It was all noise, markets are roaring back, Denmark say's 'let's make a deal'

Remember what I said - it was all noise!

Stocks in the US that were under pressure on Tuesday clawed back most of those losses on Wednesday, offering yet another reminder of how quickly sentiment can swing when headlines (noise) — not fundamentals — take control. Anyone who got spooked and hit the SELL button on Tuesday may want to reconsider that reaction the next time the news cycle turns loud and noisy. Volatility driven by noise rarely changes the underlying story but always creates opportunity.

And so, stocks advanced. The Dow gaining 588 pts or 1.2%, the S&P up 78 pts or 1.2%, the Nasdaq added 270 pts or 1.2%, the Russell took back 52 pts or 2%, the Transports added 554 pts or 3.1%, the Equal Weight S&P added 134 pts or 1.7% while the Mag 7 took back 365 pts or 1.1%.

Now to be clear - this week’s market action had almost nothing to do with fundamentals. It wasn’t the economy, earnings, inflation, the Fed, rates, jobs, housing, or growth that moved prices — it was headline noise. The volatility was driven by geopolitics and optics surrounding Donald Trump, Greenland, Denmark, NATO, and the annual gathering at the World Economic Forum.

At Davos, Trump delivered a blunt defense of U.S. economic performance — easing inflation pressures, strong employment, resilient consumer demand, and relative outperformance versus global peers. Hard to dispute.

He also addressed Greenland, framing it as a strategic issue rather than a political one. Historically, that argument isn’t new: Andrew Johnson – a Democrat - tried it in 1867, William Howard Taft – a Republican -revisited it in 1910, and then Harry Truman – a Democrat - in 1946 offered $100 million in gold bullion to secure the Arctic (Greenland) and no one apparently called any of them a ‘bully’. The strategic logic centers on Arctic & NATO security, US national security, shipping lanes, undersea infrastructure, and defense positioning as Russia and China try to expand their presence in the region.

The crowd and media reaction, predictably, focused more on style than substance. Many acknowledged privately that the data and strategic considerations are hard to dismiss, even if the delivery made some uncomfortable. In the end, it is what it is and remember – algo’s, traders and investors don’t trade on tone — they trade on either certainty or uncertainty. This week was a textbook example: headlines not fundamentals created uncertainty which created volatility – markets sold off and then they rallied – they created lots of noise that’s all.

Then, around 2:30 p.m. on Wednesday, the headlines crossed the tape. A framework (or concept) for a deal had emerged and the expected February 1^st tariffs against European allies were taken off the table — and the algo’s responded immediately, all trying to get back ‘IN” the door (after they all panicked and ran out) and stocks ripped higher. That’s the noise.

Every sector in the S&P advanced…..Energy taking the top spot – up 2.4%, Basic Materials up 2.2%, Consumer Discretionary gained 1.9%, Healthcare up 1.8%, Industrials up 1.7%, Tech up 1.4%, Communications up 1%, Financials up 0.5%, Utilities and Consumer Staples gained 0.15%.

Homebuilders up 2.6%, Triple Levered Home Builders – NAIL up 8%, Airlines up 2.4%, Disruptive Tech up 1.4%, Semi’s up 3.2%, Cyber up 0.2%, Triple Levered S&P Long up 3.4%, Exploration and Production up 3%, Big Pharma up 1.2%, Aerospace & Defense up 1% (and likely going higher) and the list goes on.

The VIX which spiked higher on Tuesday – up 20% – was down 15% on Wednesday and is now back below all 3 trendlines – suggesting that things are calming down and we can start to refocus on what matters.

Bonds caught a bid as well after the beating they took on Tuesday. The TLT rallied 0.75% while TLH gained 0.6%, with yields backing off across the curve. The 10-year Treasury is now at 4.24%, down 4 basis points, and the 30-year sits at 4.86%, down 5 basis points. Now while yields are still a bit elevated – I suspect they will settle lower in the days ahead.

Oil rallied — go figure! Headlines were pulling prices up and down. Reports that Venezuelan crude is heading to Europe were seen as a positive for European energy security and a signal that global demand remains firm. At the same time, the API reported U.S. crude stockpiles rose by 3 million barrels, which would normally suggest weaker near-term demand.

Then came the wildcard: a massive ice/snowstorm sweeping across the country, raising expectations that heaters will be running full blast, boosting near-term energy consumption.

Add it all up, and the market chose to focus on demand rather than supply. In the end – the push and pull saw oil end higher…up 30 cts at $60.67. This morning oil is down 70 cts at $59.92….and so it remains in the $58.30/$60.50 trading range.

Gold ended up churning at new all-time highs…. closing at $4,631. This morning it is trading down $2. There is nothing new to say that hasn’t already been said. The backing and filling continues….and the chart suggests $4,580 support with $4,860 resistance.

European markets are trading higher this morning as tensions are easing. Denmark signaled it is prepared to advance discussions with the U.S. and NATO around broader security cooperation, and the once-looming European tariff threats have quickly faded from view. The so-called “Golden Dome” missile-defense narrative is now front and center — and the “war” some feared earlier in the week is clearly not materializing. Once again, it was noise. Markets across the continent are higher by roughly 0.6% to 1.3%.

U.S. futures are following suit — Dow +200, S&P +45, Nasdaq +230, Russell +19 — making it feel as if this week’s turmoil never happened. For investors who stayed disciplined and resisted the urge to react, the outcome is familiar: you’re likely in a better position today than you were on Tuesday morning. As always, once the headlines cooled, cooler heads prevailed and markets stabilized.

Which brings us back to the lesson of the week: do not confuse noisy headlines with strong fundamentals, and do not abandon a long-term plan because of short-term volatility. The S&P 500 closed yesterday at 6,875, up 78 points and back in positive territory year-to-date. My view remains unchanged — 6,830 to 7,000 continues to define the near-term trading range.

Davos has one more day of presentations ahead, while earnings season continues to broaden. Today we hear from- GE, PG, MKC, ABT, FCX, COF, CSX, INTC, ALK, AA – these companies represent Aircraft & Parts, Personal Care, Packaged Food, Medical Devices, Base Metals, Consumer Finance, Rail Freight, Semi’s & Airlines. This is where earnings season gets more informative, as results increasingly reflect the health of the broader economy, not just a handful of banks.

Eco data today includes the final read on 3Q GDP, and it is expected to unchanged at +4.3%. Core PCE q/q of +2.9% (unchanged), Personal Income +0.4%, Personal Spending +0.5% (both healthy numbers). We are also getting the November PCE Index – which at this point seems irrelevant to me – we are in mid-January, and a November data point is NOT making me change my investment thesis. In any event it is not expected to be out of line.

Fagioli cannellini cremosi con broccoli

Now this is simple and you can eat it just as a side dish or you can mix it with a small pasta – something like a Farfalle or medium shells.

For this you need: 1 can of Cannelloni Beans, Olive oil, chopped broccoli heads, chopped onion, sliced garlic, fresh ricotta and freshly grated parmegiana cheese. And if you put it over pasta – then you need the pasta.

Start by chopping the broccoli, onion, and garlic. Set aside.

In a large sauté pan, warm a generous splash of olive oil over medium heat. Add the onion and garlic and sauté until soft and fragrant, about 5 minutes — don’t rush this.

Add the broccoli, season with salt and pepper, and sauté for another 5 minutes until just tender but still bright.

Now add the cannellini beans — you’re just warming them through, not cooking them. Stir gently to combine, then remove the pan from the heat.

Add a dollop of fresh ricotta, a generous handful of Parmigiano, and another splash of olive oil. Stir until everything is creamy, glossy, and coated.

Bang. You’re done.

If you’re serving it over pasta, cook the pasta until al dente, add it directly to the pan, toss to combine, and serve immediately.