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Fed Throws Cold Water on the Rally, Be Like Dolly

Writer: Doug MacGray
Doug MacGray
Aug 30
6 min read

August 30, 2026


STOCKS RISE A LITTLE: All eyes were on Nvidia mid-week as the tech giant reported its earnings. Would they disappoint? They did not. Nvidia reported not only strong earnings, but expected revenue growth of 70% in the company's next fiscal year. Salesforce stock rose 23% on Thursday after the software company reported its second quarter earnings. Its earnings per share rose 103% year-over-year. The upward momentum for stocks were slowed when Federal Reserve chair Kevin Warsh commented publicly indicating the central bank's resolve to fight inflation, sparking fears of a rate hike once again. "The Fed's predominant focus right now should be on prices," said the chairman.



LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.



U.S. DURABLE GOODS ORDERS INCREASE: New orders for durable goods rose 1.1% in July, and are up 12.0% year-over-year. Capital investment in data centers is a big driver of this growth. However, in July a big boost came from a 2.3% rise in transportation equipment. Commercial aircraft orders rose by 12.7%.


PCE STATISTICS: According to the personal consumption expenditures (PCE) index, prices rose by 0.2% in July and are up 3.7% compared to a year ago. The "core" PCE index rose 0.2% and is up 3.3% year-over-year. The good news for consumers is that personal income rose 0.4% increasing their buying power. The personal savings rate rose to 3.0% in July, but that is still unsustainably low. It means consumers are spending, but that spending, at the expense of savings, is not healthy in the long term.


CHALLENGES FOR THE BOND MARKET: The U.S. deficit is running at about 6% of GDP. Interest costs the U.S. about $1.1 trillion per year now. Other developed markets are facing similar situations. Inflation remains too high, running above 3% while the Federal Reserve maintains a target of 2%. The Iran conflict stopped what seemed to be slow, downward momentum for inflation. The Fed is sending mixed signals about future rate hikes, but seems to be moving in the direction of a rate hike or two. Large AI and other tech companies are growing rapidly, and that growth requires capital, and that capital often requires them to issue bonds which have to pay competitive interest rates in a market being flooded with bonds. With inflation remaining high, consumers want bonds to provide a hedge against inflation, and thus require higher payouts. The bond market faces pressure to keep rates up, which puts pressure on the Fed, and which keeps mortgage rates high. All of these factors are conspiring to keep the bond market treading water (the Bloomberg U.S. Aggregate Bond index is barely above break even for the year, see above). The bond markets would be buoyed by 1) one or both of the major global wars ending, 2) major developed governments, especially the U.S., getting serious about cutting deficit spending, and/or 3) inflation coming back down.


AMAZING CORPORATE EARNINGS: S&P 500 companies are on track for a full year of 34% growth in earnings. The 10-year average is 9%.


THE 14 DAY RULE: The IRS does not give us many opportunities at tax free income, but the "Augusta Rule" is one of them. According to Internal Revenue Code Section 280A(g), a homeowner may rent out a personal residence for fewer than 15 days (i.e., up to 14 days) in a tax year without including the rental income in gross income, and without deducting related rental expenses. The nickname comes from homeowners in Augusta, Georgia, who traditionally rent their homes during the Masters golf tournament for a short period each year. The rule has been part of the tax code since the 1970s. The days do not need to be consecutive, the limit is the total for the calendar year. There is no dollar limit on the rent amount. Exceeding 14 days (renting for 15 or more) causes the exclusion to disappear. Many business owners leverage the rule by having their company rent the home for legitimate business purposes (board meetings, strategy sessions, team events, client gatherings, etc.) for up to 14 days. The business deducts the rent as an ordinary and necessary business expense (under IRC §162), provided the amount is reasonable and the use is genuine. There are specific exceptions to this application, and there are nuances that require you to consult your CPA before taking advantage of this rule. (This is not specific tax advice for your circumstances.)


ENCOURAGEMENT: The entire world is mourning the death of beloved country music star Dolly Parton. The accolades keep coming in. One that I found poignant came from rap singer Eminem. Soon after Dolly Parton died, Eminem publicly shared that he never met Dolly Parton, but that at one point, she wrote him an encouraging note. Many of you may have already seen this, but I'll share it here:


Marshall (Eminem),


Congratulations on your induction into the Rock & Roll Hall of Fame. Your performance was amazing and everybody said so. Even though I don't know a lot about rap music, I've come to know that you are the very best at it. Aside from that I hope what I have to say will not seem weird or strange to you but I have always felt some unexplained connection to you like I know you somehow. I had hoped to meet you at the show but you know how nuts those things are, personally I hate 'em and I missed my chance but maybe someday we'll meet. In the meantime, keep doing what you're doing because you do it so well and no matter how complex your world may be just know you are very special and touch people in ways you don't even know.


With love and respect,

Dolly Parton Just think how encouraged you would be if you received a handwritten note like that today.   Have a great week!


Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.



Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545



"When I wake up, I expect things to be good. If they're not, then I try to set about trying to make them as good as I can 'cause I know I'm gonna have to live that day anyway. So why not try to make the most of it if you can? Some days, they pan out a little better than others, but you still gotta always just try." Dolly Parton


"The country cannot afford to be materially rich and spiritually poor." John F. Kennedy*


"But encourage one another daily." Hebrews 3:13 (NIV)


*In commemoration of the 250th anniversary of the United States, I am finding a quote from a president each week, in order. This is the 35th week, and John F. Kennedy was our 35th president. SOURCES:

THE 14 DAY RULE: https://www.irs.gov/taxtopics/tc415 AND https://www.bankrate.com/investing/what-is-the-augusta-rule/

STOCKS RISE A LITTLE: https://www.wsj.com/finance/stocks/nvidias-victory-lap-bbe710b5?mod=stocks_more_article_pos8 AND https://www.wsj.com/finance/investing/u-s-stocks-fall-after-warsh-speech-boosts-bond-yields-c96bb5da?mod=stocks_news_article_pos1 AND https://www.fool.com/investing/2026/08/27/salesforce-stock-just-soared-but-investment-gains-delivered-usd2-53-of-its-usd5-90-in-per-share-profit/

CHALLENGES FOR THE BOND MARKET: https://www.reuters.com/legal/transactional/why-bond-market-may-be-resetting-expectations-about-us-2026-08-25/ AND https://www.marquetteassociates.com/long-weakened/ AND https://www.ubs.com/global/en/wealthmanagement/insights/chief-investment-office/house-view/daily/2026/latest-27082026.html


© 2026 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved


*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.


Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.


The information contained herein has been compiled from third party sources (see above) and is believed to be reliable, however its accuracy is not guaranteed. This newsletter is not an offer or a solicitation to buy or sell securities, and you should not construe it as investment, tax, or legal advice, or a specific investment recommendation. Any opinion included in this newsletter is our judgment as of the date of this report and is subject to change without notice.


If you want any additional information regarding Stonecrop Wealth Advisors, including management fees and expenses, you can contact us directly, or review our Form ADV Part 2 which can be found here (www.adviserinfo.sec.gov), or which we will be happy to provide to you upon request. Only God knows the future, and so while past performance can be helpful information, it is not a guarantee of future performance which could be completely different.

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