Things you need to know.
– Stocks pushed higher, the Dow notching a new 2024 high.
– Trump Taps the Junior Senator from Ohio as his running mate.
– Oil producers, Gun Makers and Private Prisons all seeing investor demand.
– Wind & Solar gets pushed aside – TAN – 5.8%, FAN -2.8%.
– RNC Convention kicks off with Make America Wealthy Again.
– Try the Pan Roasted Sea Bass
Stocks continued to march higher yesterday, futures were up sharply overnight Sunday and into the early pre-mkt yesterday. Many are waiting for a volatile day as investors, traders and algo’s tried to price in what the attempted assassination of DJT would mean for the markets. Other than a short-term reaction – Investors will continue to focus on the economy, earnings and forward guidance when making long term decisions and plans. The VIX (fear index), while up (+5.3%), failed to create any real volatility and that laid the groundwork for stocks to push higher. At the closing bell – we saw the Dow + 210 pts or 0.5%, the S&P up 16 pts or 0.3%, the Nasdaq added 75 pts or 0.4%, the Russell up 38 pts or 1.8%, the Transports ahead by 260 pts or 1.7% while the Equal Weight S&P added 8 pts or 0.1%.
It was a busy day – GS kicked it off by reporting and beating the estimates – investment banking revenues up 21%…Davey Solomon (CEO) telling investors that we are ‘in the early innings of a capital markets and M&A recovery’…. investors loved it and took the stock up 2.6%. JPM, which announced on Friday (and did not disappoint) saw some of the usual selling as investors played ‘buy the rumor/sell the news’ – ended Friday lower by 1.2%, but more than recouped that loss – rising by 2.55% yesterday. (I think I told you that would happen, didn’t I?). It always does…they take JPM and others up into the earnings and then sell them on the day of only to move higher in the days after…C down on Friday ended higher on Monday +1%. Even WFC – which got pummeled on Friday (-5+%) gained back 2.1% on Monday.
BAC just announced and they too beat expectations on better-than-expected investment banking revenues…. the stock is quoted up 0.5% in the pre-mkt.
Bubbling beneath the surface were the rumors all day of the VP pick on the Republican ticket…. Burghum and Rubio were the first to be eliminated leaving the country wondering which one of the other names had risen to the top…. RFK, Haley, Vance or Ramaswamy. As the speculation built, stocks moved higher…. In the end – JD Vance (the favorite) was selected….he is 4 decades younger than Trump (at 39 yrs. old), he personifies the ‘New Right’ (rejects many of the traditional GOP views) he is a Senator, an author, venture capitalist, a marine, a yale law school graduate, a husband (married to Usha Vance – an Indian American – herself an accomplished lawyer with degrees from both Yale and Cambridge) and father of 3 young children. He has spoken out AGAINST any cuts to SS or Medicaid. He personally is pro-life BUT accepts the fact that women and men do NOT want to be told to accept blanket bans on abortion – something that the old GOP has to recognize (and accept). In the end, he is a fresh voice, appeals to the working class (read his book to learn why – a 2016 best seller – Hillbilly Elegy) and can deliver a new populist message to the younger generation of voters that are yearning for new leadership. In the end – investors, traders and algo’s were pleased with the choice.
From an investment perspective – The Russell was the clear winner – adding nearly 2% – completing the best 4 day run since 2020. The small and mid-cap index, which was down 6% by mid-April is now up 7.5% as of yesterday….(that’s a 13% swing) in that sector….all on the idea that rate cuts are coming……And to that point – JJ came out to say that the recent data has ‘provided more confidence inflation is heading to target’ (remember – the target is 2%).
The headline said it all…. “Powell Indicates FED Won’t Wait Until Inflation is Down to 2% Before Cutting Rates” clearly suggesting investors and traders strap in. Now – the next FOMC meeting is on July 30th and 31st…He is not expected to cut rates then, but the sense is that he will suggest (confirm) that they plan on starting cuts in September (mkt is now pricing in a 100% chance of a September cut) – just 5 weeks ahead of the election….(curious, no?). The implication is that if you wait until it gets to 2% – then you’ve waited too long……Yeah, that’s what they thought in 1979/80 too…And yes, that was then, this is now, I get it…but I am not convinced yet that inflation is under control and my fear is that pre-maturely lowering rates will only reignite the monster…..…just go to the grocery store….but hey, I am just one lone voice.
As you can imagine – bonds rallied on that news….as some investors tried to lock in those higher risk-free rates……This morning – the 2 yr. is now yielding 4.41% while the 10 yr. is yielding 4.18%. Yields are now dramatically lower than they were just weeks ago…before it became this clear that the FED has now changed course.
Now while Oil and Gas Exploration sector gained (on the idea of a Trump Presidency)….XOP + 1.5% – oil itself did come under some pressure on the idea that demand is weakening in China….Ok – not sure about you, but I’m done with that argument…..I’d say oil reacted to the idea that Trump wants the US to be the oil supplier to the world – so if we encourage exploration and production – it becomes a supply issue and not a demand issue. More supply means lower prices…. it’s econ 101…. This morning – oil is down 84 cts at $81.06/barrel…. We remain in the $80/$84 range….
Gold rallied yesterday and is up another $15 this morning at $2445/oz. The idea of lower rates will send the dollar down and that is supportive of commodity prices…. Gold is now solidly in the $2400/$2500 range.
Eco data today is all about Retail Sales and Retail Sales ex Autos and Gas.
Earnings from BAC, UNH, PNC (all beat) – later on we get PGR, STT, MS, & SCHW.
US futures are UP…. Dow futures up 11 pts, the S&P’s up 7, the Nasdaq is ahead by 40 while the Russell is up 22 pts. The idea that we could see a GOP victory in November means more favorable tax policies, less gov’t spending and better overall fiscal policies and so investors are betting with their wallets taking stocks to new highs.
European markets are all a bit lower…. Investors there continue to assess the landscape and wonder if political upheaval and the current earnings cycle will derail the recent rally in stocks. At 7 am – European markets are down between 0.4% and 0.8%.
The S&P closed at 5631 up 15 pts…. Markets are awaiting the latest round of eco data to hit the tape to see if this data continues to support the FED’s latest narrative. And while this rally continues to create all kinds of excitement – do not lose sight of the end game. Investing is a marathon, not a sprint. Call me to discuss.
Take good care, 
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions, which may not necessarily align with our firm’s standpoint.
While considerable effort has been invested to ensure the accuracy and dependability of the information presented, we must clarify that we cannot guarantee the accuracy of third-party information. Our usual sources for third-party data include channels such as Bloomberg.
Kenny Polcari is the Chief Market Strategist for SlateStone Wealth. Neither Kenny nor the partners of SlateStone Wealth are compensated in any manner by the issuers of any securities mentioned in the publication.
Pan Roasted Sea Bass
You will need: 1 lb. of Sea Bass, olive oil, butter, onion, Marsala Wine, Fresh wild mushrooms, Chicken stock, s&p, and chopped parsley for color.
Prepare by chopping the onion, slicing the mushrooms and chopping the parsley. Have all other ingredients out on the counter to ease the process of creating this dish….
Preheat the oven to 450 degrees – this is important – you want the oven ready and waiting…
In a sauté pan – heat the olive oil and the chopped onion – cook until soft and translucent. Turn the heat to high to make the pan really hot – then remove the pan from heat and deglaze with 1/4 cup or so of Marsala Wine – you can use White wine if you prefer – but you will get a different flavor – just fyi. (I say remove the pan from the heat because – if you use Marsala – the flame can easily ignite the wine and singe your face. – reg white wine – no worries) When the wine has cooked off add the sliced mushrooms and about a tblsp of butter. Reduce heat to med and cook until tender…
Now add the chicken stock – maybe 1/2 cup or so….and s&p… let it cook down…. just so it thickens a bit….
In another sauté pan heat up a bit more olive oil…season the filet with s&p and add to the pan skin side down for about 5 mins…you want the skin to be crispy……flip and cook for about 1 min – transfer to a baking dish and put in the pre-heated oven and roast for another 4 / 5 mins.
Warm the serving dishes and place a bed of the onion/mushroom mixture on the plate and then top with the pan roasted filet. Adorn with a bit of chopped parsley. You can serve this dish with herb/garlic wild rice and sautéed green beans. Complement with a cold bottle of Pinot Grigio – Santa Margherita.
Buon Appetito
