Things you need to know.
- Stocks rallied – just not as much as we thought.
- NVDA pierced the February high and then failed.
- An appeals court reinstates the Tariffs.
- China trade talks ‘stalled’
- Try the Lemon Basil Swordfish
**I am joining Stuart Varney on Varney & Co from 9 – 10 am this morning on Fox Business – Live from NYC **
Stocks rallied on Thursday – but just not as much as originally expected. Futures which were pointing up 2% in the early morning – on the back of the blowout earnings report and bullish forward guidance by NVDA and the news that Trump got ‘trumped’ by 3 judges that blocked his retaliatory tariffs – pointed to a much more exciting day than what it turned out to be.
But it was the idea that the impact of the court ruling may prove limited along with some ‘weaker’ eco data that caused markets to back off of the path that many thought it would take.
The eco data that came out yesterday was NOT the non-event (for the markets) that I thought it would be…. And that is what caused investors to be a bit more cautious – for some reason they chose to focus on the negatives as the day wore on – with some (the usual suspects) calling for a contraction in the economy on the back of the data. So, while 1st Qtr. GDP did improve by 0.1% to -0.2%, and the PCE Q/Q Price Index was better than expected – falling not +3.4% vs. the expectation of +3.5% – it was Personal Consumption that was weaker than expected at +1.2% vs. the +1.7% expectation, it was Initial Jobless Claims that was slightly higher than expected and it was Pending Home Sales that were worse than expected that kept the lid on the excitement.
So, the RISK ON excitement at 8 am turned to caution as the economic headlines and the court analysis headlines tempered the bullish sentiment. And in fact, that is what we saw as an appeals court granted a ‘stay of execution’ – temporarily keeping the tariffs in place until at least June 9th.
By the end of the day – the Dow added 117 pts or 0.3%, the S&P up 23 pts or 0.4%, the Nasdaq rose by 75 pts or 0.4%, the Russell up 7 pts or 0.4%, the Transports up 78 pts or 0.5%, the Equal Weight S&P up 22 pts or 0.3% and the Mag 7 gained 160 pts or 0.6%.
The caution caused a ‘flight to safety’ move into bonds – as they (the usual suspects) once again called for the FED to cut interest rates! The TLT and TLH both rose by 0.9% and 0.75% respectively and that caused bond yields to decline…. the 2 yr fell 8 bps to end the day yielding 3.94%, while the 10 yr dropped 12 bps to end the day yielding 4.43%. The 30 yr which pieced 5% rate is now yielding 4.93%.
Oil just continues to march in time…. kissing but failing to pierce trendline resistance. This morning oil is trading at $61.30 – staying below trendline resistance at $62.50. but seemingly finding support at $60. The next move in oil will be about how the market interprets today’s economic – PCE data.
Gold also rallied a bit on the tempered sentiment – rising $20 to end the day at $3,342 but this morning it is down $22 at $3,322– once again sitting on trendline support as it awaits today’s economic data – the April PCE report – the FED’s favored inflation gauge. The move lower this morning also being attributed to the fact that Gold has struggled at the $3,350 level lately, unable to pierce it to retest the recent $3400 high. But do not dismiss its importance – despite this churn – Gold remains appealing to a lot of investors as they continue to price in the effect of Trumps tariffs and the ongoing tensions with China. And you know how I know that? Because our friends at Goldman Sachs said it was true! LOL.
Speaking of that – Scotty tells us that trade talks with China have ‘stalled’ or as he says it they are ‘a bit stalled’- trying to be a bit more positive….pointing to the idea that XiXi is mad at us because Marco will start to pull (revoke) Chinese student visas and the WH introduced new restrictions on the sale of chip design software to Beijing.
And this headline – the trade talks have stalled headline, and the coming eco data headline is causing investors, trader and algo’s to sit tight and that is causing futures to trade around the unchanged line. In fact – they are pointing just a bit weaker…. The Dow down 22 pts, the S&P down 6, the Nasdaq down 25 and the Russel down 9.
Now do not be surprised – the media will accentuate any negatives in the eco data that they can find causing some investors and traders to reassess the situation. Any concerns over weaker growth or fiscal strain that is amplified by some of the talking heads will be the reason for a weaker market. And the angst is a bit elevated this morning as we await the PCE report…..which makes me laugh. Do you want to know why? Because topline is expected to come in at +0.1% m/m (which is nothing) and up 2.2% y/y – which would be down from last month. And Core PCE? Up 0.1% m/m and +2.5% y/y – again down from last month. So if that is true – then the report is strong….because the trend continues to move lower….but here is the rub – if the number comes in flat to up – then expect them (again the usual suspects) to scream about how inflation is ‘out of control’ – I mean its laughable.
In addition – we will get the Personal Income and Personal Spending reports which are expected to be +0.3% and +0.2% respectively. Now we know this, none of this is a surprise, but what they will say is that it is down from last month’s read – suggesting that the hard economic data is weakening….And then we get the soft data – the opinion data – the U of Mich data…..and while still soft – if the expectations are correct – the results show improvement – meaning it is getting ‘less’ soft – which is better!
Look – it’s Friday, It’s the end of the month – so I suspect it will churn and may even end the day a bit lower – depending on the data – but my guts just say the market is a bit tired, that’s all. But do not despair -it’s been a great month…the market has rallied nicely and for the most part – if you stayed still – your account today is back to where it was on Liberation Day. Now if you started to panic and hit the sell button on the way down and the buy button on the way up – who the heck knows where you are!
Asian markets ended the month weaker while European markets are higher this morning. The EU saying that the latest court action is only adding more uncertainty to the process, but if it holds, then the EU feels like they have a leg up on the negotiations – thus the rally. Now don’t get me wrong – the EU is committed to negotiating a deal – because our relationship is the largest in the world and there is a lot at stake.
The S&P closed at 5912 – up 74 pts…. down 32 pts…. After testing as high as 5,943 – falling short of short-term resistance is at 5968 – a level that I though was going to be violated on the opening trade…..It was not, so it stands as a level of resistance for the markets. Recall – what I said yesterday….” the excitement today will be met with caution tomorrow….as we tease the overbot level on the RSI scale”. In any event –its Friday – enjoy your weekend.
Call me for a free (no obligation) portfolio analysis. 561-931-0190
Take good care,
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Lemon Basil Swordfish
You need: Swordfish, olive oil, fresh lemon juice, chopped basil, chopped mint, chopped garlic (like 2 cloves), s&p…..
Mix the olive oil, fresh lemon juice, chopped basil, chopped mint, chopped garlic and taste to make sure you got it right…. now pour half of the mixture over the swordfish and let marinate for 30 mins….
Heat the grill – Now place the swordfish on the grill and cook for about 3 mins and then flip (depending on thickness).
While the swordfish is cooking – prepare the plates with a bed of arugula and sliced – tomatoes. Season with s&p, and a squirt of fresh lemon juice. (You can add a splash of balsamic if you like). Now place the grilled swordfish on the arugula and serve with your favorite chilled white wine. Simple – yet elegant.
Buon Appetito
