Noise fades, SMIDs surge, Gold blasts past $4,900, Fed decision next week

• The noise fades, investors go back to fundamentals.
• Risk appetite is alive and well – look at the SMIDS.
• Oil churns, bonds hold steady and Gold just won’t stop!
• An armada moves closer to the Gulf.
• FOMC announcement next Wednesday.
• Try the Steak Florentine.

The Greenland issue? Largely resolved — and guess what? We didn’t go to war, and we didn’t blow up alliances. Although we did get under Gavin Newsom’s skin. Denmark and key NATO partners reconsidered the offer, paving the way for the U.S. to gain total strategic access to the island — a meaningful step toward the long-standing missile-defense vision first envisioned decades ago during the Reagan presidency.

At the same time, the economic data cooperated. Final Q3 GDP was revised higher to +4.4% versus +4.3% expected. PCE — quarterly, monthly, and year-over-year — landed exactly as forecast, while Initial Jobless Claims came in weaker than expected which in this case is constructive, signaling continued labor-market resilience rather than stress. The point here is that the labor market is NOT collapsing.

Put it all together and the market responded exactly as you’d expect: stocks pushed higher, with technology leading the charge – Look tech has been for sale for a couple of weeks, so it was primed for a relief rally – so you should not be surprised.

But this move wasn’t confined to just mega-cap tech. Small- and mid-caps continue to quietly outperform the broader market. SMIDs are now up 14 straight sessions, lifting year-to-date gains to +9.5%, versus just +0.6% for the S&P 500. In barely three weeks, the Russell 2000 is on pace to smash records — a clear sign that risk appetite is broadening beneath the surface.

You can see the same message echoing elsewhere: the Equal-Weight S&P is up +4% YTD, while Transports have gained +6.2% YTD — classic confirmation that investor appetite is hungry for more than just a handful of mega-cap tech names.

At 4 pm – the Dow advanced by 306 pts or 0.6%, the S&P up 35 pts or 0.5%, the Nasdaq added 211 pts or 0.9%, the Russell rose 19 pts or 0.7%, the Transports added 45 pts or 2.4%, the Equal Weight S&P added 13 pts or 0.2% while the Mag 7 took back 688 pts or 2.1%.

Bonds continued to catch a bid — no surprise there — with TLT and TLH advancing +0.45% and +0.30%, respectively. Treasury yields, however, were largely unchanged. The 10-year is still yielding 4.24%, flat on the day, while the 30-year finished at 4.84%, down 2 bps.

10-year yields didn’t move meaningfully lower because there was no new catalyst to force a repricing. There was no true flight-to-safety bid, and the economic data was good — not weak, and certainly not recessionary — which removed any urgency for rates to fall. Fed expectations remain unchanged, no cut for you!

Oil fell $1.10, or 1.8%, to end the day at $59.52, with the move lower tied to growing chatter that the Russia-Ukraine war might be edging toward an end. That was yesterday’s narrative.

Overnight, the script shifted again. Fresh Middle East drama — with Saudi Arabia and the UAE exchanging harsh words — quickly reignited concerns around potential supply disruptions, pushing prices higher. The issue? Ongoing unrest across Libya, Sudan, Somalia, and Yemen. Nothing fundamentally new — just more of the same infighting and geopolitical noise.

This morning, oil is up $0.75 to $60.10, leaving it stuck between key trendlines at $59.40 and $60.50.

And don’t lose sight of the bigger near-term catalyst: a powerful winter storm racing across the country, expected to bring significant damage and sub-zero temperatures from Texas to Maine. That’s a natural gas story far more than an oil story. Nat gas prices have already surged 87% in just the past week in anticipation of this train wreck!

Gold just keeps pushing — and yesterday it put on a show. The metal surged $104, or 2.2%, to close at $4,936, after briefly kissing $4,967 intraday.

And here’s the thing: there’s nothing new driving this move. The momentum is firmly on the buy side. Global stock and bond markets saw meaningful outflows this week, and that cash didn’t go to the sidelines — it flowed straight into gold and the broader precious metals complex because when the noise gets loud and investors get uneasy, gold becomes the default destination. (*See mid-east comments below.)

Remember that trendline resistance I flagged earlier this week around $4,860? Yeah… about that. Gold blew straight through it and didn’t even look back. At this point, the metal is trading in a mindset of its own. Wall Street banks are now racing to slap $5,000 (BAC, JPM) and even $6,600 (Jeffries) price targets on it for this year — which raises the only real question left: who’s going to post an even MORE aggressive target next?

Today’s economic data is hardly flashing warning signs. S&P U.S. Manufacturing PMI is expected at 52, while Services PMI is seen at 52.9 — comfortably in expansion territory. There’s nothing recessionary here, nothing negative, and certainly nothing that suggests an economy rolling over.

We’ll also get the University of Michigan Sentiment reading, expected at 54 — a level that’s been hovering there for a while and is often described as “cautious” or even “pessimistic.” The problem? That characterization doesn’t line up with reality. Spending remains resilient, risk appetite is broadening, and markets continue to look forward, not backward.

In other words, sentiment surveys say “uneasy,” but behavior says otherwise — a clear disconnect between how consumers say they feel and how they’re actually acting.

We’ve got 4 more earnings reports today – none of which will drive the action….

European markets are trading modestly lower this morning. On the international front, reports suggest the U.S. is moving additional naval assets toward the Middle East — Iran specifically — as a deterrent amid escalating concerns over Tehran’s ongoing crackdown on its own citizens. (And yes — think about what that does for gold – do I hear $5k?.)

With the weekend approaching, the risk is obvious: a lot can change in 48 hours. And while the rhetoric remains measured — with assurances that no one is looking for escalation — markets are conditioned to respect headline risk when geopolitical tensions rise.

For now, it’s another reminder that uncertainty, not fundamentals, is the dominant variable as we head into the end of the week.

U.S. futures are following suit and are a bit lower this morning…. Dow -100, S&P -4, Nasdaq -30, Russell -3. I wouldn’t read too much into it, it has been a volatile week, and markets need to settle down. If the anxiety level were really elevated – the VIX would be surging and it is not, so in my opinion this is just more churn.

The S&P 500 closed yesterday at 6,913, up 37 points. Over the past week, we’ve seen nearly a 3% swing — trading as high as 6,989, then slicing through the trendline to a low of 6,789. And let’s be clear: that entire move was driven by noise, not fundamentals.

Remember, next week is the Fed meeting. No one should be expecting a rate cut, but everyone will be hanging on every word at the press conference. I remain firmly in the camp that we don’t see another cut until there’s a new Fed chair — and yes, I’m still betting (on Kalshi) on the dark-horse in the race – Rick Rieder.

Today’s economic data should help the markets, but with naval assets being repositioned and the potential for geopolitical flare-ups, my gut says the market absorbs it all and consolidates rather than charges. I’m not expecting new highs today. For now, the S&P remains range-bound between 6,836 and 7,000.

Steak florentine

Steak...for meat lovers - this is a great dish.....and brings me back to the days when I studied in Florence during fall semester of Jr. year. Aug 1981 - Dec 1981.

Start with a nice cut T-Bone or Rib Eye - always on the bone as the bone provides so much more flavor and makes a nicer presentation for your dinner guests.

You will need: The steaks, 10 cloves of Garlic, Pork fatback, dried rosemary, coarse salt (kosher salt works nicely) and pepper.

Remove steaks from fridge - rinse under cold water and pat dry with a paper towel. Leave on a platter for about 20 mins so that they get to room temp.

In a food processor blend the pork fatback, garlic, rosemary to a paste like consistency. Next - massage this mixture into the steaks - taking time to make sure that you have worked the meat and the mixture well. Now season with S&P. Set aside.

Light the grill and turn the heat to high and allow the grill time to heat up - it has to be nice and hot. Place the steaks on the grill and cook for about 5 min/side - depending on thickness - This will result in a med rare steak...so if you add a couple more mins on each side you will get a more cooked center.

Remember though - when you remove the steaks from the grill - you will cover and let them rest for 4 mins allowing them time to continue cooking and allowing the juice to flow.

Once ready serve immediately on warmed plates. Accompanied by both starch and vegetable. Garlic herb rice and brussel sprouts are a good option or mashed potatoes and peas - along with a mixed green salad with red wine vinaigrette dressing.

This meal deserves a robust red wine - my favorite is Brunello di Montalcino - like velvet.