Things you need to know.
– Stocks pushed higher.
– Bank Earnings began mixed – traders take money off the table.
– GS, BAC and MS due out this week.
– Eco data to be overshadowed by the RNC convention.
– Trump assassination attempt raises his odds of winning.
– Try the Jack Daniles Chicken Thighs
Stocks continued to march higher on Friday…The Dow up 247 pts, the S&P up 31 pts, the Nasdaq added 115 pts, the Russell up 24 pts, the Transports up 93 pts while the Equal Weighted S&P gained 55 pts.
Interestingly enough – it was NOT led by the big banks…. like many had hoped…. JPM – 1.15%, C -1.8% & WFC -5.9%. Both C and WFC suggest that costs will be higher than many analysts had suggested. WFC reported profits of $4.9 billion – down 1% y/y while adding that NII (Net Interest Income) would be down 8%. Citigroup – in the middle of another restructuring noted that costs will likely be higher for them due to a ‘series of regulatory penalties’ as well as higher restructuring costs. Expenses were down 2% this quarter but are expected to be at the higher end of the range – $53.5 – $53.8 billion for all of 2024, recall that 2023 expenses were $56.4 billion. Jane Fraser – C CEO – noting that the efforts to reduce costs may be a bit more difficult than she had hoped.
And at JPM – traders do what they always do…they take it up prior to the announcement and then take money off the table on the day of…. only to see JPM higher in the days following…. This morning it is quoted up 0.7% in the pre-mkt. – Jamie did not disappoint (never does) …. profits exceeded expectation on the top line – it did include a one-time $7.9 billion gain on an exchange of JPM/Visa shares in a previously announced deal. Fees from investment banking surged past any estimate – rising by 50%, Sales and Trading up 21% while Net Interest Income did rise by 4% but was down from one year ago. JPM also added more money to their loan loss reserve account suggesting that they continue to see a number of issues on the horizon that could cause defaults to rise– multiple inflation forces, large deficits, ongoing infrastructure needs, remilitarization of the world and a very contentious US election. He also expects inflation and interest rates to remain higher for longer…. contrary to what the market now expects after some contradictory CPI and PPI inflation data last week.
On Thursday – we got a softer CPI reports – which ignited the fire and conversation about multiple rate cuts in the latter half of 2024 – September, November and December…….and then on Friday – we got a hotter PPI report – which would suggest future inflation at the consumer level is just around the corner…. – but traders & algo’s appeared to ignore it – because it throws cold water on the latest narrative, and they don’t want that.
Of the 11 groups – the only one that saw weakness was Communications…. the XLC down 0.3% on the day. We saw strength in Consumer Discretionary + 1.3%, Tech +0.9%, Basic Materials +0.9%, Real Estate and Utilities up 0.75%, Industrials & Healthcare +0.6%, Consumer Staples + 0.45%, while Energy + 0.25%.
Further down the chain – Home builders + 1.7%, Retail + 0.8%, Airlines + 0.3%, Disruptive Tech + 2.4%, Semi’s +1.3%, Metals & Mining + 1.1%, Cybersecurity + 1%, Oil & Exploration +0.2%, Aerospace & Defense +0.3% – and the list goes on….
Bonds rallied a bit on the back of that ongoing rate cut story…the TLT up 0.4% on Friday and up 7.8% off the April lows…while the TLH was up 0.25% and up 6.4% off the April lows…… – This after investors chose to ignore the latest Hotter PPI report we got on Friday. The 2 yr. is now yielding 4.44% – down 12% off the April high of 5.04% while the 10 yr. is yielding 4.21% down 11% off the April highs of 4.74%.
Oil continues to hold tight in the $80/$84 range…. This morning the oil is flat at $82.20. The weekend assassination attempt on DJT causing all kinds of confusion for the markets. The dollar – did firm up – reflecting the fact that it is expected to be a beneficiary of a Trump Presidency. And as we know – a stronger dollar will put some pressure on the commodity complex…think oil and precious metals. Trendline support of oil is at $79.34 with resistance at the April highs of $85.
Gold is down $4 at $2416 – again some of this is some profit taking after the surge higher last week and some of it being credited to the firmer dollar. Trendline support is at $2365 with resistance at $2475.
Ok – so now – let’s just discuss the elephant in the room…and that is the weekend assassination attempt of the GOP candidate – DJT. A young man –Thomas Matthew Crooks – identified as a lone shooter took a shot at Donny on Saturday afternoon at the Pennsylvania rally. While Donny did get hit – he was not hurt……but there was a victim…. Corey Competore – a husband and father that dove on his family to protect them from the shots. He died a hero, and we should all offer our condolences…. 2 other people were also hurt – 57 yr old David Dutch and 74 yr. old James Copenhaver – both in stable condition.
Secret service did take out the shooter and there are now all kinds of analysis about what failed…How could this happen? Calls for the resignation of Kimberly Cheatle – Director of the SS – are getting more heated by the day. Interestingly enough, calls for Jo Jo to resign have now gone silent…. Anyone who thought that they may want to challenge Trump – have now reconsidered (after the weekend event) …. Let’s see how this plays out……
In addition – we are now in the throes of earnings season and the start of the RNC convention in Milwaukee, WI, so it is going to be a busy week.
Eco data this week includes Retail Sales, Retail Sales ex Autos and Gas, Business Inventories, Building Permits, Housing Starts, Industrial Production, Capacity Utilization, Philly Fed Business Outlook. Now, while all of this is important – it will play second fiddle to the convention.
US futures are UP strongly this morning…. Dow futures up 230 pts, the S&P’s up 25, the Nasdaq is ahead by 105 while the Russell is up 27 pts.
Headlines screaming that the Trump trade is gaining momentum…. talk of tax cuts, higher tariffs in China and less regulation on us are the focus. Odds of a Trump win is now exploding…the latest data showing that he is leading JoJo 51% to 49%. And so where are investors looking for opportunities? Energy as he (DJT) wants the US to be the ’supplier to the world’, Crypto – as he is a supporter of the cryptocurrencies – Bitcoin has gone up $7k dollars since the Saturday event and is now trading at $62,400. Financials as he would push for less regulation. Tech may be under some pressure – as higher tariffs on China could put some pressure on the Semi’s but if the AI optimism remains strong – which many think it will, then the Semi’s should be fine….they may not continue making the gains we have seen, but do not be so quick as to count them out. And while some big asset managers will trim positions to take some of the gains off the table – do not expect them to abandon the trade at all.
European markets are all a bit lower…. down between 0.2% and 0.5% across the board. The weakness being credited to a weaker China GDP report and the Trump attempted assassination…. Earnings have also begun across the continent, so we are seeing a range of earnings this morning…. Burberry down 16.5% – weaker sales etc.…. – as they axe the dividend while the Swatch group fell 10% as sales in China fell.
GS reports and crushes it…the stock was up 1% in the moments after the report but has since gone in reverse and is now down 0.4% …. Remember – they took GS up 17.5% since April…and it is up 24% ytd….so taking money off the table after that performance is typical…. If you are a long-term GS investor – watch what happens and take advantage of any substantial weakness. (if there is any substantial weakness).
The S&P closed at 5615 up 30 pts….and this morning it appears as if we are only going higher…. On July 10th – we closed at 5633 – and if futures remain strong, we are about to blow right through that on the opening. Again – this means having a plan. Avoid making FOMO decisions during earnings season and do not make them based on every headline…. – talk to your advisor and tweak if necessary.
Remember – we are in the final innings of the election cycle…. This week we have the RNC convention and next month we’ll have the DNC convention. As a long-term investor – the focus remains on the long term. Call me to discuss a game plan to help you create long term and generational wealth.
Take good care, 
kpolcari@slatestone.com
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.
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.
Kenny Polcari is the Chief Market Strategist for SlateStone Wealth. Neither Kenny nor the partners of SlateStone Wealth are compensated in any manner by the issuers of any securities mentioned in the publication.
Jack Daniels Chicken Thighs
You will need: Chicken Thighs (I prefer on the bone), but you can use boneless. brushed lightly with peanut oil and seasoned with s&p.
For the Sauce – mix: 1/2 c of soy sauce, 4 tablespoons vinegar, 1/2 c of Jack (Daniels), 1/2 c of brown sugar, 3 scallions, grated ginger – like a tblspn, 4 garlic cloves – smashed and chopped. Chop the scallions and mix all of the sauce ingredients together and set aside. Taste – make any small adjustments.
If you do this on the grill, then – heat the grill to high… add chicken – careful not to burn – cook about 4 mins on each side – or until lightly browned – not burned… remove and place in a metal roasting pan.
Turn heat down to low. Add the sauce to the pan and return to the grill (leaving the chicken in the pan on the grill – capisce?) – stirring to coat the chicken pieces well. Continue to cook until the sauce is reduced to all but a glaze on the chicken. Remove and serve.
If you are doing this in the house – then heat a sauté pan to high with a bit of the peanut oil and add chicken pieces cook until lightly browned. Reduce heat and add the sauce. Cook uncovered until only a glaze is left… serve immediately.
Buon Appetito
