Newsletter — week of September 7, 2026

Market performance

The S&P 500 ends the week down about 0.8%, despite a sharp Friday rebound of nearly 1% that broke a run of four straight losing sessions. The index was under pressure for much of the week, dragged down by the surge in oil and the rise in bond yields, before an inflation figure in line with expectations reassured investors at the very end of the week, five days ahead of the Federal Reserve’s monetary-policy decision.

Market news

The geopolitical picture: the Houthis tighten the noose

After several U.S. strikes targeting Iranian oil tankers, Brent topped the $110-a-barrel mark for the first time since early May:

The pressure intensified further when the Houthi rebels—Iran’s allies based in Yemen—opened a second front by capturing the Yemeni port of Mokha, then the island of Perim, which controls the southern entrance to the Red Sea through the Bab el-Mandeb strait:

This route is precisely the one Saudi Arabia uses to export part of its oil now that the Strait of Hormuz is disrupted, and the kingdom in fact announced it had closed a major pipeline as a precaution after an attack. With two strategic chokepoints for global oil now under strain simultaneously, the market fears lasting pressure on supplies and therefore on prices.

These events keep reinforcing our conviction in our strategy of betting on two major sectors: oil/energy and AI. We hold companies in the portfolio that should perform very well in the coming quarters if oil stays at current levels.

The inflation front: the ECB tightens rates

This oil surge revives inflation fears and brings the Fed closer to a rate hike. Thursday’s producer price index came in a bit hotter than expected, partly due to rising energy costs, which heightened market nervousness:

Friday’s August consumer price index, by contrast, was seen as more reassuring, up 0.4% on the month and 3.4% year-over-year, exactly in line with expectations, even though core inflation came in slightly above forecasts. As a result, the odds of a Fed rate hike at its September 15–16 meeting rose from barely 50% at the start of the week to nearly 90% on Friday.

In the same global wave of monetary tightening, the European Central Bank carried out its second consecutive rate hike this week, leaving the door open to another move in October, while the Bank of Japan is due to meet next week with, likewise, a rate hike widely anticipated by the market.

Even though the market strongly anticipates a Fed rate hike, we have our doubts. The current inflation is tied to an oil supply shock pushing prices up. A Fed rate hike will not make it possible to produce more oil and will only weigh on an economy that already has to absorb higher oil prices. A central bank raising rates to counter inflation only makes sense when the economy is overheating. The ECB’s decision is, in our view, entirely misplaced, and it is far from certain to us that the Fed will make the same mistake.

What’s more, the new Fed chair, Kevin Warsh, was appointed by Trump, who does not want rate hikes. This meeting will be the first real test for Warsh: will he raise rates as his predecessor probably would have, or will he surprise the market and push for rate stability? We’ll find out Wednesday!

In any case, a 25-basis-point hike by the Fed will not be enough to break the current economic cycle and call our strategy into question. The big companies investing in AI are not going to halt their technology race over a small rate hike.