Why Mortgage Rates Are Rising While the Fed Holds Steady

[0:00] Dano: It's Friday, September 4th, 2026. Hey, let's go out On The Markets. My name is Dan O'Weir, joined shortly by our managing principals here at Fremont Advisors, Sonoma Wealth Advisors. We're talking about mortgage rates today, why mortgage rates are rising while the Fed holds steady, hovering around 7%.

[0:20] We're going to get a detailed look at that 7% mortgage rate. Are they basing to go higher or are they starting a distribution pattern to go lower? Daren's got the technicals. We'll find out his take. Also, why rates likely won't come down despite the second best jobs report of the year.

[0:37] And we'll look at the impact rates have had on bonds, a traditional inflation hedge. And oh yeah, one more thing. If you followed the headlines this week, you probably thought the market took a dip. Would you be surprised to find out it didn't? We'll find out why.

[0:51] Announcer: The stock market, the economy, your money. What's the latest and what could be next? Find out now with Fermata On The Markets. Straightforward financial market updates for the brands of Fermata Advisors, Sonoma Wealth Advisors, Fermata 401k and Fermata Tax. On The Markets starts now.

[1:22] Dano: Managing principals of the firm, Daren Blonski, CFP, Chris Sipes, CFP. Chris, why don't you start us with some inspiration this week?

[1:31] Chris: Yeah, this is from Andrew Ross Sorkin, who has a book out about the Great Depression. And Andrew says, The almost singular through line behind every major financial crisis is one thing, debt. It's a powerful, optimistic force. If we envision the future as a land of ever-expanding opportunity and affluence.

[1:57] And that's true. We've talked in the past about how human nature doesn't change even though market conditions change. And the buildup of debt and excess debt seems to have always led to problems in the past and will probably lead to problems in the future.

[2:18] Dano: And it is now one of those times.

[2:21] Chris: Yeah, it is now. We won't know until hindsight makes it clear. The other thing is, you know, fraud is always present, but it seems to be more so in good times. And that's Walter Baggett says, the good times almost always engender much fraud.

[2:41] All people are most credulous when they are most happy, and there's a happy opportunity for ingenious mendacity. So he says it better than I did. But essentially, when times are good, there's a lot of froth.

[2:56] Of course, we'll notice a lot of that after the fact, of course.

[3:01] Dano: I have been seeing that anecdotally. You see some of these because I'll follow those headlines. It feels like a few of these fraudsters are getting exposed. The Dodgers scandal, Dodgers-Lakers scandal is one of them, potential fraud there.

[3:15] And I've mentioned this before, but there's an amazing show that was on CNBC called American Greed. Basically, every show is about a Ponzi scheme, and all of them were exposed because of the 2008 crisis. So are we in one of those now? Like you said, we won't know until it's all done.

[3:34] Chris: Yeah, sentiment indicators went back to pretty much normal this week with the AAII sentiment survey. The CNN Fear and Greed Index actually dropped down to 36 fear. It was from a 55 neutral stance. And Bitcoin is about unchanged. We're at 65 greed. Last week we were at 71 greed. Boy, it seems like Bitcoin jumped up there and is just kind of coiled, which I'm sure we'll see when we get to the candles.

[4:08] So the big news today was a massive jobs report. I think it was 3x what was expected. So let me just read this. And this is from Heather Long. Heather says, August was a wow jobs report. August jobs added 162,000, three times the expectation of 55,000. July was revised up 21,000, June up 31,000.

[4:39] So the unemployment rate is at 4.1%, which is unchanged from July. The labor force participation rate, was 61.6 which is up from 61.4 And it isn't just healthcare hiring. She says hospitality added 59,000 jobs, education. We'll see the breakdown of this later. But she says that's a big rebound from 10,000 a month in 2025.

[5:06] You can see the little bit longer term. Now, why does this matter? Well, those that watch the show will know that the Fed has a dual mandate of full employment and price stability. Many would say. Unemployment rate of 4.1% is full employment. So job number one, check for the Fed.

[5:30] But job number two, price stability is questionable at the moment. And therefore, the market's wondering if the Fed is going to hike, specifically at the next meeting here in September. Probably not, in my opinion, given that they usually don't make big... Changes in direction right before elections.

[5:56] Daren: They did a lot. I mean, they did it during the presidential election.

[6:00] Chris: Yep.

[6:01] Daren: They didn't drop them otherwise, but yeah.

[6:04] Dano: Yeah. Nothing is one for one, but the expectation or the general sense is that if there's a good jobs report to market, we'll see a bump from that. That didn't happen today. What do you think that's saying?

[6:21] Daren: We saw a great market jobs report today.

[6:24] Dano: No, no, the market, the stock market. If there's a good jobs report, the stock market would see a bump.

[6:32] Daren: Well, I think it's mixed news, right? If you have a good jobs report, it means the economy's strong. You have less room to cut rates, right? So then is the market excited because the economy's strong, or is it excited because they're about to deluge us with liquidity? So I think there's kind of a mixing line. You'll see that in charts. It's kind of a mixed day. Good, but wasn't bad, wasn't great kind of thing.

[6:59] Chris: Yeah, I think it was yesterday or Wednesday, one of the Fed governors, Waller, who has been hawkish, came out and said, you know, I could see a case for keeping rates steady. And the market immediately rallied off that information. And...

[7:19] And then today we got the hot jobs report, which to Daren's point means that, hey, the underlying economy seems pretty strong and employment is, they're at full employment, which is going to give less cover for the Fed to stay pat on rates. Hence the reason the market was like, that's not great news if they're going to be hiking rates. So, and. Why? Why does that matter?

[7:50] Well, from a governmental, you know, budgetary standpoint, we're already running massive deficits and those deficits could get even bigger as the interest rates on the debt goes up. The U. S. Government is a massive borrower and those interest rates are going up. So the net interest expense is going to exceed pretty much everything but Social Security in terms of expenses. By 2036.

[8:20] So 10 years from now is that's the, that's the projection. Now a lot can happen in 10 years. So I don't know how much, you know, credence I put in this, but, that's the projection at this point. So markets are all about expectations and, what do people expect to happen? That's going to drive the prices of the interest rates.

[8:43] And so you've really got, Warsh in a pickle because that good jobs report comes out today and the market starts to sell off and President Trump immediately takes to true social and says, hey, why is this happening? This doesn't make any sense.

[9:02] Interest rates should be going down. And basically, if the Fed doesn't lower rates, he's going to, I guess, cut off trade with every country we have a trade deficit with. Obviously, the market doesn't believe that.

[9:17] Daren: Is even possible let's hope he's let's hope he's being hyperbolic here and that's not going to happen because that would cut off trade with you know Japan germany i mean i don't even know how many countries it would cut off you would have global economic collapse if he did that like for sure for real 100 for.

[9:39] Chris: Sure so it's kind of you know it I wonder if somebody is whispering in his ear like, hey, you're probably not doing much to help the interest rates go down by, you know. Creating this volatility. Because remember, the more volatile things are, the higher the interest rate. The less credit worthy you are, the higher the interest rate. And volatility equals panic in the market. So nobody wants to see more of that.

[10:10] Dano: And look at this on the chart here, Chris, just before we move on. Medicare and Medicaid combined is triple the defense. Expenditure, which if you look at the U. S. Defense expenditure compared to the rest of the world, we're obscenely expensed.

[10:30] I mean, we'd spend the most in the world, not even close to anybody else on defense. And that's only a third of what we spend from the federal government on healthcare, which that's just crazy. That's a very large number to see on the screen, I think.

[10:46] Chris: Yeah, absolutely. Absolutely. And, so where did those jobs come from, with this jobs report, you know, private payrolls actually, and this is from Eric Basmajian and his, he's showing here that the private payrolls are where, those, those jobs are coming from and while government payrolls are going down.

[11:12] So I, I think if, you know, you're coming from that side of the aisle that, That's what you wanted to see. And that's what's, that's what's happening, in, in those payrolls. And then on the private sector side of things, where are those jobs coming from?

[11:29] This was a pretty cool chart from The New York Times, healthcare and social assistance, utilities, leisure and hospitality, big jump construction. So, you know, a lot of strength. Now, where's, where are the, jobs? Disappearing. And you see that in information and federal jobs.

[11:51] But everywhere else is showing a lot of signs of strength. Now, from an interest rate standpoint, not only does that say to the Fed, like, hey, it's going to be tough for us to cut rates based on employment and full employment, but also in general, the more people that have jobs, the more people that have incomes, that's going to keep demand high and it's going to keep...

[12:14] Pressure on inflation because, you know, especially as people change jobs, that typically leads to higher wages. Those higher wages, when people spend more, that's more demand in the system.

[12:29] And that's in the middle of a supply shock, you know, where a lot of these goods and services are being, we're in somewhat of a supply shock, most famously with energy due to the wars. So... So those increased payrolls can keep pressure on inflation, which adds to the pressure on the Fed to hike, to keep up with inflation.

[12:56] Dano: Chris, before you move on to the next slide, just want to shout out that this is a live broadcast on all of the Sonoma Wealth social and YouTube accounts. So as you're watching this, if you're watching this live on Friday in the 1 p. m.

[13:09] Hour on September 4th, you can comment on the live stream. And we will get you a reaction here on the show. So wherever you're watching the show, on any of the platforms, you can comment live and we will respond.

[13:23] Chris: Now, there's a lot of different reasons interest rates can be going up. And one of them is growth. And when you get a lot of growth in the economy, that leads to a higher demand for money. And remember, interest rates are just the price of money. And so... As you have more growth, you have more demand for money.

[13:45] Those interest rates go higher. And we got really good services PMIs this week. Anything over 50 is considered expansionary. And we're a very high relative to where we've been over the last few years at 55.4 this week. Now, we haven't seen a print that high since maybe, what?

[14:10] I guess a little bit in the early part of 24, but then you'd have to go back to 22 to see the services PMI going up like that. So we've got growth on the services side of things. We've got growth on the manufacturing side of things because the manufacturing PMIs came in at 54.6, also a pretty hot number.

[14:35] So a lot of underlying growth in the economy that is driving... Those that rise in interest rates okay and private construction versus data centers this was from the wall street journal just showing, I mean, this chart is pretty, it's just, it's like you can sort of assume this is what was happening in the background, but to see it charted like this is pretty, I guess, shocking.

[15:07] I don't know, shocking to me. But you can see where most of that construction is going and it's to data centers, while private construction spending has been tanking.

[15:22] So when you consider the fact that these large, what we call hyperscalers, the Googles and the Metas and Amazons of the world, the amount of money that they are spending on the AI infrastructure build out and data centers, I think is part of it. But if you also think about the implementation of AI within businesses, whether it's putting in the new software, training the employees.

[15:51] Etc., etc., that is a lot of spending that's going into the market right now, which is kind of crowding out the private construction space. While interest rates have gone higher on housing and other private spending, it's been more than covered up by the fact that these data centers and kind of AI build-out spending has taken its place and then some.

[16:21] That spending at first was coming out of cash flows of the hyperscalers. So they were able to just cover the build out without having to borrow. And that changed towards the end of 2025 and has just taken off. Explosive rise, this from Bloomberg, the hyperscaler debt has doubled in nine months. Now, before you start to panic. Remember that the hyperscalers had next to no debt coming into this.

[16:53] So they had very clean balance sheets and they were able to borrow at extremely low interest rates. In some cases, pretty close to what the US government can borrow at. But that debt that they started with has doubled. And so they are starting to take on debt now rather than funding through cash flow. So going back to the...

[17:17] The premise that we started the show with, you know, debt can be a good thing, you know, it can help you grow, it can amplify growth, it can amplify profits, but it can also, it introduces more risk to the situation as well. And there is some sort of, you know, spot on the efficient frontier where it's like, okay, now you've got too much debt to where it's a hindrance instead of a help.

[17:46] So that debt knife can cut both ways. And if you look at the credit markets for signs of stress at this point, you can't really say that that's the case. Sometimes interest rates would rise because spreads are starting to go up and lenders are requiring a higher return for their money in order to lend their money.

[18:13] But that's really not the case. What you're looking at here is this. Spread of corporate junk bonds, so corporations with pretty poor credit versus treasuries. And that spread is extremely low compared to history and really is not showing any signs of changing.

[18:31] So at least from a debt market perspective, a corporate debt markets perspective, you don't see any signs of worry at this moment. Now, in times of stress, You can see that those spreads get much wider and they typically do so pretty quickly. But we haven't really seen that since COVID. And now that we're on the back half of the 2020s, which is kind of crazy.

[19:03] Now, if you look at this chart from Apollo, this is Torsten Slocke at Apollo, and in his opinion... He says, if AI succeeds, rates will be lower. If AI fails, rates will be lower.

[19:21] So funny that at least somebody feels there's a little bit of light at the end of the tunnel.

[19:30] And what does he say here? Okay, so if AI succeeds, we're going to get productivity gains, trillions in revenue, which would be a deflationary impulse. Because of the productivity gains, that's going to create deflation across the market, which would make long rates fall.

[19:51] Now, if AI fails. The bubble bursts, equities sell off, light to treasuries, long rates also fall. So if you're a bond bull, that's good news for you. Because if rates fall, then the principle on bonds will increase.

[20:14] Kind of the opposite of what we've been seeing here for this year.

[20:24] Inflation broadens okay now this is from Bloomberg and they're showing that the other side of the mandate the Fed's mandate you know you've got the employment side but on the inflation side and this was you know the other news this week was Warsh's discussions at jackson hole and how he sounded very hawkish on inflation and talked a big tough game that the Fed was going to be was going to nip nip inflation once and for all.

[20:55] And here it shows the broadening out of inflation. So this is the share of components in the PCE that were rising by more than 3% over the last 12 months. That's the yellow line and over the last six months. And so the yellow line is heading up, meaning that you know, when you take the basket of goods.

[21:22] There's there's many more of them that are going up by more than three percent at least by the the official measurement now kind of not surprising given the wars also not surprising and i haven't really heard many people talking about this but given the expectations for the el nino year this year and the impacts that that'll have on crops and food across the planet, supposedly this is supposed to be one of the, you know, most extreme El Ninos on record, which could impact crop prices, across the country.

[22:05] We're already seeing that early rains in, in September in California. Right guys. From what I understand, it actually might be a good thing for California crops, given that, a little bit more expected rain, which. Which would be helpful. At least it helps for fire season, if nothing else, right?

[22:24] Dano: We did just get sprinkled this week, Chris. I couldn't believe it.

[22:28] It was back-to-school night for some people in Petaluma this past week, which is typically the past few years. September has been hotter than July, and we were sitting there fighting off rain. So, yeah, maybe we are looking at a wetter fall. More mud games for the 49Ers. Yep, yep. Now...

[22:50] Chris: The, the, the, obviously the biggest, price increase that I I'm personally surprised has not affected the markets more, is the gas prices. And this is showing the increases in gas prices since the Iran War. I guess guys, if you look at the bright side that California's gas prices are already so high, we've noticed the least amount of increases in California.

[23:20] Dano: Relative to other areas of the it already sucks here so welcome to the rest of the united states look at the i won't i won't i won't show it but there's that meme where it's james franco who has been since canceled but there's a movie where he's sitting there and he's getting ready to it's the old west he's gonna get hung he's got a noose around his neck and he looks over at somebody else is also in line to do it and he looks at them and he goes first time and i feel like that for about California a lot of times you know we're looking at the rest of the country like oh my god four dollars a gallon and we're just you know like oh okay yeah cute yeah yeah and you look at some of the areas in the midwest where gas is up over 60 i.

[24:02] Chris: Mean that's wow that's that's incredible but hey the market has not cared yet just think everyone can move back to of California now because y'all your gas is high too That's right. That's right.

[24:17] Daren: But this is kind of, let me just interject here for a second. Like the gas is a big story, but the bigger story is the diesel and what's happening in diesel. And some of you are like, well, I don't drive a diesel truck.

[24:27] Well, everything you bought at Walmart this week or Target came to you in diesel form, right? Like, and so this is really impacting the inflation story in a big way. And it's much more meaningful than I think. A lot of people are paying attention to, but diesel prices are just out of control right now.

[24:48] Chris: Yeah. Now, The calci betting markets still have the chances of a rate hike at basically a coin flip at this point, about 50-50.

[25:01] They were a little higher yesterday in terms of expected to stay flat. I will bet that they stay flat. I think that I'll be surprised if they hike. I'll be surprised if Warsh is as tough on inflation as he says.

[25:21] Maybe he will be, but I'd just be surprised at this point.

[25:26] Dano: Just an opinion, Chris, but I feel like they're hyping a potential hike so that they can present a hold as a cut, if that makes sense.

[25:36] Chris: Yeah.

[25:37] Dano: Oh, we might, You know what? All right, we're going to back down. We'll just hold when they were going to hold the whole time.

[25:43] Chris: Sure, that's possible. Lots that goes into it. Now, from an investment standpoint, if we are... Going into a different regime. We've been in a regime for a long period of time where inflation just didn't matter. Nobody had to worry about inflation. And then 2022 came along and everybody that had just a standard stock and bond portfolio was like, whoa, didn't realize these things would go down at the same time together.

[26:11] And in fact, those correlations change with the rate of inflation. And don't have the exact numbers in front of me, but roughly 3%, meaning that when inflation is over 3%, the correlations between stocks and bonds historically have gone up. And so if bonds are the only part of your portfolio that you are expecting to offset your stocks, that has not worked as well from the time period of 2021 till 2025.

[26:45] And you can see that illustrated here. On the sufficient frontier map from the Financial Times. And so they show that 1986 to 2020, how those bonds were pretty good diversifiers to the stock portfolio and how that has completely changed regimes in the last five years. So interesting to note.

[27:11] And I guess on the positive side, Because the rates on bonds are so much higher now than they were in 2022, the drawdowns in bonds have been far smaller. So at least the fact, you know, they may not hedge you as well, but hopefully they're not going to be hit as hard as they were in 2021. So here you can see the drops in 26 and over the last few years versus 2022, which was much higher.

[27:45] Now, this is leading to a lot of folks around the world, whether it's governments and individuals, saying like, hey, do I even want to keep bonds? And that's adding to pressure on the rates. And if you look at the long-term cycles between stocks and bonds, this is one of the longest outperformances of stocks over bonds. This is the largest margin in 66 years.

[28:15] Cycles are getting stretched. And on the plus side, at least gold and equities, so gold and stocks, have started to lose their correlation. They were pretty highly correlated over the last year or so relative to history. So gold is finally starting to show a little non-correlation to stocks. So with that, I'll throw it over to you guys with the candlesticks.

[28:43] Dano: Before we do, Chris, because bonds are clearly at a low moment, and it's almost getting to the point where it's very obvious. And so just for anyone who has bonds in their portfolio, or if you were to talk to someone about bonds right now, they'd say, oh, absolutely not. Could you just share again what you've said so many times before, which is what can happen when a situation seems obvious in investing?

[29:11] Chris: Well, you have to remember that... All of those expectations are already known. So the market's already priced in all this terrible news that the US government's borrowed so much money and that they continue to run massive deficits and blah, blah, blah, all these things. That's already priced in. And so what matters in markets is what happens relative to those expectations.

[29:37] And in asset classes in general, typically, as Warren Buffett says, you pay a high price for a cheery consensus, meaning that when everybody thinks it's the greatest, you're probably going to be spending a lot of money to buy that asset, which therefore... Makes those expected returns in the future lower.

[29:58] Whereas when you buy things when nobody else wants them, typically you can get them at a decent price, and therefore your expected returns should be higher because you're taking on more perceived risk. So it's really a brain pretzel twister, and it's emotionally very difficult to do is to consider buying assets when everybody hates them.

[30:21] But historically... Those that can get the courage to do so can be rewarded.

[30:34] Dano: Exactly what I was looking to hear you say, buddy.

[30:36] Daren: And let's start with rates, folks. So we're going to tell you the 10-year to start with the charts this week. We're getting to the zone. Last week we talked about breaking above 4.68, somewhere in that range. You can see this area. And how important this area has been.

[30:55] We start breaking too far above this, we start seeing something break. So I would start looking to the Fed to do something interesting, the Treasury to do something interesting, politically something to happen because pushing the 10-year to 5%, something's breaking. I don't know what, but that's not really good news in the short term.

[31:18] I guess you could argue that it's just on its way up. And over the long term, it's still fine. But I think there would have to be some interventions that begin if we break above that 5% line. That's a pretty important zone and has some pretty significant implications for the overall economy if we climb up into that area, including, as we talked about in our thumbnail in the open to the show today, mortgage rates.

[31:46] So when we look at U. S. Mortgage rates, 30-year U. S. So this is the one week chart and where they're at. And you can see their base effect really between six and seven or just going between there.

[31:57] I will say on the positive note, we have lots of friends in the mortgage business and it looks to me like technically there's still some hope it's in a downtrend. Still some hope, but we'll see. You can see it move right up into that downtrend line right there and seems to be holding around 6.7. I think you get into mortgages in the 7%.

[32:21] The real estate market is already pretty dead. I think then it's like on life support at that point. And buying and selling houses is such an important part of our economy. No politician wants that. So I don't think they'll let it stay there very long if it is. And I think that's why you had VP come out yesterday and say, oh, we need to push rates down.

[32:44] We need to push rates down. You have the politicians kind of screaming at the central bankers. Meanwhile, you got diesel going up, right? That's very inflationary. You got gas going up. That's very inflationary. You've got, you know, apparently we're still in a war with Iran. I don't really know if we are. I guess we are. I guess it depends how you define war.

[33:03] But sometime this week, we lobbed bombs at each other. So I guess by definition, we're at war. I'm not sure the politicians want to accept that or believe that. I think, you know, those who are not in power, who want power, want to say, oh, look, we're at war and it's bad. Those who are in power and want to keep their power, they're like, oh, we're not in more.

[33:21] What are you talking about? But definitely with oil shooting up this week and getting up in the 90 range, we're on the upward momentum with oil. And that's going to impact crude or gas and oil to pump. Has a slowing effect on the economy. Again, I've been talking for a while between this 80 and 100. I think there's kind of room for the economy to keep pacing along in here.

[33:45] Everybody get above 100. Then there's certain players that don't want it up there. And then you get below 80 and there's certain players that don't want it down there. So keeping it all happy medium, I think, is the goal. But you can see how important this area right here is, kind of where we're at in this zone, this 90 and change.

[34:10] So I would expect the politicians to kind of hang it out in this range. We get much above here, then I think we see some fireworks. Works. Dollar, let's get dollar currency, dollars just trend.

[34:21] Dano: One second, Darren, I just want to go back to this for a second because we talk about this concept a lot. And for anyone who's new to the show, are you literally saying that whoever is making political and or military decisions are using this very chart that we're looking at as a data point, in your opinion?

[34:41] Daren: I mean, you know, that would be me pontificating, but I think you can easily extrapolate what happens to the economy if oil goes above 100. You could also extrapolate what happens to the Russian economy, to the Iranian economy, if oil goes below 80. So there's countervailing forces that want oil to stay in a certain area, right?

[35:06] And so on some level, yeah, we're at war with, proxy war with Russia, we're at full war with Iran. There is amongst the powers that be, like keeping oil within relative calm, right? No one's full. All holds bar going at it because there's consequences, right? If we really wanted to end the Iranian regime, we could just bomb Karg Island.

[35:31] Then they would be getting next to no money and they would crumble and there would be mass famine and starvation. It would be really bad. But who's going to do that? Even though Trump threatened that, it would be kind of crazy because it would just potentially shoot oil through the roof. And that has all kinds of political implications walking into a midterm for the Trump administration.

[35:54] Dano: And it's just something that, again, things just seem to magically happen. So there's an interesting rhyming that happens right around certain points on the chart where it's like, oh, we've got a ceasefire because it's around those points. So not a fact. There's nothing clear indicating that necessarily, but it just keeps seeming to happen. So kind of an interesting thing to note. I just wanted to point that out.

[36:20] Daren: Yeah, I mean, I think that's kind of the thing of the market, right? Do the markets drive the decisions or the citizens drive the markets? And there's this interconnected relationship amongst the market participants that I think collude to keep oil in a certain place because really stability, instability is not good for either side. And that's really the point, right?

[36:43] We did see gold look like it was going to sell off below that.

[36:47] Morning week moving average this week and it recovered and looks okay so you know seemed to be going to the moon last week and then sold off this week and then recovered right in this area so that's i think fairly good news for those who want gold to keep moving higher silver really not doing much it looks like it might have survived this and broke above this you long-term resistance of 65, but it's sitting there.

[37:15] And we closed, you can see right on the daily chart, right below that 20-day moving average, which on its face, you have to call that bearish. Still some weakness there. So last week, we had this, you know, precious metals, Bitcoin going to the moon. This week, meh, not so much, right? So Bitcoin, again, their market doesn't close.

[37:34] The Bitcoin market doesn't close till five. We closed at one and everything else. Nice move up above this long-term trend line. We held it this week. Yesterday, we had this huge candlestick up and we held it. It looks like we're basing to build, right? 82,000.

[37:49] You see 82 break out. I think I would expect some really significant moves in the Bitcoin chart. Real hard to bet against that one at the moment. Eth, which is the number two kind of crypto, you can see we're basing to break right above this long-term downtrend line.

[38:08] Again, we break out of this area. You'll start seeing these monster candles most likely. There will be resistance at $27.90, but I think we get to $27.90 pretty quick if we break above this range right here. So definitely some basing for risk on assets, which is kind of interesting.

[38:26] You know, last week it was kind of the people flooding out of the dollar into gold and silver and Bitcoin. And then gold and silver kind of calming this week and Bitcoin still continuing to run. So one could argue it's the risk on trade back.

[38:40] Right wouldn't that be something like hey risk on again we kind of saw the beginning to the plumbing for that with besant coming out and buying more treasuries and it's much more complicated than we need a half hour to go into on this channel but you know perhaps the plumbing is getting warmer to where they tell if we look at the s&p 500 for the week Dan you mentioned that you know if you just paid attention to the news you You would think the market was down this week and it was down at one point, but now it's back up and you can see it actually closed above the high of last week.

[39:17] So risk on there. I don't think even though we had a little bit of a sell off today, I don't think you can argue that market's going to sell off all of a sudden. When we look at the RSP, which is the equally weighted index, it's a little bit different of a look, right? Because the cap weighted index is the index that shows all these squares.

[39:37] The bigger companies get the bigger squares, and then the RSP, all it's showing is each of these squares equaling the same size. And so the RSP can be a way of us just saying, well, let's look at and see what's under the hood. And you can see it's not as rosy under the hood, but it's still not that negative, right? The fact that it traded down with a long whip down tells you a lot of people are willing to trade.

[40:00] To step into the market and buy here. We're basing to go higher. Interesting first week of September wasn't awful. That's good news so far. September's been often a very difficult month in the markets and to stay put. So expect that kind of thing to happen. If it doesn't, wonderful.

[40:22] When we look at the ag market, which is the bond index market, so when people say the bond market, yada, yada, yada, kind of on the lower end. We're below that 20-period moving average. Basing effect, distribution, some could argue that people are selling, selling, buying, and eventually the sellers will either get worn out or the buyers will get worn out.

[40:39] And this will either go higher if the sellers get worn out, and it'll go lower if the buyers get worn out. So interesting is closing lower here, which then could be signaling because rates are going higher, that bonds are getting ready to drop down and go lower. We want to watch this 10-year.

[41:00] It's getting up there, like I said, in the nosebleed section where I would expect some type of intervention, especially going into the midterms, to take place. When we look at the probability of Fed rates going up, we're at 58.4 right now. 58% chance that rates are actually going to get moved up here on September 16th is the meeting date, that they're going to move the rates higher.

[41:24] So when we look at the betting market to see what the... The betting markets stay on rates. The bet is just slightly to the upside that they're going to have a 25 basis point increase versus a 49% no change.

[41:40] So pretty much a push at this point on the betting markets, but on the CME group site where they look at futures, etc., there's a bet that rates are going up. Too hard to tell right now. I think it's going to come down to... Core inflation, and probably they're already seeing the data. They probably already have it, but they haven't released it to us yet.

[42:06] And that depends on what Warsh decides to talk about, right? Because Warsh is singing the song that he's not going to tell the market what he's doing. Interestingly enough, we have volatility really low. So if you have volatility really low, often this is the beginning.

[42:18] And when you get down to these low spots in volatility, volatility picks up, volume picks up. In the VIX. That's because usually if there's a sell-off. So it would be on time right now on this chart if volatility picked up next week, the week after.

[42:38] We go into the Fed meeting on the 16th. We work it through to the midterm elections, which are handedly, I think at this point, we're going to have a split government. Chris and I have watched these stats for the last you I don't know, four cycles maybe I think it's been. And in the last four cycles, they've been pretty accurate. They get tighter and tighter as we get closer and closer.

[43:06] The polls are like, don't bother listening to the polls. Look at the betting markets where people actually put their money where their mouth is. And you can see the midterm elections right now. 52% the Democrats take the Senate and 89% the Democrats take the House. There's your split government. Start seeing a ton of... Fighting and executive orders getting pushed around like crazy would be what we would expect.

[43:33] Sorry, here's the betting markets. You can see the predictions, midterm elections, et cetera. Democrats, 52% chance on the Senate, 89% on the House. Again, this is just the betting markets. It's not for sure, but that all impacts how everything works. But hey, keep in mind that regardless of who wins, guess what's still going to go up?

[43:52] That's right, the U. S. National debt. And guess what? No party can touch. That's right. Medicare, Medicaid, Social Security, defense and more. And guess what? Doesn't matter which party interest rates stay high. If inflation stays high, that's problematic, right? That's why Trump would love for interest rates to go down right now, walking into the midterms. So overall, decent week considering all the news.

[44:18] Too hard to say yet. We're still walking into September doldrums. Wouldn't get too excited. We're going higher yet. Interest rates look to be doing something funky. They're going to need to get control of those interest rates as soon as they can because this is starting to get in a problematic range. We'll see what the Fed does in a couple weeks at the meeting.

[44:40] Again, I'll always stay the course.

[44:44] Dano: Darren, could you pull one up for me real quick? Because I like to catch. There's always, especially if you're sitting in a diversified... Portfolio, there's always a little bit of a FOMO to...

[44:54] Your stock pick and oh i should have and i heard my buddy had and Lulu lemon dropped their earnings this week and i wonder if you could pull that up and take a look over the last few years i saw a meme that was like Lulu was it you know imagine if you're the guy who bought you.

[45:12] Daren: Know sweatpants for five hundred dollars a share and now it's a hundred dollars a share yeah i mean just Brutal. I didn't want to rub this in, but since you're going to rub it in, let's talk about like, whoa, dude, 400%, 80% down. So, I mean, wow. Let's just take a minute and say, okay, and this is why we use diversified portfolios.

[45:40] Dano: Yep.

[45:41] Daren: And here's the truth. The truth is the person who was bragging about you, bragging about their purchase of Lulu at the barbecue. They're not calling you up to tell you that they were actually wrong when they were bragging you about how good they're doing in Lulu when you're at the barbecue last year.

[45:57] Dano: Right, right. And the product's the same too, by the way. Like the sweatpants are just as good. So your little intuition had nothing to, well, maybe had nothing to do with it.

[46:08] But I just, I always like to look at these cautionary tales because, you know, it can feel a little boring sometimes if you're sitting in a 60-40. If you like, if you want it to be less boring, this is less boring. So tell me if you like the look of that next time you are thinking about boring.

[46:24] Daren: I mean, I don't know about you, Dan. I don't know if you've walked into a Lulu. I've walked in like three or four times in my life and I always walk out and I'm just like, those shorts are not worth a hundred dollars. I'm sorry. I just can't, I can't do it.

[46:37] Dano: Yeah.

[46:38] Daren: You know, I'm still a Viore fan. What can I say?

[46:42] Dano: Big five.

[46:44] Daren: Big five is out of business, bro. It's gone. Yeah. Oh, yeah. Private equity bought big five, shut all the stores down. Gone.

[46:52] Dano: That's one.

[46:54] Daren: Go look at your local Petaluma big five, my friend, and you will be liquidated already or going to be liquidated.

[47:01] Dano: I don't think that's true. All right. Well, I'll have to figure that out as we wrap up the show here. There I go opening my big mouth. We'll get you a report back on that next week. I'm going to drive down to the East Washington and North McDowell.

[47:16] Big five in Petaluma and see if Darren's telling the truth. Meanwhile, while I do that, make sure you subscribe wherever you found our show, whether it's YouTube, Apple Podcasts, or Spotify. We are On The Markets from Fermata Advisors and our private wealth arm, Sonoma Wealth, and the other brands in the Fermata family of brands.

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