Stocks closed higher on Friday and for the week, with only the small-cap Russell 2000 missing the weekly cut. But the S&P and Nasdaq both made new all-time high weekly closes. And for the Nasdaq, it was their fourth up-week in a row.

Rising crude and rising Treasury yields continue to vex the market. But stocks have largely been able to overcome it and push higher.

Been the same story for a couple of weeks.

Worries over escalating tensions in the Middle East continue to influence energy prices. But the supply picture is looking better with Middle East crude exports rising to approximately 80% of pre-war levels, thanks in part to other export routes used by other regional producers rising significantly.

Treasury yields also continue to rise. But it's feeling overdone. Regardless, the worry over rising yields should be put into proper perspective. With the 10-year closing at 5.24%, and the Fed Funds Rate (FFR) at 3.88% midpoint, the spread between the two is 136 basis points. And that's completely within the historical norm, because over the past 40 years (1985-2025), the spread has been 100 to 150 bps, with the median at 120 bps. So I contend that the recent rise in yields is simply a normal reversion to the long-run median.

And give easing inflation per the latest PCE Index, not to mention a cooling, but still growing labor market, the probabilities for a rate hike at the next Fed meeting at the end of the month, have completely flipped, going from nearly 70% for a hike just a few weeks ago, to now over 82% for a pause.

The odds still suggest one more hike by year's end (after October's meeting there's only one more left for the year, and that'll be in December), but a couple more better-than-expected inflation reports could put an end to talk of hiking interest rates. That too could cap yields. And if oil were to fall (positive developments in the Middle East could dramatically cut oil prices), that would likely be the end of the oil, inflation, and yield worries.

We'll get another look at inflation with this week's Consumer Price Index (CPI) retail inflation report (Wednesday, 10/14), and the Producer Price Index (PPI) wholesale inflation report (Thursday, 10/15).

But the market is soon expected to shift its focus back to earnings when Q3 earnings season starts this week. And that's great news since stocks typically go up during earnings season.

And this one is expected to be another stellar one with the EPS growth rate estimates for the S&P 500 pointing to 24.6% growth.

Let's also not forget that we're now in Q4. And that too is great news since historically the fourth quarter is the best quarter of the year (since 1950, the S&P has gone up 79% of the time, with an average gain of 4.1%).

The quarter is off to a great start (no surprise), and I'm expecting this quarter to be the best quarter of the year.

So make sure you're taking full advantage of it.

See you tomorrow,