futures contract against it.
Those two prices converge by the delivery date. The fund pockets the gap between them, the “basis,” almost regardless of where yields go.
The basis trade on a single treasury bond is a rounding error.
The hedge fund then pledges the bond in the repo market. Borrows against it at a near-zero haircut, and puts the proceeds right back into the same trade.
Wash, rinse, and repeat.

While the spread is so thin it barely registers, repeatedly borrowing against the position makes that number large. Then, once every large fund runs the same trade, that number becomes large enough to move the entire bond market. In other words, when $10 million of capital can carry a $100 million position, that is 10x leverage at work.

The Fed now pegs the basis trade at roughly $830 billion. That is about double its pre-2020 peak, and that financing sits inside a $3 trillion pile of repo borrowing. Such is the nature of any carry trade. It looks riskless right up until something breaks.

The New Owner Of The Bond Market

Step back, and the basis trade is one piece of a much larger shift. Hedge funds have doubled their total Treasury footprint since 2023. Their long book now accounts for 8.5% of the Treasury’s outstanding, up from 4.5% at the start of 2023, more than the entire US mutual fund industry holds and more than the whole banking system.

Read that again. Fifty funds, most of them financed overnight in a market that can seize up without much warning, now stand exactly where foreign central banks, pension funds, and insurers, the patient money that almost never had to sell, used to stand.

The chart below shows where that $2.4 trillion long book resides. The basis trade dominates at 35%, with swap spread arbitrage and curve trades filling most of the rest. Genuine buy-and-hold money is a rounding error at 3%. This is not the price-insensitive ownership the Treasury market was built on. As I wrote in February in “Is China Really Dumping US Treasuries?,” the foreign official bid has faded over the past decade, so something had to fill the hole. Leverage did.

How The Basis Trade Bends The Signal

Here is why any of this touches the number on your screen. A long Treasury yield is really two things added together:

The market’s expected path for short rates, which carries its read on inflation, growth, and the Fed, and
The “term premium” is the extra compensation investors want for locking up money for a decade.

Split the 10-year into those pieces with the New York Fed’s model, and something jumps out. The expected-path component is tracking the Fed’s own projections closely. The part doing the moving is the term premium, and it’s exactly where the basis trade lives.

The issue at hand is that when hedge funds crowd in, they become net buyers of cash Treasuries. That short-term, manufactured demand pushes the term premium down. In other words, hedge funds may be suppressing the term premium, keeping yields lower than fundamentals alone would imply.

However, this is where the obvious question exists.

“If the trade pushes yields down, why are they going up?”

Because the basis trade is just one force among several, and right now, rising oil prices due to the Iran crisis and the AI borrowing boom are the stronger ones. That does not make the basis trade harmless, but it does make it a coiled spring under a market already strained.

The Fed made the link itself in its June minutes, noting that the shift toward “price-sensitive private investors” could affect the “term premium component of yields.” When your biggest marginal buyer is a leveraged fund that must sell the moment its financing tightens, the message inside the yield stops being a clean read on the economy. The signal is not clean.

What Happens When The Basis Trade Reverses

Here is the part that should keep you up at night. Every one of these trades assumes it can be closed calmly; however, that is always the case, and history says otherwise. The danger is not the trade, it is the exit. When a strategy is built to shrug off interest-rate direction, that trade can suddenly be forced to reverse, causing rates to move faster and further than any economic news would.

Just like all leveraged bets, when an event causes a reversal, it can trigger a chain reaction.

The unexpected, exogenous shock causes a spike in volatility.
Margin and repo haircuts jump, and
The fund has to sell Treasuries into a market where everyone else is selling too.
Prices fall, yields spike, and the spike triggers the next margin call.

As is always the case, that is the cruel arithmetic of leverage. The same borrowing that magnifies the gain magnifies the forced sale.

If you look at the chart above, you will notice that we have already watched this movie twice. The first time was in March 2020, when funds dumped roughly $180 billion in Treasuries in a matter of days, and yields spiked as the economy imploded. That is the opposite of what a “safe haven” is supposed to do. Only the Fed’s interventions, which drove its balance sheet toward $9 trillion, stopped the bleeding.

Then, in April 2025, the “Liberation Day” tariff shock hit the swap spread trade, causing an unwind of about $60 billion before markets steadied.

However, there is another side to this self-correcting event that matters as much as the initial cascade event.

The forced selling leaves the cash bond cheap, its yield artificially high, and that gap is extremely appealing to cash-rich buyers. A real-money buyer or a fresh arbitrageur steps in to lock the fatter yield, and their buying drags it back down, which is why the spike is usually temporary. Most of these basis-trade wobbles never make headline news, just the event that caused them.

Your next question is a good one.

“Why were March 2020 and April 2025 the exceptions?”

The reason those two periods were exceptions was that those reversals depended on three things holding at the worst possible moment:

A dealer with a balance sheet to finance the bond,
Cheap repo to fund a fresh trade, and
Unlevered real money is buying, not selling.

In a genuine dash for cash, all three of those factors arrive at once. That was March 2020 exactly, when mutual funds dumped another $270 billion right alongside the hedge funds, so the natural stabilizer just became an additional seller. When the three hold, the reversal is a blip. When they jam, yields overshoot, and the only buyer left with the size to stop it is the Fed. The chart below traces the full sequence: the doom loop on the left and the buyer who ends it on the right.

This time, the fuses are not hypothetical. Japan, the largest foreign holder at $1.2 trillion, is defending a yen at 40-year lows. Such is why Washington decided to join Tokyo’s yen intervention in July to mitigate the risk of an isolated event from spreading.

Secondly, the “Iran stalemate” has pushed yields to multi-decade highs and continues to impact the real economy through an oil shock. Furthermore, the plumbing is already creaking: the Fed’s repo backstops saw their first real use over the winter; the Fed quietly stopped shrinking its balance sheet and restarted buying bills; and just this week, the Treasury doubled its long-bond buybacks to fight the sell-off. When the government is already reaching for the fire hose, there is smoke in the building.

Which brings us to the real question.

“If the basis trade blows up, will the Fed step in?”

Almost certainly, in the end. The Treasury market is the one market monetary policy cannot function without, and the tools are already built: a standing repo facility for domestic funding stress, the FIMA facility for foreign central banks like Japan, and, at the extreme, the same unlimited buying that stopped the last two episodes. To wit, the Fed’s own economist has already put the risk on the record.

“The combination of large scale, high concentration, and elevated leverage creates the potential for systemic stress if multiple strategies face simultaneous pressure or if severe shocks affect the largest participants.” – Federal Reserve, Decomposing Hedge Funds’ U.S. Treasury Exposures, June 2026

However, the fireman is different now, and that matters more than the market likely wants to admit. Kevin Warsh took over in May after years of arguing that the crisis backstop gets reached for far too freely. He wants a smaller balance sheet, and he blames the old regime’s bond buying for enabling government overspending.

Warsh is also rewriting how the Fed and Treasury work together. On top of that, add the moral-hazard problem that policymakers now openly discuss: a guaranteed rescue just invites investors to lever up more, and you get a Fed likely to let the basis trade take real losses before it acts.

Such is the new reality. The “Fed put” on the bond market is not gone. It just has a higher strike and a slower trigger than under Powell, which means the overshoot before your rate reversal arrives is likely bigger, not smaller.

What Should Investors Do Now

So where does that leave you? Not in a bunker, but not asleep either. The current setup is going to reward investors who can read who read the tape correctly, not those who react to every headline.

None of this argues for panic, but just for reasonable respect for the risks. As Lacy Hunt has been warning, and as we covered in Lacy Hunt Turns Bearish Bonds, the old rules for owning duration are shifting under our feet. The basis trade is one more reason the bond market is no longer the quiet corner of the portfolio. Do NOT mistake a leverage-driven spike for an economic message, or an economic message for a leverage-driven spike. Trade accordingly.

🖊️ From Lance’s Desk

This week’s #MacroView blog explores why Japan didn’t just spark a currency crisis, but reminded everyone that the Fed has quietly backstopped the dollar for 60 years. The Yen intervention is not new, and while the “end of fiat, buy gold” crowd is right about the destination, they are wrong about the departure time.

Also Posted This Week:

Three Percent Real TIPS Yields: Boring But Valuable – RIA – by Michael Lebowitz
Think Like An Investor, Not A Speculator (Chapter 1 of 5) – RIA – by Lance Roberts

📊 Market Statistics & Analysis

Weekly technical overview across key sectors, risk indicators, and market internals

💸 Market & Sector X-Ray: Market Gains Ground

The market struggled a bit this past week Energy took the lead with rising oil prices.Overall, the market remains well deviated above longer-term moving averages but has reversed some of its previous overbought conditions. Staples, Energy, Materials, International and Discretionary are overbought, while Utilities, Technology, and Industrials are oversold.

📐 Technical Composite: 71.81 – Overbought Reversing

The technical condition eased slightly again this past week but the market remains overbought, and sentiment remains bullish for now with no significant technical breaks. Indicator does suggest more struggles for the market next next.

🤑 Fear/Greed Index: 86.63 – Extreme Greed

The recent push in the market brought investor positioning and sentiment along with it. From a “how are investors positioned” perspective, investors remain very bullish on the market and show no real signs of concern. However, these levels are historically present near short-term market peaks and consolidations.

🔁 Relative Factor Performance

About 12-weeks ago we noted that Goldminers were the most oversold factor on the list which suggested that a rotation was likely. That rotation has now occurred and Goldminers are extremely overbought. Take profits and rebalance your positioning. Disruptive Tech, US Qualrity, Large Cap Value, and Equal Weight are also very overbought suggesting we could see a bit more of correction in the market over the next few weeks and see a rotation towards lower beta and technically beaten up sectors.

📊 MFBR Index (Money Flow/Breadth Ratio Indicator)

“As of August 21, 2026, with the S&P 500 at 7,674.37, the Money Flow Breadth Ratio (MFBR) stands at 75% and reversing, versus 80% the prior week – still a 10 percentage-point increase over the trailing four weeks. This places the indicator in extreme overbought territory (75% or higher). The raw breadth signal still reads BUY, but the MFBR is a contrarian indicator at extremes: readings this stretched have historically been followed by below-average forward returns, so the model treats this as a caution flag rather than a green light to add risk.
The model’s 25-year backtest is the reason for the trim: MFBR readings above 70% have been followed by below-average forward returns, so the grid reduces exposure at these levels rather than adding to it.
Breadth this stretched is a profit-taking signal, not a chase signal. The model’s message is to sell into strength, move down to the target weight, and reassess next week.”

📊 Sector Model & Risk Ranges

Last week we noted that “These extremes are often a good signal to take profits and rebalance, and such is the case now with markets overbought, stretched and excessively bullish.” That turned out to be good advice given the turnmoil this past week. Gold and Goldminers are once again grossly extended so taking profits is recommended along with Energy exposures as well.

Have a great week.

~ Lance Roberts, CIO, RIA Advisors

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Lacy Hunt & Brent Johnson: The US Has Entered A New Inflationary Era That Will Prove Bad For Bonds

Adam Taggart — Fri, 21 Aug 2026 20:20:29 GMT

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Lacy Hunt, longtime deflationist and bond investor, has undergone a major pivot where he now assesses inflation as the bigger risk trend over the coming decade.

That inflation, he expects, will be accompanied by higher bond yields than what we're suffering today.

So he advises caution for today's investors, particularly for who own bonds.

Brent Johnson of Santiago Capital, creator of the Dollar Milkshake Theory, joins me in asking Lacy a number of probing & clarifying follow-up questions.

For an in-depth discussion about one of the most important trends out there right now regarding money & wealth-building, click here or on the video below:

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Adam’s Notes: New Harbor Financial (recorded 8.19.26)

EXECUTIVE SUMMARY:

Lacy Hunt has shifted from a long-standing concern about deflation to a greater focus on inflation risks, driven by a secular capital shortage and the end of the three-decade globalization era that previously delivered strong disinflationary forces.
Net national saving is near historic lows (under 1% and close to zero), while physical capital demands from AI infrastructure, semiconductors, the electrical grid, space exploration, and large federal deficits are rising sharply. This imbalance points to

Is The Market Breaking Out Or Breaking Bad? | New Harbor Financial

Adam Taggart — Thu, 20 Aug 2026 21:43:04 GMT

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Volatility is returning to the market as bond yields keep rising.

Yet stocks remain near all-time highs.

Is the market breaking out, to set new highs soon?

Or is it "breaking bad"? In danger of being pulled down by price whipsawing & higher borrowing costs?

To answer for us, the senior partners at New Harbor Financial joined us for a livestream yesterday.

They shared the data convincing them which direction stocks & bonds are headed, as well as took live audience Q&A.

To watch the replay, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) AT spot.

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Adam’s Notes: New Harbor Financial (recorded 8.19.26)

EXECUTIVE SUMMARY:

Mike Preston and John Llodra of New Harbor Financial view the current equity market as being in breakout mode rather than breaking down, supported by technical indicators, broadening participation beyond mega-caps, and their firm’s own models that keep them at a relatively high 50% equity allocation despite elevated valuations.
The recent Treasury announcement of more aggressive buybacks of longer-duration bonds (funded by shorter-term issuance) is interpreted as

With Trust Breaking The World Over, Quality Collateral Is Now Key | Jonathan Wellum

Adam Taggart — Tue, 18 Aug 2026 16:11:22 GMT

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Trust is breaking the world over, as evidenced by de-globalization and central banks preferring gold over any country's financial assets.

In such an era, collateral you CAN trust becomes key.

Which is why Jonathan Wellum is confident that owning critical hard assets -- and the companies that produce them -- is a winning strategy for investors.

To find out which ones he favors most right now, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) AT spot.

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Adam’s Notes: Jonathan Wellum (recorded 8.17.26)

EXECUTIVE SUMMARY:

Jonathan Wellum, founder and CEO of RockLINC Investment Partners, frames the current market environment around six long-term “D’s”: digitization (including AI, data centers, robotics and EVs), debt, currency debasement, deglobalization and reshoring, demographics, and dear (high) valuations.
He and his team remain cautious about the lofty valuations attached to pure AI and hyperscaler stocks, preferring to invest around the theme rather than chase the most expensive names directly.
RockLINC maintains a meaningful position in

Announcing Thoughtful Money's Fall Online Conference: October 17th 2026

Adam Taggart — Sun, 16 Aug 2026 18:02:16 GMT

2027: The Year Everything Changes?

Thoughtful Money’s Fall online conference is now available for registration!

After four straight years of ~20% returns in the stock market, can we expect 2027 to continue the streak?

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Lacy Hunt (keynote)
Jan van Eck
Ed Dowd
Fred Hickey
Mark Newton
Darius Dale
Michael Howell
Grant Williams
Stephanie Pomboy
David Hay
Melody Wright
Andy Schectman
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The Market Is Mispricing The Inevitable | Peter Tchir

Adam Taggart — Sun, 16 Aug 2026 16:05:20 GMT

Peter Tchir is shocked how many big investors haven't accepted the end of globalization.

As a result, the market is mispricing assets -- assuming the future is going to resemble the past.

For those who understand the new ProSec era, that means key assets can be picked up at discount right now.

To learn which ones Peter is most focused on, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) AT spot.

Contact Miles Franklin About This Offer

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Adam’s Notes: Peter Tchir (recorded 8.14.26)

EXECUTIVE SUMMARY:

Peter Tchir highlights three main areas of focus: the Federal Reserve under Kevin Warsh and its potential shift toward better real-time data rather than lagging official metrics; the strategic competition with China as the overriding long-term geopolitical issue (with tactical elements like the Iran conflict secondary); and the accelerating “ProSec” (production for security/resilience) theme of reshoring and national-security-driven industrial policy.
He expects the Fed to

Recent Market Breakout Running Out Of Steam? | Lance Roberts

Adam Taggart — Sat, 15 Aug 2026 16:42:39 GMT

Stocks are now "stuck" in a trading range after their recent upside breakout.

Is the rally running out of steam?

Or are new highs ahead, perhaps after a brief re-test?

Portfolio manager Lance Roberts and I discuss the odds, as well as the future of AI stocks, the latest employment & CPI data and, of course, his firm's latest trades -- of which he made many over the past week.

For everything that mattered to markets this week, click here or on the video below:

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But whether you do or not, get ready for another week of more great content ahead. We have interviews with Peter Tchir, Bill Fleckenstein, Brent Johnson, Jonathan Wellum and New Harbor.

Stay tuned!

cheers,

My sincere thanks to Lance Roberts and his team at Real Investment Advice for kindly making their weekly Bull/Bear market report available to the Thoughtful Money audience below:

Record Highs: Should You Chase The Rally?

By Lance Roberts | Aug 15, 2026

🔎 At a Glance

Record Highs: Should You Chase The Rally?
Market Brief & Technical Review
From Lance’s Desk: Yen Intervention Narrative: What’s True And Not – RIA
Market stats, screens, and risk indicators

🏛️ Market Brief – Record Highs And A Friday Wobble

This past week, stocks pushed to a fresh record, then gave a little back on Friday as inflation came in softer-than-expected. Both CPI and PPI prints cooled the case for a September rate hike, and Friday’s weak retail sales report and a softer read on consumer sentiment nudged the index down about 0.2% into the close.

The numbers, however, were good. The S&P 500 added 0.4%, its third straight weekly gain. It finished at 7,785.76, roughly 13% higher year over year. The Nasdaq eked out a 0.1% gain to 26,729.16, with Communication Services and Technology leading again, powered by AI and memory names. The Dow was the laggard, off 0.6% on the week to 53,732.41, and the small-cap Russell 2000 finished roughly flat near 3,055. Energy was the soft spot at the sector level even as crude firmed, and the run to record highs was, once again, a tech-driven affair.

Under the tape, the bond market did the talking. The 10-year Treasury yield ticked up to 4.69% as oil prices rose, but the soft data pulled the “Fed on hold” story forward, pushing the 2-year toward 4.13%. Volatility stayed asleep, with the VIX pinned near 14.6. That is a market priced for calm heading into a data-heavy and seasonally rough stretch. It is exactly the tension we take up in this week’s main story.

📈Technical Backdrop – Pinned and Stretched

There is nothing bearish about the tape, and the overall trend could not be much cleaner. The S&P 500 sits above every major moving average and above a rising 200-day line it has not closed beneath since April. That is a healthy, intact uptrend, and it deserves respect. The problem is not the direction, but the distance from the longer-term trend, which is more concerning. As is always the case, deviations above the long-term trend eventually “revert to the mean.” We see it almost every year.

At Friday’s close, the index sat roughly 10% above its 200-day moving average. That is one of the widest gaps of this entire cycle, and it sits about 3.7% above the 50-day line, too. Add our Money Flow and Breadth Indicator at 80%, with 72% of members above their own 200-day average. This market has done a lot of work in a short window. Friday’s quiet fade from record highs is the kind of small caution flag that shows up when a tape gets this extended.

Look at the ceiling first. Price is pressed right against its own record highs, with Thursday’s 7,801 close and 7,817 intraday high just overhead. Above that sits the round 8,000 mark, which also happens to be Goldman’s year-end target. Round numbers act like magnets until they act like ceilings, so that’s where sellers tend to dig in. The floor sits much further away. First support is the 20-day line near 7,585, then the 50-day line near 7,510, both comfortably below Friday’s close. The takeaway is the asymmetry. There’s little cushion above, and plenty of open air below, down to those averages.

Neither support level is very far away, and a pullback to either would be routine housekeeping within an uptrend, not a break of it. The number that matters for risk is lower down. As noted, the gap from here to the rising 200-day line near 7,076 is roughly 10%, and that mean-reversion “air pocket” is the risk. The trend remains up, but momentum is overbought; therefore, entries here offer poor near-term reward relative to risk.

🔑 Key Catalysts Next Week

Next week hands us the two things this tape cares about most. We get a fresh read on the consumer and the Fed. After Friday’s soft retail sales print, the retail bellwethers offer a real-time answer to the same question. The FOMC minutes hit on Wednesday, and Jackson Hole starts Friday, pushing the rate-path debate back to center stage. All of it lands right before the September 16 meeting.

This week, we also get numbers from key retailers to gauge consumers’ actual health. Are high oil prices finally creating some demand destruction in the economy? Or is slower job growth showing up in consumer spending that suggests the economy is slowing more than expected?

The through-line is simple. Say the retailers echo Friday’s soft sales, and the minutes show a Fed leaning toward patience. Then the “Fed on hold” story we lean on gets firmer footing. If a hawkish surprise turns up at Jackson Hole, the calm priced into that 14-handle VIX gets tested in a hurry. Either way, the playbook holds, and this is a week to hold quality, keep the cash buffer, and let the tape come to us.

💰 Record Highs: Should You Chase The Rally

Last week in the Bull Bear Report, I flagged that our Money Flow and Breadth Indicator had pushed into extreme overbought territory. This week, it pushed even further.

“As of August 14, 2026, with the S&P 500 at 7,785.76, the Money Flow Breadth Ratio (MFBR) stands at 80% and rising, versus 75% the prior week – a 15 percentage-point increase over the trailing four weeks. This places the indicator in extreme overbought territory (75% or higher). The raw breadth signal still reads BUY, but the MFBR is a contrarian indicator at extremes: readings this stretched have historically been followed by below-average forward returns, so the model treats this as a caution flag rather than a green light to add risk.“

Regardless, the market shrugged, as it tends to do when momentum runs this hot. The S&P 500 is back near record highs, just under 7,800, and suddenly everyone wants back in the pool. So, here is the honest question before us this week:

“Should you keep chasing record highs here, or is the smarter move to participate while quietly managing the risk building underneath it?”

The Inflation Data Just Made The Bulls’ Job Easier

Before we answer that larger question, let’s touch on what changed this week. Both inflation reports came in soft. July CPI rose just 0.1% on the month and 3.4% over the year, with core at 0.2% and 2.5%. The reports were all in line with forecasts, and the shelter reading did most of the lifting, a slow-moving piece that the Fed will likely fade. The next morning, PPI landed flat at 0.0% versus a 0.2% gain expected, and the annual rate cooled to 4.7% from 5.5%. Final demand goods prices actually fell 0.7%. The tariff “passthrough” the hawks keep warning about simply hasn’t shown up in the pipeline yet, a point I walked through in Friday’s commentary.

That data is important, as the upcoming FOMC meeting in September won’t be about rate cuts but rather about a small minority of “hawks” rescinding their previous dissenting opinions. Coming into the week, futures had the September meeting near a coin flip. After the CPI print, the odds of the Fed holding rates jumped to roughly 64%, and the soft PPI only reinforced that move. A hike on September 16 is now the least likely outcome, particularly following very weak employment and retail sales reports.

For stock buyers, a Fed parked on hold removes the one macro tail risk that could have knocked a richly priced tape off course, a surprise hike into record highs. Notably, the recent data isn’t the same as “all clear,” and inflation is still running north of 3% keeps the Fed on hold for now. However, the near-term policy threat is smaller, and that is precisely the backdrop that emboldens buyers.

Speaking of that, let’s talk about who has been buying this market lately.

The Buyer List Behind Record Highs Keeps Growing

Give the bulls their due, because the setup is real. Scott Rubner at Citadel Securities laid out his “buyer checklist” this week, and it keeps getting longer.

Earnings are carrying the load, with Q2 profits for the index growing roughly 33%, one of the steepest revision paths in a quarter century. Furthermore, the forward multiple has actually fallen to about 20x earnings from 23 last October.

In other words, earnings are doing the heavy lifting, not “easy money” multiple expansion. Passive demand never blinked either. Households pushed a record 350 billion dollars into ETFs in July alone, part of 1.6 trillion in year-to-date inflows.

More than a trillion dollars of buyback authorizations reopen this month, and nearly 70% of them sit outside Technology.

When several sources of demand strengthen simultaneously, and selling pressure fades, the path of least resistance is higher. Breadth has healed, volatility has fallen, and the same rule-based strategies that were dumping stocks in the spring can start buying them back. Such is the mechanical reality of this tape right now.

That is the bull case, and it is a compelling one. However, a market where the buyer list is this crowded, moves this fast, and is on the heels of a 26th record high for the year, is also a market where the easy part of the move is behind us. In other words, it is now the marginal new buyer who is “paying up” for exposure near the highs.

Retail Is Back, And Buying What Already Burned It

As noted above, retail investors returned as net buyers across Citadel’s platform with a vengeance, reversing the selling seen at the end of June. However, while participation is back, conviction seems to be lacking. The same traders buying cash equities are still paying up for downside protection. Put buying sits near its highest reading since the March lows, and “what” they are buying is notable. Over the last two weeks, retail’s most-bought names were semiconductors and memory, the exact “story” trades that got cut hard in the summer washout.

We wrote about one flavor of this on Monday in Leveraged ETFs: Math Often Trumps Hype, where a widely shared post pitched a 2x-leveraged SK Hynix fund as “magnified exposure” to a doubling of the stock. The math does not work that way in option-backed ETFs. Daily resets and volatility decay mean a leveraged fund can end a year in the red even when the underlying stock doubles. Buying the same crowded names that already burned you, and doing it with leverage, is not a strategy. It is a “this time is different” bet.

The question, naturally, is if the flows are this strong, why fight them? I am not saying fight them. I am saying do not confuse a strong tape with a safe entry point.

Stretched Breadth: A Reason To Chase Record Highs?

As discussed in yesterday’s Daily Market Commentary, market breadth is very healthy. As noted above, more than 72% of the S&P 500 now trades above its 200-day moving average, the broadest participation since December 2024, up from a washed-out 41% this spring, and cross-stock correlation sits near record lows.

Historically, when more than 50% of stocks are trading above their 200-day moving averages, it indicates a long-term uptrend. As StockCharts has noted for years, readings north of 70% are technically overbought, yet in a real uptrend, overbought stays overbought. Over the next 6-12 months, broad market participation like this has been a tailwind more often than not. Citadel’s own point reinforces this:

“Breadth is rising while cross-stock correlation sits near record lows, indicating a wide market, not a narrow pocket of leadership.”

From a contrarian view, this is also where the risk resides. Elevated breadth by itself has NOT reliably preceded corrections. What precedes them is a divergence, the index pushing to new highs while fewer stocks tag along. We don’t have that today, as breadth is rising into the highs rather than fading beneath them.

Here is what you should take away from this data. The biggest forward returns show up after washed-out lows near 20%, not after the crowd is already all-in near 70%. In other words, breadth predicts risk better than it predicts return. While over the next 3, 6, and 12 months the odds tilt toward higher returns, the next month is the stretch when an overbought tape can correct without changing the larger trend.

That is exactly why this past Monday, we took profits in winners like MSFT across the Equity 60/40 Portfolio and the Dividend Growth Model, and rebalanced the AI, Crypto, and Infrastructure thematic sleeves back toward target weights

The “Supply Of Stock” Nobody Is Talking About

With the market now back to more overbought conditions, what could cause the next correction? Is there a “supply of stock” waiting above current levels, where “trapped longs” who bought the previous semiconductor highs and rode them down into the lows will look to sell the instant they get back to breakeven? The honest answer is: yes, but less than a classic top. In a classical textbook distribution-topping process, the index pushes to record highs while fewer and fewer stocks tag along. That “divergence” is what marks the overhead supply. Currently, we do not see that in the data, particularly with breadth rising into the highs, not fading beneath them.

When overall market participation is high, and prices reach record highs, most of the buyers who were underwater relative to the old highs are getting whole and holding, not dumping. That is the difference between a market building a base of support and one quietly distributing stock to the next greater fool. Do not confuse less supply with no risk, though. Such is where the calendar comes in.

As shown in the chart above, September is typically the weakest month of the year for stocks. Over the last decade, the S&P 500 has averaged a loss in September and finished higher only half the time, the worst reading of any month on the calendar. Now layer the events on top. A September 16 FOMC meeting with a fresh dot plot, a midterm election on November 3 that reliably injects volatility, and a VIX pinned near 14.6 after spiking toward the low 30s in the March selloff. The VIX seasonal pattern points in the same direction. Volatility tends to trough right about now and grind higher into the fall, and it does so more dependably in a midterm year.

A compressed VIX is not a signal to sell. It is a signal that protection is cheap, right before the calendar turns hostile.

What Should Investors Do Now

So what do you actually do with all of this? For now, continue to participate while managing your risk. Those two actions are not in conflict and do coexist successfully. The trend is up, breadth is broad, and the flows are real, so this is not the moment to run to cash. It is the moment to stop chasing record highs and start rebalancing.

Consider the setup on both sides. Goldman just raised its year-end target for the S&P 500 to 8,000, roughly 3% above current levels. However, here is the “risk” for your portfolio: while there is 3% to gain, the market sits roughly 10% above its 200-day moving average, one of the widest stretches of this entire cycle. Pay attention to the math: for every new dollar you invest, you risk $3.33 in losses.

When the upside is a coin-flip 3%, and the downside air pocket is roughly three times larger, committing fresh capital in size into record highs right here is the textbook definition of poor risk-reward. That skew doesn’t argue for selling, but does argue for how you participate, which is why the following tactics make sense.

Does that mean sell everything and hide? No. It means take the gifts the market is handing you now, while it is still handing them out. Such is the discipline that separates managing risk from trying to time the top.

Manage risk into the strength, not after it breaks. I hope this helps.

🖊️ From Lance’s Desk

Also Posted This Week:

Lacy Hunt Turns Bearish Bonds: Studying His Reversal – RIA – by Michael Lebowitz
Earnings Drive Both Bull & Bear Markets – RIA – by Lance Roberts

📊 Market Statistics & Analysis

Weekly technical overview across key sectors, risk indicators, and market internals

💸 Market & Sector X-Ray: Market Gains Ground

The market action this week continued to vindicate the bulls, with the market hitting all-time highs. As we have noted previously, the out-of-favor Mag 7 stocks led the charge, but now most every sector and market is very overbought with bonds extremely oversold. Such is usually a good setup for a short-term reversal.

📐 Technical Composite: 85.03 – Bullish Overbought

The technical condition eased slightly this past week but The market remains overbought, and sentiment remains bullish for now.

🤑 Fear/Greed Index: 86.63 – Extreme Greed

The recent push in the market brought investor positioning and sentiment along with it. From a “how are investors positioned” perspective, investors remain very bullish on the market and show no real signs of concern. However, these levels are historically present near short-term market peaks and consolidations.

🔁 Relative Factor Performance

We noted last week that “Magacaps continued to outperform this past week, along with Gold Miners, and Growth stocks are now overbought.” That remains the case this week, and with the market very bullish, we could see a rotation back to defensive positioning heading into September/October.

📊 MFBR Index (Money Flow/Breadth Ratio Indicator)

“As of August 14, 2026, with the S&P 500 at 7,785.76, the Money Flow Breadth Ratio (MFBR) stands at 80% and rising, versus 75% the prior week – a 15 percentage-point increase over the trailing four weeks. This places the indicator in extreme overbought territory (75% or higher). The raw breadth signal still reads BUY, but the MFBR is a contrarian indicator at extremes: readings this stretched have historically been followed by below-average forward returns, so the model treats this as a caution flag rather than a green light to add risk.
The model currently recommends reducing equity exposure, with a target equity weight of 50%. The trim is driven by the contrarian grid rather than by weak breadth – the model takes profits into strength when participation reaches extremes.
Breadth this stretched is a profit-taking signal, not a chase signal. The model’s message is to sell into strength, move down to the target weight, and reassess next week.”

📊 Sector Model & Risk Ranges

This past week, the surge in the markets to new highs also pushed quite a few, previously lagging areas, of the market above historical risk tolerances. These extremes are often a good signal to take profits and rebalance, and such is the case now with markets overbought, stretched and excessively bullish.

Have a great week.

~ Lance Roberts, CIO, RIA Advisors

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Will You Maximize Your Social Security Income? Or Choose Poorly? | Julia Lembcke

Adam Taggart — Thu, 13 Aug 2026 16:00:38 GMT

When to take Social Security is more important, and more complicated, than most realize.

There are plenty of ways to make a bad choice and miss out on $tens of thousands (or more) of income you could otherwise receive in retirement,.

Julia Lembcke returns to explain how Social Security works and the most important considerations you need to take into account in determining when to take it.

For a very practically useful breakdown of all things Social Security, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka, “junk” silver) at $0.75 AT spot.

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Adam’s Notes: Julia Lembcke (recorded 8.11.26)

EXECUTIVE SUMMARY:

Social Security is a pay-as-you-go government program funded mainly by payroll taxes that provides monthly income to retirees, disabled workers, and survivors; benefits are based on a worker’s highest 35 earning years and are adjusted for inflation in most years.
The system faces long-term demographic pressures, with trust-fund reserves projected to be depleted around 2033 if Congress takes no action, resulting in an approximate 22–23% benefit cut rather than the program’s disappearance; historical precedent suggests lawmakers will enact reforms.
Claiming age is a major decision: benefits taken at

Are Gold & Silver Breaking Out? | Andy Schectman

Adam Taggart — Wed, 12 Aug 2026 18:06:03 GMT

Gold and silver prices are on the move, rising above the technical wedge they’ve been trading in since the start of the year.

Is this the breakout precious metals investors have been hoping for?

Precious metals expert Andy Schectman, CEO of Miles Franklin, thinks so. And he returned for a livestream this morning to explain why.

To hear his logic, you can watch the replay of the livestream below.

But first, a reminder: Andy is kindly extending this exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us pre-1965 half dollars (aka “junk silver”) AT spot.

Contact Miles Franklin About This Offer

To watch this latest interview with Andy, click here or on the video below:

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Adam’s Notes: Andy Schectman (recorded 8.12.26)

EXECUTIVE SUMMARY:

Gold and silver appear to have broken out of a falling wedge technical pattern after a year-long decline, which Andy Schectman views as a bullish signal, though he places more weight on structural and flow-based factors than pure technical analysis in a manipulated market.
Central banks and other large, informed players (including Tether) have continued aggressive physical gold accumulation even as prices fell, with reported purchases significantly understated according to export data and analysts like Goldman Sachs and the World Gold Council.
Schectman argues that Western price suppression via paper markets is becoming

Is A.I. A Massive Lie? | Ed Zitron

Adam Taggart — Tue, 11 Aug 2026 16:34:01 GMT

AI-linked stocks account for a record 45% of the S&P 500's total market capitalization and drive nearly all of the gains it's had for the year so far.

Note that's the S&P, the general market.

These companies make up an even higher percentage -- nearly 70% -- of the NASDAQ 100's market cap.

Regarding whether the financial markets are in an AI bubble or not, I've received an abnormally high number of requests recently from you, the audience, to interview Ed Zitron, host of the Better Offline podcast.

Well, today, your wish comes true.

To learn why he believes the promises of A.I. are a massive lie, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us junk silver at $0.75 below spot.

Contact Miles Franklin About This Offer

If you, too, would like to become a premium subscriber to this Substack (it’s only $0.52/day), then sign up now below:

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Adam’s Notes: Ed Zitron (recorded 8.11.26)

EXECUTIVE SUMMARY:

Ed Zitron argues that current large language models deliver neither the technological breakthroughs nor the economic returns promised by AI champions, functioning more as unreliable, compute-heavy automation than true intelligence.
Productivity gains remain minimal and hard to measure, while costs (especially compute) escalate rapidly, with most hyperscaler AI revenue concentrated in a few money-losing labs like OpenAI and Anthropic.
The massive capital expenditure wave is

Fed To "Punch The Economy In The Gut" This Fall? | Darius Dale

Adam Taggart — Sun, 09 Aug 2026 16:41:24 GMT

Darius Dale is worried, in the short term, about a near-term correction in stocks.

He calculates that it's more likely than not the Federal Reserve will tighten this fall in order to appease the bond market and set itself up to start easing in early 2027.

But to do that, in the immediate term, it will likely spook markets by hiking (and perhaps reducing its balance sheet) soon.

It wouldn't surprise him to see stocks fall by as much as 20%.

But he expects the pain to be short-lived.

Once the Fed reverts to easing again, he expects stocks to quickly soar back to new highs.

For all the details on his projections, click here or on the video below.

But before you do, if you are a do-it-yourself investor (managing your own portfolio without the supervision of a financial advisor), please note that Darius’ 42 Macro research service is Thoughtful Money’s endorsed solution for DIY investors just like you. To learn more about it and get access to the current allocation of Darius’ KISS and Dr Mo models, click on the button below:

Access Darius' Research

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us junk silver at $0.75 below spot.

Contact Miles Franklin About This Offer

If you, too, would like to become a premium subscriber to this Substack (it’s only $0.52/day), then sign up now below:

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Adam’s Notes: Darius Dale (recorded 8.5.26)

EXECUTIVE SUMMARY:

Darius Dale of 42 Macro remains constructive on the longer-term “run it hot” (Paradigm C) backdrop of above-trend nominal growth, but sees rising near-term risks of a 1998-style correction in risk assets over the next few months if the Fed tightens policy to restore credibility with the bond market.
The core issue is a geopolitically driven supply-demand imbalance in global fixed income: structural fiscal deficits are widening while the growth rate of global savings has slowed and demand from traditional buyers (including foreign official accounts) has weakened, pushing neutral rates higher.
Dale expects

False Breakout?| Michael Lebowitz

Adam Taggart — Sat, 08 Aug 2026 18:13:16 GMT

Stocks have recently ripped to new highs, after spending months in a trading range.

Is this a sustainable breakout?

Or a false one, as we saw back in June?

Portfolio manager Michael Lebowitz discuss the odds, as well as the new surprise payroll numbers, his outlook for bond yields, as well as his firm's latest trades.

For everything that mattered to markets this week, click here or on the video below:

RECENT VIDEOS

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TM ON PODCAST PLAYERS

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But whether you do or not, get ready for another week of more great content ahead. We have interviews with Darius Dale, Ed Zitron, Andy Schectman and Julia Lembecke.

Stay tuned!

cheers,

My sincere thanks to Lance Roberts and his team at Real Investment Advice for kindly making their weekly Bull/Bear market report available to the Thoughtful Money audience below:

AI Narrative Risk: The Hyperscaler Story Changes Again.

By Lance Roberts | Aug 8, 2026

🔎 At a Glance

AI Narrative Risk: The Hyperscaler Story Changes Again
Market Brief & Technical Review
From Lance’s Desk: Sound Money: Be Careful What You Wish For – RIA
Market stats, screens, and risk indicators

🏛️ Market Brief – Weak Jobs Data Fuels Rally

The week the labor market cracked was the week stocks had their best run since April. Friday’s close of 7,757.64 on the S&P 500 set a record, up 3.6% over five sessions. The Nasdaq Composite gained 5.2% to 26,690.62, and the Dow added roughly 3% to 54,036.93. Small caps kept pace, with the Russell 2000 proxy up 3.6%. That is two straight weekly gains, and it is the first close above 7,700 in the index’s history, and it arrived in the very week that delivered the worst payroll print in years, which is the kind of contradiction that usually resolves badly for whoever assumes it simply continues.

In July, the economy shed 23,000 jobs against expectations of a gain of nearly 83,000. The unemployment rate then fell to 4.1% rather than holding at 4.2%. Don’t overlook those two numbers; read them together, and you get the real story. Unemployment did not drop because hiring improved. It dropped because the labor force shrank again. Participation slipped to 61.4%, down 0.7 percentage points this year, as roughly 1.4 million people simply left.

Interestingly, the markets did not care about the mechanism, but rather about the fact that a September rate hike was taken off the table. That matters more than it sounds. The Fed held on July 29 by a 9-3 vote, with Hammack, Kashkari, and Logan all dissenting in favor of an increase. It was the most divided decision since 2016. On Thursday, a rebound in crude prompted desks to openly debate an autumn move; however, by Friday morning, that debate was over. Futures still carry a hike in 2026, though not before December.

Leadership was narrow and violent, with Technology gaining 7.2%. Semiconductors did even better, with the iShares and VanEck chip funds up 7.6% and 7.8%, a full reversal of the memory-led damage from the prior month. Energy fell 3.4% as crude dropped nearly 9% on renewed Iran diplomacy. Utilities lost 1.7%. Gold was the quiet standout at 7.3%, running on the same rate-cut arithmetic that lifted equities. The dollar slipped, and volatility collapsed.

One caution worth carrying into the week. The cap-weighted index beat its equal-weighted twin by about 115 basis points, so the same handful of names is doing the lifting again. Watch the macro thread: the softening labor market is bullish only as long as inflation cooperates, and Wednesday’s CPI is the first real test of whether that condition still holds.

📈Technical Backdrop – Breakout Confirmed, Momentum Extended

The S&P 500 finished at 7,757.64, up 3.6% on the week and at a record close. The index sits 3.5% above its 50-day moving average near 7,488 and 10.0% above a rising 200-day average near 7,045. RSI(14) closed at 66.0, which is firm but still shy of the 70 overbought threshold. MACD remains above its signal line with the histogram widening to +3.3.

What happened here matters more than the level, and I want to reiterate an analysis from this past week because of its importance.

From early June, the market did not fall, but went sideways. This is crucial to understand because an overbought tape corrects one of two ways. It can either drop in price or work off the excess over time. This current cycle chose time. Eight weeks of chop reset momentum without breaking the trend. Tuesday’s record close at 7,736.52 confirmed buyers had finally absorbed the overhead supply. Friday extended it on the jobs print, and volume confirmed the move rather than contradicting it. That is what separates a real breakout from a squeeze.

So the obvious question is whether you chase a market at record highs. History argues against the fear. Going back a decade, we count eleven prior cases where the S&P broke to a new high after at least two months without one.

The downside is what surprises people. The worst 12-month outcome in that group was a 2.8% dip, compared with a 21% drawdown for the worst year following a random day since 2016. Carson Group’s work dates back to 1957, and it lands in the same place: stocks are higher a year after a new high roughly 71% of the time. New highs beget new highs FAR more often than they ring the bell at the top.

None of that even remotely suggests abandoning discipline. We are extended, and the markets are not cheap. The index runs 10% above its 200-day average into a historically soft August-to-October window, and breadth is thinning again. In our equity models, we are staying long the trend and holding cash for the pullback that eventually arrives. If you are trying to add money into the markets, do that on weakness toward the 50-day, not on strength into round numbers.

The level that matters is 7,736.52. That was Tuesday’s breakout close, and a decisive move back below it would turn this from a confirmed breakout into a failed one, which is the single scenario that would change how we are positioned. Ride the trend. Keep your stops honest.

🔑 Key Catalysts Next Week

Two questions dominate the week, and the second only matters because of the first. July CPI lands on Wednesday, and it arrives amid a visibly deteriorating labor market. That combination is the whole ballgame for the markets. If the print is cool, the Fed sits still and validates the rally that Friday’s payroll miss set off. A hot one revives the three dissenters who wanted a July hike and forces the market to price in stagflation rather than a soft landing.

However, it isn’t the headline print that matters; it’s the core reading. Headline CPI will move with energy, and crude just fell nearly 9%. That flatters the print for reasons unrelated to underlying price pressure. Shelter and services are where the signal lives, and the signal is in the core reading.

PPI follows on Thursday, and retail sales on Friday. They answer whether consumers are still spending as employment shrinks. Again, instead of the headline numbers, watch the control group, which feeds into GDP. Weekly claims on Thursday now carry more weight than usual. A second soft labor reading inside the same week would harden the case that July was a trend rather than a stumble.

Two other threads remain unresolved, with the Strait of Hormuz still at issue. Thursday night brought reports of explosions tied to Iranian interceptions. The oil move that helped equities this week can reverse on one headline. The FOMC minutes land the following Wednesday, and after a 9-3 split, they will be read closely for how close the hawks came to winning.

Earnings thin out to the AI supply chain. Cisco reports after the close midweek, the tape’s bellwether for AI networking, where we will be watching for margin compression rather than demand. Applied Materials reports on Thursday after the close and is the more consequential print because it is where hyperscaler capital spending ultimately lands. The China revenue mix is the cleanest read available on export-control drag. CoreWeave reports early in the week, and after a 40% drawdown, it is the sharpest live test of whether the neocloud backlog actually converts.

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💰 AI Narrative Risk: The Cost Of Trading The Story

Two weeks ago, in The AI Capex Bill Comes Due, we closed the week at 7,411.98 with an AI capex scare and an oil shock against us. Last week, we asked whether the momentum crash was over. On Tuesday, the S&P 500 closed at 7,736.52, its first finish above 7,700. This morning, July payrolls printed at -23,000, against expectations of +83,000. Almost nothing about the underlying businesses changed across those sessions. However, the AI narrative story changed twice. That gap is the subject of this piece because “AI narrative risk” has cost investors more this year than being wrong about AI ever did.

Let’s dig into it.

Four Obituaries And Not One Funeral

First, let’s start with the overall pattern, because it is the most useful thing here. Over the last roughly eighteen months, the market has written the AI narrative’s trade obituary four separate times. Each obituary was intelligent and written by serious people who argued with one another with real evidence, from a widely cited MIT study to a $1.1 billion options position. Each one produced a violent repricing inside the AI complex that never became a market event.

Look at the pattern rather than any single row. Each time, the claim changes, whether it was the models are too cheap to justify the chips, to an enterprise that would never pay, to fake accounting, to stretched balance sheets. However, the shape never changes. Something inside the complex gets destroyed, and the index goes on to make new highs.

Retail Bought The Story And Sold The Stocks

Here is what turns this from an intellectual exercise into a P&L problem. Scott Rubner’s team at Citadel Securities tracks retail order flow, and their July data is the cleanest illustration of narrative risk I have seen this cycle.

Read those rows together. Separately, they look like a sentimental story, and together they describe the single most expensive mistake available to an investor this year, which is being right about a theme and wrong about which part of it you own. Through May and June, retail aggressively accumulated semiconductor and memory names on the narrative that the infrastructure layer captured the value. In the final week of July, they sold those same names at more than five times the previous record. Days later, the hyperscalers rose between 4.6% and 6%, and the index closed at a record.

They were not wrong about AI, but they were wrong about WHERE twice, and the second mistake landed at the point of maximum discouragement. That is what a narrative does to a portfolio. It tells you what to own without telling you what you are paid to own it.

This past week supplied the epilogue. SanDisk and Western Digital both reported beat-and-raise quarters on Wednesday night. Then on Thursday, SanDisk fell more than 6%, and Western Digital dropped 13%. Coming in, the two were up roughly 469% and 201% on the year. AppLovin lost nearly 20% on mixed results. The point here is that when a stock falls on a beat, the price is carrying the story, not the numbers.

What Was Knowable All Along

The frustrating part is that the July bear case was checkable while it was being made. The claim was that spending had decoupled from demand. So do the arithmetic. Microsoft’s commercial remaining performance obligation reached $678 billion. Alphabet’s cloud backlog reached $514 billion. Amazon’s reached $496 billion. That is $1.688 trillion of contracted revenue against roughly $725 billion of 2026 capital spending across the four largest hyperscalers.

The contracted book is 2.3 times the spending it must justify, and the duration is short. Microsoft disclosed a weighted average duration of 2.3 years, with the slice converting inside twelve months growing 37% year over year. Alphabet expects to recognize just over half of its backlog within 24 months. None of this required a forecast, just a reading of the disclosures instead of the headlines.

Andy Jassy told analysts that “the demand we already have for 2028 is striking.” The return question was equally testable. Here is the point. In theory, if AI workloads carried structurally worse economics, a rising AI mix would compress cloud margins. In reality, it did the opposite.

Where The Profit Actually Lands

So, here is where this whole AI narrative matters. The question we need to be asking, and understanding, is where the profit in an AI dollar actually ends up.

Pay very close attention to the chart above. Currently, the hyperscalers keep 29.7 cents of every dollar spent on AI. Conversely, the entire chip and equipment complex retains 26.1 cents in combined revenue, while the neoclouds retain only 0.3 cents.

That split has been roughly stable through all four narrative cycles, which is precisely what makes it useful. Through Tuesday, Micron was up nearly 700% over twelve months while Meta was down 25% and Microsoft 6%. Think about that, for the last eighteen months, the market bid up the 26 cents and discounted the 30 cents.

The Next Narrative Is Already Forming

Before you run out and do anything, let’s analyze both sides of the debate. Everything above supports a conclusion that is rapidly becoming the new consensus; however, the “AI capex ROI is proven, own the hyperscalers” is also a narrative. If you look at our core portfolio, you will see that it also reflects the narrative we think is correct. At least for now. However, it is also the fifth story in eighteen months, and the previous four all felt obvious on the day they peaked. So we are watching this very closely.

While we are cautious, we are aware that the setup has genuinely improved. Citadel’s read is that:

Positioning has normalized,
Fundamentals matter again,
Leverage has unwound, and
Funding spreads are near 50 basis points over SOFR, down from a peak of 138 basis points.

We agree with that analysis, particularly, Information Technology now trades near 20x forward earnings, close to the first percentile of its one-year range and below its 23x ten-year average.

“July did not change the structural bull market. It reset it.” – Scott Rubner, Citadel Securities Global Market Intelligence, Aug 3, 2026

Again, we agree with the mechanics, but we should add the following part. The same $1.5 trillion in semiconductor market value that came out can go back in, and 411 companies have now reported, with 87% beating, up from 82% a year ago. If semis re-accelerate, then “hyperscalers over chips” becomes the crowded trade, and the next reset takes whoever arrives late.

Bob Farrell’s Rule #9 exists for exactly this moment. When all the experts and forecasts agree, something else will happen.

What Should Investors Do Now

So what do you do with this? The answer is not to guess which story wins next. Everyone who tried that got whipsawed at least once, and the ones who used leverage are gone. Michael Lebowitz made the credit version of this point last week. Strip out Oracle, and the other four hyperscalers’ spreads have sat at or below the AA index since the start of 2025. The “carnage” applied one company’s story to four balance sheets that never shared it.

Three risks deserve naming.

Memory costs are still climbing, which is what moved Amazon’s capex guide from roughly $200 billion to $220 billion. That pressure eventually reaches margins.
Regulation is second, and underpriced. New York State has already imposed a moratorium on data-center construction, enough for Baird to cut Caterpillar to Hold in late July. Land and power were supposed to be the flexible part of the plan.
The third is the labor market. A negative payroll print, with unemployment falling to 4.1%, signals a shrinking workforce, not a hiring boom, and ADP reported only 44,000 private jobs on Wednesday.

Cheaper money helps long-duration assets. However, a workforce that stops growing eventually reaches enterprise software budgets, and that is where much of the $1.688 trillion backlog is paid. Jamie Dimon warned on Wednesday that “margin debt is the highest it has ever been,” much of it carried under other names. FactSet shows incremental debt rising from 9% of capex in fiscal 2024 to 32% over the trailing year.

As portfolio managers, our job is to manage the risk of being wrong, and as such, our confidence is calibrated rather than absolute. Over the next 12-months, I think the profit-share argument wins. However, over 12 weeks, anything can happen, given that August through October is the weakest seasonal stretch of the year, breadth is thin, and this complex has repriced violently four times with no warning.

For now, we own the part of the chain where the cash lands, sized so no single story can hurt us. It is crucial to remember that narratives are free to change, and they change often. Your portfolio, however, is not.

🖊️ From Lance’s Desk

This week’s #MacroView blog explores that while everyone wants the discipline of gold, almost no one has done the math on what getting it would actually cost.

Also Posted This Week:

Hidden Debt: Is Our Hyperscaler Thesis Wrong – Part 2 – RIA – by Michael Lebowitz
Bonds In Your Portfolio: Why Ditching Them Is The Wrong Move – RIA – by Lance Roberts

📹 Watch & Listen

The S&P 500 has broken out to fresh all-time highs after months of consolidation, triggering a new momentum buy signal. But after one of the strongest five-day rallies since April 2025, should investors keep buying or start taking profits?

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📊 Market Statistics & Analysis

Weekly technical overview across key sectors, risk indicators, and market internals

💸 Market & Sector X-Ray: Market Gains Ground

The market action this week vindicated the bulls, with the market hitting all-time highs. As we have noted previously, the out-of-favor Mag 7 stocks led the charge with momentum stocks lagging, and Energy faded as new hopes of an Iran resolution emerged. The market is now up over 13% YTD, with Technology up more than 30%

📐 Technical Composite: 86.38 – Bullish Overbought

The technical condition ticked up this past week as the Megacaps put in a strong run at the end of the week. The market is now overbought, and sentiment remains bullish for now.

🤑 Fear/Greed Index: 83.21 – Extreme Greed

Earnings reports from large-cap stocks pushed the market higher, bringing investor positioning and sentiment along with it. From a “how are investors positioned” perspective, investors remain very bullish on the market and show no real signs of concern.

🔁 Relative Factor Performance

We noted three weeks ago that “compression of factors has been evident…that clustering will shake itself out sooner than later, and the opportunity will be in which factors start to take the lead.” That happened at the end of this past week with some of the Megacap names leading the charge. Magacaps continued to outperform this past week, along with Gold Miners, and Growth stocks are now overbought. With the market very bullish, we could see a rotation back to defensive positioning heading into September.

📊 MFBR Index (Money Flow/Breadth Ratio Indicator)

NEW! MFBR Index: The Money Flow Breadth Ratio (MFBR) model is a rules-based equity allocation framework that uses weekly S&P 500 money flow data to generate buy, sell, and neutral signals. The MFBR systematically adjusts portfolio equity exposure in response to the direction and persistence of institutional capital flows. It aims to reduce drawdowns while capturing the majority of market upside.

“As of August 7, 2026, with the S&P 500 at 7,757.64, the Money Flow Breadth Ratio (MFBR) stands at 75% and rising, versus 70% the prior week – a 10 percentage-point increase over the trailing four weeks. This places the indicator in extreme overbought territory (75% or higher). The raw breadth signal still reads BUY, but the MFBR is a contrarian indicator at extremes: readings this stretched have historically been followed by below-average forward returns, so the model treats this as a caution flag rather than a green light to add risk.
The model currently recommends reducing equity exposure to a target weight of 50%. Against your current equity weight of 63%, that implies reducing equity exposure by roughly 13 percentage points. The trim is driven by the contrarian grid rather than by weak breadth – the model takes profits into strength when participation reaches extremes.
Breadth this stretched is a profit-taking signal, not a chase signal. The model’s message is to sell into strength, move down to the target weight, and reassess next week.”

📊 Sector Model & Risk Ranges

This past week, the surge in Megacap and Technology related names, as well as Basic Materials, Gold, and Goldminers, back to very overbought and extended conditions. Take profits and rebalance risk particularly given the status of the MFBR indicator above.

Have a great week.

~ Lance Roberts, CIO, RIA Advisors

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The Fed Is Facing An Impossible Problem | Judy Shelton & Thomas Hoenig

Adam Taggart — Thu, 06 Aug 2026 16:22:42 GMT

This year so far has been full of transition & challenge for the Federal Reserve, arguably the single most influential institution for the global economy.

The Chairmanship has been passed on from Jerome Powell to Kevin Warsh, who appears to want to chart a more hawkish and limited scope for the Fed.

Inflation remains stubbornly above the 2% target. And elevated oil prices resulting from the US war with Iran are a new inflationary force outside of the Fed's control.

Meanwhile bond yields are rising as former foreign buyers of US Treasurys, like China and Japan, are now actively reducing their net holdings. That doesn't please the Administration that just put Warsh in his seat.

So what is the Fed most likely to do in the remainder of 2026?

Is it well-positioned to handle these challenges of higher inflation and higher yields?

Or are events slipping out of its control?

For answers, we are incredibly fortunate to be able to turn to today's remarkably qualified panelists.

Dr Judy Shelton is an economist, author, Senior Fellow at the Independent Institute and the author of Good as Gold How to Unleash the Power of Sound Money. She's a particularly qualified expert on today's topic because she served as an economic advisor to President Trump during his first term, and was nominated by him in 2020 for the Federal Reserve.

And Dr Thomas Hoenig is the former CEO of the Kansas City Fed, a former voting member of the Federal Open Market Committee, a former director of the FDIC, and now a Distinguished Senior Fellow at the Mercatus Center.

To find out why they think the Fed is currently facing an “impossible problem”, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us junk silver at $0.75 below spot.

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Adam’s Notes: Judy Shelton & Thomas Hoenig (recorded 8.4.26)

EXECUTIVE SUMMARY:

Kevin Warsh’s early leadership draws strong approval from both guests for its reform-minded task-force approach and preference for letting markets set the cost of capital rather than relying solely on committee-imposed rates, though both stress that structural pressures from massive deficits, sticky inflation, and external shocks will severely constrain him.
Foreign central-bank behavior—especially Japan’s need for dollar liquidity and the broader shift of former Treasury buyers into net sellers—creates a difficult dilemma for the Fed: accommodate via facilities and risk further monetization, or refuse and push yields higher sooner.
The U.S. debt trajectory ($2 trillion annual deficits) is viewed as the core problem; Hoenig outlines three paths

Rising Yields Are The Greatest Threat Markets Face Today | Stephanie Pomboy

Adam Taggart — Wed, 05 Aug 2026 16:05:10 GMT

"Higher for longer" bond yields appear to be heading even higher for even longer than Wall Street expected.

This is the greatest threat to asset prices right now, claims Stephanie Pomboy.

Stephanie returns to offer her latest monthly macro and markets outlook.

To hear it all, click here or on the video below:

REMINDER: Precious metals expert Andy Schectman, CEO of Miles Franklin, is kindly offering an exclusive discount to the Thoughtful Money audience:

While supplies last, he’s willing to sell us junk silver at $0.75 below spot.

Contact Miles Franklin About This Offer

If you, too, would like to become a premium subscriber to this Substack (it’s only $0.52/day), then sign up now below:

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Adam’s Notes: Stephanie Pomboy (recorded 8.4.26)

EXECUTIVE SUMMARY:

Markets remain resilient and near record highs despite July’s extreme volatility (worst NASDAQ July in 25 years, sharp bond yield spike, and oil price surge), largely because strong headline earnings are offsetting concerns about higher rates and oil prices.
Much of the reported profit growth, especially among AI-related hyperscalers, is inflated by one-time mark-to-market gains on stakes in private companies such as Anthropic rather than sustainable operating results; free cash flow has turned negative for many of these firms as they issue large amounts of increasingly expensive debt.
Corporate bond issuance is now