Markets navigate earnings and tariff jitters, but bonds keep their cool, Gold surges

• The volley continues…stocks decline on Monday and advance on Tuesday.

• Eco data in line, AMD and GOOG disappointed.

• China launches a probe on AAPL.

• 4 FED heads take the stage – It’s a stand off!

• Try the Chicken Valdostana.

Stocks rebounded by the end of the day after a volatile early start – think trade war concerns. Eco data revealed that the JOLTS report continues to suggest the labor market is just fine…..they reported 7.6 million jobs available – which was below expectations giving some the right to suggest that the labor market is ‘falling apart’ and the FED needs to ‘cut rates’…..OMG…..They also reported a 2% quit rate, which was higher than expected, and remember how you interpret that number….the quit rate is the percentage of people that ‘voluntarily quit’ assuming they can get a ‘better job’ with higher wages – so again, I’d say it’s a mixed to better report….the fact is we still have 7.6 million jobs available, jobs that are unfilled, jobs that represent demand by employers, but the slowdown does support the idea that the job market may no longer be a source of inflationary pressures. OK, let’s run with that.

Factory orders were a bit weaker at -0.9%, factory orders EX transportation were up 0.3%. Durable Goods at -2.2% came in as expected – so no surprise there….……Tech ultimately taking the lead – you can thank PLTR +24% ahead of GOOG’s earnings after the bell. By the end of the day the Dow gained 135 pts or 0.3%, the S&P up 43 or 0.7%, the Nasdaq added 262 pts or 1.4%, the Russell up 32 pts or 1.4%, the Transports added 178 pts or 1.1%, the Equal weight S&P up 10 pts or 0.15% while the Mag 7 gained 460 pts or 1.7%.

Now – after the bell – we heard from 22 companies….and while they are all important – let’s be honest – all eyes were focused on the tech names…. AMD beat – but disappointed on data center revenues suggesting a disappointing outlook for their AI growth. AMD is quoted down $10 or 8.5%.

GOOG reported and beat on the top line with EPS of $2.15/sh vs. $2.13/sh but they disappointed on the revenue line….get ready – they reported $96.47 billion vs. the expected $96.62 billion – (one tenth of 1% miss), Cloud revenues came in at $11.96 billion vs. the expected $12.19 billion (a 1.8% miss) while they ramped up spending on AI from $57.9 billion to $75 billion – a 30% increase – and that apparently was the line item that sent the algo’s into a tailspin taking 7% or $15 out of the stock in the moments after the announcement….. Ok – but did they see that Ad Revenues jumped by 10%? Guess not, in any event – this morning – the stock is only quoted lower by 2% or $5. Think about the poor bastard (last night) that panicked and sold his stock down $15 in the after-hours session……Whatever!

In the end – remember what I said on Tuesday – Monday’s meltdown did cause some internal damage to the markets and individual names, so the short term jitters that saw some great names lose more than 5% is proving to be a longer term opportunity for both day traders and long term investors. But continue to expect volatility in the days ahead as the healing continues and this will continue to provide opportunities.

With stocks higher, the VIX moves lower and yesterday it lost 8% settling in at 17.15…. bringing it right back to trendline support, while leaving it in the ‘cautious’ range. This morning the VIX is up 2%, you can thank those GOOG earnings and AAPL’s weakness (stock trading down 3% after CHINA launches a prob on their APP store fees) for this morning’s weakness….

The volley in the tariffs continues…. while Mexico and Canada came to the table, China is still a question mark. US tariffs on China took effect on Tuesday, Chinese retaliatory tariffs will hit us on the 10th – unless Donny & XiXi (Ding and Dong) come to an agreement.

There is a reasonable expectation that the tariffs will NOT be the disaster that some expect. The market is pricing in the idea that this first shot across the bow is just that – the first shot across the bow. Let’s see what the second shot looks like.

Bonds rallied a bit – both the TLT and TLH gained + 0.3%. This caused yields to decline…. The 2 yr is now yielding 4.19% while the 10 yr is yielding 4.47%. Just an fyi - After all of the action this week – yields have not really moved at all, and this could suggest several things.

Cautious optimism/indifference, Confidence in the FED, Eco data NOT shocking or the volatility is seen as temporary…in any event – bond market investors are not panicking, rather they are seeing the volatility as an emotional reaction rather than a shift in economic conditions.

Yesterday – Oil was erratic….at one point falling 2.5%, breaking thru 2 trendline supports at $72.04 & $71.56 to test a third trendline support at $70.39 on the back of the China tariffs announced in retaliation…..but it ultimately ended the day flat at $72.70 as some speculated that this issue, won’t be an issue. This morning – oil is down 50 cts at $72.15 after the API reported that US crude stockpiles and gasoline inventories increased by 5.03 and 5.43 million barrels. The increase in stockpiles suggesting waning demand…. yeah….Ok.

Gold on the other hand shot higher…. gaining $17 to end the day at $2874 which was a new high – on the ‘flight to safety’ trade. (think ongoing tariff threats) This morning that flight to safety is alive and well – as gold traders took it into a new century – rising $26 to $2901.50. Gold is now up 9.75% ytd…this on top of the 22% move higher last year – leaving gold (which is typically a boring but stable asset) as one of the most recent best performing assets in your portfolio.

Eco data today includes Mortgage apps, ADP employment which is expected to show an increase of 150k new jobs and S&P Services PMI at 52.9 and ISM Services PMI at 54 – both remaining in expansionary territory suggesting that the ‘services’ part of our economy is just fine…remember we are a 75% services economy, so this is a key data point.

US futures are down at 6:30 am – the Dow is down 65, the S&P’s down 28, the Nasdaq is down 180 while the Russell is up 3. And this makes some sense after the AMD and GOOG earnings and the AAPL probe along with the ongoing uncertainty concerning a potential trade war. It also makes sense that we are seeing this back and forth after the ‘selloff’ on Monday…. that saw us test 5920 – a level I believe will be tested again as the market recuperates.

European markets are scattered…. Spain is up 1%. Higher while Italy is down 0.6%. Everyone else is somewhere in the middle. There is no eco data to speak of, so the focus there remains on earnings as well.

The S&P closed at 6037 up 45 pts…. taking back the 45 pts, it lost on Monday…. We remain in this 5920/6115 trading range hugging the trendline. We will get 4 FED heads speaking today. Chicago’s Austan Goolsbee (a dove), Richmond’s Tommy Barkin (leans hawkish), Governor Mishy Bowman (leans MORE hawkish) and Vice Chair Philly Jefferson (leans dovish) - So it’s a tie….let’s see what the market interprets from the conversation…..understanding that the market wants to be dovish (they want lower rates)…..so do not be surprised if it ignores the hawks and focuses on what the doves say, trying to convince themselves that the FED just has to cut rates.

All this means is that it remains a challenge to have a high degree of conviction, which supports my thesis… Do not get fomo’ized, do not make emotional decisions and do not chase anything. Create a plan and then stick to it thru thick and thin…Taking advantage of stocks on sale – a sale being defined as 10+%....but each sector/stock is different….stocks that have been stretched may see bigger corrective moves, but have your list ready to take advantage of the moves when they happen.

Chicken valdostana

Perfect for a weeknight or a weekend get together with friends. What makes it better is that it comes together in 15 mins.

For this you need: thin sliced chicken cutlets, flour, olive oil, s&p butter, chicken broth, white wine, prosciutto cotto*, fresh parsley and shredded fontina cheese.

(*Prosciutto cotto is an Italian cooked ham, distinct from prosciutto crudo, which is dry-cured and aged. "Cotto" means "cooked" in Italian, referring to the process in which the ham is slowly steamed at a low temperature.)

Begin by shredding the fontina cheese and setting it aside.

Rinse and dry the cutlets with paper towel. Season with s&p and then dredge in the flour.

Heat up the butter and splash olive oil in a large sauté pan. Sear the chicken on both sides.

Now deglaze with some white wine, then add in the chicken broth. Now top the chicken cutlets with the prosciutto cotto, shredded fontina cheese and parsley. Cover it and turn the heat to low until all the cheese is melted. Bang! There you go.