Things you need to know.

• Trump Threatens 50% tariffs on the EU on Friday – stocks sell off.
• Trump announces a delay of those same tariffs and stocks surge on Monday.
• Someone check the Personal Trading Accts!
• Bonds are up, Yields are down, Gold is down, and oil is steady.
• Lots of Eco data this week – but PCE is the highlight.
• NVDA to report on Wednesday after the bell! Strap IN!
• Try the Tagliolini with Pear, Gorgonzola and Guanciale.

Investors, trader and the Algo’s all got rattled by two aggressive Trump Truth Social posts – one saying that on June 1^st the US would impose a 50% tariff across the Eurozone, period, the end….Saying that he was ‘NO longer looking for a deal’ while the second post was a more direct hit to one of the world’s biggest companies – AAPL and their CEO – Timmy Cook…..threatening to impose a 25% tariff on AAPL if they did not start manufacturing their phones and other products that are sold to American’s in America. Not something anyone expected to see on a Friday going into a long holiday weekend.

The move caused the VIX to spike at one point by 27% in the pre-mkt – only to close up 10% by the end of the day, causing stocks to tumble….as trading desks were running on ‘skeleton crews’ as so many asset managers/traders had already hit the road to enjoy the Memorial Day Weekend.

As you can imagine – stocks struggled – the S&P falling by 1.3% or 72 pts right out of the gate…as so many tried to make sense out of the move….But how could they – There was no sense in the post at all, Trump – being Trump – unable to keep quiet just can’t stop, always playing to the crowd – demanding change on his schedule – which means right now.

And so, – many are now looking at Scotty B (Treasury Secretary) to take the reigns to clarify and temper the Truth Social Posts. In fact – that is exactly what happened…..and while he did not ‘mute’ Trumps commentary he did offer some insight – saying that the negotiations are ongoing but that Trump was not satisfied, saying that he thought the EU’s offers were ‘insufficient’ and that he hoped a June 1^st threat would help to light a fire under Ursula Von Der Leyen – the President of the EU commission – which is the executive branch of the EU. As Commission President, she sets the EU’s policy agenda, leads a team of 27 Commissioners, and represents the EU in international summits and negotiations. And that is key here…. there are 27 countries* in the EU and each one of them has their own agenda – so a trade agreement with the EU is a bit more complex than say a trade agreement with just one country. And that took some of the sting out, but markets did close lower going into the weekend with many wonderings what’s next?

*27 EU Countries include Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.

The Dow lost 256 pts, the S&P lost 40 pts, The Nasdaq down 188 pts, the Russell gave back 5 pts, the Transports lost 88 pts, the Equal Weight S&P was down 28 pts, while the Mag 7 gave up 338 pts.

And here is what’s next – Over the weekend – the negotiations continued and guess what? Trump announced – on Truth Social – that he was delaying the tariff threat until July 9^th – after Ursula made an appeal to Trump – basically telling him to stop the histrionics and grow up and that she would ‘fast track’ the negotiations – saying that she would work rapidly…..

And with that – Trump backed down (like he did with China) – and this morning markets are surging! And if you are surprised, then you need to see a shrink – we have seen this playbook before, I just want someone to examine all of the trading accounts of anyone in the administration….….European markets are higher – Germany up 0.8%, Italy +0.6%, Eurostoxx up 0.6%, France up 0.3% and the UK is ahead by 1.1%.

And US futures are higher as well…Dow futures are up 550 pts, The S&P up 88 pts, the Nasdaq up 360 pts, and the Russell is up 33 pts. So, anyone that sold on Friday because the ‘end was near’ are the same ones trying to get back in this morning…. I mean, you can’t make this up…..

Now while the broader market was lower on Friday – we did see strength in Utilities +1.2%, Consumer Staples up 0.3%, Energy + 0.3% – which all make sense. The biggest losers? Tech! it lost 1.1%, Consumer Discretionary was down 0.9% and that also makes sense! The balance of the sectors while lower were not sounding any alarm bells, Industrials -0.3%, Financials – 0.4%, Communications – 0.4%, Healthcare – 0.2%, Basic Materials – 0.2% while Real Estate was flat.

Further down the chain – Homebuilders -0.5%, Airlines – 0.8%, Retailers -1.13%, Disruptive Tech – 0.6%, Metal & Miners +2.8%, Semi’s – 1.6%, Aerospace & Defense +0.6%, Big Pharma +0.2%, Exploration & Production +0.1%.

As you would expect – the contra trades had a winning day – the VIXY surged by 6.5%, the DOG +0.6%, SH + 0.8%, PSQ + 1.1% while the SPXS (Triple Levered S&P) +2.3%.

Now this IS a big week for data and earnings……and the one that everyone is focused on is NVDA – tomorrow after the bell. The question isn’t whether Jensen will surprise – the question is by HOW MUCH will he surprise! EPS are expected to come in at 87/cts/share. Revenues of $43 billion – which would be a 67% increase y/y. Investors are looking for NVIDIA to meet or exceed these figures, as the company has a history of surpassing estimates, though recent beats have been narrower (e.g., 3.4% revenue beat last quarter). A significant beat, driven by strong demand for NVIDIA’s AI chips (think Blackwell) will boost the stock, while falling short might lead to volatility given high expectations. Concerns about slowing growth could be an issue but a strong forward-looking statement will reassure markets. Investors will focus on AI infrastructure demand and easing tariff impacts.

The options market is implying a move of 8-10% ($10- $13) if they surprise to the upside and an 8 – 10% move to the downside if they miss – think $115/$118. The key area to watch is $136 (current resistance) – if we pierce that – then the January 7^th high of $153 is in the bullseye! Let’s go!

On the economic front – we are due to get Durable Goods – exp of -7.8% (hard data), Conf board consumer confidence – exp of 87.1 (soft data), Richmond Fed Manufacturing (hard) and Business Conditions Index (soft). We will also get the latest FED mins – I expect to learn nothing, first revision to 1^st Qtr. GDP at -0.3% (hard), Pending Home Sales of -1% (hard), Personal Income and Spending (hard) and the biggie! The April Top Line PCE inflation report (hard) – which is expected to be +0.1% m/m, +2.2% y/y while Core PCE m/m is expected to be +0.1% and y/y of +2.5%. I don’t expect that we will see an upside surprise – but you never know.

Gold was up $63 or 1.9% on Friday (think headlines) and is down $74 or 2.2% this morning… (again think the headlines).

Oil is tight at $61.70 – still below trendline resistance at $62.80…Leaving us in the $60/$64 range.

Bonds were up on Friday; TLT was up 0.2% while TLH was up 0.35%. This morning – bonds are higher again and that is sending yields lower…the 10 yr is yielding 4.45% – down 5 bps and the 30 yr is down 7 bps at 4.96% – below that key 5% rate.

As noted – US Futures are UP – Friday’s action saw the S&P test trendline support at 5767 and bounce to end the day down 40 pts at 5802. This morning’s action will see us bounce potentially taking us back to 5850/5870 ish…. 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.

Tagliolini, Pears, Gorgonzola and Guanciale!

Delish!

The combination of pear, Gorgonzola, and guanciale in a sauce is a modern evolution of classic Italian flavor pairings. The pear and Gorgonzola pairing is deeply Northern Italian, while the guanciale component adds a distinctly Central Italian (Roman) savory depth.

Here you go..

For this you need the Tagliolini, (you can use thin spaghetti too) Bosc Pears, Gorgonzola cheese, honey, Guanciale, s&p, olive oil.

Bring a pot of salt water to a rolling boil on the back burner so it’s ready for you.

Now, slice the guanciale into thin strips. Add to the sauté pan and cook until nice and crisp – do not burn – remove and set aside.

Now – peel the pear, then slice into quarters, remove the seeds and then cut it up into small pieces. Add to the sauté pan with the fat from the guanciale. Add in one tsp. of honey – Cook on med low heat for 5 mins – until the honey helps it all caramelize….

Now, add the pasta to the water and cook until aldente – 8 mins..

Now – add the gorgonzola, the pears and a ¼ cup of the tears of the Gods (pasta water) to the blender and blend until nice and creamy.

Now add some of the sauce to the sauté pan, add the pasta, and ½ ladle of the pasta water – stir to coat well. You can always add a bit more of the water if you need to.

Now – serve in a warmed bowl, – sprinkle with some pepper and a bit more of the sauce on top – then place some of the crispy guanciale on top.

Che spectacolo!

Buon Appetito