What turned out to be a strong month of August ended on a bit of a sour note heading into the long holiday weekend. Up until today’s pullback this week had largely been a digestion of last Friday’s post Powell speech rally. For the week the major US indices closed slightly lower but not before the S&P 500 hit a new all-time high crossing 6,500. The two-month window of August and September is known to be a difficult period seasonally, but the headwinds tend to get stronger in September which is the only month with a negative return profile since 1970. That headwind has been particularly strong recently with the S&P 500 down for five consecutive years by an average of 5.4%. For the month of August the S&P 500 ended up ~2% but it was the small cap outperformance that was more notable with the Russell 2k up ~7% as a September rate cut came into view. The big catalysts marked on everyone’s calendar this week were Nvidia earnings and the PCE data. Both came and went without much of a direct impact. Despite Nvidia's numbers coming in ahead of expectations the stock reaction was muted given the high bar, but eventually headed lower. Throughout the month we’ve seen fits and starts of a rotation happening beneath the surface, particularly down the market capitalization scale, as investors seem to be preparing for rate cuts. Time will tell whether this is a sustainable rotation or just another flash in the pan. Next week will be a short one as markets are closed for Labor Day and we say goodbye to Summer. But that means we also say hello to the NFL when the Micah Parsons-less Cowboys and Eagles kick-off Thursday night. Before that, it's Texas-Ohio St. this Saturday. Sell-side conference season also kicks off. The biggest US data event will be the jobs report on Friday. Before that, we'll get ISM manufacturing (Tues), ISM services (Thrs), JOLTS and ADP job numbers (Wed/Thrs). International data includes Chinese PMIs and European CPI. Stephen Miran's Fed governor confirmation hearing will be Thursday and RFK Jr. will also head to the Hill to testify in front of the Senate Finance Committee on Trump's Healthcare policy. More retail earnings are ahead of us as well. But lets enjoy our long weekend first.

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