MAC Desk Weekly Recap NYSE MAC Desk Weekly Recap: STRAIGHT FROM THE TRADING FLOOR by Eric Criscuolo & Michael Reinking, CFA Published on 8/14/26 DOW 53,732 (-108), S&P 500 7,786 (-13), Russell 2000 3,068 (+16), NYSE FANG+ 18,656 (-180), ICE Brent Crude $88.71/barrel (+$1.64), Gold $4,432/oz (+$12), Bitcoin ~62.8k (-570) Last week the calendar flipped to a new month as the S&P 500 ended July essentially flat, despite significant turbulence under the surface. Stocks saw reason to celebrate the beginning of the new month. US equities posted solid gains which pushed the major indexes to their latest record highs. The collapse of tech hedge fund Situational Awareness at the end of July seemed to provide a clearing event for markets, and Tech rallied at the start of August. More importantly, it provided the MAC Desk a huge pile of opportunities to make ridiculous references to Mike “The Situation” Sorrentino and Treasury Secretary Bessent as a warlock in an apothecary- see our notes the last two weeks if you have no idea what we are talking about. The second half of last week saw the S&P begin to consolidate the sharp moves from earlier in the week. In retrospect it was a sign, because this week has felt a lot different. The Dog Days of Summer fell upon Wall Street, and the consolidation trend continued. From last Wednesday to this Wednesday, the S&P 500 traded in about a 1% range, and just off its All-Time High. At the close Wednesday it was basically flat for the week, and the equal-weight only slightly higher. You know what was also higher? The valuation of the LA Lakers - and probably all professional sports franchises. Josh Kushner and Bog Iger are buying a controlling interest in the team at about a $12.5B valuation. Current Lakers owner Mark Walter just bought his stake in October at a $10B valuation. MSGS and BATRA (Atlanta Braves Holdings) were up ~5% this week. Sectors were basically split between gainers and losers at mid-week and most were +/- 1%. Energy led due to oil prices rising again. There was some divergence in the Tech sector. Mega-caps and hyperscalers were flat to lower but the neoclouds and bitcoin-miners-turned AI datacenters, or BTCMTAIDCs, were sharply higher. Earnings and demand commentary out of the group were bullish but also continued to highlight the never-ending spending. Memory/storage names were up sharply as well. The news that Nvidia is partnering with several giant Wall Street firms to establish a $500B “compute financing platform” was the key talking point that helped push the AI ecosystem higher, outside of the hyperscalers. It also powered it’s asset manager partners- APO, BLK, BX, BAM, GS and KKR- higher as well. As we said at the time, Black Leather Jackets and Patagonia Vests…Unite! Reports that Silverlake was looking to take WDAY private helped software push higher. PE and broader M&A activity in the industry could become an interesting dynamic given the pressure on business models and valuations that AI has put on it. The CPI inflation report was the big piece of economic data this week, eclipsed only by Week 1 of pre-season football as the most anticipated event. And befitting the action, it was uneventful. Headline and core inflation were right in line with consensus. Yields fell modestly as markets took down expectations for a rate hike in September, along with oil pausing after a recent sharp move higher. The PPI followed on Thursday, and was slightly cooler than expected, with no big surprises here either. It felt like the CPI non-event turned the cool-ish PPI data into more of a catalyst than it would have been otherwise. Two tame inflation prints back-to-back pushed yields lower and the S&P to its best day of the week, along with breaking above 7800 for the first time and setting a new record high. Thursday’s gain kept the S&P in the Green for the week. On Friday we pulled back from those records modestly, ending the week at 7785. Notably yields backed up, particularly at the long-end, cutting of a long-tenor Treasury rally before it began. Breadth was relatively strong with 8/11 sectors higher and the equal-weight up over 1%, outperforming by ~80bp. Energy was the clear leader, up ~7% on the back of oil’s gain. Utilities followed with IPPs leading. Financials (alt assets / banks led, insurance lower), Healthcare (Med Devices +ve) and Staples (Food, Beverage +ve, retailers mixed) sectors were up ~1% each. Discretionary led to the downside (AMZN -4%, luxury/retail -ve). Comm Services (GOOG -3%) and Materials (miners, chemicals lower) were also weaker. Market volatility has been significantly depressed, especially in equities. The VIX as fallen to its low on the year, just above 14. That’s allowed systematic and vol-targeting investors to add exposure. While low volatility can remain in place for long stretches, it can also jump suddenly, which could lead to those funds taking their exposure down. The High dispersion / Low correlation market regime has begun to shift, with dispersion declining in particular and correlations inching up. The monthly VIX expiration is next Wednesday, August 19 and opex is on Friday August 21, resetting positions ahead of the Fed's Jackson Hole meeting at the end of August and the Fed meeting September 16. Economic Data and the Fed: On the heels of last Friday’s disappointing employment report the focus shifted to inflation data this week. The data was largely in line with expectations remaining elevated but not suggesting an acceleration. Headline and Core CPI were both on the screws up 0.1% / 0.2% m/m respectively. On an annual basis the reading were 3.4% and 2.5% both down a tenth from last month. Energy prices continued to decline though this could reverse in August. Within core the components that fell in June saw some modest bounce back (apparel/used cars/transportation services). Shelter was muted again at 0.1%. Headline PPI was flat month-over-month, below consensus of 0.2% and up from last month’s -0.1% reading (revised up from -0.3%). Core was up 0.2%, a tick below the 0.3% consensus and down from 0.4% last month (revised from 0.2%). Final Demand Goods ex-Food & Energy rose 0.1%, down from 0.2% last month. Final Demand Services rose 0.2%, down from 0.5%. The volatile Trade services (retail margins) fell 0.1%. The prior 3 readings saw it ping-pong: 1.5%, -3.1%, and 1.4% last month. Transportation and Warehousing pricing continued to ease after a run of strong increases in the first 5 months of the year. Excluding Trade, Transportation and Warehousing, Services rose 0.6%. One other note portfolio management fees were up 6.5%, which feeds into PCE later this month. However, the methodology changes in September within PCE will likely lead to lower readings going forward. The labor market data was mixed. ADP weekly employment dropped to 8.25K/week, down from 15.0K in the prior report and the sixth straight decline overall. Initial claims moved up to 209k, but continuing claims remained under 1.8ml for the fifth consecutive week. Within the NFIB Small Business index owners expecting to hire- a net 20% of owners plan to create new jobs over the next 3 months, up from 11% last month This morning’s retail sales unexpectedly fell 0.6%, the largest drop since Feb. 2023. Ex-autos and the control group, which feeds into GDP, both fell as well, down 0.3% and 0.4%, respectively. Two caveats within the data - gas stations fell 0.9% as oil prices declined and non-store retailers (internet sales) fell 2.2%, which is some give back after Prime Day. Sales at restaurants and bars were up 0.5% maybe some World Cup tailwind. However, that could be a headwind moving forward as well as the easing impacts of tax refunds. Earlier this week Bank of America Institute noted that consumer spending growth moderated to 5% y/y from 6.3% in June Today’s U of Mich Sentiment fell to 51 from 55.2 last month with steep declines in business conditions. Inflation expectations held reasonably steady, ticking up 0.1% for the 1yr time frame to 4.3% but holding steady at 3.3% over the 5yr time horizon. The cumulative impact of inflation over the last couple of years is weighing on consumer sentiment only 8% of consumers expect income to outpace inflation over the next year. The NY Fed released its Quarter Report on Household Debt and Credit which showed a slight decrease in household debt (-0.1%) to $18.8T driven by a decline in mortgage balances while most other categories increased. There was also a slight improvement in delinquencies with 4.7% of outstanding debt in some state of delinquency, down 0.1% from the previous quarter. Credit card and auto delinquencies >90 days remain elevated. This week there has been a steepening of the yield curve as the mix of last week’s jobs report, inflation data and disappointing retail sales report ease expectations for the Fed to hike rates. However, the long end moved modestly higher with investors not showing much interest in owning duration amidst the well-known fiscal imbalances and uncertainty around monetary policy. (See 2-10 spread below). This week’s 30yr auction tailed by 4bps. It is worth noting that this is not just a US issue but a global phenomenon. The odds of a rate hike in September have fallen to about 1 in 3 chances from about a coin flip a over the last month. The probability of at least 1 hike this year is now ~68% down from nearly 80% over the same time frame. Commodities and Crypto - geopolitical tension pushes energy & agriculture higher. Metals consolidate. Crypto lower Energy - ICE Brent has spent most of the week in the high 80’s with a Iran deal remaining elusive. The administration has pivoted away from military action saying that unprecedented economic isolation measures will be announced next week. Metals- it was a choppy week consolidating last week’s gains. Gold tested its 200d ~4,500 a couple of times this week. Ag - Wheat was the big mover this week amidst Black Sea supply disruptions. Russia rejected Ukraine’s proposal for a ceasefire covering civilian vessels and port infrastructure. Corn also rallied after the WASDE report highlighted tighter supplies. Soy underperformed but China was reportedly back in the market. Crypto - after the Clarity Act got pushed back to the fall the SEC scheduled a open meeting related to Crypto regulation for today which subsequently got cancelled. Next week the administration is reportedly meeting with crypto and prediction market executives. Since hitting a YTD low early in June Bitcoin has been trading in a range between ~57.5k - 67k ending back in the middle of that range down ~3%. Global Equities - Tech heavy indices in Asia closed higher. Europe was mixed, Latin America under pressure Asia - South Korea - broke a 7-week losing streak ending up >10% for the week and >20% from the recent low (Bull market back on baby time to get some double levered ETFs!). Samsung & SK Hynix both up >15% for the week. Japan - The Nikkei ended the week up nearly 5%. Tech stocks led to the upside while retail and financials were mixed. There were reports that the BOJ and government are open to rate hikes starting as early as next month. The Yen started to drift back up to ~160 during the week with officials continuing to warn of additional intervention. Since we were just mentioning leveraged ETFs US asset managers have been filing for listings on stocks in Japan. China/Hong Kong - The Hang Seng fell ~2% for the week while mainland China was only slightly lower. Busy week of earnings with disappointing results from Tencent and JD.com continuing to highlight consumer weakness. Lenovo was a positive standout. Markets were somewhat disappointed that the PBOC’s Q2 Quarterly Report didn’t signal any additional policy support Europe - major indices ended the week on either side of unchanged consolidating around ATH highs. Latin America - Brazilian banks were off >5% pretty much across the board after earning…