Things you need to know
- Markets ignored the noise on Friday – but not today.
- Supreme Court Decision and Administration reaction just adds more uncertainty.
- Gold surges on news, Dollar Weakens, Bonds steady.
- Oil awaits news on US/Iran talks.
- Try the Short Ribs.
Considering all of the angst that existed on Friday morning – angst that should have caused the markets to go lower – investors, traders and the algos chose to ignore that noise – think Iran headlines and the Supreme Court tariff decision. Under normal circumstances, (although I’m not really sure what ‘normal’ is) geopolitical tension plus legal uncertainty around trade policy would have been the perfect recipe for a ‘risk-off’ reaction. Instead, the market absorbed it, stabilized, and pushed higher.
By the end of the day – the Dow added 230 pts, the S&P gained 48 pts, the Nasdaq up 203 pts the Russell lost 1, the Transports added 350 pts, the Equal Weight S&P added 40 pts while the Mag 7 surged – adding 493 pts.
I was on with Stuart Varney Friday morning at 9 am and I said it would NOT surprise me if we saw stocks end the week a bit lower in anticipation of what could have happened with both of those looming issues. I also said that I thought the tariff decision was a non-event, that the markets have had plenty of time to consider the alternatives open to the administration – should the court rule against him, but I still thought the headline would cause stocks to retreat – going into the weekend.
You can find that clip here: https://www.foxbusiness.com/video/6389635155112
Now, stocks did not retreat on Friday….and what that tells you is important. It suggests positioning was already defensive, expectations were already in place, and the bad news was largely priced in. When markets refuse to go down on headlines that feel negative, it often means the sellers are exhausted. The algos that typically amplify fear, chose to go offline leaving room for stocks to advance.
That was until today….Apparently, investors, traders and algo’s had some time to reconsider all of the headlines and futures this morning are pointing lower, not crashing, but giving back half of what they gained – but, it is still dark outside, the sun has not risen, so, so much can change…..But let’s unpack it – and figure out what’s next – because there is a lot to consider.
The Supreme Court decision striking down the prior emergency tariffs does not end the tariff story — it just gave it a new shape. The administration’s immediate pivot to a flat 15% global tariff under the Trade Act of 1974 (something that was assumed to happen if the court ruled against him) creates a new structure for U.S. trade policy.
For some, this actually lowers tariffs for certain countries. China, Brazil, Canada and Mexico for example, were facing steeper, targeted penalties under the prior plan, so a uniform 15% rate actually helps them, because the new framework is more standardized and less punitive on a case-by-case basis.
But there is another side. For Europe, the shift could mean being hit harder relative to the negotiated arrangements that allowed for lower tariff rates. The concern now is of unilateral action. Brussels has been clear: “a deal is a deal.” If Washington overrides previously negotiated trade deals, it raises diplomatic friction. Don’t expect the EU to sit there and take it, it has tools at its disposal, and it could deploy them if it views the U.S. move as coercive. This opens the door to targeted retaliation, procurement restrictions, and/or sector-specific countermeasures.
The pro argument is that a flat tariff simplifies the landscape. It levels the playing field, removes the optics of country-specific punishment, and potentially gives the U.S. leverage in broader trade negotiations. It may also encourage domestic production and reshoring, aligning with the administration’s industrial policy goals.
The con argument is structural: it reinforces the idea that U.S. trade policy is politically fluid and subject to rapid change. That raises the risk in the global marketplace. This leaves open many questions…..Will companies hedge? Will supply chains diversify away from reliance on the U.S. market? Will allies reconsider long-term strategic alignment?
So, while this is not necessarily an immediate trade war escalation, it does create a bit more uncertainty. Remember – markets don’t like ‘uncertainty’, they like predictability and certainty, even if that is negative. Because positive or negative allows the markets to reprice risk – it’s the uncertainty around being positive or negative that creates the ongoing volatility. I for one am not changing my investment thesis based on this headline – Markets have operated just fine ever since this whole argument began – this is not going to change the narrative for me…..but you do you. So, let’s move on…
This is the big ‘final’ week for earnings…We are going to hear from NVDA, DELL, CRM, CRWV – these names represent chips, enterprise solutions, cloud and data centers. We’ll also hear from HD, LOW, TJX, URBN – representing home improvement and retail, Dominion – is about energy. In any event – expect NVIDIA (on Wednesday) to be the focus – setting the tone for sentiment around tech valuations, AI, growth forecasts and new opportunities.
Eco data today includes Factory Orders – expected to be down 0.6%, Ex Transports of +0.3%. Durable Goods Ex Transports of +0.9%. Finally – we will get the Dallas Fed Manufacturing Activity – and that is expected to down 0.8%.
Bonds lost a bit of ground on Friday – the TLT down 0.2%, while the TLH lost 0.1%. The 10-yr is yielding 4.07%, while the 30 yr is yielding 4.72%. Just more churn.
Oil ticked higher again on Friday – creating yet another new high at $67.03 since the rally off last month’s lows. The Iran situation remains front and center for oil, but now the rumor is that talks are proceeding. If that’s true, it should lower the geopolitical temperature and take some of the risk premium out of oil. How much? That depends entirely on the tone and credibility of those conversations. This morning oil is down 30 cents at $66.20, but let’s be clear — we’re still firmly locked in that $62 to $68 trading range.
Gold, on the other hand, back in rally mode. The surge isn’t about Iran, it’s about trade uncertainty and a potentially weaker dollar in the wake of the Supreme Court tariff drama. If trade tensions persist and the dollar rolls over, gold and other precious metals become the ‘hedge of choice’. It exploded higher on Friday — up more than $100 — and is adding another $45 this morning, now trading around $5,150. On Friday I said the path of least resistance was higher — and now that we’ve cleared the February high it opens the door to $5,500 if momentum continues.
And the dollar? It tried to break through trendline resistance at 97.96 — and failed. Just as suspected, it’s struggling. This morning it’s softer as trade uncertainty weighs. Look for support down near 97, while resistance remains right at that trendline.
Crypto continues to do NOTHING…Bitcoin is trading at $66,000, Ethereum around $1,920, and Solana is $80.
European markets are all mixed – but they are not collapsing on the back of the latest tariff drama. In fact – Germany is down 0.5% but Spain and Italy are both up 1%. So, it does not look like this whole tariff argument is causing global angst.
This morning US futures are lower – but well off their overnight lows…. Dow futures are down 160 pts, the S&P’s down 25 pts, the Nasdaq down 140 pts, and the Russell is down 13 pts.
The S&P closed at 6,909 — up 48 points — and on Friday we did exactly what the bulls needed: we busted up and through resistance at 6,894. That was the line in the sand. That breakout mattered. It suggests momentum was shifting and that selling was becoming exhausted.
But here’s the problem today — this morning we’re set to give it right back as the confusion continues. When markets break out and then immediately roll back – you have to ask – “Was it real or was it Memorex’ (that’s a nod to all the baby boomers out there!)
Now the level that matters is 6,820. That’s your near-term support. If we test it and it holds, the market stays in consolidation mode. But if that level fails? Then you start looking down at 6,530 — the November low — as the next logical target on the chart.
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,
[email protected]
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
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Beef Short Ribs – A great cold winter meal.
For this you need: the beef short ribs (on the bone), carrots, onions, garlic and celery, tomato paste, red wine, beef broth, s&p and olive oil.
Begin with 6 / 8 beef short ribs. season with s&p and then brown in a frying pan with a bit of Olive oil. Make sure to brown all sides being careful not to burn the meat. After you have browned them – place them in a large/deep baking pan. Lining them up on their sides.
Next – large Chop – 2 lg White Spanish Onions, 1 bunch of celery stalk, 1 bag of carrots. Smash 4 /5 cloves of garlic and add to the meat – making sure you disperse the garlic all around. Next add the chopped veggies right on top.
In the frying pan that you used to brown the meat – add: 1 can of beef broth, 1 can tomato paste, and 1/4 to 1/2 bottle of red wine. mix well and let the broth come to a boil for a couple of mins as you steam away some of the alcohol in the wine.
Now add the liquid and bathe (do not drown) the short ribs in this mixture and cover tightly. Place the baking dish in the oven – preheated to 350 degrees. Let cook for 4 hours – tightly covered.
The presentation: Remove the baking dish from the oven. Puree 1/2 the veggies in the food processor. On a warmed serving platter – pour the pureed veggies down the center of the platter. Arrange the short ribs on top of the pureed veggies and then place the balance of the cooked veggies around the meat.
Complement this meal with oven roasted red new potatoes. – Rinse the potatoes – toss in baking dish…. season with s&p, add a bit of olive oil to coat the potatoes. mix well. Prior to putting it in oven – add 1/2 stick of butter – cut into pieces and strategically place around the potatoes. Cover and roast at 400 degrees for 40 mins. Remove cover and lower heat to 350 degrees and roast for another 15 mins or so – …. check for doneness by piercing with a fork.
Enjoy this with a large mixed green salad dressed in a Red Wine Vinaigrette and complement with a bottle of Brunello di Montalcino – it’s like velvet.
Buon Appetito.