What's Going On?

Scott Poore, AIF^®, AWMA^®, APMA^®

August 28, 2026

From markets that seem to move back-and-forth, to tragedies in Nepal, to strange court cases and social commentary, it's easy to see similarities between the late '60s / early '70s and today. However, it's never that easy when it comes to pinpointing what's going on in the market. This week we gather inspiration from the timeless song "What's Gong On." recorded by Marvin Gaye in 1971. Here is some trivia about the films:

This single is widely-regarded as one of Motown's "fastest-selling singles" of all time. It sold more than 2.5 million copies and reached #1 on the Billboard R&B charts and #2 on the Billboard Hot 100 charts.
The song was written by three golfing buddies - Al Cleveland, Renaldo "Obie" Benson, and Marvin Gaye. Cleveland was a top-selling songwriter, Benson was a member of the Four Tops, and Gaye was an established solo artist. Gaye wanted the group The Originals to record the song, but Benson & Cleveland convinced Gaye to record it.
Gaye said the lyrics were inspired by his brother Frankie's stories of the Vietnam War upon is his return home.
Gaye wanted to make a political statement, but Motown was hesitant. Gaye was a star and had enough power to pull it off. He even pulled in an orchestra to play on this song.
Rolling Stone, in both 2004 and 2010, included this song at #6 on its list of "500 Greatest Songs of All Time."

Here's what we've seen so far this week...

War Is Not The Answer. As mentioned previously, Gaye used his brother's return from Vietnam as his inspiration for "What's Going On." In the vein of soldiers returning home, some of the U.S. troops have been reduced in the Gulf due to a shift in the current Administration's approach to the conflict. Treasury Secretary Bessent earlier this week announced a new initiative based on economic warfare.1 The focus of the new economic sanctions exceed just an oil embargo against Iran. Now included in the embargo are securities and assets such as gold, digital assets, and technology.¹ Also included are areas such as aviation and shipping. The punishment would not just be on Iranian assets, but partners who might be helping the regime. According to Bessent, the goal is to reduce the need for military operations and to isolate the regime.¹ Some progress is already visible as ships passing through the Strait of Hormuz have reached 1-month highs this week, as evidenced in the graph above. The price of oil and gas has also seen some signs of stabilization. The price of oil is off the recent 1-month high of $92/barrel and is trading around $83/barrel. In addition, oil has not seen the elevated prices north of $100/barrel since mid-May. Progress has been in alternative methods of exporting oil out of the Middle East other than the Strait of Hormuz. Pre-war flows through the Strait were approximately 20 million barrel per day.² While we're still not seeing that level of export from the Strait, flows have reached between 15 and 16 million barrels per day, with only 8 to 10 million barrels per day coming through the Strait.² This shows that producers and shippers are adapting to the conflict and supplemental methods such as pipelines, other ports of entry, and ground transportation have helped get flows back to a more reasonable level. Diesel fuel is still elevated in cost, but is off recent highs from last week.² If more progress is made on the conflict front, that could help the inflation outlook.

Don't Need To Escalate. Marvin Gaye sought to use this song to help de-escalate the tensions in society and to help convince policymakers to end the Vietnam War. In fact, just a few years later, U.S. involvement in the war would come to an end on January 27, 1973. Perhaps a de-escalation of words might be helpful when interpreting the intention of the Federal Reserve. Today, Chairman Warsh delivered remarks at the annual Economic Symposium at Jackson Hole, Wyoming. His comments were taken as "hawkish" by the market.³ During his speech, Warsh stated that while Summer readings on inflation were better than expected, the readings "do not tell me that underlying trends have meaningfully improved."³ This caused the Fed Futures to flip. Last week, there was a 65% probability of no rate hike at next month's Fed meeting.⁴ Today, there is almost a 60% probability of at least a 25 basis point rate hike.⁴ As a result, risk assets, at least so far today, are down about anywhere from 0.5% to more than 1% since Warsh finished his public comments at the symposium.⁵ The Cleveland Federal Reserve is currently showing the possibility that the Consumer Price Index for August would come in at +0.4%. However, the year-over-year reading is expected to come in at 3.4%, which would be even with the July reading. While Warsh's comments have been taken as "hawkish," the reading on inflation, as measured by the CPI, has come off it's recent high of 4.3% which could make it difficult to explain the need for rate hike. July's report on the Job Market was less than stellar and did not indicate runaway job growth.⁶ The latest revision for GDP was +1.5%, which also does not indicate robust growth.⁷ So, if inflation is off recent highs and is showing some signs of stabilization and the economy is not over-heating at the moment, it could be argued that investors should maintain their respective investment strategy based on their long-term risk tolerance and ignore the noise.

Got To Find A Way. Speaking of risk tolerance, Marvin Gaye was beginning to experience a concentration event in his own time when this song was written. By 1972, the market concentration event know as the "Nifty Fifty" was in on full display. For those unfamiliar with that phenomenon, roughly 50 stocks made up the majority of institutional portfolios and mutual funds.⁸ Most were typical household names such as IBM, Coca-Cola, and Disney. By early January 1973, the concentration in those 50 names had reached at least 40% of the US market, in terms of market capitalization, as shown in the graph above, and the stock market experienced a bear market shortly thereafter. Concentrations such as this can serve as a healthy warning to investors, although, the beginning and ending of each concentration event tends to differ. The relatively recent launch of AI has helped contribute to another concentration-type of market phenomenon. The largest companies currently in the equity market are the 10 largest AI companies and have reached a similar concentration amount as we saw during the "Nifty Fifty" event and, perhaps more similar, "Dot.com" or "Technology, Media, and Telecommunications" as shown in the concentration graph. Since ChatGPT was released in late 2022, the path of the Nasdaq has been similar to that index's path during the "Dot.com" run up. However, as noted previously, these concentration events are not all the same in duration, appreciation, nor decline. There are often nuances. For example, by this point in the "Dot.com" era, the concentration of in the top 10 names of the S&P 500 Index (as represented by SPY) was approximately 20% by the end of September 1998.⁹ Today, however, that concentration is north of 37%.¹⁰ So, what's the point? The point is not that the market is about to come crashing down or that this type of concentration we're witnessing is at an end. As stated, these events are different and we could see much greater upside from current levels. However, while the future cannot be seen, there is a reasonable case to be made for investors to manage their respective risk tolerance wisely during periods of over-concentration in the equity market when just a few names make up such a large portion of growth. History does have a way of repeating itself.

Click here to watch the entertaining scene where Rod sings "What's Going On" at Jerry's wedding.....

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The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

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