Things You Need to Know
- Retail Sales Strong, Consumer Sentiment Weak.
- Healthcare is making a ‘comeback’…. up 6.75% last week alone.
- Anchorage did not produce a ‘ceasefire’.
- This week: Lots of Eco data, Retail Earnings and the Jackson Hole Summit.
- Try the Pork Chops from Benevento.
Stocks lost ground on Friday…..Economic data was mixed…. Retail Sales came in strong, yet Consumer Sentiment unexpectedly fell, all while long term inflation expectations rose…..
News that some of the biggest names in the industry — think Buffett, Tepper, and Burry — have all piled into UNH, after the stock’s 61% decline from its November high of $630, was the only reason the Dow managed to advance. Friday’s +32 pt move in UNH alone added 199 pts to the Dow. Remember, the Dow is a price-weighted index — meaning higher-priced stocks have an outsized impact. Strip out UNH, and instead of rising 32 pts, the Dow would have actually fallen 165 pts.
In addition, markets were on edge as the Trump–Putin Summit unfolded in Anchorage, Alaska. But by the time any headlines hit, markets were already closed — meaning traders had no chance to react. We may see that reaction today.
What we do know so far: no ceasefire was announced, though officials hinted that more developments are coming. Today, President Zelensky joins Trump at the White House to outline what Ukraine needs — think security guarantees — to move forward. At the core, Russia wants land and no NATO, while Ukraine may be willing to cede land but will demand NATO-style security assurances in return. Stay tuned.
By the end of the day – the Dow added 34 pts, the S&P lost 18 pts, the Nasdaq gave back 88 pts, the Russell lost 12 pts, the Transports gave up 62 pts, the Equal Weight S&P gave up 21 pts while the Mag 7 lost 100 pts.
Sector performance was led by healthcare — thanks entirely to UNH — which jumped 1.7% on the day and 6.75% for the week. Even so, the sector remains down 1% YTD, making it the biggest underperformer this year. As I’ve said before, buying quality names in beaten-down sectors can be a winning formula.
Real Estate gained 0.7%, Communications rose 0.25%, and Consumer Staples added 0.2%. The other seven sectors finished in the red: Financials (-1%), Tech (-0.7%), Industrials (-0.5%), Utilities (-0.3%), and Consumer Discretionary (-0.25%).
Down the chain, we saw weakness in the Homebuilders (XHB -0.3%) and Retailers (-0.25%), while Airlines managed a 1% gain. Disruptive Tech was flat. The Value trade (SPYV) slipped 0.2%, Growth (SPYG) lost 0.3%, Metals & Miners fell 1%, Semis dropped 2.3%, and Aerospace & Defense gave back 0.5%.
The contra trades were mixed — DOG down 0.1%, while PSQ and SH advanced 0.5% and 1%, respectively. The VIXY fell 0.5% even though the VIX rose 1.7%. That said, the VIX remains well below all three key trendlines, a sign of complacency — which, by definition, is a warning flag.
This morning, though, the VIX is up 4.5% in pre-market trading at 15.75 as investors digest weekend geopolitical headlines. The first resistance level to watch sits at 17.05. A break above that could put more pressure on stocks, with the next resistance levels at 19.20 and 21 — all key thresholds for measuring “fear” in the markets.
Investors are no longer bracing for the meltdown they feared back in April. Instead, they’re preparing for a slower economy and somewhat higher prices — and that leaves markets confused. With indexes hovering near record highs, you can feel the tension: it will only take one headline to change the tone.
Now there are a number of things happening this week – lots of eco data – Housing Starts, Building Permits, the July FOMC minutes, Services and Manufacturing PMI’s and New Home Sales. We also have the second wave of earnings…..with all the big retailers reporting…. HD, WMT, LOW, ROSS, TGT, EL, TJX. We are also going to get homebuilders – TOL and LEN… but the BIG deal is the annual Jackson Hole Summit – hosted by the Kansas City Fed on August 21st – 23rd. The theme for 2025 is “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.”
So, what’s stake?
JJ takes the stage on August 22 — the centerpiece of this year’s symposium — and markets will hang on every word for clues on rate cuts and broader policy direction. Powell has used this platform before to mark key shifts: from his aggressive anti-inflation stance in 2022 to a more labor-friendly tone last year. Now, with inflation still elevated and the labor market softening, he’s walking a tightrope.
Will he hint at a bigger cut? Unlikely. 85% of forecasts point to a 25-bps cut in September, last week’s chatter about a 50-bps move has been silenced by the hot PPI. The consensus now is for two modest cuts this year — one in September, another in December. Some analysts still want a 50 bps September cut, but others warn a “jumbo cut” would appear panicky and risk destabilizing markets. Powell isn’t likely to go there.
Instead, expect caution. He’ll avoid firm commitments, emphasize risks, and stress that the Fed remains data dependent. Flexibility will be the message.
If Powell sounds too hawkish — pushing back on rate cut expectations — markets will correct. A more neutral tone may calm nerves, while still allowing for a healthy pullback. Remember: valuations are already stretched — the last thing we need is for them to become even more extended.
Bonds took a hit, with the TLT down 0.7% and the TLH off 0.5%. The 10-yr yield now sits at 4.29% — right in the middle of this year’s range (3.68%–4.62%). It remains below all three trendlines but is pressing up against them to see if they hold. The first real test is at 4.34% — a key level to watch.
Oil is firmer this morning, up $0.26 at $63.06, hugging resistance at $63.40. From here, the next move is tied directly to Russia/Ukraine developments. No deal would mean tougher sanctions on Russia — and possibly on countries still buying Russian crude (think India and China). That would send oil higher. A break above $63.40 sets up a run to $65.80, and a move beyond that could fuel a rally toward $70.
Like oil, gold is trading higher — up $12 at $3,394/oz. While still within its trendlines, it feels like it wants to break out. If it looks like no deal can be reached, I’d expect a move to test the July highs near $3,500. On the other hand, if a deal materializes, gold — like oil — will likely back off. For now, that doesn’t appear to be the case… so stay tuned.
U.S. futures are lower….. Dow futures down 60, The S&P down 8, the Nasdaq is down 25, and the Russell is down 1. We are now in the final two weeks of August – expect volumes to decline and moves to be even more exaggerated. Remember, we are coming into September – typically, the worst month of the year…. which doesn’t mean it will be the worst month, but the odds are what they are…..
Let’s be honest — the market is frothy. Valuations are rich. A pullback would be healthy (and welcomed by some). Don’t let FOMO make your decisions. This is where discipline and the plan matter most.
European markets are all lower…Geo-politics is front and center. Peace in Ukraine would be a positive development for Europe and the global economy.
The S&P closed at 6449 – down 18 pts. Proceed with caution…Remember – you are invested, so you are participating….Just be careful how you allocate new money into the markets….Look at those underperforming sectors (healthcare, energy, consumer staples) to add to you outperforming sectors…to help you balance out your portfolio.
The VIX remain well into the complacent zone – but is starting to lift its head….…. which should be a warning flag.
I remain in the camp that we are toppy – which only means I am more cautious on where I allocate. Doing nothing is a decision – remember – you don’t have to do something all the time…. Let your portfolio do the work…. We still have the end of August and the whole month of September to work through…..
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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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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Pork Chops Benevento Style
So, Benevento is a city in the region of Campania in the Southeastern region of Italy, 50 km northeast of Naples. and sits atop a hill with a beautiful view of the valley below. The area itself is mountainous, providing some unbelievable photo opportunities. It is also a region of that country where so many Italian Americans can trace their heritage – It is off the beaten path but well worth the visit if you happen to be in the area.
Fennel is the key ingredient in this dish, and it grows like wildfire in Campania and so you will find so many of the pork dishes from this region somehow incorporate this plant.
For this you will need: 1 in thick pork chops, s&p, flour, olive oil, fennel seeds (about 1 tblsp), garlic, dry white wine, and beef bouillon.
Preheat the oven to 300 degrees.
Season the chops with s&p and then dredge in flour.
Now in a large sauté pan and one that can go in the oven – heat up the olive oil – when hot – add the chops browning on both sides – maybe like 1 min per side. Next – remove the pan from the heat and sprinkle the fennel seeds on one side of each chop then turn and repeat. – now place the chops and the pan in the oven for about 12-15 mins.
When done – remove the pan from the oven and place the chops on a large serving platter. Cover with foil to keep warm.
Now place the sauté pan back on the stove over med heat – add 2 crushed garlic cloves and cook until just brown. Now add 1/2 cup of the white wine and 1/2 cup of the bullion – being sure to deglaze the pan and scape up any of the browned bits on the bottom. Stir – until the sauce has reduced by 1/2.
Now remove the garlic and spoon the sauce over the chops and serve immediately.
Enjoy this with a large cold mixed green salad with red onion and tomatoes. Dress with s&p, oregano, fresh lemon juice and olive oil. Toss and serve.
Buon Appetito!