Stocks closed lower on Friday, but the big three indexes (Dow, S&P 500 and Nasdaq) all closed higher for the week.

Blowout earnings from NVIDIA last week (along with plenty of other AI names) underscored that the AI trade is alive and well and is accelerating.

A softer Personal Consumption Expenditures (PCE) index (the Fed?s preferred inflation gauge) also helped lift stocks. And it does help to undercut any urgency to raise rates as some in the Fed have been suggesting in previous meetings.

Although, Fed Chair Kevin Warsh, who is not considered a hawk at this time, did sound a bit hawkish at his Jackson Hole speech last Friday.

In it he said that inflation is still too high and that it remains the Fed's central focus. He also downplayed easier inflation readings by saying "better than expected" readings, "do not tell me that underlying trends have meaningfully improved."

Nonetheless, the majority of the Fed has taken a wait and see approach by keeping rates steady and seeing how the data comes in. And so far, inflation has not meaningfully ticked up. Instead, it has modestly eased.

But the next Fed meeting is fast approaching on September 15-16. As of now, the CME's FedWatch tool puts the odds at 59.7% for a 25-basis point hike, and just 40.3% for rates to remain steady.

In other news, Friday's Consumer Sentiment report improved to 51.7 vs. last month's 51.0 and views for 51.0.

This week, the main event will be the always important Employment Situation Report by the Bureau of Labor Statistics (BLS). While the Fed said inflation is the main focus right now, it should be noted that the Fed has a dual mandate, which is maximum employment and stable prices (low inflation). And last month's weaker-than-expected employment report may have just complicated the Fed's job. So you can be sure all eyes will be on Friday's report.

The wild card, of course, for inflation remains the oil market, and what happens in the Middle East, in particular the Strait of Hormuz and tanker traffic.

Maximum economic pressure from the U.S. towards Iran is having an impact. And there's been renewed interest from Iran to discuss a path to open the Strait. But nothing's concrete yet.

Separately, the White House on Friday announced it has secured a 25-year deal where the U.S. will control 55% of a joint oil venture with Venezuela. The oil reserves in the joint venture is believed to be as much as 65 billion barrels of oil.

It will take years to develop the fields and infrastructure. About 3-5 years before there's any meaningful new supply hitting the market. And 5-10 for a fuller recovery. But it's a massive acquisition. And is a major strategic benefit to the U.S.

President Trump also said the U.S. would refill the Strategic Petroleum Reserves (SPR) with Venezuelan oil at cost. That too, however, will take time.

Over the near term, the quickest energy relief will come from some type of deal to open the Strait. That would bring oil prices down in the near-term and take upward pressure off of inflation, and in turn, off the Fed.

In the meantime, such a deal remains elusive. And over the weekend, it was reported the U.S. launched strikes against Iranian missile launchers in the Strait.

With one more day to go in the month, all of the major indexes are on pace to finish in the green for the month.

See you tomorrow,