September Rate Hike Odds, Middle East Oil Disruptions, AI Researcher Resignations 9/11/26

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I'm your host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com/marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.

Brian Sullivan (1:03)

A strong end to a weak week for the markets and your money. Welcome to Power Lunch everybody. Stocks are higher as the entire country commemorates the 9-11 terror attacks. Oil is down as now investors look ahead to the Fed next week, but how much does the Fed even matter right now? Also, we'll ask Don Struyven, Goldman Sachs' head of oil research who recently raised his oil price forecast on concerns about the Middle East, how hard it is to price oil right now.

Kelly Evans (1:30)

The AI race is accelerating, and so are the warnings from inside the industry. Alex Turner recently left Google DeepMind citing concerns about the direction and its use of artificial intelligence as investors weigh AI's enormous commercial promise. He joins us today to talk about those risks.

But we begin with some breaking news because the latest scorecard on the Federal deficit is in. The Treasury just releasing its latest monthly report on government receipts and spending. Steve Leesman is here with the low light. Steve?

Steve Leesman (2:00)

Ha ha ha. Minus 1.95 trillion. That's the deficit for August. That kind of guarantees we're on the way to 2 trillion when we get the full fiscal year in September. That's up by 84 billion on the month. That's 5 percent. And we're giving you these numbers on an adjusted basis. Taking account for calendar differentials here. The deficit increased by 248 billion on the month. That's month over month. Treasury individual taxes up 5 percent. Appropriate taxes down 17 percent. And that is fiscal year to date. We have tariff money going in and tariff money going out. And out is the refund. So paid on a monthly basis, 23 billion year to date, 293

Refunded on a monthly basis, 11 billion. And we've given back 125 I've seen some estimates that we need to maybe refund as much as 170 billion. So Kelly, you and I were talking about this yesterday, when tariffs start to add more meaningfully and bring down the deficit. It could be several more months at this rate. And Treasury receipts and outlays did hit a record year to date.

Kelly Evans (3:02)

Folks? Steve, just the highlight for us, did it get better or worse?

Steve Leesman (3:06)

It got worse just by a little bit on a calendar-adjusted basis. The deficit was $84 billion higher, and that is up 5% on the month. And we are headed for $2 trillion, it looks like.

Those are numbers that we hit, I think, at 24 And then, of course, we were substantially higher or lower in the pandemic era.

Kelly Evans (3:27)

Yeah, more, deeper, I guess we would call it. Steve, thank you.

Steve Leesman (3:30)

Happy to do the lowlights for you anytime on the treasury.

Kelly Evans (3:33)

It's all it really is, Steve Leesman. Thanks very much.

Brian Sullivan (3:35)

All right, for more on the Federal Reserve and its impact on your money, let's bring in David Zervos of Jefferies. David, great to have you on. Listen, here's a pretty hot take. This might be a lowlight, maybe it's a highlight.

The Federal Reserve is meeting on Wednesday. Kelly and I will be in DC for the meeting, so I am not doing anything to take away the importance of that coverage. But how much right now, given the wars, Ukraine, Russia, Iran, etc., oil inflation, how much does the Fed matter to the macro markets right now?

David Zervos (4:09)

Well, Brian, I'm all about highlights. Lowlights just don't interest me.

Unfortunately, for your coverage on the 16th, I just don't think this matters that much, and we've been saying this to our clients now for a while. The drivers of the macro are really not focused in on the Federal Reserve. We have deregulation. We have changes from the fiscal side, tax cuts, depreciation. We have the technology story, which is the biggest story of all. We have energy, which you focus on consistently and constantly, and energy policy more generally. All of these are far more important than are they going to go 25? Are they not going to go 25? What that means for financial conditions. The razor thin story is just, to me, so overblown.