Stocks closed lower again yesterday as oil gained and yields rose.

Tensions in the Middle East continue to escalate with Iran firing missiles at U.S. Navy warships and commercial vessels, while the U.S. has destroyed multiple Iranian oil tankers.

Oil has continued to climb with Brent Crude topping $100 yesterday ($101.68), and gaining roughly 4% on the day. It's still under its conflict highs of $119.27 in March (down -14.7% from its peak), but it is up 45% from its recent lows of $70.14 just two months ago before the memorandum of understanding fell apart.

Treasury yields continue to climb as well. The 10-year, at 4.85%, is at a nearly 20-year high. Bond yields are also rising across the globe with Germany's 10-yr at 3.37%, the UK's 10-yr at 5.18%, Australia's 10-yr at 5.21%, and Japan's 10-yr at 2.91%. Across 30-tracked countries, 23 have 10-yr yields higher than a year ago.

Massive Treasury issuance is flooding the market which is causing yields to rise. That too causes other yields to rise and capital flows force convergence.

But increased inflation concerns are also driving yields higher.

As for inflation, we'll get a look at the Producer Price Index (PPI ? wholesale inflation) this morning. The headline rate is expected to be up 0.4% m/m vs. last month's 0.0%, while the y/y rate is forecast to rise to 5.3% vs. last month's 4.7%. The core rate (ex-food & energy) is estimated to come in at 0.3% m/m vs. last month's 0.2%, with the y/y rate 4.6% vs. last month's 4.2%.

After today's PPI, we'll get another look at inflation tomorrow morning with the Consumer Price Index (CPI ? retail inflation) report. That one is forecasting very little change (even a slight decrease) with the headline y/y rate at 3.4%, which is in line with last month, and the core y/y rate easing to 2.4% vs. last month's 2.5%.

In other news, yesterday's Apple event finally showcased the new iPhone 18, along with the new foldable iPhone called Duo. Both phones will be heavily AI-focused. And the expectation is that these will get many more people to ditch their old iPhones, which may have skipped the latest version or two, and finally upgrade to the latest and greatest. Apple also announced price increases. The iPhone 18 Pro will go for $1,199 (up $200), while the iPhone Pro Max will go for $1,299 (up $100). The Duo will start at $1,999, with $2,199, and $2,599 versions. The largest 2TB version will go for $3,199. Apple was off -0.28% yesterday at $315.34. They are up 16.0% YTD.

Still two more days of trading this week. But all of the major indexes are in the red so far.

As a reminder, September does have a history of being a tougher month. However, the S&P bucked that trend last year gaining 3.53%. It was also up in September 2024 by 2.02%. In 2023 it was down -4.87%. But went on to erase those temporary losses and close up 24.2% for the year. Those three years, not surprisingly, coincided with the AI boom. And I'm expecting another trend-bucking performance this year.

But even if this turns out to be a rougher September, I'm still expecting a great finish to the year.

The AI boom is alive and well.

And the earning picture is nothing short of spectacular with Q3'26 S&P earnings growth forecast at 23.0%, with Q4 at 25.3%, and Q1'27 at 20.4%.

And that augurs well for more gains to come.

See you tomorrow,