The Kendall Report

Sectors Are Peeling Off. The Range Hasn’t Broken Yet.

The Kendall Report — Tue, 01 Sep 2026 07:28:16 GMT

The Kendall Report · Tuesday, September 1, 2026

KendallReport Opinion

We are heading into the toughest month of the year, and history is working against us. September has delivered the worst average performance of any month over the past decade, and it does not arrive quietly. It arrives at a market that has already spent an entire summer refusing to commit to a direction, and I have been describing that refusal week after week because nothing has come along to break it.

In spite of the calendar, the configuration has not changed. We continue to hover between 7650 and 7750, and until we break below that lower boundary we are likely to remain in the sideways trading range I have unfortunately been talking about for the entire summer. I want to be precise about what that range is and what it is not. It is not a forecast. It is a description of what the tape has actually been doing, and the honest thing to say about it is that it has held far longer than most people expected it to. Every attempt to sell it has been absorbed, and every attempt to break it higher has failed at roughly the same place. That is a market with two-sided interest and no conviction on either side of it.

But the setup underneath the range is changing, and this is the part I want readers to slow down on. The configuration is now issuing lower Fibonacci targets, which does suggest that we are going lower in the pattern. That distinction matters far more than any single day’s print. When the projection structure starts placing its objectives beneath the market rather than above it, the range stops functioning as a resting place and starts functioning as a distribution zone. The price action looks identical from the outside, with buyers still showing up at the lows and sellers still showing up at the highs. What has changed is where the model expects the next resolution to land, and it is now pointing down.

The WaveTech pattern unfolding from the database standpoint is possibly working toward the full liquidation area, which would put the short term models down at 22 to 18 percent bullish. We are not there yet. We are walking toward it, and the pace of that walk is the thing worth watching. On the short term we are seeing the sectors peel off, while the intermediate term models remain stable. That divergence is the entire story right now, and it deserves an explanation in plain terms. Sector participation is the widest measure of how many parts of this market are actually working. When that number thins while the intermediate structure holds, you are watching the top of the market erode before the middle of it does. The intermediate models are the last thing to give way, and they have not given way. That is precisely why I am not calling for a crash here. I am calling for the beginning of a give-back, and those are two very different things to position around.

I do think this week is the week we are likely to start to witness a bit of a selloff. I think job creations come in a little weaker, and throughout the week I think we see the data signal a weaker tone, the second month in a row of it. That said, September weakness is historically concentrated later in the month rather than at the front of it. So it is entirely possible that we hold here until we get the next Fed meeting, continue to chop, and see the market break down after that. The second half of the month deserves particular attention on the historical pattern alone, and we are already seeing the short term models trading down to 28 percent. I expect a bit more volatility as we move through the month.

Through the beginning of this week I think we continue to trade inside that sideways range until we start to see some of the more material news coming out on Wednesday and Thursday. That is when we start to get a feel for what the nonfarm payrolls are going to look like, and I think they surprise to the downside. Understand what that would mean for the tape. A weak payroll number arriving at a market that is already thinning at the sector level is not a data point that gets shrugged off. It is a confirmation, and confirmations are what turn a range into a trend.

The geopolitical anxiety spiked over the weekend following the US military strikes in Iran, and we are seeing the resumption of the oil trade come back on the strength of it. I do not think it will mean anything until crude gets above 92 dollars. Below that level, the bid in oil is a reaction rather than a trend, and reactions get faded once the headlines stop arriving.

Now to the part the market has decided matters most, and the part where I part company with the consensus. The market has made a big deal out of Kevin Warsh talking about raising rates. I think he is going to allow the markets to continue to move higher. We are seeing the 10 year move up above the sub 4.72 level, with a possibility of the market moving toward 4.84 and possibly running to 5 percent if it swirls out of control. The bond vigilantes are going to continue to suggest that the back end of the curve is going to move higher. Even though we saw some flattening in the twos and tens, I do not see that as a significant event.

Here is the mechanism, because it is the piece most readers are not being told. Traders are putting on a 60 percent probability for the raising of interest rates. I believe that they will hold. And I believe the market raises the back end up pretty substantially anyway, at least moving the 10 year up toward the 4.84 percent level. Long rates do not require permission from the Fed. They are set by buyers deciding what compensation they need in order to hold duration, and those buyers have been demanding more of it. A Fed that holds while the long end climbs is not an easy market to own. It is a market where borrowing costs rise without any of the tightening being deliberate, and that is the version that catches equity investors off guard, because they are watching the wrong end of the curve.

I also believe that the markets are going to start to sense out the weakness in the labor market from the JOLTS reports of the jobs available, and it will build from there. Job openings lead hiring, hiring leads payrolls, and payrolls lead the narrative. Markets are very nervous and looking for a reason to sell off right now, and it appears they are becoming nervous again on the geopolitical front, as I mentioned earlier. A nervous market does not need a large shock to change direction. It only needs a plausible one.

The media has continued to conjure up the hawkish message by Kevin Warsh, and this is where I think the reading has gone wrong. He said that the Fed is responsible for it. He did not say that the way he was going to attack it was through higher rates. Everybody read between the lines, and he purposely set everyone up with those comments from Jackson Hole last Friday. That is a very different thing from a policy commitment, and the market has priced it as though it were one.

But in the end it will come down to the employment levels, and the interest rates will continue to rise on the upside. That is the through-line for this month. The range holds until the labor data breaks it, the long end climbs whether or not the Fed moves, and the database keeps walking toward liquidation while the sectors peel away one at a time. Watch 7650. Everything else is commentary until that level gives.

Economic Calendar

Warsh Just Broke the Crystal Ball Wall Street Traded On

The Kendall Report — Mon, 31 Aug 2026 07:08:17 GMT

PLATFORM TRANSITION NOTICE

As you know, we are transitioning our software over to new servers, and the platform is going to be completely revamped. The WaveTech Portfolio Manager is now the AdviZe Portfolio Manager. Go to advize.io and use the log in button at the top of the page. That is your access point for the portfolio software from here forward.

You also know that PortfolioXpert is no longer available. A major improvement called Prism is coming, and it will evolve over the next thirty days or less. For now, if you had access to PortfolioXpert, you will ultimately have more capability than you did before. We will be enhancing the entire platform over the next thirty to sixty days and there is a lot of new material coming.

Nothing changes for you on access. Your credentials are the same as the platform you had before. Go to the website, click the link, and it brings you into your login. I will likely put together some videos to help you transition as we go forward.

This is a very exciting time, because the technology is going to be drastically enhanced and there are analytics coming that we have not had in the past environment. I look forward to serving you on the software side, portfolio management, and much more.

Bob Kendall

KENDALL OPINION

Yesterday the world’s central bankers, senior government officials, and the academics who orbit them gathered in Wyoming for the annual Jackson Hole summit. It was Kevin Warsh’s first appearance there as chairman of the Federal Reserve. Within hours the corporate financial press had run his speech through its own filter and handed you back a story about interest rates going higher. Warsh fuels higher rate outlook. A clear signal of a rate rise. Interest rate increase in play. Those were the headlines. I read the same speech they read, and I want to say this plainly. They either deliberately missed what he said, or they were unsettled enough by it to lock it out. I do not know which one it was. What I do know is that the implications of that speech are almost impossible to miss if you are actually reading it rather than mining it for the answer you walked in with.

Start with the one signal nobody can miss. Responsibility for sixty-five months of sustained elevated inflation sits squarely with the central bank, and that is exactly where it belongs. Sit with what just happened there. That is the head of the Federal Reserve laying the blame for sixty-five months of inflation on the Federal Reserve. Not on snarled supply chains. Not on a war. Not on the American consumer buying too much. On the institution he now runs. Then do the arithmetic yourself, because it is worth doing. Sixty-five months back from today lands you at the beginning of the Biden auto pen presidency. Nobody stumbles into a number like that from a podium at Jackson Hole.

To see why the rest of the speech matters so much, you have to understand the tool he went after. It is called forward guidance, and the name makes it sound more technical than it is. Forward guidance is simply the chairman of the Fed and the FOMC signaling in advance what they intend to do with interest rates. That is all. And on its face it sounds like transparency, which is why it has been defended for years as a public good. But think about who actually benefits from knowing the price of money before the price of money moves. The Lords of money get to place their bets early. Everyone else finds out when the bet has already paid. Forward guidance is one of the instruments the Federal Reserve has used to tilt the game toward the financial high flyers, and it has been doing it in plain sight.

Consider what that does to the job of investing. If you know months ahead of time where the policy rate is going, you are not taking a risk on a business or a commodity anymore. You are taking a position on an announcement. The firms with the fastest desks and the closest reading of the language get paid for interpreting a press release, not for evaluating anything real. Capital that should be finding productive use instead pools around the calendar of Fed meetings. That is a subsidy, and like most subsidies it is invisible to the people paying for it.

Warsh made no bones about the fact that this is over. He said we should not indulge a regime in which market participants look primarily to the Fed for their next trade. He then reached for a phrase the economic literature has used for a long time, the hall of mirrors problem, where everyone is watching everyone else watch the Fed, and the price of an asset gradually stops having anything to do with the asset. And then he made the point that I think is the real story of the week, and the one that got almost no airtime. The people who bear the biggest cost of that hall of mirrors are not the market participants who play inside it. The most serious harm falls on the people who own no financial assets at all. The bottom half of this country does not get to front-run a policy signal. It just absorbs the price of everything going up.

That is the ethical core of the whole speech, and nobody wanted to report it. If you own stocks and bonds and a house, a policy that inflates asset prices makes you feel wealthier even when nothing productive has happened. If you own none of those things, the same policy hands you higher rents, higher grocery bills, and a savings account that loses ground every year. The Federal Reserve has spent a decade and a half insisting its tools are neutral. The chairman just stood at Jackson Hole and said, in effect, that they are not, and that the people hurt worst by them are the ones with the least ability to complain about it.

So what did he really do up there. He smashed the crystal ball that the high flyers have been reading for years, and he told them to go look at the real economy instead. Pay attention to risk. Pay attention to what businesses and households are actually doing. Stop counting on the Federal Reserve to game the system on your behalf. I do not think Kevin Warsh has become a Hamiltonian, and I am not going to pretend that one speech remakes an institution. But what he is doing is reducing the Federal Reserve’s footprint. He is pulling it back from a role that has metastasized into something that simply feeds the financial parasite, whether the instrument is forward guidance or quantitative easing, and he is getting it out of the way so the real economy can begin to grow again by other methods, for people who work for a living.

You are not going to get that analysis from many of the folks on the financial news. I have said this on my YouTube channel and I have said it here, and I am going to keep saying it. Be careful with the news that gets put in front of you. The debasement story is the perfect example, and it is the one I want you carrying into this week. That narrative got propagated absolutely everywhere. I have been telling you for weeks that it is not a real narrative, and that gold and Bitcoin were the big beneficiaries of the dialogue rather than of anything structural. It got enormous traction anyway. Gold and Bitcoin are now pulling back, and it appears to me there will be more of that. Notice what else happened. The story is hardly being talked about at all anymore, and only days ago it was supposedly the primary factor that was going to drive the markets. That is how you know what it was. A real structural force does not go quiet when the price stops cooperating.

Pay close attention to the analysis below this column. That work is short term by design, day by day, and the wider frame up here is what makes the two fit together.

We come into this week on the final day of August, and September is going to hand us a good dosage of what is about to hit these markets. Manufacturing first, then the job openings on September first, and from there we get deeper into the employment picture. I have been very favorable on the labor situation for a while now. No breaks, no breakdown, nothing in the data that told me the floor was giving way. We may start to see some things a bit different. The forecast on Friday for nonfarm payrolls is only about forty thousand. We have been seeing these come in roughly as expected, sometimes a little better, but with no real breakdown underneath. My sense is that as we come up into the end of the third quarter, which is September, and remembering that this is the final month of quantitative tightening, we are going to start getting information that leads us toward more of what I would call seams and cracks. Not a rupture. Seams and cracks.

The difference matters, so let me be precise. A rupture is a print that reorders the market in a single morning, and I am not forecasting one. Seams and cracks are what you see first: hiring that slows without firing that accelerates, revisions that keep landing on the weaker side of the original number, a workweek that shortens before a payroll count falls. Those are the tells that show up a quarter before anything dramatic does. Forty thousand on Friday against a prior of negative twenty-three thousand is not a collapse. It is thin enough that a modest miss changes the conversation, which is why it deserves your attention now.

The WaveTech Database is telling the same story from the other direction. The intermediate reading continues to stay in a very positive posture. On the short term, though, we have now seen a breakdown below forty-two percent, and forty-two is the line that separates a sustainable upside bias from liquidation mode. That is the combination worth holding in your head this week. A structure that is still intact underneath and a short-term layer that has already cracked. It is why this week sets up as genuinely interesting rather than routine. We came in a little bit weaker overnight, nothing material, but as we move through the week we are going to get a feel for which of those two layers is doing the leading.

And it is very clear to me that the Federal Reserve is not going to intervene. I said earlier in this commentary that the media is trying to pump up the idea of rates going higher, and that Warsh said some things that could be read that way if you wanted to read them that way. We are a couple of weeks from the September meeting and we will find out. I will get into that more as we get closer. But I continue to believe the Fed is staying out of the way, letting rates run where they want to run, and letting the economy tell us what ought to be done about interest rates rather than the other way around. That is the whole point of taking the crystal ball away.

There is still a bit of dialogue out there about a dislocation of capital under way. I do not really see that at the moment. What I do see is that we are trading at or above the range I have been talking about for a while on the treasuries. Around 4.72 is where we closed on Friday. From here we start to get up toward some critical numbers, and I will be covering those as they come.

And notice how that fits with everything above. In the old arrangement, a move up in yields sent everyone straight to the Fed to ask what the Fed intended to do about it. That question is now the wrong question. If the chairman has genuinely stepped back, then yields are going to be set by the actual demand for capital and the actual appetite to lend, which is exactly how a rate is supposed to be discovered. It will feel less orderly. It will also be more honest, and the levels will mean something again because they will be describing the economy rather than describing a committee.

One housekeeping note. There is probably not going to be a YouTube video this week. I may get one done depending on how the workload falls, but I am still in the middle of the software transition, so I am going to communicate primarily through the Substack newsletter you are reading right now. If anything major develops I will do my best to come up and give you a brief presentation. Otherwise, watch the data, watch the levels below, and stop watching the Fed for your next trade. That is exactly what the chairman just told everyone to do.

Economic Calendar

Week of August 31 - September 04

Tuesday, September 1

09:45 ET: S&P Global U.S. Manufacturing PMI - Final
For: Aug | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: 53.2

10:00 ET: Construction Spending
For: Jul | Trading Impact: Low | KR Forecast: 0.3% | KR Forecast Cons: 0.2% | Prior: -0.1%

10:00 ET: ISM Manufacturing Index
For: Aug | Trading Impact: High | KR Forecast: 55.5% | KR Forecast Cons: 55.3% | Prior: 55.6%

10:00 ET: JOLTs - Job Openings
For: Jul | Trading Impact: Low | KR Forecast: 7.365M | KR Forecast Cons: 7.390M | Prior: 7.359M

Wednesday, September 2

07:00 ET: MBA Mortgage Applications Index
For: 08/29 | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: -1.0%

08:15 ET: ADP Employment Change
For: Aug | Trading Impact: Medium | KR Forecast: 53K | KR Forecast Cons: 47K | Prior: 44K

10:00 ET: Factory Orders
For: Jul | Trading Impact: Low | KR Forecast: 0.5% | KR Forecast Cons: 0.6% | Prior: -0.3%

10:30 ET: EIA Crude Oil Inventories
For: 08/29 | Trading Impact: High | KR Forecast: NA | KR Forecast Cons: NA | Prior: +4.41M

14:00 ET: Beige Book
For: Sep | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: NA

Thursday, September 3

08:30 ET: Trade Balance
For: Jul | Trading Impact: High | KR Forecast: -$83.0B | KR Forecast Cons: -$89.6B | Prior: -$73.3B

08:30 ET: Productivity-Rev.
For: Q2 | Trading Impact: Low | KR Forecast: 1.5% | KR Forecast Cons: 1.4% | Prior: 1.4%

08:30 ET: Unit Labor Costs-Rev
For: Q2 | Trading Impact: Low | KR Forecast: 1.3% | KR Forecast Cons: 1.3% | Prior: 1.3%

08:30 ET: Initial Claims
For: 08/29 | Trading Impact: High | KR Forecast: 199K | KR Forecast Cons: 205K | Prior: 203K

08:30 ET: Continuing Claims
For: 08/22 | Trading Impact: High | KR Forecast: NA | KR Forecast Cons: NA | Prior: 1778K

09:45 ET: S&P Global U.S. Services PMI - Final
For: Aug | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: 56.8

10:00 ET: ISM Non-Manufacturing Index
For: Aug | Trading Impact: High | KR Forecast: 53.5% | KR Forecast Cons: 54.1% | Prior: 54.1%

10:30 ET: EIA Natural Gas Inventories
For: 08/29 | Trading Impact: High | KR Forecast: NA | KR Forecast Cons: NA | Prior: +15 bcf

Friday, September 4

08:30 ET: Nonfarm Payrolls
For: Aug | Trading Impact: High | KR Forecast: 40K | KR Forecast Cons: 45K | Prior: -23K

08:30 ET: Nonfarm Private Payrolls
For: Aug | Trading Impact: High | KR Forecast: 40K | KR Forecast Cons: 45K | Prior: 30K

08:30 ET: Unemployment Rate
For: Aug | Trading Impact: High | KR Forecast: 4.1% | KR Forecast Cons: 4.2% | Prior: 4.1%

08:30 ET: Average Hourly Earnings
For: Aug | Trading Impact: High | KR Forecast: 0.2% | KR Forecast Cons: 0.2% | Prior: 0.1%

08:30 ET: Average Workweek
For: Aug | Trading Impact: High | KR Forecast: 34.3 | KR Forecast Cons: 34.3 | Prior: 34.3

NVIDIA Carries the Range the Sectors Refuse to Confirm

The Kendall Report — Fri, 28 Aug 2026 08:18:19 GMT

KENDALL OPINION

We come into the final session of the week with a speech from Kevin Warsh at Jackson Hole landing early, before the market opens. I am not sure what gets revealed there, or whether it gets the volatility going at all. What I am sure of is that the market has already settled on the shape of this week, and it settled on it without any help from a podium. As I said on Wednesday night’s video, the market has been in a mode to rebound back toward the upper end of the range, and that is exactly what it did. We remain locked into the range we have been trading for a while now. Maybe Friday gives us something that produces real leadership. I am not building a week around that hope.

Underneath the range, the thing I keep watching is participation, and participation keeps getting thinner. The WaveTech Database on a short term basis continues to narrow. It is still above the 42% level, so the structural floor has not given way, but more sectors are starting to fall out, and that is what narrows the broader participation. We get the intermediate models today and it would not surprise me to see some weakness there as well. This is the part of the tape that most people are not looking at, because the index level is doing something pleasant and the internals are doing something else. When three sectors out of twelve are carrying a long position and the other nine are sitting flat, the market is not broad. It is concentrated. Concentrated markets can run for a long time, and this one has, but they run on fewer legs, and fewer legs is a fact worth knowing before it becomes a problem.

Nobody Debased Anything. The Metals Traded Like Somebody Did

The Kendall Report — Thu, 27 Aug 2026 08:38:16 GMT

The Kendall Report · Thursday, August 27, 2026

KENDALL OPINION

We come into Thursday with a market that still has no genuinely new fundamental catalyst to trade against. When there is nothing new to price, price does not stop moving. It simply moves, and the explanations arrive afterward. Much of the recent action has been surrounded by narratives built to account for movement after the fact, and the so-called debasement trade remains the most prominent example of that habit. I continue to believe the debasement story is largely a narrative wrapped around the market action rather than a driver of it, and that financial media has amplified it well past what the underlying facts support. Markets have been trading as though substantial currency debasement measures had already occurred. Yet no actual action has been taken. No bond purchase program and no other significant steps of the kind the positioning implies. The trade got ahead of a policy that never arrived, and it stayed there because the story was easier to repeat than to examine.

We are now beginning to see some of that fade, and it is showing up first in the two markets that carried the story hardest. Both the metals and Bitcoin, and Bitcoin was affected most by this story, are starting to lose their grip on it. I want to be careful here. This does not necessarily mean those markets are entering major declines. What it means is that the narrative itself is beginning to lose momentum, and price is saying so before the commentary catches up. When markets move primarily in anticipation of an event, and that expected event does not materialize, some amount of unwinding is inevitable. Positioning built on an expectation has to be released once the expectation expires. That is the mechanism, and it is slower and far less dramatic than a collapse.

From an equity market standpoint, the underlying pattern has also not changed. We continue to chop within the range I have been talking about for a while now. Capital is rotating between sectors and between individual names inside those sectors, and not doing much beyond that. The WaveTech Database is rotating on a short-term basis and has lost much of the sector strength it showed a couple of weeks ago. That distinction matters. A rotating market redistributes capital among its own components. A market that is expanding is bringing new capital in. We are doing the first and not the second, and that is what keeps a range intact.

The major event we waited for was NVIDIA earnings, and the result came in roughly in line and positive. The initial reaction was negative, which is often what happens when the number was already priced. Then after the conference call the markets rallied substantially on that commentary, with the index futures moving up well over half a percent. We actually printed up into the upper ranges of the market grid, both on the S&P and on the NASDAQ. That is where the session became interesting rather than simply strong.

Once the markets reached R3 early, the risk reward structure changed and we started to see some selling come back in. This is worth slowing down on, because it is the part most readers skip. At the top of the grid you are no longer buying a move, you are paying for the last portion of one. The distance up to the next resistance shrinks while the distance back down to support does not, and disciplined money recognizes that arithmetic immediately. That is why the selling showed up where it did. It was not a change of opinion about the earnings. It was a change in what the tape was offering. As we come into the London open, though, we are seeing a big recovery back toward the higher levels of the session.

For today, on Thursday, I expect both the S&P and the NASDAQ to remain generally contained within the market grid range. The area between S1 and R3 represents the maximum expected zone of travel, and S1 could provide initial downside support if reasonable selling comes into the market. That is the framework I am working from, and I would need to see something outside of it before I change posture.

The next economic releases will include jobless claims and continuing claims, and I do not expect any major surprises from these metrics. The remaining economic reports scheduled for this week are also unlikely to materially change market sentiment. That is not a dismissal of the data. It is a recognition that a market trading on narrative rather than fundamentals does not reprice on a claims number that lands where everyone expects.

The primary question now is whether or not the NVIDIA-driven rally can expand beyond one company and the chips. That is the whole test. A rally that stays inside a single name and a single group is a rotation with good publicity. A rally that broadens into the rest of the tape is something else, and we have not seen it yet. My guess is that they moderate as we approach the Fed's statement at Jackson Hole on Friday.

But the main takeaway, and this has really been the thing since mid June, is that the markets remain in a very choppy sideways range dominated by just a couple of narratives that seem to keep the markets in check. The debasement story is one of them, and it is fading. The chip story is the other, and it is about to be tested. Neither one of them is a fundamental. That is exactly why the range continues to hold.

ECONOMIC CALENDAR

Week of August 24 - 28

Aug 27

08:30 ET: Adv. Intl. Trade in Goods
For: Jul | Trading Impact: Low | B.com Forecast: NA | B.com Cons: NA | Prior: -$101.5B

08:30 ET: Adv. Retail Inventories
For: Jul | Trading Impact: Low | B.com Forecast: NA | B.com Cons: NA | Prior: 0.0%

08:30 ET: Adv. Wholesale Inventories
For: Jul | Trading Impact: Low | B.com Forecast: NA | B.com Cons: NA | Prior: 0.3%

08:30 ET: Initial Claims
For: 08/22 | Trading Impact: High | B.com Forecast: 205K | B.com Cons: 210K | Prior: 206K

08:30 ET: Continuing Claims
For: 08/15 | Trading Impact: High | B.com Forecast: NA | B.com Cons: NA | Prior: 1799K

10:30 ET: EIA Natural Gas Inventories
For: 08/22 | Trading Impact: Low | B.com Forecast: NA | B.com Cons: NA | Prior: +16 bcf

Aug 28

09:45 ET: Chicago PMI
For: Aug | Trading Impact: Low | B.com Forecast: 57.5 | B.com Cons: 57.0 | Prior: 57.6

10:00 ET: Univ. of Michigan Consumer Sentiment, Final
For: Aug | Trading Impact: Low | B.com Forecast: 51.2 | B.com Cons: 51.0 | Prior: 51.0

Gold and Bitcoin Are Trading on a Buyback That Hasn’t Started

The Kendall Report — Wed, 26 Aug 2026 07:01:56 GMT

The Kendall Report · Wednesday, August 26, 2026

KendallReport Opinion

We come into midweek without a meaningful new catalyst, and that absence is doing more work than most people realize. When there is nothing genuinely new for a market to price, price does not stop. It drifts, it compresses, and it waits. That is what the last several sessions have been: relatively quiet and rangebound, with a slight bias to the downside. What fills a vacuum like that is not information. It is story. And the story currently being sold is the debasement trade, which I continue to believe is little more than a narrative conjured up to explain market activity after the fact. At this point it has no real legs under it.

Let me be specific about why, because this is where I part company with the consensus reading. The Treasury has proposed an increase in purchases of longer-dated securities, and that proposal is being presented as a major monetary event. I view it much more simply. This is debt management. It is an effort to restructure the maturity profile of the federal debt, which is ordinary housekeeping for a government carrying a great deal of debt. Most importantly, nothing has happened yet. Not one bond has been purchased under the expanded program. The announcement activity does not begin until September 9th. So when I look at where this story has actually shown up in price, primarily in Bitcoin and in gold, what I see is a rally trading on an event that has not occurred.

The confusion I keep running into is that a Treasury buyback is being treated as though it were Federal Reserve quantitative easing. It is not the same thing, and the two should not be automatically confused. They are different mechanisms, run by different institutions, for entirely different reasons. It is worth slowing down on this, because the whole debasement argument rests on the two being the same and they are not. Quantitative easing is a central bank operation. The Fed creates new reserves and its own balance sheet expands, and that expansion is the thing people are really pointing at when they talk about a currency being debased. A Treasury buyback is the issuer managing its own obligations, swapping one form of its debt for another and changing the shape of what it owes rather than the quantity of money in the system. One of those adds something new. The other rearranges what already exists. Conflating them is precisely how a piece of routine housekeeping gets mistaken for a monetary regime change, and it is how a rally gets built on a misunderstanding.

Once you take that mistake out of the analysis, the rally in the metals and in crypto is left standing on a schedule rather than on a flow. Schedules can slip, get revised, or arrive smaller than advertised. Flows are real and they show up in the tape whether anyone writes about them or not. Right now there is no flow. There is a date.

Tuesday’s session tells the same story from a different angle. The modest advance was driven primarily by renewed buying in semiconductor stocks, and participation was not broad-based. The NASDAQ gained 0.07 percent, and the S&P 500 was up 0.3 percent. Those are positive closes, but the session lacked conviction, and what happened underneath them matters more than the index prints. Retail and athletic apparel stocks remained under pressure, with Dick’s Sporting Goods collapsing 30.68. That is another example of a market being held up by concentrated leadership while participation beneath the major indices stays mixed. This is worth explaining plainly, because index levels hide it. When a handful of large names in one sector do the lifting, the index can print green while the majority of what sits inside it is flat or falling. The number on the screen says the market went up. The market underneath did not. A tape that needs one sector to carry it is a tape that is thinner than its closing numbers suggest, and thin tapes are the ones that move fastest when a story they were leaning on stops working.

All eyes are now on NVIDIA and on the inflation numbers. I do not expect surprises in the inflation data. Crude oil has been maintained in a narrow range back around 81 dollars on WTI, and I am simply not seeing acceleration in inflation. In fact, some of the inflation that is showing up is the AI boom itself. It is high demand, and it is that demand that is causing interest rates to run a bit higher. This is pressure on capital coming out of the AI expansion, not a currency being quietly destroyed. The mechanism is not complicated. An enormous amount of capital is being pulled toward one build out at the same time, everyone wants that capital at once, and the price of capital is the interest rate. Rates go up because demand went up, which is what a rate is supposed to do. That is a very different explanation from the one being sold, and it happens to be the one that fits the crude price sitting quietly in its range. The market keeps reaching for the more dramatic reading when the ordinary one is right there.

On NVIDIA, everybody is looking to tomorrow’s earnings for some kind of confirmation. They did exactly this last quarter. The same thing was said about the last report, that it would validate or invalidate the AI boom. It did not, and it will not this time either, because there is a great deal more to it than one company’s quarter. NVIDIA did not used to have much competition. Now the competition is extreme, and they are getting to the point where they are losing their hold on the leadership position. We are starting to see more integration of new chips and memory all coming to the market, with everybody moving as fast as they can to supply the demand. When an entire industry is racing to supply one bottleneck, the bottleneck stops being a moat. That is the part a single quarter cannot tell you. Earnings measure what was already sold. They do not measure how many people are now building the same thing, and that second question is the one that decides what this business looks like in two years.

So as we come into Wednesday we are a day away from the next level of labor information, alongside GDP and some other elements, and I do not view any of it as likely to be nuanced or to give new guidance. That is the honest summary of this week. There is no catalyst, and in the absence of one a story has been asked to do the work that data normally does. I would rather own the absence than the story. Until a bond is actually purchased, the debasement trade is a calendar entry, not a flow, and positions built on it are positions built on something that has not happened yet.

Economic Calendar

Week of August 24 - 28

Aug 26

07:00 ET: MBA Mortgage Applications Index
For: 08/22 | Trading Impact: Low | Forecast: NA | Consensus: NA | Prior: -0.4%

08:30 ET: Personal Income
For: Jul | Trading Impact: High | Forecast: 0.3% | Consensus: 0.2% | Prior: 0.2%

08:30 ET: Personal Spending
For: Jul | Trading Impact: High | Forecast: 0.1% | Consensus: 0.2% | Prior: 0.3%

08:30 ET: PCE Prices
For: Jul | Trading Impact: High | Forecast: 0.0% | Consensus: 0.1% | Prior: -0.1%

08:30 ET: PCE Prices - Core
For: Jul | Trading Impact: High | Forecast: 0.1% | Consensus: 0.2% | Prior: 0.1%

08:30 ET: GDP - Second Estimate
For: Q2 | Trading Impact: Medium | Forecast: 1.7% | Consensus: 1.5% | Prior: 1.5%

08:30 ET: GDP Deflator - Second Estimate
For: Q2 | Trading Impact: Medium | Forecast: 6.2% | Consensus: 6.3% | Prior: 6.3%

08:30 ET: Durable Orders
For: Jul | Trading Impact: Medium | Forecast: 1.0% | Consensus: 0.5% | Prior: 0.3%

08:30 ET: Durable Goods, ex transportation
For: Jul | Trading Impact: Medium | Forecast: 0.6% | Consensus: 0.5% | Prior: 0.6%

10:30 ET: EIA Crude Oil Inventories
For: 08/22 | Trading Impact: High | Forecast: NA | Consensus: NA | Prior: +4.41M

Aug 27

08:30 ET: Adv. Intl. Trade in Goods
For: Jul | Trading Impact: Low | Forecast: NA | Consensus: NA | Prior: -$101.5B

08:30 ET: Adv. Retail Inventories
For: Jul | Trading Impact: Low | Forecast: NA | Consensus: NA | Prior: 0.0%

08:30 ET: Adv. Wholesale Inventories
For: Jul | Trading Impact: Low | Forecast: NA | Consensus: NA | Prior: 0.3%

08:30 ET: Initial Claims
For: 08/22 | Trading Impact: High | Forecast: 205K | Consensus: 210K | Prior: 206K

08:30 ET: Continuing Claims
For: 08/15 | Trading Impact: High | Forecast: NA | Consensus: NA | Prior: 1799K

10:30 ET: EIA Natural Gas Inventories
For: 08/22 | Trading Impact: Low | Forecast: NA | Consensus: NA | Prior: +16 bcf

Aug 28

09:45 ET: Chicago PMI
For: Aug | Trading Impact: Low | Forecast: 57.5 | Consensus: 57.0 | Prior: 57.6

10:00 ET: Univ. of Michigan Consumer Sentiment - Final
For: Aug | Trading Impact: Low | Forecast: 51.2 | Consensus: 51.0 | Prior: 51.0

The Floor Sits Near 7,660

The Kendall Report — Tue, 25 Aug 2026 07:10:34 GMT

Platform Notice

Before we get into tonight’s letter, a housekeeping item that has a hard deadline. On Friday night, the Portfolio Expert platform will no longer be available. Before Friday night, get the names of your portfolios, the constituent lists and stocks in them, and any other elements like watch lists, and copy them out. Then go into WaveTech using the same credentials and build everything in there. There is going to be a new release of the Prism software, potentially a couple of weeks or sooner, and you will have everything and very much more than what you had before with Portfolio Expert. I will be disclosing more of this as we get to this project, but this is a critical step or everything will be lost, and there is no way to recover it after Friday night. So please make sure you do that. Log in at vpm2.vpmpartners.com.

KR Opinion

As we come into Tuesday, we are getting closer to some of the key levels this market has been seeking out. Basis the S&P 500 futures, I believe the 7,660 to 7,600 level is the likely point where we are going to see a bottom. That is a narrow band, and I am naming it deliberately. It is where two months of selling pressure that has been building under the surface finally meets a level with enough structure beneath it to matter.

One of the big elements I continue to discuss, as we watch the distribution pattern that has been unfolding for the last two months, is that the Russell and the mid cap indices are coming under more pressure. I ultimately expect them to lose the leadership they have held this year as the stocks in them continue to decline. That matters more than most people appreciate. Small and mid caps have been the part of this market that let people argue the rally was broad. When that leadership goes, the argument goes with it.

The headline averages are telling a different story, and it is worth slowing down on why that story misleads. Even though they were negative on the session, eight of the eleven sectors advanced. Read quickly, that looks like the broadening trade everyone is talking about. Read carefully, it is the opposite. The weakness in semiconductors was the main thing driving the indexes lower, into negative territory. This was not a uniformly strong broadening trade. Eight sectors closing green while the index closes red tells you the money that is moving is not new money arriving in equities. It is existing money leaving one place and looking for somewhere else to sit.

That is what distribution looks like when you are standing inside it. It rarely announces itself with a single ugly session. It shows up as a tape that gets wider and thinner at the same time, where capital is being redistributed and parked in selected areas rather than confirming a durable, healthy expansion of the bull market.

The numbers underneath the session make the case. Semiconductors were down 2.7 percent and information technology was down 1.6 percent. The memory and chip names were all negative. NVIDIA fell 2.9 percent, and I believe it has now been down seven days in a row. That is material weakness right at the top of this market, in the names that carried it here. Meanwhile consumer staples led the market with a gain of 1.8 percent, Walmart was up 2.69 percent, and financials were up 1.2 percent. Look hard at where that strength sits. Staples and financials are not where money goes when investors believe the expansion is accelerating. They are where money goes when investors want to stay invested without staying exposed. Investors appear to be searching for parking places outside the semiconductors rather than aggressively increasing overall equity exposure, and those are two very different behaviors.

As I said earlier, the Russell was down .8 and the midcap was also down .8. I want to underline the conditions they underperformed into. Both indexes fell despite falling oil prices, despite lower long term treasury yields, despite gains across eight S&P sectors, and despite strength in financials. That is a favorable backdrop by any reasonable reading. Small and mid caps should have caught a bid on any one of those inputs, and they caught none of it. When a group cannot rally on good news, it is telling you something about who is selling into it. The session continued to show a spreading distribution pattern, money leaving concentrated leadership while moving selectively into the defensive and lower volatility areas without lifting the broader market.

The trade that still remains out there is WTI, which was down slightly but remains elevated and locked into that $80 to $90 range we have been locked into for several weeks. Until that range breaks in one direction or the other, crude is not the variable that decides this tape.

Gold continues to gain, and this is where I part company with the popular explanation. I believe gold and Bitcoin are rallying on the whole premise that debasement of the US dollar is happening, just because the Treasury announced they are going to buy bonds. Look at what was actually said. Secretary Bessent today made it clear they have not bought one bond and they will not. They will be announcing their intentions for the month of September on September 9th, which is the time when they announce all of their Treasury actions for the month. So there is nothing coming out right now that genuinely presses the case that any kind of major debasement is underway. The trade is running well ahead of a policy that has not happened.

I said this in last night’s newsletter and I will say it again, because the historical comparison settles the question. The Clinton administration ultimately retired all of the 30 year bonds, changing the mix by 45 percent. That was never even discussed as a debasement. It was understood as what it was, which is managing the debt. Changing the composition of what you issue is a financing decision. It is not a currency decision, and treating it as one is how a reasonable trade turns into a bad thesis.

So here is where all of this leaves me coming into Tuesday. The top of this market is weakening in the names that matter most, the breadth people are pointing to is rotation rather than expansion, the small and mid cap leadership is in the process of being lost, and the two assets rallying hardest are doing it on a premise the Treasury Secretary explicitly denied today. That combination does not resolve higher from here. It resolves lower, into the zone I named, and 7,660 to 7,600 basis the S&P futures is where I expect this selling to find its floor.

Economic Calendar

Week of August 24 - 28

Aug 25
09:00 ET: FHFA Housing Price Index
For: Jun | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: 0.3%

09:00 ET: S&P Case-Shiller Home Price Index
For: Jul | Trading Impact: Low | KR Forecast: 1.7% | KR Forecast Cons: 1.8% | Prior: 1.6%

10:00 ET: Consumer Confidence
For: Aug | Trading Impact: High | KR Forecast: 91.2 | KR Forecast Cons: 90.6 | Prior: 90.8

10:00 ET: New Home Sales
For: Jul | Trading Impact: High | KR Forecast: 606K | KR Forecast Cons: 620K | Prior: 628K

Aug 26
07:00 ET: MBA Mortgage Applications Index
For: 08/22 | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: -0.4%

08:30 ET: Personal Income
For: Jul | Trading Impact: High | KR Forecast: 0.3% | KR Forecast Cons: 0.2% | Prior: 0.2%

08:30 ET: Personal Spending
For: Jul | Trading Impact: High | KR Forecast: 0.1% | KR Forecast Cons: 0.2% | Prior: 0.3%

08:30 ET: PCE Prices
For: Jul | Trading Impact: High | KR Forecast: 0.0% | KR Forecast Cons: 0.1% | Prior: -0.1%

08:30 ET: PCE Prices - Core
For: Jul | Trading Impact: High | KR Forecast: 0.1% | KR Forecast Cons: 0.2% | Prior: 0.1%

08:30 ET: GDP - Second Estimate
For: Q2 | Trading Impact: Med | KR Forecast: 1.7% | KR Forecast Cons: 1.5% | Prior: 1.5%

08:30 ET: GDP Deflator - Second Estimate
For: Q2 | Trading Impact: Med | KR Forecast: 6.2% | KR Forecast Cons: 6.3% | Prior: 6.3%

08:30 ET: Durable Orders
For: Jul | Trading Impact: Med | KR Forecast: 1.0% | KR Forecast Cons: 0.5% | Prior: 0.3%

08:30 ET: Durable Goods ex transportation
For: Jul | Trading Impact: Med | KR Forecast: 0.6% | KR Forecast Cons: 0.5% | Prior: 0.6%

10:30 ET: EIA Crude Oil Inventories
For: 08/22 | Trading Impact: High | KR Forecast: NA | KR Forecast Cons: NA | Prior: +4.41M

Aug 27
08:30 ET: Adv. Intl. Trade in Goods
For: Jul | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: -$101.5B

08:30 ET: Adv. Retail Inventories
For: Jul | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: 0.0%

08:30 ET: Adv. Wholesale Inventories
For: Jul | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: 0.3%

08:30 ET: Initial Claims
For: 08/22 | Trading Impact: High | KR Forecast: 205K | KR Forecast Cons: 210K | Prior: 206K

08:30 ET: Continuing Claims
For: 08/15 | Trading Impact: High | KR Forecast: NA | KR Forecast Cons: NA | Prior: 1799K

10:30 ET: EIA Natural Gas Inventories
For: 08/22 | Trading Impact: Low | KR Forecast: NA | KR Forecast Cons: NA | Prior: +16 bcf

Aug 28
09:45 ET: Chicago PMI
For: Aug | Trading Impact: Low | KR Forecast: 57.5 | KR Forecast Cons: 57.0 | Prior: 57.6

10:00 ET: Univ. of Michigan Consumer Sentiment - Final
For: Aug | Trading Impact: Low | KR Forecast: 51.2 | KR Forecast Cons: 51.0 | Prior: 51.0

Gold and Bitcoin Rally on a Story the Treasury Isn’t Telling

The Kendall Report — Mon, 24 Aug 2026 08:39:13 GMT

KR Opinion

The financial press wasted no time labeling the Treasury’s decision to increase its long-bond buybacks as the return of the debasement trade. Gold has rallied. Bitcoin has surged. The dollar has weakened. The accepted narrative is that the Treasury is attempting to suppress long-term interest rates because the government can no longer afford market-clearing financing costs. I believe this interpretation is getting ahead of the facts, and I want to walk through why, because the difference between what the market thinks is happening and what is actually happening is where the opportunity and the risk both live this week.

What we are seeing looks more like a reorganization of the government’s debt structure, something the Treasury has done before, rather than an attempt to debase the dollar. The precedent worth studying is the Clinton administration. In May of 1993, the Treasury made a much larger change to the maturity structure of the federal debt than anything being contemplated today, shifting approximately 45 percent of its long-term financing toward shorter-term securities. Thirty-year bond auctions were cut from four per year to two, and the seven-year note was eliminated entirely. The purpose was straightforward. Reduce the government’s financing costs, and concentrate issuance in the parts of the yield curve offering better liquidity and stronger investor demand. That is, in my opinion, exactly what is happening at this very moment. And here is the part the debasement crowd skips past. No one seriously characterized the 1993 restructuring as currency debasement, then or in the decades since. It was debt management; it was treated as debt management, and the dollar survived it just fine.

Part of what makes the current episode so easy to misread is that the 30-year bond is no longer the market’s primary benchmark, yet much of the commentary is written as though it still is. The 30-year was once the central bellwether of the bond market. When I started trading at the Chicago Board of Trade, we traded the 30-year bond. It was the dominant maturity, the instrument every desk watched, the number that moved everything else. That world is gone. The 10-year is now the more important reference point, the anchor for mortgage rates, corporate debt pricing, equity valuations, international capital flows, the works. When the Treasury reduces its emphasis on the long end, it is stepping back from a corner of the market that has already lost its central role. Even the current auction sizes reflect that hierarchy. The most recent refunding ran 58 billion dollars of three-year notes, 42 billion of 10-year notes, and just 25 billion of 30-year bonds. I suspect those numbers will migrate further in that direction over time, back toward something resembling the Clinton-era structure, with the longest maturities offered at even smaller sizes than they are today.

The practical effects of what the Treasury is doing are unglamorous and constructive, which is usually a sign that the exotic explanation is the wrong one. Buying back older, less liquid long-term securities frees up dealer balance sheets that have been clogged with paper nobody wants to warehouse. Maintaining larger and more liquid benchmark issues improves how the whole market functions. Shifting financing toward the maturities where investor demand is strongest lowers the government’s borrowing cost. And declining to lock in excessive long term financing costs at elevated yields is simply prudent treasury management, the same decision any corporate finance office would make. None of that requires a monetary conspiracy to explain it.

This also does not qualify as quantitative easing in any traditional monetary sense, and I want to be precise about why, because I have said before that this operation looks sort of like QE without actually being QE. Under quantitative easing, the Federal Reserve creates bank reserves and uses those newly created reserves to purchase Treasury securities. New money enters the financial system. That is not what is going on here. The Treasury does not create money. It must fund its buyback purchases with cash on hand or with the proceeds from selling other securities. If it buys back a long bond and replaces it with a bill or a shorter note, it has changed the maturity profile of the outstanding debt, and that is all it has done. That is a swap, not money creation. The mischaracterization of this operation as debasement of the currency is a misinterpretation, and as I keep pointing out in this letter, there is an awful lot of easily conjured story getting easy traction in today’s markets. We are watching one get traction right now.

Keep the timeline honest as well. We are working on roughly the second week of declines in equities, and the weaknesses in this tape were identifiable before the debasement narrative ever showed up. The selling did not start because of the buybacks. The story arrived after the weakness and offered itself as the explanation, which is how most of these narratives work. The fiscal problem is certainly real, but it is a separate issue, and this distinction matters more than anything else I will write today. Fiscal deterioration and currency debasement are not automatically the same thing. A Treasury can reorganize maturities, reduce long term issuance, and improve market liquidity without debasing anything. My view is that the current market reaction has turned a relatively conventional debt management operation into a far larger monetary narrative than the facts support. I will grant the transaction may have a mildly stimulative effect, because it removes some duration from the market and puts cash temporarily into the financial system, and it has more of that effect than any debasement effect. But gold and Bitcoin trading on the narrative does not prove the narrative. Price action is evidence of positioning, not evidence of the underlying argument. For now, I see Treasury debt management, not monetary debasement, and I am positioned accordingly.

Getting to the markets this week, we do have PCE prices coming. Based on the look back window feeding that number, I do not see us getting any kind of new signal that inflation is coming back. The data will be what the components already tell us it will be. The more important tell, as I have been discussing for the past several weeks, is the giant distribution pattern I have seen building in this market. Distribution is a slow process, strong hands handing inventory to weaker ones while the indexes hold together on the surface, and the place it shows first is in the smaller names. I would continue to watch the small and mid caps to see whether they carry a relatively weaker tone as we move through this week, because if they do, the distribution read stays on.

The stories swirling around the US dollar, and the idea that the Treasury is somehow panicking because it cannot pay its bills, have very little to do with anything. Most of the rhetoric is likely to keep flowing around this market until it finds its floor, and I expect this market will end up finding a floor this week. On the S&P, I am still looking at roughly 7,640 to 7,676 as the floor of this particular run. We are also waiting on Jackson Hole. We will see on Friday whether the Federal Reserve Chairman has any kind of message for the markets that settles things down. I think the debasement framing is completely the wrong story for what is going on in markets right now, and I believe that in the end you are going to hear that none of the issues being worried about at the moment are material at this time. The key is whether the market comes to think so too, because market belief is what actually prices. And here is the trigger I am watching to tell me whether belief is shifting the wrong way. If the 10 year Treasury yield starts to climb over the 4.79 to 4.84 percent level, that could invite more selling and exaggerate the very scenarios floating around the street. Below that band, the narrative stays noise. Above it, the noise starts to price, and the floor call gets tested in a hurry.