Things You Need to Know
- Wow, what a bounceback!
- More drama at the FED.
- PLTR crushes it and off we go!
- Everything rose yesterday – except of course the Contra’s.
- Oil down, gold down, bonds unchanged.
- Try the Veal!
August is living up to her reputation as the volatility continues…
Stocks got hit hard on Friday — but took most of it back yesterday. The Dow surged 585 points (after losing 542 on Friday), the S&P jumped 91 points (vs. Friday’s 101-point drop), and the Nasdaq rallied 403 points (after falling 472). The Russell gained 45, nearly erasing Friday’s 44-point loss. Transports lagged a bit — up 160 after losing 342. The Equal Weight S&P popped 90 points, more than making up for Friday’s 80-point dip. And the Mag 7? They rose 580 points — not quite reclaiming the 900 they gave up Friday, but a solid bounce, nonetheless.
This came after traders and investors had a chance to digest the latest headlines — along with what continues to be a strong earnings season. So far, companies are crushing it — 83% have beaten expectations, and by an average of 9.1%. That’s nearly triple the beat rate forecast at the start of the year — and the strongest we’ve seen since 2021.
There is also the growing belief that the Fed is definitely going to cut rates in September (if not sooner), by at least 25 bps. San Fran’s Mary Daly told us this morning that ‘we may need more than 2 cuts if the labor market continues to weaken and inflation remains subdued.’ I should note that she is late to the game, she is not telling us any secrets – the market is expecting a total of 75 bps worth of cuts – how we get there is anyone’s guess. 3 – 25 bps cuts, 1 – 50 and 1- 25 or 1 cut of 75 bps…. You pick – in the end, it gets us to the same place. 3.5% – 3.75% by the end of year.
Then came the news that Fed Governor Adriana Kugler is stepping down early — a move that sparked fresh speculation, intrigue, and yes, excitement. She didn’t give a reason for her early exit, but the whisper is that it may be tied to internal disagreements with JJ over the path of interest rate policy.
So, you ask — why does this matter? Oh boy… it matters.
Her departure gives Trump the opportunity to fill that seat — and that pick could very well be someone in line to replace JJ when his term ends in May 2026. Don’t forget both Chrissy Waller and Mishy Bowman were Trump appointees, and both have been floated as potential candidates for the Chair.
So yeah — the buzz? It’s real. Because another Trump appointee likely means another voice aligned with his view of where rates are… vs. where he thinks they should be.
Every major sector rose……Tech took the lead up 2% with Consumer Staples carrying up the rear – rising only 0.5%. Most of the other sectors were up better than 1 full percent.
Homebuilders continued to advance up 1.8%, Retail surged by 2.1% – leaving the sector slightly in negative territory ytd. Disruptive Tech – rose by 3.5%, Semis’ up 1.5%, AI & Robotics advanced by 2.6%, Aerospace & Defense up 1.25%, Big Pharma up 1.4% and the list goes on….
The contra trades took it on the chin – giving back their gains from Friday…the DOG – 1.4%, the SH – 1.5%, the PSQ gave back 1.8%, the VIXY lost 6.37% while the SPXS (triple levered Short) gave up 4.1% and that must mean that the SPXL (triple levered Long) rose and it did, it added 4.5%.
Now bonds didn’t do much — mostly because everyone’s watching the slate of auctions on the horizon… 17-week bills today, 13- and 26-week bills on Thursday, and then the 20- and 30-year bonds later this month. The TLT rose 0.3%, and the TLH gained 0.2%. Yields moved slightly lower — the 10-year is now yielding 4.2%, down 6.9% since mid-July, and the 30-year sits at 4.8%, down 5.4% over the same stretch.
What’s that telling you? Maybe it’s just positioning ahead of the auctions… or maybe it’s a sign that the bond market is starting to price in slower growth and real potential for easing — especially with the latest drama at the Fed.
Oil fell — and why, you ask? Here we go again… demand worries! They want you to believe that there is a demand issue! Can you believe that?
We’ve just talked about how companies are crushing it, the economy remains robust, rate cuts are likely coming, and energy needs are only growing (hello, AI data centers!) — and yet they want you to believe oil is down because of demand concerns?
Let’s be honest — this isn’t about demand, it’s about supply and there is plenty of it. Ample supply means no shortage. It just means there’s more oil available, and when that happens, prices adjust lower — it’s called Econ 101…. Did you skip that class?
Oil has been down $5 since early August, now trading at $65.48 — piercing the long-term trendline at $66.50. That breach alone is enough to trigger some technical selling. Next levels of support come in at $65.26 and $63.64, so I’m not so sure that we’re going much lower. And btw – Lower energy prices are a net positive for the economy and the consumer.
Gold continues to hug the trendline at $3413 – taking us right back to where it closed on Friday. – and like I said yesterday – If the latest wave of anxiety dies down — I’d expect gold to back off a bit. Next week brings us the latest inflation reports – CPI and PPI. So be patient.
US futures are up this morning…. Dow futures are up 80 pts, S&P’s up 15, Nasdaq up 66, while Russell is up 8. After the bell last night – we heard from PLTR (Palantir), and they blew the roof off the house…..EPS 16 ct/share (vs. the 14 ct estimate) up 78% while revenues were up 48% piercing the billion-dollar mark vs. the estimate of $938 million. US Gov’t revenues were up 52% to $426 million vs. the estimate of $392 million. The stock is up $8 or 5.5% in the pre-mkt…. but the stock is up 112% ytd….and is up 1300% since August 2022…. This is one of those names you just buy. Now if you own the QQQ’s or the S&P 500 or the IVES etf or any number of other ‘tech’ styled etf’s then you own a piece of PLTR…….Clearly though, it would have been better if you bought just IT 2 yrs ago…but you can’t look backwards….always forwards….
The VIX? Now trading below all three major trendlines — down 21% since Friday’s surge. And while that might suggest calm has returned, don’t be fooled… all it takes is one negative headline to light the match on a market that feels priced to perfection. Or is it?
Tommy Lee over at Fundstrat — one of the industry’s top headline-makers — said yesterday that he expects August to be a blowout month. He’s calling for the S&P to hit 6600 before the month’s end. If that plays out, we’re talking about a 4% move from here. And here we go, sports fans…
The S&P closed at 6329 up to 91 pts. And guess what we filled? The gap was created on Friday. Unlike Tommy, I am in the camp that we will continue to churn lower over the month of August and into September – with the surge up to 6500 ish by end of year…..I continue to believe that we could see a 4 – 5% pullback that would take us to 6100 – and then we should see a rally back to here by year end…..
Want to talk about strategy? Let’s review your plan. Call me for a complimentary, no-obligation portfolio analysis: 561-931-0190.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Veal Scaloppine in White Wine & Porcinis
You will need: 3/4 oz of dried porcini, 1/b of fresh mushrooms, 1/2 stick butter, dried sage leaves (finely chopped), 6 veal scaloppines, 3/4 cup white wine, chopped Italian parsley, s&p, 1/2 cup heavy cream.
Soak the dried porcini in 1 cup of warm water for 30 minutes. Once softened, remove with a slotted spoon. Line a strainer with a paper towel, strain the soaking liquid into a bowl, and set aside. Rinse the porcini under cold water to remove any grit, rough chop, and set aside.
Thinly slice the fresh mushrooms and set aside. Season the veal scaloppine with salt and pepper.
In a sauté pan over medium-high heat, melt the butter with a splash of olive oil and a sprinkle of sage. Add the veal — don’t crowd the pan. Brown well on one side, then flip and brown the other — about 3–4 minutes total. They should remain slightly pink inside.
Pour in the white wine and let it boil for about 30 seconds. Remove the veal and set aside on a plate. Continue steaming the wine, scraping up the browned bits from the bottom until the liquid evaporates. Add the reserved porcini soaking liquid and the chopped porcinis to the pan, stirring until the liquid evaporates again.
Now add fresh mushrooms and chopped parsley. Season with salt and pepper, reduce heat to low, and cover. The mushrooms will release their juices — stir occasionally, then uncover and cook until the liquid evaporates. Add a splash of wine and the cream, stirring until the sauce thickens slightly — 3 to 4 minutes.
Return the veal to the pan, turning once or twice to warm through evenly.
Serve on a warmed plate with steamed asparagus (just a touch of butter and seasoning), and a simple salad of arugula, Boston Bibb, maybe a little spinach, red onion, cucumber, and tomatoes. Dress it with salt, pepper, oregano, lemon juice, and olive oil.
A nice Merlot works beautifully with this — medium-bodied, smooth, and just right.
Buon Appetito!