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This Week on Wall Street
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| Week of September 8, 2026 |
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| Two supply questions open the week, one at the northern border and one in the Gulf. Canada's retaliatory tariffs took effect Tuesday, matching the 50% duties Washington placed on about $20 billion of Canadian products late last month. Ottawa's list runs to steel, dairy, appliances, farm equipment, pulp and paper, and electronics, and no further talks are scheduled, which leaves the next move in Washington. The Gulf question is older and wider. Traffic through the Strait of Hormuz has been at a near standstill for months, and the exchange of strikes there widened over the weekend before drone and missile attacks reached energy facilities in southern Saudi Arabia on Tuesday. Riyadh has been routing most of its crude out through the Red Sea, so the campaign against shipping in that corridor now bears on the same barrels. Crude has pushed back toward triple digits and diesel is at a record, and that bill lands first on freight, airlines and anything else that moves goods by road. |
| The Federal Reserve entered its pre-meeting quiet period over the weekend, which leaves this week's two price reports as the last inputs before the September 16 decision: producer prices Thursday, consumer prices Friday. The shape of the debate has changed. Hiring rebounded in August after two soft months and the unemployment rate held steady, so a labor market that had been read as the case for easing is now read as the case against it, and pricing has drifted toward the possibility of an increase rather than a cut. That moves the weight of the decision onto the price side, where the picture splits in two. Consensus looks for the headline rate to hold near 3.4% while the core reading eases to about 2.4%, a gap that has more to do with energy than with any broadening of pressure. Which of the two deserves more weight is the open question, and with no official free to signal an answer this week, the market is left to work it out from the releases themselves. |
| Underneath the calendar sits a change in what the market's largest sector actually is. For most of three decades technology was the asset-light corner of the index. It earned cash, kept the greater part of it, and sent the rest back to shareholders. The build-out of computing capacity has undone that arrangement. Server halls, power, land and chips that lose their edge within a few years now absorb a rising share of the cash these businesses produce, and the accounting trails behind the spending, since what is bought today becomes a depreciation charge that grows for years afterward. The funding has changed with it. Bond issuance from the largest cloud operators has gone from roughly 2% of the investment grade market between 2022 and 2024 to an expected 9% this year, so a group that once stood outside the credit market is now one of its larger sources of supply. The practical effect is that a sector associated with growth has taken on some of the profile of heavy industry: cash committed further out, results more sensitive to the cost of capital, and paper sitting in bond indexes beside the utilities and railroads it long had nothing in common with. |
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Capital Intensity Has Changed Hands
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| Through the late 1990s and again after the financial crisis, the miners spent more on new capacity than their operations produced in cash, holding above the 100% line for years at a stretch. Technology ran near a fifth of operating cash flow for most of the 2010s. Both now sit close to two-fifths, near the low end of the miners' range and the highest technology has reached in more than twenty years. |
| Source: Bloomberg, analysis by Tavi Costa, via Azuria Capital |
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Economic Releases This Week
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| Monday | None (Labor Day holiday) |
| Tuesday | None |
| Wednesday | None |
| Thursday | Initial Jobless Claims, Producer Price Index,
Existing Home Sales |
| Friday | Consumer Price Index,
Consumer Sentiment (Preliminary) |
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Stories to Start the Week
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What is Newton?
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Our Newton model determines the highest probability of future price direction using advanced algorithmic and high-order mathematical techniques on the current market environment. It scores securities over multiple time periods on a 0–20 scale (0 worst, 20 best). Trend and level both matter. A name moving from 18 to 16 still signals a strong level, with slight exhaustion in the trend.
▼ 0–8 declining
▬ 9–13 neutral
▲ 14–20 strong
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| Equities |
Trend |
This Wk |
Last Wk |
| Large Cap | ▲ | 15 | 11 |
| Emerging Markets | ▲ | 15 | 9 |
| Mid Cap | ▲ | 14 | 8 |
| Foreign Developed | ▬ | 13 | 13 |
| Small Cap | ▬ | 12 | 9 |
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| Fixed Income |
Trend |
This Wk |
Last Wk |
| Long-Term Bond | ▼ | 5 | 8 |
| Floating Rate Bond | ▼ | 4 | 9 |
| Corporate Bond | ▼ | 4 | 9 |
| High Yield Bond | ▼ | 4 | 9 |
| Short Term Bond | ▼ | 3 | 5 |
| Intermediate Term Bond | ▼ | 2 | 7 |
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| Sectors |
Trend |
This Wk |
Last Wk |
| Technology | ▲ | 14 | 12 |
| Financials | ▬ | 12 | 12 |
| Consumer Cyclical | ▬ | 12 | 12 |
| Communications | ▬ | 10 | 8 |
| Health Care | ▬ | 9 | 9 |
| Energy | ▼ | 8 | 8 |
| Industrials | ▼ | 8 | 6 |
| Utilities | ▼ | 8 | 2 |
| Materials | ▼ | 7 | 9 |
| Consumer Defensive | ▼ | 3 | 5 |
| Real Estate | ▼ | 2 | 5 |
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| Market Segments |
Trend |
This Wk |
Last Wk |
| Large Growth | ▲ | 14 | 12 |
| Small Growth | ▬ | 13 | 12 |
| Small Value | ▬ | 12 | 10 |
| Large Value | ▬ | 11 | 12 |
| Mid-Cap Value | ▬ | 10 | 11 |
| Mid-Cap Growth | ▬ | 9 | 10 |
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Notable Newton Moves This Week: Equity reads improved across the board, with Large Cap moving 11 to 15, Emerging Markets 9 to 15 and Mid Cap 8 to 14, putting three of the five equity lines in the strong band. Fixed income went the other way and did so uniformly, leaving every reading in the declining band, with Floating Rate, Corporate and High Yield Bond all falling 9 to 4 and Intermediate Term Bond 7 to 2. Among sectors Technology took the top spot at 12 to 14, while Real Estate slipped 5 to 2 and Consumer Defensive 5 to 3. Utilities posted the largest single move at 2 to 8 and still reads as declining.
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Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.
Disclosure: Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results. This newsletter is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date noted and may change as subsequent conditions vary. The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Waterloo Capital to be reliable. The letter may contain "forward-looking" information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecast made will materialize. Reliance upon information in this letter is at sole discretion of the reader. Please consult with a Waterloo Capital financial advisor to ensure that any contemplated transaction in any securities or investment strategy mentioned in this newsletter aligns with your overall investment goals, objectives and tolerance for risk. Additional information about Waterloo Capital is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary report which are accessible online via the SEC's Investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 133705. Waterloo Capital is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.
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