Things you need to know
- Tech gets hit – the momo guys run for the exits.
- Kevy Warsh is the rumored pick – Precious Metals get Whacked.
- AAPL beats and misses….stock down $1.
- Bonds flat, Oil up and Gold DOWN 5%.
- Try the Pork Chops from Benevento
Yesterday’s market action was a classic risk-off gut punch, and it all started — and accelerated — on the back of MSFT. Stocks opened on shaky footing and quickly unraveled as investors fixated on slowing (not reversing) Azure growth and AI capex that continues to run hotter — and more expensive — than expected. What began as a 6% after-hours selloff on Wednesday morphed into a full-blown liquidation on Thursday, with MSFT down more than 12% by 11:30 a.m. and nearly 23% off its October highs. The technical damage was impossible to ignore: a stunning downside gap from Wednesday’s $481.63 close to a $439.99 open — a $41 air pocket — followed by another $20 slide to $421 before sellers finally exhausted themselves. It was a textbook shoot first, ask questions later reaction.
And that move set the tone for tech. Once MSFT broke, the entire complex followed. The story — and the relentless selling — flipped the narrative from “AI spending boom” to “AI spending anxiety,” sending the trader crowd screaming FIRE and racing for the exits. The result was broad derisking across the sector: the Nasdaq down 2.6%, semis off 4.4%, software lower by 4%, disruptive tech down 3.5%, and the Mag-7 off 3.2% — all before lunchtime. Importantly, this wasn’t a call about the end of AI; it was a valuation and positioning reset — a reminder that even the best themes can get priced to perfection and become vulnerable to violent pullbacks when that ‘perfection’ disappoints.
But before anyone got too worked up, cooler heads prevailed. Opportunistic buyers saw blood in the streets and did what they always do — they stepped in and started scooping up names that suddenly looked oversold. The “disaster” everyone feared turned into the disaster that wasn’t. And just like that, it became another day on the Street.
At 4 pm – this is how it ended and it was a far cry from how it started – the Dow rose 55 pts, the S&P lost 9 pts, the Nasdaq gave up 170 pts, the Russell added 1 pt, the Transports rallied – gaining 233 pts, the Equal Weight S&P was up 10 pts while the Mag 7 lost 17 pts.
The morning brought another list of companies walking the runway – giving us just another reality check about the health of the broader economy – and it is not bad….
Housing looked resilient, with PHM beating expectations despite softer volumes, suggesting demand is holding in better than feared. Industrial and global activity was mixed — CAT delivered strong results and a massive backlog, reinforcing the infrastructure and mining build-out theme, while IP struggled with weak pricing and restructuring noise. Life sciences stayed steady, as TMO beat but offered cautious forward guidance. Defense remained firm, with LHX posting an earnings beat on steady government demand. Security exchanges are healthy, as NDAQ showed strong growth across its data and solutions businesses. On the consumer side, MO beat on revenue but slightly missed on earnings, reflecting margin pressure, while XRX disappointed again as office demand remains challenged. The bottom line? There is no recession in sight and while the economy may be uneven it is still moving forward. Which is exactly why diversification matters! Just look at those results…. Housing, Construction, Biotech, & Exchanges were all strong while Tobacco, Consumer Electronics and Containers & Packaging showed some weakness.
And then we got AAPL – after the bell and guess what they did? They CRUSHED it – delivering record quarterly sales and a better-than-expected forecast – but they did warn that rising component costs are threatening margins….
Revenues rose by 16% vs. the projected 10%…. they reported revenue of $143.8 billion vs. the $138.4 billion in just 3 months – just to be clear – that is $1.6 billion/day for 90 days – weekends, holidays, no days off! IPhones had their best qtr. EVER, demand came from everywhere – Timmy telling us that demand is ‘staggering’ (that doesn’t sound negative to me) ….and those ‘higher end’ versions? Yeah – no one apparently balking at the price…that range from $1600 to $2,000.
Timmy did say though that Mac’s and wearables were a bit weaker than he would have preferred – Macs down 6.7% while wearables/home accessories were down 2.7%. But here’s the thing – those declines don’t signal trouble — they signal normalization. Macs are coming off a massive pull-forward cycle, so a mid-single-digit decline simply reflects longer replacement cycles, not collapsing demand. Wearables are essentially flat in a mature, highly penetrated category where upgrades are more incremental. Importantly, this doesn’t point to brand weakness or consumer stress — especially with iPhone posting its best quarter ever and Services continuing to deliver high-margin growth. In short, it’s a pause in secondary categories, not a crack in the Apple story.
And then there are those ongoing concerns about their AI intelligence push – although that is under ‘reconstruction’. Under the Apple Intelligence umbrella, Apple relies primarily on its own on-device and private cloud models to power everyday features, keeping privacy front and center. However, for more advanced, cloud-based generative tasks — especially as Siri gets rebuilt — Apple is also tapping Google’s Gemini models where it makes sense. Bottom line: Apple isn’t outsourcing AI — it’s blending best-in-class external models with its own ecosystem, controlling the experience while accelerating capability.
So, no, I am not a seller. The stock did trade up 3.2% in the immediate afterhours but this morning we are seeing some of that excitement fade…the stock is quoted down $1 at $257.
Amzn and GOOG report next week….so sit tight…..more to come.
Bonds ended flat….no change in yields.
Oil shot a bit higher again yesterday…trading up and thru $66…. this still on the back of the unrest with Iran as Trump moves the Abraham Lincoln Carrier Strike Group to the Persian Gulf. You can also point to increased demand from guess who? China!
Yesterday’s action took us right up to the July 2025 high of $66.48. This morning oil is trading down a bit at $64.74 on an advancing dollar– but will remain on edge until we get clarity on Iran.
Gold — oh boy. It’s down $275 (4.9%) to $5,110, after trading as low as $4,941 or 8% overnight. The move is being blamed on a rumor that Trump is preparing to nominate Kevy Warsh as Fed Chair — and not Ricky Reider — but let’s be clear: it is still a whisper. Still, that whisper was enough to wreak havoc across the precious metals complex — silver down 12%, platinum down 12%, copper off 3%. This isn’t about fundamentals changing overnight; it’s about positioning, leverage, and a crowded trade getting flushed on a policy headline. When trades get this one-sided, it doesn’t take much to spark forced selling — and that’s exactly what we’re seeing.
Recall – Warsh is an inflation hawk – more skeptical of easy money, and less tolerant of financial-market excess. He has consistently argued that the Fed kept policy too loose for too long, contributed to asset bubbles, and blurred the line between monetary policy and fiscal support. (100% correct!) In other words, he’s far less inclined to “bail out markets” and more inclined to prioritize price stability, even if that means tighter financial conditions.
That’s exactly why a Warsh Fed Chair rumor hits gold, precious metals, and other inflation hedges so hard. Markets immediately translate “Warsh” into higher real rates, a firmer dollar, and less policy tolerance for inflation — whether that assumption ultimately proves true or not is yet to be seen.
So, what’s happening in gold feels eerily similar to what we just watched in tech — especially in Microsoft. In both cases, nothing fundamentally broke overnight. MSFT sold off hard on slowing — not reversing — Azure growth and AI capex anxiety, while gold is getting hit on a Fed rumor, not a confirmed policy shift. Same movie, different sector. Crowded trades, heavy positioning, leverage in the system — and then a headline (or whisper) flips sentiment and triggers a shoot-first, ask-questions-later unwind. This isn’t the end of either story — it’s a ‘swift’ reset. When markets get one-sided, price moves faster than logic, and both tech yesterday and precious metals today are textbook examples of how quickly the tone can change.
Now, I will say that Kalshi now says that Kevy Warsh is the favorite….94% chance of being named…. Reider? 4%! Ok – so I lost that bet! But it was fun while it lasted!
The VIX is up 11% this morning after yesterday’s 3% advance….taking it now up and thru all 3 trendlines…..Remember what I said – All it takes is one anxiety-driven headline — geopolitics, rates, policy, you name it — and up it goes. And when the VIX surges, stocks typically back off. Not a prediction — just a reminder of how this movie usually plays out.
European markets are higher…. Spain up 1.25% while the UK is only up 0.2%. Everyone else is in between.
U.S. futures are DOWN…. think VIX up 11%! Dow -325, S&P down 48, Nasdaq down 210, Russell down 32. It feels ugly….and if Warsh is the guy – it could get uglier before it gets better.
Eco data today includes Dec PPI (producer price inflation) and that is expected to show +0.2% and + 2.8% on the top line with PPI Ex food and Energy of + 0.2% and +2.9%. It remains in line…no surprises.
The S&P closed at 6,969 —down 9 pts but only after we traded down to 6,870 and that will be the level to watch today….should we break that, then we will test the trendline at 6,850….and if that doesn’t hold – then expect the algo’s to whip themselves up into a frenzy to test lower as the momo guys bail!
Yesterday I said – it’s only a matter of time — any day now. From a technical standpoint, the S&P would have to pull back to around 6,874 to kiss trendline support to see if it holds – We just may do that today.
Call me at 561-931-0190 for a no-obligation portfolio review. Let me assess whether the risk in your portfolio actually matches your tolerance — because this works both ways: you may be taking too much risk, or you may not be taking enough to meet your goals.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Pork Chops Benevento Style
So, Benevento is a city in the region of Campania in the Southeastern region of Italy. Benevento is 50 km northeast of Naples. and sits atop a hill with a beautiful view of the valley below and is at the cross section of the Sabato and Calore Irpino rivers. It borders Molise and Puglia and is fairly mountainous, providing some unbelievable photo opportunities. It is also a region of that country where so many Italian Americans can trace their heritage – It is off the beaten path but well worth the visit if you happen to be in the area.
Fennel is the key ingredient in this dish, and it grows like wildfire in Campania and so you will find so much of their cooking to reflect that.
For this you will need: 1 in thick pork chops, s&p, flour, olive oil, fennel seeds (about 1 tblsp), garlic, dry white wine, water and a beef bouillon cube.
Preheat the oven to 300 degrees.
Season the chops with s&p and then dredge in flour.
Now in a large sauté pan and one that can go in the oven – heat up the olive oil – when hot – add the chops browning on both sides – maybe like 1 min per side. Next – remove the pan from the heat and sprinkle the fennel seeds on one side of each chop then turn and repeat. – now place the chops and the pan in the oven for about 12-15 mins.
When done – remove the pan from the oven and place the chops on a large serving platter. Cover with foil to keep warm.
Now place the sauté pan back on the stove over med heat – add 2 crushed garlic cloves and cook until just brown. Now add 1/2 cup of the white wine and 1/2 cup of water- being sure to deglaze the pan and scrape up any of the browned bits on the bottom. Now crumble the bouillon cube into the pan and stir – until the sauce has reduced by 1/2. Remove the garlic and spoon the sauce over the chops and serve immediately.
Enjoy this with steamed green beans and a large cold mixed green salad with red onion and tomatoes. Dress with s&p, oregano, fresh lemon juice and olive oil. Toss and serve.
Buon Appetito.