Investment Newsletter: Stock Market & Investment Strategies
HELPING YOU NAVIGATE A TOUGH INVESTMENT ENVIRONMENT
DECISION MOOSE-- Global Investment Markets
Executive Summary-- AUG.21.2026
GLOBAL MARKETS: WEEK’S ACTION—Risk-OFF (1)
THIS WEEK: 1st Risk-OFF week after 3 Risk-ON weeks.
US Stocks DOWN, Foreign Stocks MIXED, Bonds FLAT and Gold UP
US RISK APPETITE ABATES
After a three-week rally that pushed US stocks to new highs earlier this August, both small (-1.7%) and large-cap (-1.4%) US equities retreated after the US Dollar (-0.7%) gapped lower on Treasury’s efforts to double bond buybacks (See Moospeak.) The Treasury effort to lower long term rates ultimately left US Long Bonds flat (+0.1%) on the week. Cash yield added a tick to 3.71% and the ten-year rose to 4.74% steepening the yield curve to 103 bps. While hurting US risk assets, the declining greenback did help commodities (+4.2%), including gold (+5.4%) and oil (+6.4%) which closed the week above $86/bbl. Offshore equities also benefitted (mostly). Latin America (+3.2) rebounded from last week’s 3% loss; while Asia-Pacific (+0.4%) and Europe (+0.3%) gained fractionally. After a 3-week 11% run, only Japan (-3.1%) gave some back. There were no changes to the models this week.
GLOBAL OUTLOOK NEUTRAL (2 of 4 and down this week). War has the Baltic Dry Index and oil down over the last quarter, while copper prices and bond yields are higher, leaving the outlook neutral.
INFLATION: Export and Import inflation are both cooling in July but still above target. WTI oil prices rose 6% this week and are now back above $85 per barrel, but still down this quarter. Global inflation per the Fed Check (86) still warrants tightening, but it has improved assisted by rate hikes in Europe and Japan.
US ECONOMIC DATA: A modest improvement in industrial production and capacity utilization in July. Housing starts weakened. Export and Import disinflation in July but still above annual target. Recession chances a year out shrinking and minimal. Financial system health per SOFR-T spread: sound. GDP Now estimate (Q3) down as of 8/19: 4.0%.
FEDERAL RESERVE: The Fed's balance sheet stands at $6.75 trillion, with the Fed Funds Rate at 3.50-3.75%. Next Fed meeting is in late September (9/29). Iran war adds to inflation fears. Fed Check (86) is improved but remains hawkish since 1/30/2026 (market price of hard assets going up faster than the market price of paper promises.) After the weak jobs and inflation reports, odds are now better than 50-50 (60%) that rates will be unchanged at the next Fed meeting in September. By December, however, a Fed rate HIKE (72%) is the most likely outcome.
INVESTMENT STRATEGIES: There were no changes to the models this week.
THE GLOBAL INDEX MODEL-- SUMMARY 8/21/2026
INDEX MODEL: HOLD US Small-Caps (IWM)
The Global Index Model HOLDS US Small-caps (IWM) 7/13/2026.
IWM leads in overall confidence among Global assets, but it lags in its very bullish technical strength and positive price momentum (PMO). Equities are still the best place to be, but there is currently rotation from US (dollar-based) assets into foreign assets and gold. The recent US-Japan joint foreign exchange intervention to smooth out “disorderly Yen movements” and this week’s Treasury action to double bond buy-backs have both fostered the rotation by weakening the Dollar.
Best Alternative: Emerging Markets (EEM), Developed Markets (EFA) and gold (GLD) are benefitting from US government currency interventions these days. It remains to be seen how permanent their impact may be.
Volatility Alert: IWM has an unfilled downside gap (249-259) from April 8 that it could revisit.
The Global Index Model continues to outperform the S&P, all Buy-and-Hold allocations, and the USES and TSP models in a major way. *stop-loss, **buy-stop, ***note
PERFORMANCE YTD 8/21/26:
INDEX MOOSE +24%
AOA (Aggressive Growth) +11%
AOM (Moderate Growth) +4%
SPY BENCHMARK +12%
2026: Strong gold kept the Index model in bullion to start 2026, supported by the notion of at least one more Fed rate cut in 2026. That support evaporated at the March FOMC meeting when chairman Powell admitted the bank's uncertainty. Meanwhile offshore equities did well with US tariffs ginning their product prices higher, especially emerging (commodity based) economies. Rate increases in June in Europe and Japan dampened interest in offshore equities.
THE GLOBAL INDEX MODEL has been around for 34-years in one iteration or another. It is a momentum-based market timing model the latest version of which compares the relative strength of ETFs representing US stocks (SPY, IWM) and international stocks (EFA, EEM)) along with US Treasuries (SHY, EDV) and Gold (GLD) in order to pick the single best asset class in which to invest your money. Rankings provide the basis for the Moosecalls global financial newsletter, and have in the past been a solid predictive tool. They provide a general direction (stocks, bonds, precious metals, cash) for allocating investment assets. A daily signal, it is provided here for free once a week as a guideline only.