Things you need to know.
- Did you see it??? Stocks surged after Trump delayed tariffs on the EU.
- Consumer Confidence also surprised to the UPSIDE – as consumers feel confident!
- Gold backs off, Oil churns and Bonds surge sending yields lower.
- Family Offices UPPING their bets on the economy! (hard data)!
- NVDA only 7 hrs. away – Jensen getting all ‘dolled up.’
- Try the Pesto di Pomidori Secchi
And – BOOM! Stocks took off like a SpaceX rocket…..The Dow up 740 pts or 1.8%, S&P + 118 pts or 2%, the Nasdaq rallied by 462 pts or 2.5% (and NVDA along with CRM report after the bell today….), the Russell up 50 pts or 2.5%, the Transports up 295 pts or 2%, the Equal Weight S&P up 128 pts or 1.8% while the Mag 7 Index was the clear winner – surging by 825 pts or 3.25%.
Investors, traders and algo’s all responding in kind to the weekend news that Trump ‘rolled over’ – going from ‘we are imposing a 50% tariff on anything out of the EU’ to ‘ok, I was just kidding, we are not going to do that right now – we are giving Ursula (Von der Leyen) some extra time to work this out’….(that’s hard data!)
And then we got another ‘soft data’ economic surprise – at 10 am – the Consumer Confidence Board reported the latest read on – that’s right – Consumer Confidence….which provides insights into consumer attitudes, spending intentions, and economic expectations and you will be surprised how consumers feel……The core number surged m/m – going from 87.1 to 98! This, my friends, is a notable recovery after 5 consecutive months of decline and that is after the whole ‘liberation day’ drama…
The Present Situation Sub-Index a component that reflects consumers’ views on current business and labor market conditions, increased by 4.8 points to 135.9, indicating a stable perception of the present economic environment. (Re-read that in case you are confused!).
The Expectations Sub-Index measures consumers’ short-term outlook for income, business, and labor market conditions and that surged by 17.4 points to 72.8. Now just to be a party pooper – while THIS one piece did rise – it remains below the 80 thresholds, which typically signals concerns about a potential recession. So expect the bears and Lizzy Warren and Chucky Schumer and Hakeem Jeffries to point to this ONE single data point to support their story about a failing economy.
And then the piece that we all want to know is what do all these consumers think about the future performance of the stock market? There’s a data point for that!
The Stock Market Optimism Index – and that showed us that consumers increased their outlook about stock prices, with 44% expecting rises over the next 12 months (up from 37.6% in April) and 37.7% anticipating declines (down from 47.2%). This shift being attributed to a couple of things – the stock market recovery in later April/Early May, the supposed U.S.-China trade deal, and the other trade deals that are on the docket.
Here is another data point – family offices are apparently also increasing their weightings in equity percentages in their portfolios from 26% to 29% – that is a significant increase and suggests that this investment ‘group’ expects bigger returns this year.
(Just fyi – A family office is a private wealth management advisory firm that serves high-net-worth or ultra-high-net-worth individuals and families, typically managing their financial affairs, investments, and legacy planning. It acts as a centralized entity to handle a family’s wealth, ensuring alignment with their financial goals, values, and long-term objectives. This is a big group!)
And with the surge in stocks we saw a surge in (global) bonds – the TLT up 1.4% while the TLH rose 1% and that sent yields in the US tumbling….There was a 2 yr note sale that was well received (meaning there were plenty of buyers – both foreign and domestic), the 2 yr yield is now below 4% at 3.96%, the 10 yr ended the day yielding 4.45%, while the 30 yr ended the day at 4.95%.
Gold lost $68 to end the day at $3,327 – the loss a direct result of the ‘feel good’ mood – this still leaves gold in the $3248/$3400 trading range.
Oil had a big swing yesterday – $60.26/$62.14 only to settle in at $60.80 – leaving us still within the $60/$64 trading range. Trendline resistance is at $62.67 – which I think will prove to be tough to pierce given the expectations that the Saudi’s and OPEC+ are expected to raise production in June. But look – lower oil prices are good for the global economy – and as of today – oil is down 18.5% off of the January 16th high and that is clearly helping ease inflationary pressures.
Eco data today includes Mortgage Apps (hard data), Richmond Fed Manufacturing Index (hard data), Richmond Fed Business Conditions Index (soft data), Dallas Fed Services Index (hard data), and the FOMC mins – which I think is a NON-Event. What are we really going to learn about what they were all thinking on May 7th? And does it really matter? Is it going to change your investment style or strategy? Hardly…. but they love to hear themselves talk….
The BIG event is happening after the bell -Jensen Huang is taking the stage to announce the latest results from NVDA….and here is my take on it. If Jensen was going to disappoint even a little bit – we would know by now…they would have ‘pre-announced’ something, they would have hinted at a slowdown or an issue with their Blackwell (or other) chip, they would have suggested that demand is ‘soft’ – they would have said something!
Now the options market is pricing in an 8 – 10% move in either direction depending on what he says…. Now here is the key…. the expectations are already high – so if he meets the expectations (let me repeat – which ARE high) but doesn’t beat them, I suspect the algo’s and traders will throw a temper tantrum and view that as a disappointment! Perfect – because as they all run for the door, you – as a long-term investor – can be there ready to ‘scoop it up’ – I mean who wouldn’t buy NVDA down 8 or 10%? Are you kidding me?
And to drive this home – I just heard Adam Johnson – portfolio manager at the Bullseye American Ingenuity Fund (and a good friend) tell Maria that he ‘wants to see NVDA beat’ the $43 billion top line revenue number. Well of course we would all love them to beat but remember – $43 billion is up 67% y/y. … the real KEY is what he says going forward…. Will his comments pacify what investors expect? We are only 7 hours away from learning what’s next….
Now let’s just be clear – NVDA is up 1% ytd….but it was down 37% on April 7th and has since rallied back by 56% – so there are a lot of trader types that I suspect will ‘take some money off the table” on the back of this report….but remember – they are TRADERS, not INVESTORS.
Now, while I hope Adam is correct, I am not selling my NVDA if they don’t beat it…. Capisce?
US futures are a bit lower this morning – and you should not be surprised after yesterday moves…. The Dow down 65 pts, the S&P’s down 5, the Nasdaq down 8 and the Russell down 5. I do not believe that any of the eco data today will drive the market. I do think – it will be all about the latest drama out of DC. The trade staff and the commentary coming out of the Senate concerning the Big Beautiful Bill and all that is wrong with it.
NVDA, CRM and the other earnings reports will play supporting roles in the broad action but will be THE focus of so many traders, algo’s and investors. Sit tight – because it’s going to be very exciting…. My money says that Jensen does not disappoint at all…. not even a teeny-weeny bit….
European markets are also a bit lower – Nothing new out of the EU concerning tariffs yet, July 9th is 6 weeks away.
The S&P closed at 5921 – up 118 pts after testing as high as 5924. …. Short term resistance is at 5968 – a level I think will prove tough to penetrate right now. There is still too much economic uncertainty – so stick to the plan…do not get drawn into the fray….do not jump in and make an emotional decision…. If you are properly allocated – you’ll be just fine….
If the action makes you nervous then 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
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.
Sun Dried Tomato Pesto (Pesto Di Pomodori Secchi)
This is a great dish, and you can use it two ways.
One – put it on garlic toast (crostini) and serve as an appetizer.
Two – boil up some Penne Rigate and toss with the Pesto.
Today – I am showing you how to make the pesto and then you decide how you want to eat it!
For this you need: Sun dried tomatoes (not in the oil), blanched almonds, Fresh Grated Parmegiana, garlic, basil, olive oil.
Begin by soaking the sun-dried tomatoes in hot water for 10 mins. Strain and dry with a paper towel.
Now add the tomatoes, a handful of blanched almonds, Parmegiana, a garlic clove, 4 or 5 fresh basil leaves, olive oil and a bit of pepper. Do not use salt – the cheese is enough. – blend until it becomes a ‘paste’. It should be thick, not liquidy.
At this point – you can use it as an appetizer on garlic toast or my favorite – over pasta.
Boil the pasta (Penne Rigate) until aldente – 8 mins. Strain – reserving some of the pasta water (Tears of the Gods). Put the pasta back into the pot, now add some of the pesto and a ladle of the pasta water. Mix well to coat. That’s it…. Always have a bit more cheese on the table for your guests.
Buon Appetito
