Quick Read

• Placing AGG’s 4.82% yield inside an IRA shields every dollar of ordinary income from annual taxation, letting interest compound untouched for decades.

• VTEB’s 3.90% muni yield equals roughly a 5.7% taxable yield for a 32% bracket investor, but only when held in a taxable account.

• VTI’s minimal turnover, qualified dividends, and step-up-in-basis eligibility make it the ideal tax-efficient equity anchor for a taxable brokerage account.

• Read More: Learn 7 ways to generate income with a $1,000,000+ portfolio (sponsor)

You have two accounts: a taxable brokerage and an IRA. Same dollars, same investments, wildly different tax bills. Park a bond fund in the wrong bucket, and you hand the IRS a slice of your interest income each April. Park it in the right one and that same interest compounds untouched for decades. Three funds can help solve the puzzle for most investors: the iShares Core U.S. Aggregate Bond ETF (NYSEARCA:AGG) for the IRA, the Vanguard Tax-Exempt Bond ETF (NYSEARCA:VTEB) for the taxable account, and the Vanguard Total Stock Market ETF (NYSEARCA:VTI) as the equity anchor that can live in either but shines in taxable.

Simply put, here is the problem: taxable bond interest is taxed as ordinary income, the same bracket as your paycheck, every year. Stock gains and qualified dividends get preferential long-term capital-gains rates, and municipal bond interest is federally tax-exempt. Match each fund to the account that respects those rules, and you keep more of what you earn.

AGG: Your Core Bond Holding Belongs Behind the IRA Wall

AGG is the plain-vanilla workhorse of the U.S. bond market. It tracks the Bloomberg U.S. Aggregate Bond Index and holds 13,422 Treasuries, agency mortgage-backed securities, and investment-grade corporates, with roughly $138 billion in assets and a September 2003 inception date. The expense ratio is 0.03%, so $3 out of every $10,000 goes to BlackRock and the rest keeps working for you. The 30-day SEC yield sits at 4.82%, in line with a 10-year Treasury at 4.97%.

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Here is the catch: Every dollar of that 4.82% is ordinary income. If you sit in the 24% federal bracket, roughly a quarter of the coupon disappears the year you receive it. Drop AGG inside a traditional IRA and none of that happens. Interest compounds tax-deferred, and you only settle up when you take withdrawals in retirement, ideally at a lower rate. In a Roth IRA, it is even cleaner: the interest is never taxed. AGG’s price is down 1.53% year-to-date, a reminder that bond funds move with rates, but the income stream is why you own it.

Story Continues

The dollar pared gains after Japanese authorities conducted rate checks in the currency market – considered a preliminary step before intervention – the Nikkei newspaper reported.

The BOJ pushed rates to their highest level in 31 years at 1.25%, yet the move did not boost the Japanese currency as traders felt there was a lack of explicitly hawkish guidance.

The decision, coming on the heels of the Fed’s hawkish message from earlier this week, clears the way for further dollar strength, strategists said.

“(The) lack of hiking punch makes it easier for USD to go higher,” Steven Englander, head of G10 FX research at Standard Chartered, said.

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“The USD strength that we have been forecasting for the medium to long term may finally be here,” Englander said.
The US dollar was 0.5% higher at 156.725 yen, after rising as much as 1.3% to a two-week high of 158.05 yen.It was set for its largest weekly rally since October 2025.

“They’ve just clearly underwhelmed versus expectations here,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

“And I think that one of the more staggering aspects of it was that they couldn’t even get the unanimous vote for that,” he said. “That really raised eyebrows in the market.”

Traders remained alert to the risk of intervention to prop up the currency after Finance Minister Satsuki Katayama said Tokyo won’t hesitate to conduct further coordinated action, following a joint US-Japan move to boost the yen in late July.

“A hike that weakens the currency is an uncomfortable outcome for policymakers and gives the Ministry of Finance a stronger case to push back against one-sided price action,” Kevin Ford, FX and macro strategist at Convera, said.

The yen rallied sharply in early September to its highest since February as traders bet the BOJ would embark on multiple rate hikes, although those wagers came into question on Friday.

Energy Prices In Focus

FX market participants remained focused on energy prices and the US Federal Reserve.

The dollar index, which tracks the currency against six major peers, was up 1.2% for the week to around a seven-week high after the US Federal Reserve hiked interest rates on Wednesday and signalled more increases could be coming.

Traders see a roughly 55% chance of a quarter-point hike at the Fed’s next two-day meeting next month, up from 27% a week ago, according to the CME Group’s FedWatch tool.

Oil prices slipped to their lowest levels in around a week on signs of easing supply pressures in Saudi Arabia.

China has asked Tehran to help rein in the Iran-aligned Houthis after their military blitz on Saudi Arabia over the past week, three Iranian sources familiar with the matter told Reuters.

The euro rose 0.5% to $1.1481 and was set to end the week 1% lower after the Fed’s rate hike.

The British pound was 0.3% higher at $1.3391, after retail sales data beat expectations on Friday. The Bank of England held interest rates on Thursday but also suggested it could raise borrowing costs.

In cryptocurrencies, bitcoin rose 5.9% to $81,000 on Friday – its third straight day of gains – as it extended a rebound from Tuesday’s sharp selloff, when the US Senate failed to advance comprehensive cryptocurrency legislation in a setback for digital-asset companies.

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Starting the lightning round on September 14, when a caller inquired about SentinelOne, Inc. (NYSE:S), Mad Money host Jim Cramer remarked:

No, look, I think you don’t need, look, my Charitable Trust owns both Palo Alto and CrowdStrike. It’s already too many. I think either one of those two is superior to letter S.

The latest results show a large difference in scale. SentinelOne’s fiscal second-quarter 2027 revenue rose 21% year over year to $292 million, while annualized recurring revenue increased 22% to $1.218 billion. Palo Alto Networks, Inc.’s (NASDAQ:PANW) fiscal fourth-quarter 2026 revenue rose 34% to $3.41 billion, while Next-Generation Security ARR increased 63% to $9.10 billion. Additionally, we have discussed CRWD in our recent article, “Jim Cramer Highlights CrowdStrike (CRWD) as AI Security Concerns Lift Cybersecurity Stocks.“

SentinelOne is Improving While PANW Generates More Cash

SentinelOne, Inc. (NYSE:S) non-GAAP operating margin reached 10% in fiscal Q2 2027, up from 2% a year earlier, while its GAAP operating margin improved to negative 31% from negative 33%. The company guided for fiscal third-quarter revenue of $309 million to $311 million and full-year revenue of $1.202 billion to $1.207 billion.

Palo Alto Networks, Inc. (NASDAQ:PANW) reported approximately $1 billion of non-GAAP operating income in its fiscal fourth quarter of 2026, compared with $768 million a year earlier. Adjusted free cash flow reached approximately $1.3 billion, while GAAP operating income was $172 million versus $497 million a year earlier. Palo Alto CEO Nikesh Arora said in the September 1 earnings release that the latest advances in AI are “elevating cybersecurity to the top of the CIO priority list.”

Bear Case for SentinelOne and PANW

For SentinelOne, Inc. (NYSE:S), the bear case is that improving non-GAAP profitability has not yet translated into GAAP profitability, while the company operates in a cybersecurity market it describes as intensely competitive, fragmented and rapidly evolving. The company says SentinelOne must continue adapting its platform as technology and customer requirements evolve, and that failing to respond effectively could weaken its competitive position and hurt revenue growth. That challenge is visible in its latest results: GAAP gross margin fell to 72% from 75% a year earlier, non-GAAP gross margin declined to 77% from 79%, and the company still reported a GAAP operating margin of negative 31%.

For Palo Alto Networks, Inc. (NASDAQ:PANW), the bear case is about margin pressure as the company expands its platform. Total gross margin fell to 70.4% in fiscal 2026 from 73.4% a year earlier, while subscription and support gross margin declined to 69.2% from 72.5%. PANW said the decline was primarily due to higher amortization of intangible assets from acquisitions and increased costs related to its cloud-based offerings. The company also warns that intense competition, including lower pricing and broader bundled offerings from rivals, could pressure revenue and gross margins.

Hedge Funds Hold More PANW Than S

According to Insider Monkey’s tracking of more than 1,000 hedge funds, 41 hedge funds held SentinelOne in the second quarter of 2026, up from 37 in the first quarter. Palo Alto Networks was held by 89 hedge funds, up from 87. Additionally, short interest for SentinelOne was 5.5% of the public float and approximately 2.7% of Palo Alto Networks’ public float. SentinelOne, Inc. (NYSE:S) faces the more immediate challenge of converting improving non-GAAP profitability into GAAP profitability, while Palo Alto Networks, Inc. (NASDAQ:PANW) is dealing with margin pressure and the costs of operating a much broader platform.

While we acknowledge the potential of S and PANW as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: Eli Lilly’s (LLY) GLP-1 Growth Made It a Core “Running Back” Stock for Jim Cramer and Jim Cramer Calls Applied Materials (AMAT) a Long-Term Buy.

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