Good morning and Happy Birthday Nolan and First Day of Middle School Devon! The worst month for stocks started according to plan yesterday. The S&P 500 fell 0.7%, equal-weight -0.8% and Russell 2000 -1.2%. The re-emergence of Middle East hostilities over the weekend continued into Tuesday after Iran struck two tankers and the US responded with strikes on IRGC targets later in the day. Oil rose 5%, treasuries rose 3-5bp and gold, silver and bitcoin fell 2-4%. Energy led as expected with oil’s strength, while the defensively-oriented Utilities, Healthcare and Staples also saw gains. Discretionary lagged, and Industrials, Materials and Tech sectors also fell 1%-plus. Economic data including ISM Manufacturing and JOLTS didn’t lean too meaningfully to either the Bull or Bear side.

US equity futures were lower this morning along with rest of the globe. Losses were modest however and futures bounced off their lows to turn positive as Treasury yields turned lower. DELL (+9% pre-market) was the big earnings print last night, and the company blew away estimates and raised guidance. The AI business was a standout as expected but even traditional products showed strong growth. Treasury yields are down ~2bp and the US Dollar Index is adding to yesterday’s gains, nearing 100 again. The 30y has pulled back from its earlier highs ~5.3%. The ADP monthly employment report showed 38K private jobs were added in August, below the 47K estimate and down from July’s 44K. It was the slowest pace since January and continues the cooling trend in the labor market.

Commodities are rather subdued. Oil is slightly lower and well off its overnight high ~$97 as the November contract pulled back from a test of its May highs. Chevron signed an agreement to expand its operations in Venezuela. Gold is lower, continuing its downtrend and falling below its 100d ma/$4400. Copper is unchanged, looking to hold its 50d after a run to record highs. Crypto continues to consolidate late August’s sharp rally.