Things You Need to Know
- Stocks yawn — quiet markets.
- Trump hosts Europeans along with Ukrainian President Zelensky.
- Economic data points to a slowing economy.
- JJ prepares to take the stage at Jackson Hole.
- HD and other retailers gear up to report.
- Try the Rigatoni alla Campagna
And we got a whole lot of nothing… It was a quiet start to the week — investors, traders, and algos all chose to sit it out. No fireworks, no meltdowns, just… nothing. Even the drama at the White House barely moved the needle.
By the close, the Dow slipped 34 points, the S&P was flat, the Nasdaq added 7, the Russell gained 8, the Transports were up 14, the Equal Weight S&P fell 21, while the Mag 7 gave back 49 points.
Leaders from across Europe, together with Ukrainian President Zelensky, gathered in the Oval Office to discuss next steps. Nothing concrete was made public, but the tone was more determined, with many praising Trump for his focus on ending the war. Even the media — CNN’s Smerconish and Bill Maher — suggested that if he pulls this off, he should be nominated for the Nobel Peace Prize. Even Hillary voiced support. As Smerconish noted, if anyone disagrees, it’s nothing more than severe TDS.
So what if Trump does bring an end to this war? Would it spark a rally? Honestly, I don’t think so. The war is now well into its third year, and if it drags on investors are likely to treat it as background noise. But if it ends, it could certainly produce short-term euphoria.
As I noted earlier this week, Aerospace and Defense stocks would likely sell off on any hint of progress — and sure enough, this morning they’re all lower in the pre-market (think RTX, NOC, LMT, LHX). Keep in mind, the sector is still up more than 34% YTD. A selloff here is just profit-taking, not a fundamental change in the story. In fact, Zelensky confirmed that “a package of coveted security guarantees for Ukraine” — expected to include massive U.S. weapons purchases — will be formalized within the next week to 10 days. Translation: these names remain well positioned. We could see an end to this war by Labor Day — and perhaps a Nobel Peace Prize announcement on October 10.
In the end, geopolitical issues don’t set long-term stock prices, but they can — and do — create short-term chaos.
The data wasn’t inspiring. The NAHB index came in weaker than expected — not great for the housing story. The NY Fed Services Business Activity index also slipped, down to -11.7 from last month’s -9.3. For context, this survey tracks service-sector activity across NY, northern NJ, and southwestern CT. A positive reading signals expansion, negative indicates contraction, zero means no change.
And then we have Jackson Hole — yes, it’s a boondoggle. Nothing truly significant ever comes out of it, but it is where central bankers gather to eat, drink, and talk. JJ is scheduled to speak Friday at 10 a.m., and markets will hang on every word hoping for clues about the next FOMC meeting.
Here’s the truth: don’t hold your breath. JJ won’t use Jackson Hole to announce policy. Will he hint at a bigger cut? No. The 50 bps chatter evaporated after last week’s hot PPI. Instead, expect caution. He’ll avoid firm commitments, emphasize risks, and stress data dependency. Flexibility will be the message.
Next up — retail earnings. HD, WMT, LOW, ROST, TJX, and TGT are all on deck. But headwinds are plenty: tariffs and supply chain pressures, weak consumer sentiment, potential price hikes, and the Fed’s reluctance to cut rates — all of which squeeze consumers.
HD: Revenues +5% (just reported — missed on earnings but kept FY forecast; stock -1.2% at 6 a.m.)
LOW: Revenues +1.7%
TGT: Revenues -2.2%; 9 analyst downgrades in past month
TJX: Revenues +5% y/y
Will that be the story this week? Stay tuned.
Bonds, Oil & Gold
Bonds traded off yesterday, with the TLT and TLH down ~0.25%. That pushed the 10-yr up 5 bps to test resistance at 4.34%. This morning, it’s eased back to 4.32%. Push through, and we’ll likely see 4.38%, then 4.54%. If it backs off, expect 4.25%.
Oil is lower on optimism around a potential end to the war. It’s down 60 cents at $62.80, below trendline support at $63.38. I expect a test of $62, maybe $60 if headlines improve. Without the war-risk premium, oil reverts to a supply/demand story — likely keeping it in a $60–$65 range.
Gold slipped $5 yesterday to close at $3,378, right on support. This morning it bounced $8 to $3,386, staying in the $3,378–$3,415 channel. If a deal is reached, the war premium fades and traders will take profits. That makes sense — gold is still up 23% YTD, 51% since Jan 2024.
The VIX is flat, well below all three trendlines — still signaling complacency. Futures are softer: Dow -42, S&P -5, Nasdaq -12, Russell -4. The focus is now firmly on retail earnings and JJ’s speech Friday.
Look — investors are no longer bracing for the meltdown they feared in April. Instead, they’re preparing for a slower economy and slightly higher prices, leaving markets confused. With indexes near record highs, traders may look to take money off the table. Long-term investors, however, should welcome a pullback as a chance to put fresh money to work.
European markets are higher, up 0.4% to 0.75%, fueled by optimism over a potential deal. Defense stocks there are lower too — same story as here, and I see it as temporary.
The Bottom Line
The S&P closed flat at 6,449, down less than 1 point. The market is frothy, valuations are rich, and a pullback would be healthy. Let’s see what the retailers deliver, and let’s see what JJ says. If he’s hawkish, markets will correct. A more neutral tone may calm nerves but still allow for a healthy reset.
I remain in the camp that we’re toppy — which means I’m more cautious with new allocations. Doing nothing is a decision. You don’t always have to act; let your portfolio do the work. We still have the end of August and the entire month of September to work through.
Want to talk 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
Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.
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.
Rigatoni alla Campagna
Delish! And so easy.
For this you need: 1 eggplant cut into bite sized cubes, Cherry tomatoes, cut in half, sliced shallots, fresh basil, cream cheese, ricotta Salata, s&p and oregano.
Begin by heating up your oven to 375 degrees.
Now put the cut-up eggplant, tomatoes and shallots in a baking dish. Season with s&p and a bit of dried oregano, a splash of olive oil. Toss to coat. Place in the oven and roast for 40 mins.
While that is happening. Bring a pot of salted water to a rolling boil.
In a food processor – add in the fresh basil, cream cheese, Olive oil, s&p and ¼ cup of water. Blend into a creamy basil sauce.
Now – when the eggplant is done – toss the rigatoni into the water and cook until aldente.
Grate some ricotta Salata into the eggplant/tomato mixture. Add in the cooked pasta and toss with some fresh chopped basil.
Next add the basil cream sauce to the dish and toss to coat. Add just a half ladle of the pasta water (tears of the Gods) to help emulsify the sauce.
When serving – grate a bit more of the ricotta Salata on each dish.
Buon Appetito!