Bulls & Bears
The Fed hiked. Everyone knew it was coming. And it still managed to rattle the market. Warsh walked up to the podium on Wednesday and delivered exactly what he's been promising since Jackson Hole: a 25 basis point increase to 3.75–4.00%, unanimous, with 16 of 18 FOMC participants signalling more to come. Trump immediately demanded 1% rates. The 10-year had already hit 5.04% on Tuesday. It's now back at 4.95%. But for three straight sessions before Thursday's snap-back, equities just bled.
Monday opened under the shadow of that hot CPI from Friday the 12th. 0.4% month-on-month headline, 0.3% core. Not a catastrophe, but enough to cement hike odds at 87%. Then Saudi Arabia's East-West pipeline went offline after drone strikes, which pushed Brent to $105.68. Semiconductors got obliterated. Down 5.9% in a single session. The catalyst? The European Parliament's proposed moratorium on frontier AI model deployment spooked the entire chip sector. Michigan consumer sentiment printed at 47.8, the lowest reading since early 2023. The S&P dropped 0.48% to 7,619.94.
Tuesday was uglier. The 10-year hit 5.04%, highest since 2007. Let that number sit for a second. Brent spiked to $108.75 on fresh Hormuz fears. Bitcoin fell 4.2% after the Senate blocked the Digital Asset Clarity Act. The ASX hit an 11-week low at 8,672. And the S&P gave back another 0.4%.
Wednesday was the main event. Warsh hiked. The decision itself was a formality. The press conference was the real show. He was blunt: inflation isn't where it needs to be, oil above $100 is a policy problem, and the committee sees the rate path going higher. No soft-pedalling. No "data dependent" escape hatches. Just: we're tightening, and we'll probably tighten again. Retail sales came in at +1.2%, which killed any argument that the consumer is rolling over. Oil fell 3% on rate-hike-means-less-demand logic. JB Hunt crashed 13.3%. Intel gained 4% on SK Hynix partnership rumours. The S&P dropped to 7,552.
Then Thursday happened. The S&P surged 1.14%. Nasdaq popped 1.69%. The market apparently decided that Warsh's clarity was bullish, because at least you know where you stand. The Bank of England held at 3.75% and paused gilt sales. Generac surged 18.33% on an Amazon backup power deal. The SEC approved a tokenized stock trading framework. Oil fell another percent. Yields eased to 4.947%. Three days of pain, wiped out in six hours of buying.
So here we are. The BoJ decision is pending today. RBA's Bullock is speaking. Oil is still above $100, just off the $108 highs. The hike is done. The question is how many more.
- Mon 15 Sep — AI safety selloff hammers semis −5.9%. EU frontier model moratorium proposed. 10Y hits 5.01%. Saudi East-West pipeline offline after drone strikes. S&P −0.48% to 7,619.94. Michigan sentiment 47.8.
- Tue 16 Sep — 10Y hits 5.04%, highest since 2007. Brent spikes to $108.75. Bitcoin −4.2% on Clarity Act blocked in Senate. ASX 11-week low at 8,672 (−0.88%). S&P −0.4% to 7,585.73.
- Wed 17 Sep — Fed hikes 25 bps to 3.75–4.00%, unanimous. Warsh hawkish: 16/18 see more hikes. Retail sales +1.2%. S&P −0.4% to 7,552. Dow −1.21%. Oil −3%. JB Hunt −13.3%.
- Wed 17 Sep — Intel +4% on SK Hynix partnership rumours. Trump calls for 1% rates. Market pricing in clarity as positive for medium-term positioning.
- Thu 18 Sep — Post-Fed snap-back. S&P +1.14% to 7,637.74. Nasdaq +1.69%. Generac +18.33% on Amazon backup power deal. BoE holds at 3.75%, pauses gilt sales.
- Thu 18 Sep — SEC approves tokenized stock trading framework. Oil −1%, 10Y eases to 4.947%. Markets decide Warsh clarity is tradeable.
- Fri 18 Sep — BoJ decision pending (75% hike probability). RBA Bullock speaks. Markets watching for next shoe to drop.
| Index | Level | Week | Signal / Commentary |
|---|---|---|---|
| S&P 500 | 7,638 | +0.7% | Wild ride to a green week. Hit 7,552 on Wed before Thursday's 1.14% bounce saved the print. The index number hides the violence underneath. |
| Nasdaq Composite | 26,418 | +1.6% | AI safety selloff Mon (−5.9% semis) then AI names led Thursday rebound. Nasdaq won the week because tech buyers showed up at the lows. |
| Dow Jones | 51,780 | −1.2% | Industrials and transports couldn't catch a bid. JB Hunt −13.3% says everything about the freight economy with diesel where it is. |
| ASX 200 | ~8,730 | −2.9% | Hit 8,672 on Tuesday, an 11-week low. Banks weakening as RBA Sep 29 hike firms. Energy bid fading as oil pulls back from $108. |
| FTSE 100 | ~8,280 | −0.4% | BoE held at 3.75% and paused gilt sales. Sterling steady. UK in wait-and-see mode as US sets the tone. |
| Euro Stoxx 600 | ~649 | −0.3% | Still digesting ECB's hike from last week. AI governance moratorium talk from the European Parliament weighed on tech. |
| Nikkei 225 | ~65,800 | +0.5% | BoJ hike anticipated today. Yen strengthening. Japanese institutions positioning ahead of what looks like a locked-in quarter-point. |
The weekly numbers look almost boring. S&P +0.7%, Nasdaq +1.6%. Don't believe them. This was one of the most violent weeks of the year, compressed into a four-day whipsaw that ended with a Thursday face-rip nobody saw coming. The S&P went from 7,587 to 7,552 to 7,638. That's an 86-point round trip in 48 hours. The Dow didn't get the memo and finished down 1.2% because industrials and transports are getting hammered by oil-driven cost pressures that no Thursday rally fixes.
The ASX was the standout loser. Down 2.9% for the week, hitting an 11-week trough at 8,672 on Tuesday before a modest bounce. Banks are softening ahead of the RBA's September 29 meeting, which Goldman now puts at near-certain for a hike. Energy names caught a bid early in the week when Brent hit $108.75 but gave some of it back as crude pulled lower on rate hike demand-destruction fears. The pattern from last week is the same: if you own resources and AI infrastructure, you're fine. Everything else is taking water.
The 10-year hit 5.04% on Tuesday. Five-point-zero-four. The highest print since October 2007. It's now back at 4.95% after Thursday's equity rally pulled money out of safe havens and back into risk, but the level was tested. And tested levels have a way of getting tested again.
Warsh hiked 25 basis points to 3.75–4.00% on Wednesday, and the vote was unanimous. Not a single dissent. He used the press conference to remove any ambiguity about direction: inflation is too high, oil above $100 is making it worse, and 16 of 18 FOMC members see at least one more hike before year-end. UBS called it the most hawkish Fed presser since Volcker. Whether you think that's an exaggeration or not, the message was clear.
Retail sales came in at +1.2% on Wednesday morning, right before the decision. Strong consumer spending when you're trying to cool an economy down is not what the Fed wants to see. It strips away any argument that the hiking cycle is hurting demand enough. And CPI from Friday the 12th was already running hot: 0.4% headline, 0.3% core. Michigan consumer sentiment at 47.8 is one of the few readings that suggests the consumer is feeling pain, but sentiment and spending are telling different stories right now.
The Bank of England held at 3.75% on Thursday and paused its gilt sales programme. The BoJ is expected to hike today, with a 75% probability priced in. If the BoJ goes, that's three G7 central banks tightening in a single week. The RBA meets September 29 and a hike looks locked. We're counting central bank hikes like bus arrivals now.
✓ Thursday snap-back (+1.14% S&P) suggests the hike was priced in. Market rewarded clarity over ambiguity. Rate path is now known, which removes one source of uncertainty.
Oil pulled back this week. Barely. Brent went from $107.40 last Friday to $108.75 on Tuesday's spike, then retreated to $104.82 by Thursday as the Fed hike triggered demand-destruction pricing. WTI fell from $103.20 to $101.91. In a normal world, a 2.4% weekly decline in Brent would be a relief. In this world, we're celebrating that oil only costs $104 a barrel. That's where we are.
The Saudi East-West pipeline going offline on Monday added fresh supply anxiety to an already tight market. Hormuz traffic is still running at a fraction of normal. The pipeline attack was a new vector. If Iran-aligned groups can hit overland infrastructure as well as maritime shipping, the redundancy that Saudi Arabia built specifically to bypass the Strait is compromised. The Houthis and Iran are not letting up. There's no ceasefire in sight and no diplomatic channel producing anything useful.
Gold dropped 1.4% to $4,341. Rising real yields are doing what rising real yields do to non-yielding assets: making them less attractive on a relative basis. But gold miners are still generating the best free cash flow of any sector globally, and the structural case (central bank buying, geopolitical hedging, dollar debasement fears) hasn't changed. Mark's been saying gold could hit $5,000. We've gone from laughing at that call to checking the chart every morning.
New Hope Coal got a mention on the Morning Call this week. Energy security is the phrase that keeps coming up. When your pipeline gets droned and your shipping lane is a warzone, coal and LNG suddenly look less like legacy assets and more like insurance policies.
The 10-year touched 5.04% on Tuesday and pulled back. That pullback matters less than the fact it got there. Technical levels work like magnets once they've been tested. The next time yields push toward 5%, the market will already know the path, and the selling will be faster. Mark said it last week: if the 10-year breaks 5% and stays there, the S&P could go to 6,100. That's 19% below current levels. It's not a prediction. It's a scenario. But it's a scenario the bond market nearly forced this week.
US margin debt is still sitting at $1.4 trillion. Berkshire's cash allocation is still at 32%, a record. Those two data points belong in the same sentence because they tell opposite sides of the same story. Retail is geared to the gills. The smartest allocator alive is hoarding cash. Both can't be right.
The new addition to the risk register is AI governance. The European Parliament's proposed moratorium on frontier AI model deployment triggered a 5.9% single-session selloff in semiconductors on Monday. Bloomberg's reporting on AI safety concerns, the Senate blocking the Digital Asset Clarity Act, and growing calls for a "pause" on the most powerful AI systems are creating a new overhang on the sector that's carried the market for two years. If regulators slow down the AI build-out, the earnings expectations baked into Nvidia, TSMC, and SK Hynix need to come down. It's early. But it's on the radar now.
The ASX hit 8,672 on Tuesday. That's an 11-week low and roughly 2.9% below where it started the week. The bounce into Thursday helped, but the damage is visible in the rate-sensitive parts of the market. Banks are weakening. Real estate is weakening. Anything that relies on cheap money is getting repriced because money isn't cheap and it's about to get more expensive.
The RBA meets on September 29 and a hike looks like a done deal. Goldman had it at 60% last week. After the Fed's move and Warsh's hawkish tone, Australia can't credibly sit still while every other developed-market central bank is tightening. Bullock is speaking today. If she gives even a mild hint, the pricing will move to 80%+ by Monday.
Telix Pharmaceuticals (TLX) FDA Pixclara approval
Got the FDA nod for Pixclara this week. Diagnostic imaging approval is a genuine milestone, not a pipeline maybe. This is revenue, not hope. The stock had been drifting on broader market weakness and this gives it a catalyst.
Energy (WDS, STO, BPT) Oil > $100
Oil pulled back from $108 but is still above $100. Santos remains a buy at 13x PE. Woodside is generating serious cash at these levels. The Saudi pipeline attack just added another reason to own Australian energy.
New Hope Coal (NHC) Energy security bid
Mentioned on the Morning Call this week. When pipelines get droned and shipping lanes are contested, thermal coal looks less like a stranded asset and more like a strategic one. The energy security thesis isn't going away.
Gold Miners (GLD, NST, GMD) FCF machines
Gold at $4,341 is off the highs but the miners are printing free cash flow at a rate that makes every other sector look anaemic. Greatland Gold still a double-buy from last week. Unhedged. Best FCF in the market.
ASX Banks (CBA, WBC, NAB) RBA hike looming
Rate hikes are supposed to help bank margins. Except when they also kill mortgage demand. New mortgage applications down 15–20% per Kai Chen. That's a volume problem no NIM expansion fixes.
ASX 200 Index 8,672 (11-wk low)
Hit the lowest level in 11 weeks on Tuesday. The Thursday bounce helped but couldn't recover the damage. Rate-sensitive names are dragging the whole index.
Real Estate / REITs Yield pressure
10Y yields touching 5% is brutal for anything priced on a yield spread. Cap rates need to widen, which means property values need to fall. Simple maths, uncomfortable conclusion.
Consumer Discretionary Cost squeeze
Diesel at extreme levels, mortgage rates climbing, petrol above $2.20/litre. The consumer is getting squeezed from three directions at once. Canaccord's downgrade cycle call from last week is playing out.
Generac (GNRC) +18.33%
Amazon backup power deal. Data centres need reliable power. Generac makes generators. Put those two sentences together and you get an 18% day. This is the AI infrastructure trade showing up in places nobody expected a year ago.
Intel (INTC) +4%
SK Hynix partnership rumours. Intel has been a punching bag for two years and any whiff of a strategic deal gets bought aggressively. The market wants to believe in an Intel turnaround.
S&P 500 (Thu bounce) +1.14%
The Thursday rip erased three days of selling. Buyers materialised at the lows. Whether that's genuine conviction or options-driven mechanics is the question nobody can answer until next week.
SEC Tokenized Stocks Framework approved
SEC approved a tokenized stock trading framework on Thursday. Either this is the beginning of something real or another crypto-adjacent regulatory footnote. The market treated it as a positive.
Semiconductors −5.9% Mon
AI safety legislation fears wiped out semis in a single session. The European Parliament's moratorium proposal was the trigger. When governments start talking about pausing frontier AI, the companies building the picks and shovels take the hit first.
JB Hunt (JBHT) −13.3%
Freight bellwether got crushed. Diesel costs are eating margins alive. When the biggest trucking company in America drops 13% in a session, it tells you something about what $100+ oil does to the real economy.
Bitcoin −4.2%
Senate blocked the Digital Asset Clarity Act on Tuesday. The regulatory overhang on crypto just got heavier. Without a clear legal framework, institutional adoption stays on pause.
Dow Industrials −1.2% Wk
Transports and industrials couldn't catch the Thursday bid. Oil-sensitive, rate-sensitive, and consumer-sensitive all at once. The old economy is feeling every one of these headwinds simultaneously.
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Kai Chen on Ausbiz “The Call”Pre-Fed positioning and the oil-yields-RBA triple bind. Mortgage applications down 15–20%. Banks weakening as hike expectations firm. RBA September 29 looking like a done deal. ASX at 11-week lows. Canaccord downgrade cycle rotating out of banks and RE into resources and healthcare. Kai's view: stay defensive, own energy, wait for the Fed to show its hand.
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Stock of the Day — Infratil (IFT)New Zealand-listed infrastructure play with data centre and renewable energy exposure. Kai highlighted the dual tailwind: AI-driven data centre demand and energy transition capex. Cross-listed on the ASX. A name that benefits from two of the biggest structural trends running simultaneously.
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Morning Call — YouTube & SpotifyDaily pre-market wrap across a massive Fed week. Sunday: "Triple Threat" — 87% hike locked, Saudi pipeline down, AI pause calls. Monday: oil and yields higher into Fed decision, Telix FDA Pixclara approval, New Hope Coal energy security thesis. Wednesday: Fed hiked, 16/18 signal more, Trump wants 1%, 10Y above 5%. Thursday: post-hike bounce, Warsh's credibility now on the line.
Lighter media week compared to recent editions. No Mark Gardner or JT on Ausbiz this week. Kai Chen held the fort on The Call with a pre-Fed read that aged well. The Morning Call daily videos ran through all the major events across what turned out to be one of the most consequential weeks of 2026.
"Inflation is not where it needs to be. Oil above $100 is a policy problem. The committee is prepared to act further if the data warrants it."
"The Federal Reserve just raised rates AGAIN. They should be at 1%, not 4%. Warsh is destroying the American economy while the rest of the world laughs."
"This was the most unambiguous Fed communication we've seen in years. Warsh has put his credibility on the line. We expect at least one more hike before year-end."
"The 10-year hitting 5.04% is a warning shot. If it breaks 5% and stays there, the maths on every borrowed position in the market changes overnight. S&P 6,100 is a live scenario."
"Three G7 central banks tightening in the same week. The global rate cycle has turned, and it's turned hard. Anyone still positioned for rate cuts is fighting every central bank on the planet."
The Fed is done for now. The next FOMC isn't until October 28–29. But the rate cycle doesn't pause just because the Americans had their meeting. The BoJ today, the RBA on September 29, and PCE on September 26 will keep the pressure on. If PCE comes in hot, the October FOMC becomes another live hike. If the BoJ goes today and the RBA goes on the 29th, we'll have had five developed-market central banks hike in September alone (Fed, ECB, BoJ, RBA, and potentially the Swiss). That hasn't happened since the coordinated tightening of 2022. We're back in that world now, except this time oil is above $100 and the AI investment cycle is under regulatory threat. Keeping position sizes small and cash levels high is still the right call. The buy-back date is October 11–13. We're not there yet.
| Date | Company | Ticker | Focus |
|---|---|---|---|
| Wed 17 | JB Hunt Transport | JBHT | −13.3%. Diesel costs eating margins. Freight volumes under pressure from rate hikes and oil. Bellwether for the real economy. |
| Thu 18 | Generac Holdings | GNRC | +18.33%. Amazon backup power deal. Data centres need reliable power supply. AI infrastructure trade in an unexpected name. |
| Mon 15 | Intel | INTC | +4%. SK Hynix partnership rumours. Market rewarded any hint of a strategic turnaround. Still deeply below 2024 highs. |
| Mon 15 | Telix Pharma (ASX) | TLX | FDA Pixclara approval. Diagnostic imaging milestone. Revenue catalyst, not just a pipeline story. Genuine de-risking event. |
| Tue 16 | Bitcoin / Crypto | BTC | −4.2%. Senate blocked Digital Asset Clarity Act. Regulatory limbo continues. Institutional adoption stalls without legal clarity. |
| Wed 17 | US Retail Sales | — | +1.2% M/M. Strong consumer spending right before the Fed hiked. Killed the dovish argument. Consumer not rolling over despite sentiment at 47.8. |
We'll give Warsh this much: he did what he said he'd do. Hiked 25 basis points, no dissent, stood at the podium and told you plainly that more is coming. There was no waffling. No "well, it depends on the data." Just: inflation is too high, oil is a problem, and we're going to keep tightening until the numbers move. Respect the clarity. Fear the consequences.
Thursday's bounce was impressive. S&P +1.14%, Nasdaq +1.69%. Three days of selling erased in one session. And we don't trust it. Not because the buying was fake, but because the reasons to sell haven't gone away. Oil is still above $100. The 10-year touched 5.04% and could get there again. Margin debt is $1.4 trillion. The RBA is about to hike on September 29. The BoJ is probably hiking today. The only thing that's changed is the Fed removed uncertainty about its next move. That's nice. It doesn't fix the structural problems.
The AI governance angle is new and it's worth watching. Monday's 5.9% selloff in semiconductors on AI safety moratorium talk was a shot across the bow. If the EU follows through, and the US political climate keeps shifting toward "maybe we should slow this down," the earnings assumptions baked into Nvidia and the entire chip supply chain need to be revisited. We're not selling our AI positions. But we're paying closer attention to the regulatory risk than we were a week ago.
Our stance remains bearish. Not apocalyptic. Not buying-puts-on-everything bearish. Just: this is not the time to add risk. Cash is yielding near 5%. Why would you chase an equity market trading on a Thursday bounce when every central bank on the planet is tightening into $100+ oil? The buy-back date is October 11–13. That's when September seasonality typically exhausts itself. Between now and then, we're keeping powder dry.
On the ASX, the thesis is unchanged. Own energy: Santos at 13x with oil above $100 is still cheap. Own gold miners: Greatland Gold, Northern Star, the unhedged producers generating free cash flow at $4,300+ gold. Avoid banks (CBA is a sell), avoid REITs (yields near 5% kills the spread trade), and be very cautious on consumer discretionary (diesel at record levels, mortgage rates climbing, petrol above $2.20/litre). Infratil is an interesting new name from Kai's segment: data centres plus renewables, dual structural tailwind, cross-listed on ASX.
Warsh has put his credibility on the line. If inflation stays hot and oil stays above $100, he'll hike again. If the data softens, he can pause. Either way, the path is higher from here until something breaks. We'd rather be three weeks early to the buy-back date than three days late to a selloff. Patience.
