Weekly Perspective - August 28, 2026
August 28, 2026
Issue No. 9
Earnings Still Write the Script
Dear Valued Client,
Last week we wrote that oil near $94 made a September Fed hold less automatic, and that Jackson Hole would set the tone. This week Chair Warsh delivered that tone: clearer on the 2% inflation target, clearer that interest rates are the active tool, and clearer that he wants more evidence before he is willing to stay on hold. Markets now treat September as roughly a coin toss. Equities still finished the week higher. Oil cooled. The AI spending cycle did not break. Here is what we believe matters now.
Warsh’s first Jackson Hole as chair did the useful clarifying work and then the harder work. Useful: the scoreboard is still 2% on PCE. Useful: rates, not the balance sheet, are the instrument he plans to use. Harder: he said the Fed must be confident underlying inflation is moving back to target clearly and at sufficient speed, or else policymakers have more work to do. He also said he is not yet convinced the summer prints show a material improvement in the underlying trend.
Put those sentences together and the burden shifts. A week ago the default story was hold unless oil or the next prints spoiled it. After Jackson Hole, staying on hold requires more confirmation from the data. Markets heard that. Odds of a September hike moved back toward a coin toss, after having fallen earlier in the summer.
Two caveats keep us from oversteering. The timeline for that confidence test is not fully spelled out. And the next jobs and inflation prints can still move the needle either way before the September 15-16 meeting. Oil helping a little this week (Brent back near the high-$80s / around $90) is constructive for the hold case. It does not retire September.
Private company surveys eased for a second week after a multi-year high, but the level remains solid and breadth stays positive. The split inside the data is familiar and sharper again: industrial, transportation, and employment contacts held up, while retailers and homebuilders pulled front-end readings back below 50.
Homebuilders remain the clear soft underbelly, with survey activity near the weakest readings since 2023 as mortgage rates weigh on demand. Capital-goods contacts tell the other story: readings near three-year highs, with data-center equipment and broader equipment demand still firm. Trucking has normalized toward seasonal patterns after a strong first half. September’s peak shipping season will be the next test for transports.
Equities gave some ground Friday after the Warsh remarks and a chip-stock digestion day, but finished the week up. The S&P closed near 7,712, the Nasdaq near 26,402, and the Dow near 53,560. That combination fits the week’s real message: policy uncertainty rose, the earnings engine kept running, and investors are willing to own both facts at once.
The medium-term case still runs through AI-related spending converting into real demand and margins. Near term, expect more September chop around the Fed calendar. A first hike, if it comes, rarely arrives as a one-and-done surprise in market psychology. Hedging and rebalancing discipline matter more in that window than inventing a new portfolio every Friday.
Market observations as of August 28, 2026 close. Index and commodity levels move; treat figures as approximate. Closes cross-checked with arithmetic (prior close + daily change). Nasdaq figures are Composite, not Nasdaq 100.
Two of the most important suppliers into AI data centers reported again this week. The message was not subtle: demand is still outrunning supply, purchase commitments are rising to lock components, and growth guidance into 2027 remains very strong. At the same time, consensus forecasts for hyperscaler capital spending imply a material slowdown. That gap is what has been weighing on parts of the semiconductor complex.
We think the more important read is the cloud side of the ledger. Where AI investment is translating into accelerating recurring revenue and rising incremental margins, the spending cycle has a fundamental sponsor. Competition among models, including open-source efforts, is intensifying rather than consolidating. Competition usually means more CapEx, not less. Separately, state-level politics around data centers (power prices, tax incentives, local pushback) is becoming a real cost and siting variable for hyperscalers into 2027. That is policy risk on the buildout, not proof the demand disappeared.
This was a week to update probabilities again, not redesign a plan. Jackson Hole made September live. Softer oil and firm AI-linked earnings keep the longer equity case intact. Housing and the front end of the consumer keep the soft-landing story honest.
Use any September volatility to rebalance toward targets rather than chase every chip rebound the same way. Keep fixed-income duration intentional. And leave room in the calendar for the jobs print and the next inflation print before treating the September meeting as settled.