Mid-Week Macro (8/5/2026)

Mid-Week Macro

The S&P 500 continues to remain strong. The S&P has begun August on a tear, reaching an ATH over 7700, closing today at 7723. Wall Street remains bullish, with no fear. Most are expecting to see 8000 this year. While that could happen, I think this bullishness is overblown. Analysts are focusing on earnings and are ignoring the underlying weakness. If you look at the complete picture, it’s not pretty. You can’t have a healthy economy when twenty-year-olds can’t afford to buy a house. Or, half of households are under financial stress.

Why did the Fed open a swap window for Japan this week? This means the Fed will print dollars for Japan if they want them and use their $1T in US Treasuries as collateral. This is bad for the dollar and bad for interest rates. We don’t want to do that, but we have no choice. We are doing it because we don’t want Japan to sell our US Treasuries. Note that we recently did the same thing for some of our allies in the Middle East who were impacted by the war in Iran.

Today, Iran and Oman agreed to control the Strait and split the fees. Whoops. How do we stop that? Wall Street only cares about last Qtr’s and next Qtr’s expected earnings, so they can ignore this important event and pretend it’s irrelevant. It’s amazing how many events Wall Street thinks are irrelevant.

The Fed has shown their cards: they have no restraint when it comes to money printing. They don’t care about inflation. If it’s 3% or 4%, it won’t get their attention. Perhaps at 5%, they will curtail printing, but it won’t end. This is why the 10-year and 30-year rates are up. This is bad news for housing and autos. It also puts pressure on AI firms that need to borrow money.

Connect the dots. The US economy is not healthy. Today, my gold/silver miner portfolio was up 8%. Gold’s next leg (Leg 2) in its bull market might have started today, but even if it didn’t, the odds remain in our favor that it will soon. The chance that we won’t see a Leg 2 is very low. On July 29th, gold traded at $4,000. Today, it closed at $4291. That’s up nearly $300 in a week. We could see $4500 by Friday. But this is just a start. A run to an ATH is coming. It’s just a matter of time.

To be clear, I’m still expecting one final correction before we get Leg 2. It might happen, and I hope it doesn’t, but I’m expecting another correction below $4000 before November that coincides with a selloff on Wall Street.