Things you need to know
- Conflicting headlines leave a mixed session for stocks.
- Eco data remains robust – Warsh sends Hawkish signal
- Geopolitics lingers under the surface/Earnings continue to impress.
- Try the Pork Milanese, Capriccioso style.
Good morning – stay buckled in because the tape is trying to figure out what matters more… geopolitics, FED confirmation, earnings or fundamentals. And right now? It’s a tug-of-war. Tuesday was one of those sessions where the market could not make up its mind. Stocks were all over the place as Wall Street played a tense waiting game on the Iran ceasefire, chewed on what Kevin Warsh said vs. what he means, watched Apple pulled an 11th-hour CEO switch and monitor several KEY earnings reports to get a read on the US economy.
What started looking like a strong day (futures were all higher) ended with stocks looking confused. At the closing bell – the Dow lost 295 pts, the S&P lost 45 pts, the Nasdaq gave up 145 pts, the Russell lost 28 pts, the Transports once again bucked the trend – rising by 611 pts. The Equal Weight S&P lost 48 pts while the Mag 7 gave up 224 pts.
Let’s start with earnings, the FED and the eco data because the Iran/US conflict is getting old now…. On Tuesday morning we got 15 reports before the opening and only 1 missed – that’s a 94% beat rate! Here are just a taste of the highlights.
UnitedHealth (Managed Care) surged more than 9% in early trading – 1st qtr. results reflecting improving fundamentals…. CFO Wayne DeVeydt telling us that they were able to improve their ‘medical cost ratio’ – which is a measure of how much of the premiums are ‘consumed’ by medical expenses. How? They raised prices…. They also raised their 2026 outlook to north of $18.25 And investors loved it…. The stock closed at $346 up 7%.
3M (Diversified Industrials) beat on both the top and bottom line — solid EPS, improving margins, cost controls working — but the stock got hit anyway because the tone was cautious. Parts of the business are still soft, they didn’t raise guidance, and they flagged rising oil costs as a headwind. In this tape, that’s not good enough. Stability doesn’t get rewarded — acceleration does.
GE Aerospace (Aircraft)— and this is where it gets interesting. They crushed it. Revenue up 29%, EPS $1.86 vs. $1.61 expected, backlog for years… and the stock drops 6%. That’s not about GE — that’s about the market. That’s a market saying: ok great but what happens next? Higher fuel costs, economic uncertainty, global demand questions – that is what it was all about yesterday.
Halliburton (Oilfield Services/Equipment) — also a beat, but the reaction was completely different. The stock moved higher because the story fits the macro. Yes, there are near-term disruptions from the Iran situation, but higher oil prices and a stronger international backdrop reinforce the longer-term demand for energy services.
Today brings us a basket of names that you need to pay attention to because of the role they play in the economy… TSLA, GOOG, IBM, BA, NOW, CME, PM, LHX, GILD & DOW….they represent – EV/ai, Communications, Tech/Enterprise ai, Tech/Enterprise Software, Capital Markets, Consumer Staples, Aerospace/Defense, Healthcare/Biotech and Chemicals.
Then you had Apple — down 2% — not on earnings, not on guidance… but on leadership. Tim Cook stepping down on September 1st after 15 years, handing it to John Ternus. Earnings due on April 30th — Cook’s final report as CEO — you better believe that call is going to be must-watch TV. And by the way – do not go and sell your Apple because Timmy is stepping down…..
Onto Capitol Hill – where Kevy Warsh got grilled by the Dems – because why not? Lizzy accusing him of being a ‘sock puppet’ – screaming that he is going to lower rates (to satisfy Trump) – funny though, all she has wanted JJ to do was lower rates…..She can’t help herself…. And then there was the question about his wealth…. which is large…. They pressed him to test him on credibility and independence. Given his wealth they wanted to know if he can truly represent Main Street, avoid conflicts, and make tough calls — like keeping rates higher for longer — even if it hurts markets. Capisce? And that seems comical – why? Because they don’t care about JJ’s wealth (while less is still substantial) and they didn’t scream when he cut rates last fall, even when the market was not calling for lower rates….
In the end – it appears as if the Warsh confirmation will be stalled because Senator Tommy Tillis is refusing to move forward until the justice department drops the FED renovation investigation…you know – the one that costs more than $3 billion…. I can only imagine who is getting rich on that contract.
And then it was about the eco data…..And it was STRONG…. Retail Sales up 1.7% – better than the expectation of +1.4% and well above the +0.6% last month. Ex autos and gas – +0.6% again above the expectation of +0.3%. And Pending Home Sales? They surged as well…up 1.5% m/m and +1.8% y/y – when the expectation was for negative 3% growth.
Ok — so now we’ve got to circle back to the Iran headlines, because like it or not, this is still the story simmering on the back burner….and it is still pricing oil, volatility, risk. And let’s be clear — the Strait is not really open. Not in any way that matters. Shipping is still disrupted, traffic is a fraction of what it should be, and now Tehran is escalating again — launching strikes at ships in the region and sending a very direct message about who controls the flow of energy.
Meanwhile, the ceasefire clock was ticking, and the market was expecting a diplomatic solution…. But when JD Vance didn’t show up in Islamabad, that tells you everything you need to know – talks are stalling and the tone is shifting and stocks ended the day lower.
And then – right on cue – at 4:30, Donald Trump jumps on Truth Social and says the ceasefire stays in place until Iran can get its act together and presents a real peace proposal (Trump pointing to the fact that the country is rudderless – no one is really in charge) which, if you read between the lines, is just another pause — not a solution. The U.S. will keep the pressure on, and Iran will keep pushing back – so what we have is a situation that’s technically “calm and chaotic’ at the same time…. Still very much on edge and one headline away from the next move.
Bonds took a hit on Tuesday for three reasons. First, the economic data came in hot – suggesting the economy remains strong – and when the economy looks strong? Yields go higher. It’s that simple.
Second, oil and Iran kept the inflation story alive. Crude remains elevated, and the bond market understands that even if you get a deal tomorrow, energy prices don’t just snap back overnight. That inflation premium? It stays embedded in the long end.
But the third punch – that’s the one that really mattered. Can you say Kevin Warsh? The moment he sat in front of that Senate committee and made it clear he wants a new inflation framework, that he’s laser-focused on price stability, and that he would “absolutely not” be cutting rates because a president tells him to — the market repriced. Immediately.
The 10-year rose 4 basis points to 4.29%, the 30-year up 2 bps to 4.91% — but remember what I told you…watch the 2-year. And there it is — up 6 basis points to 3.79%. And that matters, because the 2-year doesn’t care about headlines or geopolitics — it cares about one thing: what is the Fed going to do next? The bottom line? The bond market is signaling hold….Warsh’s views support tighter overall policy (with a balance-sheet twist), and easy-money days appear behind us unless growth or labor weakens sharply.
And OIL…..it’s churning in a tight range as traders weigh conflicting headlines out of the Middle East – hoping for a ceasefire against the reality that supply disruptions haven’t fully cleared. This morning – oil is up 47 cts at $90.12…..and seems to be stuck in the $85/$95 range. Trendline support is down at $82.75 with resistance at $100…
Gold also continues to trade in a tight range…. support at $4,730/ resistance at $4,880…this morning – gold is up $38 at $4,757…. caught in this push/pull – think rising yields against geo-political stress. Higher rates are a headwind, but the uncertainty out of the Middle East is keeping a bid under the market. So, for now, gold isn’t breaking out — but it’s not breaking down either… it’s just consolidating, waiting for the next catalyst.
Eco data today is about Mortgage Apps and with rising Pending Home Sales – I suspect that we should see applications rise.
European markets are flat to lower… ASML crushes it and the stock is up 7%.
At 7 am US futures are up! Dow futures +250, S&P’s +40, Nasdaq +191 and Russell is +25.
Look — while the Iran conflict is ongoing, my sense is that investors are already starting to look through it and focus on what really matters. Because at the end of the day, geopolitical drama creates short-term chaos — and yes, opportunity — but it’s not what prices stocks. The economy does. Earnings do. Cash flow does.
We’ve seen this movie before — the headlines hit, the market reacts, volatility spikes… and then it settles down and refocuses on fundamentals. So, while everyone’s watching the tape for the next headline, the smarter money is asking a different question — what does this mean for the economy? Because that’s what’s going to determine where stocks go next.
The S&P closed at 7,064 – down 45 pts. We are teasing ‘trendline resistance’ at 7,075 that we identified last week – yesterday saw the S&P trade as low as 7,050 and as high as 7,137. This morning, it appears as if we are about to test and push thru that trendline again…. and depending on what we learn today (think earnings) will dictate the next move.
So far, this morning we’ve gotten 13 reports and only 2 misses – that’s an 85% beat rate….
After the bell – we’ll get 12 more…and the ones I am watching are IBM, TSLA, NOW, LUV & CSX.
IBM is going to give you a read on enterprise spending. If IBM is strong, it tells you businesses still have confidence.
Tesla? That’s your consumer + global demand story. Big-ticket discretionary spending. If margins are under pressure or demand is soft, that’s a warning sign — not just for autos, but for the higher-end consumer.
ServiceNow – NOW – that’s another lens into hiring, workflow, and productivity spend. If companies are investing in efficiency tools, they could be preparing for growth or tighter conditions.
Southwest Airlines – LUV. Are people still traveling? Are they trading down? Are fares holding? Airlines tell you quickly if the consumer is feeling pressure.
And then CSX — that’s the heartbeat of the industrial economy. What’s moving across the country? Raw materials, autos, intermodal freight — if volumes are strong, the economy is moving. If they’re weak, it’s slowing. Simple as that.
Call me at 561-931-0190 and let’s talk about how SlateStone Wealth can help you navigate all of this and reach your goals.
Take good care,
Kp
[email protected]
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
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Pork Cutlet Milanese – Capriccioso Style.
So, this is just like making a chicken or veal cutlet Milanese – except you use a pork cutlet – pounded thin.
So, for this you need pork cutlets, seasoned breadcrumbs, eggs, flour, olive oil, fresh lemon juice, arugula, cherry tomatoes, red onions and mozzarella bocconcini.
Set your oven to broil. Scramble 5 eggs, set aside. Add flour to a bowl and put the seasoned breadcrumbs in a large baking pan.
Ok begin by dredging the cutlets in flour – then dip in the egg wash and then place in the breadcrumbs on both sides. Making sure to coat the cutlet with the seasoned breadcrumbs.
When done, add olive oil to a baking dish and place in the oven on the second rack (not right up against the heat) …let the oil get hot….do not leave it – stand there as it heat ups just a min or two.
When hot – add the cutlets to the oil and hear the sizzle…flip to coat the other side and then place under the heat. Cook until they brown nicely. Flip and repeat on the other side.
While that is cooking – make an arugula salad with the cherry tomatoes and red onion. Season with s&p, oregano, fresh lemon juice and a splash of olive oil.
Serve the cutlet on a warmed plate – top with the arugula salad – add the bocconcini. That’s it…
Buon Appetito