Things You Need To Know

– Stocks continued to trade lower.

– Canada threatens to cut electricity to the US, Trump raises tariffs to 50%.

– JOLTS shows a robust job market.

– Today is about the CPI, tomorrow the PPI.

– Trumps says he sees NO recession – stocks jump.

– Try the All-American Bison Burger

***Markets are anxious, and that can make you uncomfortable….Click on the link https://slatestone.com/contact-us/ to send me a message to discuss your plan….or feel free to call me at 561-244-2504.

Stocks fell again – after global trade tensions created another fierce day of trading as the investors, traders and algo’s tried to figure out ‘what’s next’?

At 4 pm – the Dow ended the day down 480 pts, the S&P lost 43, the Nasdaq gave back 32 pts, the Russell actually ended up 5 pts, the Transports lost 474 pts, the Equal Weight S&P gave back 95 pts while the Mag 7 gained 80 pts.

Out of the gate – Trump took to Truth Social announcing a doubling of tariffs (50% vs. 25%)) on steel and aluminum out of Canada AFTER they announced a ‘surcharge’ on the electricity they deliver to the US….in fact – Ontario Premier Doug Ford, threatened to cut off electricity to New York, Michigan, and Minnesota in response to U.S. tariffs imposed by Trump. These states were singled out because they rely heavily on Ontario’s electricity exports, which power approximately 1.5 million U.S. homes in those regions. While Ford’s threat gained attention, it was not supported by all Canadian provinces at all, and it should be noted – that Ford did a 180 and removed the surcharge causing Trump to do the same…. helping stocks steady.

In addition, we got the JOLTS report which was better than expected – showing that the US has 7.74 million jobs available up from 7.51 million…and that is a positive.

So back to the issues at hand…..Tariffs, spending, policy, inflation, global conflict and Fed action….….

In the end – we all knew that the path we were on was unsustainable…. We could not keep spending money like there was no tomorrow, we needed to update trade agreements, we needed to clean the house, so someone had to be the ‘bad guy’. What I think has to happen is he needs to be clearer in the messaging, he needs to give real life examples – so for instance – Canada imposes a 270% tariff on milk, 245% on cheese, 240% on chickens – those are real numbers that Americans need to understand…because then they will understand what this fight is all about….It’s about fairness…..and if you look – you’ll find that is true around the world – to different extents, but we get tariffed all over the place…. And while this all feels a bit uncomfortable from a market’s perspective, it feels less uncomfortable from a spending perspective, so, this too shall pass. And again, this is not the time to panic at all.

We also needed to try and bring the Russia/Ukraine war to end because the money we were spending was out of control and it could not go on any longer – and to that point – Secretary of State Rubio announced (yesterday) the framework of a 30 day cease fire in the region…..Ukraine accepting the terms and now he is on his way to Moscow to get them to come to the table….and that is a positive……But it ‘ain’t over til the fat lady sings’. In addition – Trump has said that we should see some movement in Iran, Hamas & Israel in the days ahead.

And the FED? Well, we will learn more after today and tomorrow…. –

Today is all about the February CPI report…..which is expected to show a 0.1% decline in the reads, this as the whisper number suggests a rise in the reads…at this point – unless it surprises by a larger move in either direction – I think it is already priced in….So I am not expecting a major reaction to the report UNLESS it surprises. Then tomorrow we will get the latest PPI report….and that too is expected to show a slight decline…..so let’s see. Now remember – we have seen the price of oil decline by 15% since Trump came into office…. ($78 to $67) and that will have an effect on both CPI and PPI….it has already had an effect at the gas pump. So, depending on what we learn – may then give us a bit more clarity on what the FED may or may not do. Now, you know me, I do not think the FED can justify any cuts at this time…. but if the data shows a real slowdown then that could change my opinion…So, let’s see. Just fyi – the market is now expecting 3 – 25 bps cuts this year….

All 11 sectors of the S&P ended the day lower…. with Industrials, Communications & Consumer Staples leading the pack – down 1.5%, Healthcare & Real Estate down 1%, Utilities -0.9%, Financials & Energy – 0.8%, Basic Materials – 0.7%, while Tech lost 0.4%.

The VIX which busted up and thru the highs seen in December (28.32) – did kiss 30 over the past 2 days….and that helped to keep the pressure on stocks…..this morning- the VIX is down 3% at 26.13 and futures are all in the green.

Bonds retreated a bit yesterday – leaving yields just a bit higher…the 2yr is yielding 3.95% while the 10 yr is yielding 4.277%.

Oil continues to trade in the $66/$70 range…. This morning oil was up 66 cts at $67.

Gold advanced is now kissing the upper end of the range we discussed…..as the lack of clarity continues…..so if that continues to be the case – then I expect gold to break out….. Now yesterday, Trump did say that he does NOT see a recession in the future – this after he dodged the question on Sunday causing all of the angst this week….and so, if they are able to talk that back off the edge then we could see gold pull back a bit….but let’s see what today’s eco data tell us..

Futures are HIGHER this morning – as investors, traders and algo’s are all looking for a bargain…and there are plenty of them….at 6 am – Dow futures are up 150, S&P’s up 30, the Nasdaq up 135 and the Russell is ahead by 7. Again though, while we may see a bounce today I continue to say – go slow…. expect more thrashing around as the market attempts to repair itself. And it will, it just needs a bit of time and clarity….

European markets are all higher by better than 1%. …. The Ukraine/Russia deal the driving force behind the move….

The S&P closed at 5572 – down 43 pts….and while the pressure was still on, it was not as pressurized as it was earlier in the week – we only traded in two centuries…..5600 and 5500…..LOL….This morning suggests that we should see some relief…..but listen, investor angst will begin to fade…..and they will return to focusing on fundamentals….and that will ultimately drive markets higher. Because you know why else? If we go into a slowdown – companies will also become more ‘efficient’, they too will cut waste and excess spending….and that will in the end – be a good thing.

My sense is that we are closer to the bottom than not…which doesn’t mean that we just shoot higher, it just means we don’t keep going lower….I expect us to churn a bit in order to repair a fractured foundation…I continue to believe that the future is bright, so stick to the plan, keep allocating monies to your portfolio and take advantage of the sale. The goal is not to panic…..

Get comfortable with being a bit uncomfortable…. Know what you own and why you own it…. remain diversified…..

Take good care,

kpolcari@slatestone.com

Sources:  Bloomberg, CNBC, Reuters, Wall Street Journal

Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment.  The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.

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.

Big Board Bison Burger

A bold, all-American burger honoring heritage, flavor, and market resilience.

For the Burgers: 1 lb. premium American bison (makes 2 burgers), coarse sea salt, freshly cracked black pepper, garlic powder, 2 brioche buns, 2 slices sharp white cheddar, Butter lettuce leaves.

For the Market Rally Onions: 1 large, sweet onion, thinly sliced, butter, 1 oz bourbon (about 2 tbsp), 1 tbsp maple syrup.

For the Wall Street Sauce: ¼ cup mayonnaise, 1 tsp Dijon mustard, 2 tbsp minced roasted red peppers, 1 tbsp chopped fresh herbs (parsley, chives, or a blend), Pinch of cayenne pepper (adjust to taste)

Prep the Bison Patties – In a bowl, gently mix the bison meat with salt, pepper, and garlic powder. Divide into two equal portions and form into patties slightly larger than your buns (they’ll shrink a bit as they cook). Let them rest while you prep the onions.

Make the Market Rally Onions – In a skillet over medium heat, melt the butter. Add the sliced onions and cook slowly until they begin to soften, about 5 minutes. Add the bourbon and maple syrup, then reduce heat to medium-low. Let them caramelize until golden brown and jammy, stirring occasionally (10–15 minutes total).

Cook the Bison Patties – Heat your grill or cast-iron skillet to medium-high. Cook patties for 4 minutes per side for medium-rare (bison is lean — don’t overcook!). Add a slice of sharp white cheddar to each patty during the last minute of cooking and cover to melt.

Toast the Buns – Split the brioche buns and toast them cut-side-down on the grill or skillet until golden brown.

Make the Wall Street Sauce – In a small bowl, mix the mayo, Dijon, roasted red peppers, herbs, and cayenne until well combined.

Assemble the Big Board Burger – Spread Wall Street Sauce on both sides of the toasted brioche bun. Add a layer of butter lettuce on the bottom bun. Place the bison patty with melted cheddar on top. Crown with a generous scoop of those Market Rally Onions. Cap it with the top bun.

Serve with: Classic kettle chips or sweet potato fries. A cold beer works great.

Buon Appetito