Stocks edge up amid mixed eco data, surging Oil and Gold, and ongoing trade tensions

It was really a non-event day – mixed eco data, and a page full of trade and geo-political headlines….…stocks started the day a bit lower but a late day rally in tech ended up taking stocks higher…..the dollar fell 0.6%, Gold rose by 2.75% or $90, Bonds were down, yields were up and oil was up 3.7% or $2.25/barrel.

Jamie Dimon told us that he is not ready to retire, but did defer to the board, Trump raised tariffs on European steel effective tomorrow and that sent steel stocks higher but also caused the EU to threaten countermeasures on July 14^th if no agreement is reached.

Word that Trump and Xi Xi are ‘likely’ to talk this week was seen as a positive. But there is a ‘rumor’ circulating that Xi Xi is OUT…. but that is just a rumor and has not been verified yet…. Gordon Chang – a conservative lawyer and famed political analyst makes note that his ‘disappearance from the People’s Daily’ points to trouble brewing….

and Vlad and Volodymyr – not to be left out – met for a second time in Istanbul but failed to reach an agreement ending the war, although they did lay the groundwork to exchange prisoners….and the plot thickens….

The eco data was a bit weaker than expected – but was not a headliner – S&P Manufacturing PMI came in at 52 vs. the expected 52.3, while the ISM Manufacturing PMI was 48.5 vs. the 49.5 expectation…..but I think it was Construction Spending at -0.4% vs. the +0.2% that we expected that changed the tone. You see the weaker spending – many will say – suggests that the FED will have to cut rates now and so we are on that circus ride again. As that narrative took hold - it was the algo’s that took stocks up….the Dow ended the day up 35 pts, the S&P up 24 pts, the Nasdaq up 129 pts, the Russell up 4, the Transports lost 70, the Equal Weight S&P up 1 pt while the Mag 7 gained 153 pts.

The markets got no help from JJ Powell – who spoke at the Federal Reserve Board's Division of International Finance 75th Anniversary Conference in Washington, D.C. His speech focused on condolences for former Vice Chair Stanley Fischer – who passed away at the age of 81 and congratulations to the Division of International Finance – that has served 75 ‘of significant contributions to international and economic policy – Period – he mentioned nothing about rates or economic policy.

But the markets did get help from the tech sector – NVDA +1.7% - specifically as they announced a new chip developed just for China that meets US export regulations that will allow ‘users’ to link multiple computers to create a high performing computer. The word is that they plan on producing 1 million units of a new B30 chip as a way to preserve market share in the world’s second largest economy. On top of that TSM +0.8% (Taiwan Semiconductor) predicts steady growth (mid 20%) in 2025 – and that just continues to support the AI story…and boom – up we go.

Bond prices as noted were lower and yields held steady…..the 2 yr is yielding 3.910%, the 10 yr is at 4.43% while the 30 yr is yielding 4.95%. This morning bonds are positive, so yields are down about 2 bps.

Oil was up big and closed at $63.04 – leaving it north of trendline resistance and now putting it in a new range with support at $62.28 and resistance at $65.88.

Gold rose $90 – ending they day in a new century – at $3406. The fact that there is still a lot of uncertainty and a weaker dollar - supported the idea that the path of least resistance is UP not down. Yesterday I did say that a push through $3400 could see gold test the early May highs of $3475 fairly quickly. And more China trade concerns will only fuel that fire.

This morning the dollar is rallying a bit – up 0.25% so that is causing both oil and gold to retreat - $16 at $3,380…which I think is short lived….look – the dollar is down 10% this year, so a ‘dead cat bounce’ would not be a surprise and while it may find support at the $98 level – the geo-political tensions will keep gold trending up vs. down. In any event – I think gold remains in the $3300/$3400 range.

Eco data today includes: Factory Orders – expected to be -3.2%, Durable Goods of -6.3%, JOLTS openings of 7.1 mil – down from 7.192 mil would be considered bearish because there are ‘fewer’ openings and that suggests that there is reduced labor demand and that signals a slowing economy or businesses cutting back hiring and that means lower corporate earnings and economic activity….Now, none of that is written in stone – but if you let your mind wander – you can get to all of those places….

US futures are down. Dow futures are -150, S&P -24, Nasdaq -80 and Russell is down 8. This morning we learned that the OECD (Org of Economic Cooperation and Development) a Paris based organization, CUT the outlook for global growth – all because of Trump’s trade tariffs citing that 2 months after he started the fight – there are no signs of any trade deal, any breakthroughs at all. We have lots of ‘MOU” s, but nothing cast in stone just yet.

And remember – yesterday I said that in order for the market to really push higher from here, we will need to see more evidence of a deal, not an understanding, but a real deal, with real rules and parameters….until then, we can expect the volatility to continue. And while I understand that they won’t get done in a week or two – we need to see that real progress is being made, not just chatter.

The S&P closed at 5935 up 24 pts… My sense is that the mkt will churn here – because it just feels tired and could test trendline support at 5775 ish – a pullback of 2.3%. Should that fail – then it will fill the gap created on May 12^th - at 5691 a pullback of 3.7%.

Now while investors, traders and algo’s will try to look ‘through’ the trade drama and focus on the economic data, my sense is that all the trade drama is still top of mind. S&P RSI is bumping its head on being ‘overbot’ – so caution is warranted. As a trader it makes no difference to you, but as a longer-term investor – the call for caution rings appropriate.

Pasta semplice

For this you need – Olive oil, garlic, shallots, red and yellow cherry tomatoes, parmegiana cheese, ricotta cheese, plenty of fresh basil leaves and of course the Rigatoni.

Start by bringing a pot of salted water to a rolling boil.

Now, in a large sauté pan – add the olive oil. The sliced garlic, sliced shallots, fresh basil leaves and the tomatoes. Season with s&p and let it cook for 10 mins.

Now – add the pasta to the pot, cook for 8 mins. While that is happening – take the tomatoes etc. And put it into the food processor. Now add the parmegiana and 2 tbls of ricotta. Blend to make smooth. Now add it back to the sauté pan.

When the pasta is done – using a slotted spoon – add the pasta to the sauté pan. Mix, now add more parmegiana and basil leaves and mix again. If you need to – you can add a ladle of the pasta water to thin it out. Serve immediately. No need for anything else.