Wall Street throws a rate-cut Tantrum, then buys the dip – Because, why not? AAPL crushed it

• Apple beats on ALL measures – All of them and they made $124 billion in 3 months!

• Eco data continues to be mixed to stronger – supporting the no cut decision.

• Tariffs are less than 24 hrs aways – unless someone comes to the table.

• Gold kissing new highs, Oil holding steady and bonds are a bit higher.

• Try the ‘Easy’ Chuck Roast.

So the chaos calmed down a bit, stocks rose on better (mixed) eco data - consumer spending was up, but 4th qtr. GDP was weaker, yet Initial Jobless Claims (speaks to the labor market) showed a decline in claims – which suggests strength in the labor market (no weakness) so what does that mean for the FED? It means the latest decision was correct – no change in rates, and in my opinion – it continues to mean no change in rates going forward, but there are always those that buck the trend and look for a reason to cut rates and that reason yesterday was the slightly weaker GDP report….

We got a +2.3% annualized 4th Qtr. GDP rate…- which is considered moderate, but whether it is considered weak or strong depends on the economic context, historical trends, and expectations. How you interpret it compared to long term trends will help you understand it. If you were expecting 2.6% then +2.3% might be a disappointment, and if you were expecting +2.1% then +2.3% is a win! In the end +2.3% is moderate growth, indicating that the economy is expanding BUT not overheating and if inflation remains under control and the job market remains strong (which it is) then +2.3% is considered sustainable and that is good.

But the haters will continue to hate and demand more rate cuts so they locked in on the ‘weaker’ GDP number and created a narrative that suggests the FED has to cut rates this year and with that we saw the dollar weaken (lower rates not good for the dollar) and that sent the market and commodities (think oil and gold) higher. Every sector in the S&P rose, some more than others, but they all rose.

By the end of the day - The Dow gained 168 pts or 0.4%, the S&P added 25 pts or 0.5%, the Nasdaq advanced by 45 pts or 0.25%, the Russell added 22 pts or 1%, the Transports gave back 146 pts or 0.9%, the Equal Weight S&P added 90 pts or 1.3% while the Mag 7 closed unchanged on the day. Now the outperformance of the Equal Weight S&P once again suggests that the market rally is broadening out……and that is a good thing for investors.

Utilities ruled the day, rising 2.2% - now remember when utilities were the sleepy sector of the market? They are great dividend payers, and they offer stability to your portfolio, and they ARE boring? Well, boring no more! Utilities have risen nearly 26% over the past 12 months and are up another 3.5% this month…. much of that driven by all the excitement around their role in powering the demand created by AI boom…. And that isn’t going away anytime soon.

But yesterday’s move in utilities can also be tied to the idea that rates are going lower…lower rates make utility divvies more attractive. Real Estate came in at second place – adding 1.3% (again that’s a lower rate story), Healthcare and Industrials up 1.1%. Financials, Consumer Staples & Consumer Discretionary jumped by 1%, Basic Materials went up 0.95%, Energy gained 0.4%, with Tech gaining 0.2% and Communications adding 0.1%.

The SMIDS (represented by the Russell) which are ‘economically sensitive’ outperformed and that suggests that while investors are feeling good about the economy, lower rates are supportive of this sector and that supports the outperformance. The IWM (iShares Russell 2000) rose 1%, (now up 3.5% ytd) while the IJT (iShares small cap 600 growth names) added 1.1%. (now up 4.6% ytd).

Treasuries rose just a bit – the TLT + 0.35% and the TLH gaining 0.4% but that did little to change yields…. The 2 yr remains at 4.2% while the 10 yr is yielding 4.52%.

Oil – which had traded off and tested trendline support ($72.12) three times this week – ended the day up 50 cts at $73.12. They are crediting the tariff threat on both Mexico and Canada this Saturday as the reason for the move higher. In the end – Tariffs can disrupt supply chains and create uncertainty, but the threats on oil producing nations – (think Mexico and Canada) could cause them to retaliate by reducing oil exports or cutting production which will tighten supplies and send prices higher. Or you can argue that oil traders are buying oil to hedge against perceived inflation or the economic uncertainty that some think will be triggered by the disputes. I think it was all of that plus the weaker dollar. In any event – It feels like it wants to test a bit higher for now…. My gut says a test of the October high of $76 is not out of the question.

Gold -busted out! Rocketing higher…. - Remember, yesterday morning I said that ‘the chart is now suggesting a move to the November high of $2845’ – well guess what sports fans? It closed at $2850.20 – BAM! We are now in NEW high territory – there is nothing above us except air…..a trendline drawn from the highs of May connecting to the high of November and out – suggests a $3000 price target….something that both Goldman and BankAmerica suggested was a possibility in 2025….Now, don’t get so excited just yet…..while the breakout is a positive – we have to see how it acts in the next couple of sessions…Short term support is $2775. This morning gold is trading down $6 at $2844,

After the bell, the news that everyone was waiting for hit the tape….AAPL’s earnings…..EPS $2.40 (beat), Revenues $124.3 billion (beat), Mac Revenues $8.99 billion (beat), iPad Revenue $8.09 billion (beat), Services Revenue $26.34 billion (beat), Gross Margins 46.9% (beat) – yet the stock traded off nearly 2% in after-hours trading.

Why? Because China sales were down 11%! Are you joking? It’s ludicrous that anyone could find a reason to sell AAPL on that report – but my gut says it’s the momo guys that bought it up 9% in the last week trying to ‘lock in those short-term profits’ –

Now this morning – cooler heads are prevailing…. Why? Because the China story was not an unknown, the estimates were for sales to be down 18% yet they were only down 11% - so that too is a BEAT! At 6 am – AAPL is up $8 or 3.5% trading at $245! Love it. (And the fact that they make $124 Billion every 3 months is enough for me!).

This morning- US futures are UP…. Dow futures + 160 pts, S&P’s up 25, Nasdaq + 160 while the Russell is flat. The markets are bracing for the tariffs about to be imposed on Mexico and Canada. Will they be negative or not?

Eco data today includes the FED’s favored inflation gauge – the PCE report and it is expected to be up 0.3% m/m and 2.6% y/y on the top line and both of those reads would be HIGHER than last month. Core PCE of +0.2% m/m and +2.8% y/y – which would be in line with last month. So, it’s a toss-up!

European markets are all higher…. The ECB did cut rates by 25 bps yesterday – that was expected, taking their rates down to 2.75% - making this the 5th time since June. ECB President Christine Lagarde warning of weakness in the Eurozone resulted in stagnation in the 4th qtr. only confirms the bets that the ECB will continue to slash rates throughout the year. Markets across the zone are all up between 0.2% - 0.5%.

The S&P closed at 6071 up 31 pts – taking back the 30 pts it lost on Wednesday. We’re churning down 30 then up 30, down 100 then up 100 - ….and my sense is that we will continue to churn and that’s good - We need to repair the damage done on Monday before moving significantly higher.

I am still in the camp that you need not chase anything…. You can find opportunities and value in plenty of places. As of today – this is how the sectors are lining up this year.

Financials and Healthcare up 7%, Basic Materials +6%, Communications and Energy +5.25%, Consumer Discretionary + 4%, Utilities +3.5%, Real Estate +2%, Consumer Staples + 1.5%, Industrials +1.1% with Tech the only loser – down 0.1%.

Down the list – Disruptive Tech – ARKK +11%, Semi’s +1.5%, Value +3.5%, Growth up 3%, Aerospace and Defense +5%, Exploration& Production +3.8%, Big Pharma + 3.8%, Homebuilders +6%, Retail +2.5%, Airlines + 4%, SMIDS +4% and the list goes on…. Even bonds are up – the TLT + 1.15% and the TLH + 1.1%.

Diversification is key as you get older…. (Younger investors can take more risks). Long-term investors should take advantage of any weakness in high-quality names if they come under pressure for no reason other than market cycles. A change in the thesis results in a change in the analysis.

Easy chuck roast

Nothing complicated, simple to make and then let it cook.

For this you need a piece of chuck roast (size depends on how many people), Dijon mustard, steak seasoning, 1 large yellow onion, chopped carrots and fresh rosemary.

Preheat your oven to 325 degrees.

Now take the veggies and chop them up. Place in the bottom of a Dutch oven. Season you roast with steak seasoning. Then generously dress it with the Dijon mustard –

Cover and place in the oven – cooking 1 hour/lb. + 30 mins. 3 lbs. = 3 1/2 hrs. When done – remove and shred with 2 forks – mix with the veggies and serve it family style with whipped mashed potatoes or whipped sweet potatoes.

I make a bed of sweet potatoes and then place the shredded meat on top.