Brunch Reads – 9/6/26
Welcome to Bespoke Brunch Reads — a linkfest of some of our favorite articles over the past week. The links are mostly market-related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
The President and the Anarchist: William McKinley arrived in Buffalo on September 5, 1901, near the height of his presidency. The former Ohio governor and last Civil War veteran elected president had recently won a second term after leading the country through the Spanish-American War and the expansion that followed. After delivering a speech at the Pan-American Exposition, McKinley returned the next afternoon, September 6, to greet the public inside the Temple of Music.
As McKinley shook hands with visitors, 28-year-old Leon Czolgosz approached with a revolver concealed beneath a handkerchief and fired twice at close range. Czolgosz, an unemployed factory worker drawn to anarchism, believed government served the wealthy at the expense of working people and viewed McKinley as a symbol of that system. One bullet entered the president’s abdomen, and although he initially appeared to recover after surgery, infection and gangrene set in. McKinley died on September 14, eight days after the shooting.
McKinley was the third president assassinated in 36 years, following Abraham Lincoln in 1865 and James Garfield in 1881. His death elevated 42-year-old Theodore Roosevelt to the presidency and pushed the Secret Service toward its permanent role protecting the president. John F. Kennedy became the fourth president assassinated in 1963, and attacks or serious plots have targeted several others, including Andrew Jackson, Franklin Roosevelt, Harry Truman, Gerald Ford, Ronald Reagan, and Donald Trump.
AI & Technology
Businesses Are Using AI to Transform Work, Not Cut Jobs (Liberty Street Economics)
AI use has jumped across businesses in New York and northern New Jersey, rising from 40% to 61% of service firms and from 26% to 51% of manufacturers over the past year. Job losses have been limited so far, with just 4% of service firms and no manufacturers reporting AI-related layoffs, and companies have been much more likely to retrain workers than replace them. [Link]
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The Bespoke Report – Summer, Out – 9/4/26
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In this week’s report, we dive into today’s jobs number and the impact it had on rates and Fed expectations. We also take a close look at chart patterns for the major indices and what they’re signaling as summer wraps up and post-Labor Day trading begins.
Closing in on 1000 Days of ChatGPT
As we head into Labor Day week, the summer is just about (unofficially) over. That means the NFL season and the holidays are all right around the corner. Another date of note is November 30th, which will mark four years since the release of ChatGPT. November 24th will also be the 1000th trading day since the release of ChatGPT, which kicked off the AI era in earnest. As we show in the chart below, the Nasdaq’s path post the release has been eerily similar to how it traded in the wake of the first major internet browser, Netscape, in 1994.
Friday is the 944th trading day since the release of ChatGPT, and the Nasdaq has risen 141.1% in that span. That compares to a 128.5% gain in the 944 days post-release of Netscape (9/14/1998). The past few years remain an impressive example of history at least rhyming. With that said, it is impossible to know how long the AI-fueled bull run will last, but assuming history continues to repeat, or at least closely rhyme, the Nasdaq would still have plenty of runway left.
Nike (NKE): Just Not Doing It
While it has served its purpose as the main US equity index in the past, the Dow Jones Industrial Average in the modern day is considered a less representative major index than other alternatives like the S&P 500 and Nasdaq. As such, its more limited exposure can miss out on certain trends, and in the past two decades, it has generally lagged the likes of the S&P or Nasdaq.
With the lagging performance aside, there have been some notable big winners among the index’s 30 components. As shown below, Caterpillar (CAT) is now up over 92% in the past year, even after the recent pullback. Earlier this summer, it was up almost 160% since last September. Meanwhile, Merck (MRK) is up over 80%, and Cisco (CSCO) has gained over 60%.
On the other hand, one stock within the Dow has been an absolute dog: Nike (NKE). The consumer apparel giant has been nearly cut in half over the past year, making it by far the worst performer in the index. As the runner-up, Home Depot (HD) is only down 21%.
As Nike (NKE) has nearly been cut in half, we would note that its weighting (the DJIA is a price-weighted index) doesn’t even come up to half of a percentage point. Accordingly, it is the smallest weight and by a wide margin. The only other stock whose price point is so low that it accounts for less than 1% of the 30-stock index is Coca-Cola (KO) at a 0.98% weight.
Given the stock’s low weight and impact on the index, it raises the possibility for it to be removed. However, as we illustrate below, in the past 30 years, a stock being an enormous decliner is not the sole ground for removal. In fact, of all removals in that time, only about half were in the red at all in the year leading up to their removal. Further, the drop in NKE would be one of the larger ones, as it would rank as the worst since General Electric (GE) when it was removed in 2018. The only other larger declines were the removals of General Motors (GM), Citigroup (C), and American International Group (AIG) in 2008 and 2009.
Summer Flings and Heartbreaks
Summer is over. Those could be three of the worst words in the English language, but as much of a bummer as it is to bid goodbye, it was a decent run for markets. Since the close on the Thursday before Memorial Day (because let’s be honest, most of you probably took off or cut out early on that Friday before the holiday weekend), the S&P 500 has rallied 3.7%. Sector breadth has been almost evenly split, with six sectors trading higher while five were lower. Leading the way higher, Health Care posted a healthy 16% rally, followed by a 12.4% gain in the Financials sector. On the downside, only Communication Services fell more than 5% (-8.1%).
With Health Care coming in as the top-performing sector this summer, it shouldn’t be surprising that three of the top four performers in the S&P 500 were from that sector. Moderna (MRNA) had a summer fling for the ages, tripling since Memorial Day. Outside the sector, Dell wasn’t a slouch either, gaining 104%.
Of the 25 stocks listed, six sectors are represented, with the most coming from Technology (9), followed by Consumer Discretionary and Health Care with five each. Financials was the second-best-performing sector this summer, but only two stocks from the sector cracked the top-performer list: Robinhood (HOOD) and FactSet (FDS).
Technology was the most well-represented sector on the “flings” list, but it absolutely dominated the ‘heartbreak” list, accounting for 14 of the 25 names listed below. The three worst performers on the list were all from the Technology sector, as Ciena (CIEN), AppLovin (APP), and ON Semiconductor (ON) all fell 30% or more.
Of the remaining 11 stocks, six other sectors were represented: four from Industrials, two each from Communication Services and Utilities, and one each from Consumer Staples, Health Care, and Materials. The only sector not to make either list was Real Estate. Not surprisingly, it experienced the smallest absolute change, with a decline of just 0.5%.
Bespoke’s Morning Lineup – 9/4/26 – Summer’s Last Stand
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“Far and away the best prize that life offers is the chance to work hard at work worth doing.” – Theodore Roosevelt
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Heading into the last unofficial day of summer and the August employment report, US equity futures are trading higher, with the S&P 500 up a modest 0.10% while the Nasdaq is up 0.54%. Treasury yields are little changed, with the 10-year trading at 4.76%. That comes despite an FT story noting that the manager of Norway’s $2 trillion wealth fund proposed to cut holdings of US Treasuries in its portfolio. Crude oil is down less than 1% to just below $91, and after a monster rally yesterday that took its price up to $82K, Bitcoin is modestly lower and trading just above $81K.
Asian stocks closed out a mostly negative week on a positive note, with the Nikkei rallying 1.3% as JGBs rallied. Despite the gains, Japanese stocks still finished the week down more than 2%. Hong Kong’s Hang Seng and the South Korean Kospi both rallied more than 1.5%.
In Europe, it’s been another quiet session, with the STOXX 600 rallying 0.1%, led higher by Germany, where the DAX is up 0.3%. Retail Sales in the Eurozone unexpectedly fell 0.6% in July versus forecasts for an increase of 0.3%
The August employment report is the only release on the calendar this morning, and the consensus forecast is for an increase of 55K jobs, which would be an improvement from July’s 23K decline. Average hourly earnings are expected to increase 0.3% with the average workweek remaining at 34.3 hours. Over the last three months, monthly payroll growth has averaged about 20K, so unless August’s report comes in significantly better than expected, overall momentum in the labor market remains sluggish.
As depressing as Labor Day weekend is for anyone who hates the colder weather, it’s been a good year so far for the S&P 500. Heading into Labor Day weekend, the S&P 500 is up over 12%, making this the sixth time in the last ten years that it is up by double-digit percentages heading into the unofficial end of summer. While 10%+ YTD gains heading into Labor Day aren’t all that uncommon (40% of all years since 1945), the current run of strength with gains in nine of the last ten years, including six with 10%+ advances, is impressive.
The chart below shows the performance of the S&P 500 during Labor Day week since 1945, and the dark blue bars indicate the years from the above chart when the S&P 500 was up at least 10% YTD. While the S&P 500 declines an average of 0.14% during all Labor Day weeks, with gains 51% of the time, in years when it was already up at least 10%, it averaged a gain of 0.35% with positive returns 63% of the time.
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The Closer – Waller Waits, Trade, Claims – 9/3/26
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- Fed Governor Waller offered much less hawkish commentary today versus his last speech in July.
- Three key AI driven categories dumped an additional $14.8bn in imports into the US in July, almost twice as large of an increase as we expected.
- Jobless claims remain at healthy levels, although claims are increasingly coming from those outside of the prime age workforce.
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Real Estate on Shaky Ground After a Six-Day Slide
Yesterday, the S&P 500’s Real Estate sector was the only sector to close in the red, down 0.79%, as the broad index rallied close to half a percent. On only six trading days this year has a single sector been the lone decliner, and yesterday marked the first such occurrence for Real Estate since 5/6/24. Over the last five years, Real Estate has been the only negative sector just four times, including yesterday.
Real Estate has been on a six-day skid, although it looks poised to break that dry spell today. It’s the sector’s longest losing streak since an eight-day run ended on 12/19/24 and just the 29th streak of six or more days since the data begins in 2001. The longest losing streaks were nine days in 2013 and 2017.
After six straight declines, Real Estate has fallen into extreme oversold territory for the first time since 10/29/25. It passed Utilities yesterday to become the second-most oversold sector, trailing only Industrials.
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Chart of the Day: Industrials Weakness
Bespoke’s Morning Lineup – 9/3/26 – Industrials Buckle
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“Those lucky enough to build a business out of a dream owe it to the world to be the caretakers of these dreams.” – Ferry Porsche
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures point to a sluggish start to trading today as S&P 500 futures are slightly lower and the Nasdaq is down about 0.3%. The modest losses come as crude oil prices rally over 2%, putting WTI at just under $93 and on pace for the highest close since early June. Treasury yields are modestly lower, though, with the 10-year yield down 2 bps to 4.78%. Gold and Bitcoin are both higher by between 1% and 2%.
In Asia, stocks were mixed, with no major index down more than 1%. The KOSPI was up 0.3% while the Nikkei fell 0.2%. In Europe, it’s a similar picture as the STOXX 600 is up 0.2%, with stocks in Spain leading the rally with a gain of 0.4%.
In the US today, there’s a good amount of data, including jobless claims, Nonfarm Productivity, and Unit Labor Costs at 8:30, and then PMIs for the Services sector at 9:45 and 10 AM.
As the calendar has transitioned from August to September, we’ve seen a significant deterioration in market breadth. The S&P 500’s 10-day A/D line has dropped to its most negative levels since May, and the cumulative A/D line is rolling over.
One big contributor to the weakness has been the Industrials sector. Over the last week alone, the sector has been the worst-performing S&P 500 sector, declining over 4%, while the S&P 500 is basically flat. The weakness in the sector has been broad-based. Of the sector’s 83 components, the average performance over the last week has been a 4.2% decline, and just four stocks are higher. Of those four gainers, only one (Deere, DE) is up more than 1%.
The decline in the sector has taken it from overbought levels (1+ standard deviation above 50-DMA) to extreme oversold territory (2+ standard deviations below 50-DMA) in two weeks. Whereas the sector was right at all-time highs two weeks ago, it’s now testing its 200-DMA.
From a longer-term perspective, the Industrials sector is already showing some disrepair. As shown in the chart below of the sector’s performance since the start of the bull market, this week’s decline has taken the sector’s price right below the uptrend line in place since the tariff-tantrum lows in April 2025. Further downside weakness in the sector would not only do notable damage to the short-term picture (below the 200-DMA), but it would also damage the sector’s longer-term foundation.
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