Things you need to know
- Markets digest the explosive move
- Investors await the data – that is expected to be strong.
- The ongoing rate cut narrative remains alive and well.
- Gold, oil, and Crypto are UP. Bonds steady.
- Try the Bucatini alla Grigia
The headline is almost comical:
“Stock Rally Fades as Traders Brace for Data Deluge.”
Fades? Really?
Stocks didn’t “fade.” They exploded on Friday — ripping higher off deeply oversold levels. The S&P 500 and the Equal-Weight S&P surged back to all-time highs, the Dow pushed through 50,000 for the first time ever, and other risk assets — gold, silver, Bitcoin — followed in a textbook relief rally.
But because markets didn’t tack on another 2–3% the very next session, suddenly the narrative flips to “fading” and “bracing”? That’s headline drama.
What actually happened yesterday is simple: after Friday’s explosive move, markets advanced again — they just didn’t explode again. Stocks rose. Gold and silver rose. Bitcoin rose. That’s hardly a fade.
The Dow added 20 points, the S&P gained 32, the Nasdaq rallied 207, the Russell rose 18, the Equal-Weight S&P added 6, and the Mag 7 gained 362 points. Yes, the Transports gave back 138 points — and that’s apparently the “fade.”
What didn’t make the headline was that Citi downgraded Old Dominion Freight Line from Buy to Neutral while raising the price target — a curious move — pressuring trucking stocks and weighing on transports. That’s consolidation, not a market rolling over.
Now we’re told investors, traders, and algo’s are “bracing” for the next wave of economic data. Maybe. But “bracing” feels dramatic.
Could today’s December Retail Sales number disappoint? Sure — anything can. But that’s not the consensus. Expectations are for solid holiday spending, and we already know the holiday season set records. A modest 0.1% decline after November’s upside surprise isn’t the economy rolling over — it’s normalization. Hardly something to brace for.
Then there’s tomorrow’s Jobs Report, which we discussed yesterday. Expectations call for about 68,000 new jobs, unemployment steady at 4.4%, and wages continuing to rise. That’s not a disaster. If payrolls turn negative or drop well below 50,000, that’s a different conversation — but I’m not in that camp, and futures this morning suggest markets aren’t either.
On Friday, we’ll also get January CPI, expected to show continued disinflation — flat month-over-month at +0.3%, with year-over-year inflation easing to 2.5% from 2.7%. That’s bullish.
Some are now arguing that any weak data point would force the Fed to cut rates at the March 18 meeting. We’ve talked about this. JJ is not cutting rates on one data point. The market itself isn’t pricing a cut until sometime this summer, think a new Fed chair. And absent a series of data points signaling a real slowdown, I don’t see a rate cut anytime soon. The data simply doesn’t support it.
In fact, expectations are for the economic rebound to broaden further in the second half of the year — hardly a reason to cut rates.
The only scenario where rate cuts would make sense sooner is if JJ simultaneously shrinks the balance sheet, which is inherently restrictive. In that case, cutting rates would act as a counterbalance. We discussed this theory two weeks ago, and the key point remains: those actions must happen in unison. And don’t expect markets to cheer. Markets are conditioned to easy money, and liquidity matters far more than the headline rate. Any move that removes liquidity — especially shrinking the balance sheet — is likely to be met with selling pressure.
Absent that coordination, I don’t see how anyone can look at the current data and credibly say, “we have to cut rates.”
At the end of the day, we continue to see a healthy rotation. Tech gained 1.6%, Basic Materials 1.3%, Communications 1%, Energy 0.7%, Real Estate 0.6%, while Industrials and Utilities rose 0.3%. On the consolidation side, Healthcare pulled back 0.9%, Financials and Consumer Staples fell 0.6%, and Consumer Discretionary lost 0.4%.
Earnings today give us another cross-section of the economy, with reports from Consumer Staples (KO), Financials/data services (S&P Global), Healthcare (CVS & Astrazeneca), Energy (BP), Utilities (duke), Travel & Leisure (MAR), and tech-enabled media (Spotfiy).
Bonds were quiet again yesterday, with the long-bond ETFs flat, though this morning yields are edging lower. The 10-year is at 4.18%, the 30-year at 4.82%. The big bond story was Alphabet’s multi-tranche offering — initially expected to raise $15 billion, but upsized to $20 billion on massive demand ($100 billion), reinforcing that capital markets remain very much open and willing to finance the AI build-out.
The other thing was the plan to include 100 yr bonds as part of an international issuance. (Think British pounds and Swiss Francs) And that speaks directly to just how strong appetite remains for high-quality corporate credit, particularly from cash-rich tech companies.
Gold rallied another $95 yesterday to $5,055 and is modestly lower this morning. Oil gained nearly 1% to $64.35, holding its $61–$66 range. Bitcoin trades near $69,500, Ethereum around $2,020, and Solana near $84.
The dollar slipped yesterday — helping commodities — and remains in the 96–98.50 range, exactly as discussed.
U.S. futures are modestly higher, and the S&P closed at 6,964, still knocking on the door of 7,000. If the data cooperates, a break higher up and thru 7000 is likely. If not, a trendline test at 6800 wouldn’t be surprising.
Call me at 561-931-0190. Let’s talk about whether the risk in your portfolio actually matches your tolerance — because this works both ways. You may be taking too much risk… or not enough to reach your goals.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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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.
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Bucatini all Grigia.
You only need 4 ingredients. The Pasta, Guanciale, s&p and Pecorino Romano Cheese.
Start by bringing a pot of salted water to a boil.
In a large sauté pan – add the sliced guanciale. Cook it on low heat until it is nice and crispy. Then remove and set aside.
Now, add the pasta to the water.
While that is boiling, grab a bowl – add one ladle of pasta water, some pepper, ½ of the fat from the guanciale and all of the Pecorino Romano cheese – mix to create a paste.
Now – when the pasta is aldente – add it to the sauté pan with the rest of the guanciale fat. Also add a ladle of pasta water. And mix well, so that the pasta absorbs the liquid.
Turn off the heat and add in the cheese paste along with another ladle of pasta water. Toss to coat.
Serve it immediately and top with the crisp guanciale.
Buon Appetito.