Despite a bounce on Friday, US equities ended the week lower. The S&P 500 drifted lower throughout the week breaking below 7,700 but holding above its rising 20d ma. The AI theme was under pressure weighing on info tech, industrials and utilities. The equal weight also ended in the red but did outperform. Only three sectors closed out the week in the green - energy and materials, following commodity strength, and healthcare which surged after the positive cancer trial results from Merck and Moderna. The macro side of things was dominated by the Treasury Department announcing it would at least double the size of its treasury buyback operations to $4B. Secretary Bessent followed that up with a wide-ranging interview in which he discussed that program, the deficit, market interventions overall and previewed today’s Economic D-Day announcement of new, maximum-pressure sanctions on Iran. Yields and commodities ended the week higher while the Dollar fell. Crypto mooned driven by a mix of a revival of the debasement trade, the push for Clarity/a regulatory framework in Washington and a massive liquidation of short positions sending both BTC and ETH up >20%.

This afternoon Treasury Secretary Bessent announced Operation Economic Outcast, though we’re not sure if that was with a C or a K. Secretary Bessent entered his press conference shaking the Treasury Statement like a Polaroid picture, warning that any nation that helps Iran will be removed from the USD system. He said President Trump is making calls directly to world leaders with each country being given a defined timeline. The operation targets five sectors for potential secondary sanctions: digital assets, technology, gold, aviation and shipping. He also said he expected a major financial institution to be sanctioned this week. The market response has reasonably muted. Oil prices were lower overnight giving back some of last week’s gains and are near session lows down ~2.5%. The USD index ticked up slightly while metals and crypto have pulled back from the morning highs.

The S&P 500 opened modestly lower, retesting last week’s low before bouncing back to unchanged. Since the press conference the index has started to roll over again currently trading just under its 20d ma (7,655). Hyperscalsers ex-Oracle are trading modestly higher helping the index outperform. Small/mid cap indices are down >0.5% sitting at session lows. One of the questions coming out of last week’s options expiration was whether the rolling off of positions would be a release valve for volatility, that has not been the case thus far but it could be a bit of a waiting game ahead this week’s major catalysts, key tech earnings on Wednesday evening and Fed Chair Warsh’s speech on Friday at the Jackson Hole Economic Symposium - or maybe everyone is just on vacation. The main topics of conversation over the weekend revolved around last week’s buyback announcement, AI, failed Canada trade talks and the 2026 World Humanoid Robot Games.