I'm Dan Sheehan, a wealth advisor / financial planner based in Charlotte, NC. I work with high earners, families, and business owners on the things that actually move the needle over a lifetime: building the plan, managing the portfolio, and getting the tax picture right. Most of my clients came to me knowing they were doing well but suspecting they were leaving something on the table. Usually they were. This newsletter is where I share the thinking behind that work, one topic at a time.
Good morning investors,
We come back from the long weekend to a market on the back foot, due to increasing pressure from the spike in oil. Crude jumped a third straight day after Houthi strikes halted operations at Saudi energy facilities and wounded more than 70 people, on top of the US and Iran trading blows over the weekend. Brent is back near $99 and WTI above $94, six week highs. Dow futures are down around 0.7%, S&P down around 0.3% and Nasdaq futures ever so slightly green.
The oil move is pushing the whole chain I've been writing about all month. Higher crude feeds inflation fears, those fears lift yields, and long bonds keep grinding to fresh highs, with French 30-year yields at their highest since 2008 and German yields since 2011. It's a short week but a heavy one for data with wholesale inflation Thursday, the CPI Friday, and Oracle reporting Thursday as the last big AI read of the cycle. There's also fresh trade friction, with Canada's retaliatory tariffs on about $20 billion of US goods taking effect today.
Friday's Jobs Report Was a Curveball
The August payrolls number came in nothing like expected. Heading into Friday the consensus was for something around 55,000 with hike odds split roughly evenly but instead the economy added 162,000 jobs, blowing past even the most bullish forecasts. A print that strong would normally push the Fed decisively toward a hike, and yet the odds barely moved.
Warsh has made inflation the singular focus, and after his Jackson Hole comments playing up labor market resilience, a strong jobs number mostly confirms what he already believed rather than changing the calculus. The real decision now rests on this week's inflation data. As one economist put it, the CPI and PPI have the power to swing the meeting between a hike and a hold. Warsh has been blunt that inflation has run above 2% for five years and that it's the Fed's job to bring it down, which has left investors asking when he actually acts on it. Friday's CPI gives us the clearest answer we'll get before the meeting.
My View On The Fed
I still don't think the Fed hikes this month. The jobs surprise strengthens the case for those who want to move, and I won't pretend otherwise. A great deal of tightening has already happened through the bond market without the Fed touching rates. Long yields near multi-decade highs, financial conditions firming on their own, oil back near $100 doing its own damage to demand. That does much of the work a hike would do, and it lets Warsh hold while keeping the hawkish reputation he's cultivated.
The market has swung to pricing a hike at around 60%, so I'm on the other side of the consensus here for sure. A cool CPI Friday would pull those odds back down fast. A hot one, especially with oil feeding into it, would make my call harder to hold. This is the data that decides it, and I'd rather state my view plainly and be tested by Friday than hedge it.
Oracle Is the Week's Real Tell
Oracle has become the market's proxy for the health of AI financing, because it has taken on a lot of debt to fund its data center buildout. The stock is down nearly 20% this year and close to 30% over twelve months, almost all of it on worry about that debt load. So the question isn't just how Oracle did but what its results say about whether the debt funded buildout across Big Tech is sound.
Bank of America is bullish going in, looking for infrastructure revenue to more than double year over year as Oracle expands its footprint, and making the point that customer prepayments should ease some of the financing worry that's dominated the story. If that holds, it would be reassuring for the whole AI credit question that's been building all month, with corporate debt issuance running at record levels to fund this buildout and competing with the government for capital. A weak Oracle would feed the opposite fear. Either way it's the tell I'll be watching Thursday, ahead of the CPI Friday.
Memory Still Looks Good to Me
One area I keep liking is the bounce back in DRAM and semiconductors. The demand for memory remains sustained well into 2027, and that's the piece that makes this cycle different from the boom and bust pattern that's humbled confident investors before. The buildout keeps confirming it, and there was another sign yesterday, with Samsung and TSMC both committing to ASML's most advanced chipmaking machines, the High NA EUV tools that run around $400 million each, with Samsung using them for DRAM from 2028. Companies don't commit to equipment at that scale unless they see the demand running for years.
I came back to memory after the group broke its downtrend last month, and nothing since has changed that read. The froth got flushed in the summer selloff, the demand never broke, and the contracted, multi-year nature of it, the fabs, the equipment orders, the supply rationed out past 2027, is what gives me confidence it's structural rather than another short cycle. I hold that with the humility the sector's history demands, but the setup keeps improving.
Final Thought
The week sets up as a real test, with oil near $100, yields grinding higher worldwide, and the inflation data that decides the Fed meeting all landing in the same few days. September is living up to its billing, and I'd expect the choppiness to hold through the CPI and into the decision next week.
My read is unchanged that the Fed holds this month, even as the odds move against me and the jobs surprise hands the hawks an argument. The market is starting to price a real chance of a hold after Waller, but a hot CPI Friday could flip that quickly, so I hold the view knowing it gets tested in three days.
I keep the closest watch on the 10-year and that 5% level, since the global bond move is the real risk if it keeps building.
New York Fed inflation expectations today, then PPI and Oracle Thursday and the CPI Friday. If any of this has you wondering whether your portfolio fits your goals rather than the day's headlines, that's a conversation I'm always glad to have.
Best regards,
Dan Sheehan [email protected]
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Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader's objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.