Good morning,
 
US equites stumbled into the weekend on Friday. The S&P fell 0.3% as did the equal-weight, but the Russell 2000 got hit for 1.4%. Yields played a role as the 2y jumped over 10bp and the long-end rose as well after markets digested Fed chair Warsh’s hawkish Jackson Hole speech. That speech assumed the role of Steve Martin in the Three Amigos market events last week (PCE as Chevy Chase and NVDA earnings as Martin Short being the others).  Rate hike expectations repriced and now stand at 64% for the September meeting, versus 40% a week ago.  
 
Today is the last day of August, and we’ve seen some significant market events and sharp moves during recent month-ends- most recently the Situational Awareness fund blowing up at the end of July.  We don’t’ see anything on the tape like that this time around but we still have a full day of trading to go.  Maybe that’s not entirely true as the US and Iran exchanged fire over the weekend, the first time since July. The US struck rocket launchers on Larak Island, which could be used to fire mines into the Strait. Iran then launched missiles at US bases in Jordan which were intercepted. President Trump also posted AI-generated videos of Kharg Island being “blown to smithereens”.  S&P futures are down ~0.4% as oil climbs ~3%.  The S&P is currently up 3% in August with the equal-weight up a little less and small caps lagging.
 

 
Among corporate headlines:
 

• SK Hynix is reportedly looking at outsourcing some production of HBM4E chips to Intel, diversifying from TSMC.
• Elon Musk said SpaceX will be building its own gas turbine blades to address the supply squeeze.
• AON confirmed it is buying USI Insurance, the 10^th largest insurance broker in the US, from KKR for $17B
• SLB is acquiring data center cooling equipment provider Kelvion from Apollo and Triton for $3.4B
• LLY is buying Merida Biosciences for up to $2.875B cash.

Yields are also backing up on the long-end by 3-4bp. The US Dollar index is down however, giving back some of Friday’s gain.  The yen is slightly stronger against the Dollar after having weakened to over ¥160 on Friday. Japan spent a record $96B on the recent intervention to prop up the yen.
 

• US 2yr -1bps to 4.34%, 5yr +1bps to 4.50%, 10yr +4bps to 4.75%, 30yr +4bps to 5.25%
• USD index: -$0.13 to $99.53

Oil is trading higher this morning on the renewed Iranian hostilities. Brent is currently up ~7% in August. US natural gas is modestly higher but Dutch TTF jumped 4% (~20% in August). EU gas storage is at 63% of capacity, well below the 80% level it’s generally at for this time of year and a 13-year low.  The WSJ reported details of the US’ oil deal with Venezuela. The US will take a 35% passive stake in North American Blue Energy Partners, a private energy company and second-largest oil producer in the country after Chevron. Rights to purchase 20% of its production would come with the investment.  Not surprisingly, the article noted a significant degree of confusion across the oil industry and Venezuela. Gold is lower and has fallen below its 200d ma ~$4500, though its up 10% this month. Silver is lower as well, trying to regain its 100d ma ~$68.70 (+17% in August). It has traded below its 200d since mid-June. Bitcoin and ETH are up about 1% and continue to consolidate their recent sharp moves higher- Bitcoin +25% in August and ETH +32%.
 

 
Europe is mostly lower, with Germany lagging as it pulls back from a record high on Friday. CPI was lower than expected. The UK was closed. Financials and Energy are broadly higher across the continent while Tech and Healthcare are among the laggards. For the month, Europe is mixed. Germany among the better performers, up 3% while France and the UK fell modestly. Japan’s Nikkei ended slightly lower overnight. In an interview Treasury Secretary Bessent said he thought the yen moves were pretty well contained, despite yen weakness re-emerging after the FX interventions briefly halted it decline. He also said he expects the BOJ to “do the right thing” and added we have likely seen the end of the reflationary Abenomics era.  Industrial Production and Retail Sales came in ahead of consensus. The Nikkei ends August up 3%. In China, Shanghai rose 0.9% while the Hang Seng was fractionally lower. Official manufacturing PMIs remained in contraction but improved from last month. However non-manufacturing was weaker than expected. The Hang Seng fell 1% in August as the large consumer-facing Tech companies were under pressure (Baidu -8%, Tencent -4%, Alibaba flat) while Shanghai gained 4%.
 

 
 
Earnings
Pre-Market: None
After-Market: PXS
Pre-Market (Tues): MDT, MMED, NIO, YEXT
 
Economic Data:
US:

• 10:30am Dallas Fed Manufacturing

 
Global:

• China official Manufacturing PMI (August): 49.8 vs 49.7 cons, prior 49.2
• China official non-Manufacturing PMI: 49.0 vs 49.5 cons, prior 49.0
• Japan Industrial Production (July, m.m): 0.1% vs -0.6% cons, prior 1.9%
• Japan Retail Sales (July) m.m / y.y: 2.4% / 4.0% vs 1.6% / 3.0% cons, prior -3.9% / 0.6%
• India GDP: 7.8% vs 7.1% cons, prior 7.8%
• Germany CPI m/m / y.y: 0.2% / 2.9% vs 0.3% / 3.0% cons, prior 0.8% / 2.8%