Things you need to know.
- The BBB is now signed, sealed and delivered.
- The BRICS meet and Trump warns of add’l tariffs
- The NFP report gives JJ cover to do NOTHING.
- Oil churns, Gold drops, bonds declines, yields rise.
- Earnings begin next week
- Try the Chilean Sea Bass with Lemon Butter
Stocks ended the holiday shortened week higher….On Thursday’s half session – we saw the Dow advance by 344 pts or 0.8%, the S&P up 52 pts or 0.8%, the Nasdaq up 207 pts or 1.1%, the Russell up 22 pts or 1.1%, the Transports + 28 pts or 0.2%, the Equal Weight S&P up 38 pts or 0.5% while the Mag 7 added 242 pts or 0.9%….
The move was fueled by 2 things. The first was the expectation of the BBB (Big Beautiful Bill) being signed -which it was and signed on Friday and the second was the better than expected NFP report – that came out at 8:30 am….
We go 147k new jobs created vs. the 109k we expected, Unemployment went DOWN to 4.1% from 4.2%, and beat the expectation of +4.3% while wages rose by 0.2% m/m and +3.7% y/y – the media pointing out that that was the smallest increase since July 2024 (trying to paint it as a negative). But in the end – the report – which was in total contrast to the June ADP report that showed a decline of 33k jobs was solid enough to confirm that the job market is just fine and that this gives JJ cover to NOT cut rates at the end of the month. In fact – the Fed Funds futures are now seeing a near 0% probability of a July cut vs. the 25% chance on Wednesday while the September bets are now only 70% vs. the 95% chance that traders had been pricing in.
Bonds declined sending yields surging…The TLT down 0.7% while the TLH lost 0.45%. the 2 yr rose 10 bps to end the day at 3.88%, the 10 Yr rose 7 bps to end the day yielding 4.34%, while the 30 yr rose 6 bps to end the day yielding 4.87%.
And don’t think that Trump is happy about that! He is calling for JJ to ‘resign’ while Scotty (Bessent) is calling the fed out (or rather questioned their judgment) on rates – saying that the “committee seems to be a little off here in their judgement” suggesting that the current 2 yr rate of 3.88% is screaming that the FED’s rate of 4.25%-4.5% is too high.
Look – The 2-year Treasury yield and the federal funds rate are tightly linked, with the former often anticipating the latter based on market expectations of Fed policy. The 2-year yield is considered a leading indicator, moving in tandem with or ahead of Fed rate changes. During May and June – the 2-yr rate has fluctuated between 3.88% and 4.02% – (while FED Funds were 4.25%-4.5%) until late June when it plunged to 3.69% just ahead of the FOMC meeting…. causing some to suggest that the FED needed to cut rates. It has since moved back up to 3.88% – and appears to be wanting to test 4% again and that means that a rising 2-year Treasury yield typically reflects market expectations of stronger economic growth, higher inflation, or tighter monetary policy. If the 2-year yield climbs above or closer to the federal funds rate (currently 4.25%–4.50%), it suggests investors anticipate sustained or higher interest rates, reducing pressure on the Fed to cut rates.
Oil remains within the trading bands that we discussed last week. $64.50/$67 – this morning it is down 8 cts at $66.92. Over the weekend – OPEC+ held a video conference to discuss what’s next – and decided to increase production even more than previously thought. Recall – they had announced that they would raise production by 411k bpd in May, June and July – and now beginning in August – they will raise production by an additional 137k bpd to 548k bpd. The decision is based on a healthy outlook and global growth – again let me be clear – energy demand is NOT going down and future prices will be driven by simple supply dynamics – not the lack of demand and this push is expected to cause the market to become ‘over supplied’ suggesting lower prices in the fall while giving OPEC+ a larger percentage of the market.
Gold fell by $22 on Thursday and is down another $23 this morning trading at $3,320/oz. We have now broken trendline support at $3,345 – leaving a possible test of intermediate support at $3,215. Much of the next move will depend on the headlines coming out of DC concerning the tariffs drama, which has now entered a new phase…Over the weekend – Trump announced that he would impose an additional 10% tariff on any country aligning themselves with the BRICS – who held a summit in Rio on July 6-7th.
The BRICS are Brazil, Russia, India, China, and South Africa – a group of emerging economies that seek to enhance economic growth, geopolitical influence, and global governance reform. In 2024, the bloc expanded to include Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. They aim to counterbalance Western-dominated institutions like the IMF and World Bank, promoting a new world order. Their summits focus on trade, investment, and challenging U.S. dollar dominance through initiatives like de-dollarization and alternative payment systems.
This morning US futures are lower…. Dow futures down 78, S&P’s down 30, Nasdaq down 143 while the Russell is lower by 12. The move being credited to the latest tariff noise. With the BBB now behind us – the focus turns to the tariff negotiations, the letters that Howie is sending out and the response by the countries that receive them. Tariffs are now due to be imposed on August 1st, not July 9th. In addition -it is the start of earning season – which officially begins on the 15th with the big banks, so the next 4 weeks will be dominated by earnings and what the C-suite says about the future.
European markets are flat, just churning ahead of any tariff headlines as well as the start of the earnings season there as well.
TSLA will be the topic of conversation today – the stock is down 6.5% or $21 at $295.40. This after Lonnie announces that he is starting a 3rd political party – called the America Party – threatening to target 2 or 3 Senate seats as well as 8 – 10 House seats. This after DC passed the BBB that hurt so much of the subsidies/credits that TSLA depends on to bolster his revenue. TSLA investors showing that they are not interested in Musk becoming a political icon.
And AMZN Prime Day begins this week – but it is not one day, it is now 4 days…July 8 – 11th….expect Target, WMT, BBY, KSS, W and many others to try and compete by offering their own version of ‘Prime Day’ over the next 4 days…..
The S&P closed at 6279 – up 52 pts. Creating yet another new closing high for 2025. This morning markets are a bit weaker, but again – this should surprise no one. Recall, last week was a holiday shortened week, volumes were lower, so moves were amplified…A look at the chart screams overbot and the RSI (Relative Strength Index) is confirming that… The RSI closed at 75.5728 – Well above 70 – which is level that typically suggests an exhausted market…I would not be surprised if we saw the S&P trade down to the 6150 range.
Call me for a free (no obligation) portfolio analysis. 561-931-0190
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.
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.
Pan-Seared Chilean Sea Bass with Lemon Herb Sauce
For this you need: 2 Chilean Sea Bass fillets (6-8 oz each), skinless, s&p, olive oil, butter, 1 shallot, finely chopped, 1 garlic clove, minced, 1/4 cup dry white wine, Juice of 1 lemon, 1 tsp lemon zest, fresh parsley, chopped, fresh thyme, chopped, and 1/4 cup heavy cream for a richer sauce (optional)
Pat the sea bass fillets dry with paper towels. Season both sides generously with s&p, Set aside for 10 mins.
Now, Heat the olive oil in a large skillet over medium-high heat until shimmering. Place fillets in the pan and sear for 4-5 minutes until golden and crisp. Carefully flip and cook for another 3-4 minutes until the fish is opaque and flakes easily (internal temperature should reach 135°F). Remove from skillet and keep warm.
Make the Sauce: Reduce heat to medium. Add 1 tbsp butter to the same skillet. Sauté shallot and garlic until soft, for about 1-2 minutes. Deglaze with white wine, scrap up any browned bits, and simmer for 2 minutes until slightly reduced. Stir in lemon juice, lemon zest, thyme, and remaining 1 tbsp butter. If you use cream, add it now and simmer for 1 minute until thickened. Stir in parsley and adjust seasoning with salt and pepper.
Plate the sea bass fillets and spoon the lemon herb sauce over the top. Serve immediately with roasted potatoes and a mixed salad.
Buon Appetito