Investment Newsletter: Stock Market & Investment Strategies
HELPING YOU NAVIGATE A TOUGH INVESTMENT ENVIRONMENT
DECISION MOOSE-- Global Investment Markets
Executive Summary-- SEP.18.2026
THIS WEEK: 2nd Risk-OFF week in a row.
US Stocks DOWN, Foreign Stocks DOWN, Bonds UP and Gold UP
CENTRAL BANK UNISON
As widely expected, the Fed hiked its overnight bank rate 25 basis points to 3.875% this Wednesday, mirroring the European Central Bank’s hike to 2.50% a week before. The Bank of Japan joined the “mini-hawk party” on Friday with a 25 bpt hike of its own to 1.25%. At least one more Fed rate hike (and possibly two) is considered likely (90%) by December. For the most part, a higher US interest rate affected the markets as expected. The US Dollar (+1.1%) rallied as both the Yen and the Euro dropped. Equities fell. US small caps (-1.7%) as expected led US large caps (-0.3%) lower. A wide US interest rate premium makes Dollar-based assets more attractive and offshore equities behaved accordingly. Europe (-1.6%), Japan (-1.6%), Latin America (-2.6%), and Asia Pacific (-1.2%) all gave ground. US very long bonds (+1.0%) got a bounce, and the inflation protected (TIPS) market dropped. The cash yield (3.98%) and the ten-year (5.00%) were both up on the week but the yield curve (102 bpts) flattened. Commodity prices (-0.7%) fell fractionally on the stronger Dollar along with oil prices (-0.7%). WTI remains above $100. Gold (+0.6%) completed a 62% Fibonacci retracement with the US hike but recovered to 50% by Friday. There were three model modifications this week.
GLOBAL OUTLOOK POSITIVE (4 of 4 and unchanged this week). The Baltic Dry Index, oil and copper prices and bond yields are all higher, making the outlook very positive.
INFLATION: Export-Import inflation came in hot. WTI oil prices stayed around $100 for a second straight week. Global inflation per the Fed Check (83) still warrants tightening despite the latest rate hike.
US ECONOMIC DATA: Industrial Production Flat, Housing and LEI Down, Retail Up. Yield curve positive and steepening. Recession chances a year out shrinking and minimal. Money market system healthy per SOFR-T spread. Above average US growth prospects. GDP Now estimate (Q3) at 5.1% as of 9/17.
FEDERAL RESERVE: 1st rate hike since 12/25 rate cut this week. Fed Check (83) remains hawkish. The Fed's balance sheet currently stands at $6.74 trillion, with the Fed Funds Rate at 3.75-4.00%. By December, at least one more Fed rate HIKE (90%) is likely and possibly two.
INVESTMENT STRATEGIES: There were two modifications to the models this week.
THE GLOBAL INDEX MODEL-- SUMMARY 9/18/2026
INDEX MODEL: HOLD Emerging Markets (EEM)
The Global Index Model: HOLD Emerging Markets (EEM) 9/11/2026.
Equities are still the best place to be, beating cash, bonds, and gold, but for how long? Former #1 US small-caps were a clear sell last Friday ahead of the Fed rate decision. IWM was no longer bullish and had a negative and deteriorating PMO. Emerging markets (EEM) took over the top slot with a very bullish technical rating and a positive, improving price momentum oscillator. Five days later, EEM is no longer bullish and has a deteriorating PMO itself.
In making the EEM call, I broke three of my informal switch rules. (1) Never put in a buy right before or over the weekend. Always wait for Monday’s open to get the lay of the land and reassess. (2) Treat the sell and buy parts of the switch as two distinct transactions remembering that if you just sold a particular asset class (e.g. equities) and are buying into the same class, price is likely to be positively correlated. (3) Don’t jump in front of the Fed.
Best Alternative: US large-caps (SPY) have the highest technical strength (TS+) but the US is expecting a second rate hike. Developed Markets (EFA) are also bullish but must absorrb 2nd rate hikes in Japan and Europe. PMO is deteriorating in every asset in the model. Best to avoid buying into an asset with a deteriorating PMO, even if it is positive.
PERFORMANCE YTD 9/11/26:
INDEX MOOSE +20%
AOA (Aggressive Growth) +9%
AOM (Moderate Growth) +3%
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 in favor of US small caps. September rate hikes including in the US, dampened bullishness everywhere.
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.