Things you need to know.
- Stocks got whiplash – as mixed headlines hit the tape.
- Oil, Gold, Bonds and Bitcoin all traded lower.
- The VIX suggested ‘PANIC’ – only adding to the action.
- And Ackman warns of a ‘Economic Nuclear Winter.’
- Try the Chicken Scarapiello
Ok – so stocks continued to get pushed around – yesterday we woke up to blood in the streets of Asia with Hong Kong down 13% and Japan and Taiwan both down nearly 10%, then in Europe where trading had just begun we saw all markets down 5+% and at home – you could feel the anxiety – as futures were spinning out of control….pointing lower yet again…..futures suggesting losses of 4+%, while the VIX (fear index) was flashing ‘PANIC’…..and then the bell rang and down we went – stocks falling significantly lower – causing many to suggest that the circuit breakers would be tripped…
The S&P crashing right thru 5000 as it tumbled into another century mark (4900) and then tumbled further into another century mark (4800) all before 9:45 am….the bottom (4835) occurred at about the same time that ‘famed’ money manager Billy Ackman made headlines when he urged Trump to “pause his recently announced tariffs, or risk a self-induced, economic nuclear winter”
An economic nuclear winter? Really? I think that was enough for people to say – ‘OK – time to get back in!’ Ackman has lost his mind (again!)
And then at 10:09 – CNBC (erroneously) reported that the President was delaying tariffs for 90 days – and before you knew it- the S&P rocketed higher…going from 4960 – which was down 4.5% to 5246 which took the index to +3.4% – a 286 point rally (+8%) – happening in 8 mins – before the WH denied that report – calling it ‘fake news’ and that sent it reeling again – falling back 5.5% in 20 mins….
The point here is that the markets are very anxious and the reaction to every headline is dramatic – investors traders and algo’s yearning for anything positive – and the technology that allows these swift moves – dare I say ‘encourages’ it – can and will ‘cut like a knife’.
By the end of the day – it felt like a WIN…..because the disaster that CNBC’s’ Jimmy Cramer was predicting – a repeat of the Crash of ’87 – did not happen…..The Dow only fell by 346 pts or 0.9%, the S&P lost 11 pts or 0.25%, the Nasdaq ROSE 15 pts or 0.1%, the Russell lost 16 pts or 0.9%, the Transports gave up 175 pts or 1.4%, the Equal Weight S&P lost 52 pts or 0.8% while the Mag 7 ROSE 60 pts or 0.3%!
And this morning – markets around the world are in rally mode – Japan up 6%, Australia up 2.3%, Hong Kong + 1.5%, China +1.7%, South Korea + 0.3% while Taiwan is still struggling – down 4%.
European markets are all up better than 1%..with the UK in the lead at +2.1% and Italy carrying up the rear at +1%.
US futures? Yup – they are in rally mode as well – after the WH now tells us that 70 countries have come knocking – mimicking Monty Hall’s famous phrase – “Let’s Make a Deal!” (That’s a nod to all the Baby Boomers out there!). Dow futures +800 pts or 2%, the S&P up 80 pts or 1.6%, the Nasdaq up 225 pts or 1.4% while the Russell is up 30 pts or 1.7%.
In the end – this is not over yet….the news out of DC will continue to dominate the headlines, but investors will once again begin to focus on the broader economic and earnings data and more importantly – the earnings guidance – that is about to hit us…and since there is still so much uncertainty concerning the guidance – we can expect the turbulence (thought to a lesser degree) to continue. Blackrock CEO Larry Fink warning us that we are already in a recession…which I would argue is not the case…. but I’m not a big bank CEO. Recall how they also all called for a recession 4 yrs ago when the yield curve inverted – yeah – that never happened….so let’s not create hysteria.
And if you are looking for that famed V shaped recovery – don’t go betting the ranch just yet – that is not happening. Look – there has been a fair amount of internal damage done to the markets that needs to be repaired… – what you want to see are strong ‘bounces’ accompanied by weaker and weaker declines…as we rebuild the base depending on what the headlines suggest. What you also want to see is an end to the ‘indiscriminate’ selling…..that’s when the panic rises causing investors to ‘throw everything out including the kitchen sink!’ It is the type of selling that implies a complete lack of discretion, selling becomes ‘uncontrolled’…..Hmmmm?
Bonds which had been in rally mode sold off yesterday…..the TLT losing 3% and the TLH down 2.6%. Several factors being cited – A significant driver appears to be heightened economic uncertainty tied to Trump’s sweeping tariff plans, which could have prompted investors to adjust their positions. while others shifted capital elsewhere, reducing demand for bonds. Additionally, concerns over rising deficits and weakened foreign demand for U.S. Treasuries (something I do not agree with) also contributed to the retreat. This sell-off caused bond yields to rise…the 2 yr is now yielding 3.73% – up from 3.45% while the 10 yr is yielding 4.15% up from 3.93%.
Oil – which had traded down to $58.95 rallied back a bit and is trading at $61. Again – a look at the chart – suggests ‘panic’ selling- dropping 18% in just 5 days….as talk of recession and waning demand took root. Ok- let’s be clear – demand is not waning…..not now, not next week, not next month and not next year….This is a supply story….not a weak demand story….OPEC+ announced their intention to increase supply, plus the NON-OPEC producers continue to flood the markets – so let’s be clear – prices are declining because of the oversupply of oil – Period. We are now back to prices last seen in December 2021….. A level that should provide support – which doesn’t’ mean oil is going right back up – it just means maybe it found a bottom…
Gold also sold off a bit yesterday – falling $36 to end the day at $2998. It was the whole ongoing tariff fallout that sent gold plunging…causing some investors to sell gold to meet margin obligations while others sold – taking profits after this years surge higher…to offset losses they took in other asset classes….Think Bitcoin in addition to stocks….as that asset traded down to $74,000….leaving it down some 31% off of the January high.
The eco data that is important this week is Thursday’s CPI and Friday’s PPI – both the latest inflation reads for investors and the FED to consider. Considering all the rage is now about how we are falling into a recession – these data points – along with the tariff’s conversation will remain top of mind for JJ and the fed.
Yesterday I said that – any sense that a tariff deal is close at hand will cause the same visceral reaction to the upside (which we saw happen)… and even if a deal is still a ways off – at some point – the selling becomes so exhausted that it creates massive long term opportunities – my sense is that we are almost there….realizing that you can never pick the bottom. In the end – it’s about sticking to the plan.
Remember – there is no reason to ‘rush out’ and be an aggressive buyer…. Patience is a virtue, and the recent action has only confirmed that narrative. Earnings start this Friday – with the Banks…..And then Tax Day is the 15th…..
The S&P closed at 5062 – down 11 pts….as we traded in 3 different centuries…. – seems to be a thing these days…..We had closed at 5074 – opened at 4953 – traded down to 4835 and then ended the day at 5062. Now to be clear – the fact that we pierced 5000 does open the door to test lower again…. Only time will tell. If global market action and US futures are correct that is not happening today.
Get comfortable by being a bit uncomfortable, stick to your plan, don’t panic and if the recent pullback is causing you undue stress then maybe you need to reconsider your plan….…. Call me to discuss 561-244-2504 or click here to send me a message. https://slatestone.com/contact-us/
Take good care,
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.
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Chicken Scarapiello
Often referred to as “shoemaker’s chicken,” is a beloved Italian American dish with a rich, albeit somewhat murky, history tied to the immigrant experience in the United States. The name “Scarapiello” comes from the Italian word scarparo, meaning “shoemaker,”
Chicken paired with sausage, potatoes and vinegar peppers – make this dish delicious. The use of vinegar, a hallmark of the dish, reflects a practical way to add bold flavor.
You will need: Thighs & legs, (bone in/skin on), s&p, olive oil, sweet Italian sausage, Vinegar peppers, garlic, white wine, chicken broth, marinated artichoke hearts, thin sliced potatoes, s&p, and flour. Total time 1 hr… start to finish….
Preheat oven to 375 degrees – Preheat grill for cooking the sausages.
Season chicken pieces with s&p – heat up oil in frying pan – when hot – reduce heat to med/hi – now add chicken and brown on all sides – maybe 10 mins total. While this is cooking – place the sliced potatoes in the baking dish – season with s&p – add a splash of oil. Now remove the chicken from the frying pan and place it in the baking dish and put it in the oven and continue to cook for about 30 mins….
Next – cook the sausage on the grill – careful not to burn…. maybe like 10 mins total…. remove from grill and rest for 3 or 4 mins then cut into bite size pieces. In the meantime – add the chopped garlic to frying pan (that still has the juices and oil from chicken) along with sliced vinegar peppers – sauté. Now add the sausage and some white wine and reduce (5 mins) – next add chicken broth and the artichoke hearts…. sauté for another 5 – 8 mins…
In a separate bowl – whisk together some flour and milk (you can use water) and add to the frying pan – allowing it to cook and thicken a bit….do not let it get too thick – you can add a bit of broth if you need to. Re-introduce the chicken to the frying pan and simmer.
Next – put the potatoes under the broiler to get them nice and browned –
Now serve on a large, warmed platter family style. Place the potatoes on the platter and then add the chicken, sausage and artichoke hearts… Accompany with a large mixed salad dressed in a balsamic vinaigrette dressing. Enjoy your favorite chilled White wine –
Buon Appetito
