Bulls charge on with $10T market surge despite mixed economic signals, S&P nears record high

• The BULLS continue to take ‘control’.
• S&P about to make another new 2025 record.
• Gold plunges by $55 breaking trendline support.
• Oil – churns between the trendlines…. OPEC meets next week.
• Bonds Up, VIX down.
• Try Pasta Fresca.

The BULLS continue to charge – adding nearly $10 trillion to market valuation from the lows of April thru yesterday – even as the data comes in a bit mixed….… leaving the S&P just 3 points away from setting yet another new closing high in 2025! The Dow gained 404 pts or 1%, the S&P up 48 pts or 0.8%, the Nasdaq +194 or 1%, the Russell up 35 pts or 1.7%, the Transports up 121 pts or 0.8%, the Equal Weight S&P up 55 pts or 0.8% while the Mag 7 added 288 pts or 1.1%.

Economic data showed

Retail Inventories rose by 0.3% but Annualized Q/Q GDP was weaker than expected at -0.5%, Personal Consumption was weaker at only +0.5% vs. the +1.2% expectation, Core PCE Q/Q (think inflation) also a bit higher than expected at +3.5% vs. +3.4%.

On the other side – Durable Goods Orders surged by 16.4% vs. the expectation of +8.5%. Now look durable goods orders are a key indicator of industrial health and a strong durable goods report, (think manufactured goods like appliances, vehicles, and machinery), is generally positive for the economy for several reasons: it is an Indicator of Economic Confidence, Boosts Manufacturing, Stimulates Investment, it has a Multiplier Effect and ultimately a Stock Market Impact.

Now IF the report continues to be strong – m/m then some will say that it can raise concerns about inflation or overheating if demand outpaces supply, potentially prompting tighter monetary policy – but that is NOT where we are by any stretch of the imagination. We would need to see this report significantly outpace expectations for 3 or 4 months before we started to get worried about demand exceeding supply.

Today we will get the one that everyone is waiting for - the PCE Price Index m/m & y/y – because this report is the FED’s favored gauge concerning where inflation is and where it might be going. Today’s report is EXPECTED to show y/y price increases both on the top line and the Core line. M/m reports are not expected to surprise at all – so my guess is that if it comes in as expected – then NO ONE should be surprised.

In addition, we will get Personal Income and Spending of +0.3% and +0.1% - both weaker than last month – and this speaks directly to consumer behavior and financial health. It provides insight into consumer trends, inflation pressures, and overall economic momentum. Declining income and spending might suggest consumer exhaustion, or it just might suggest that consumers are cutting spending to increase savings during uncertain times. Remember - you can’t look at any eco data point in a vacuum – it’s always about context.

Now only Consumer Staples and Real Estate ended the day lower…and again Consumer Staples makes sense….if the economy is strong then investors want to be where the action is and that is NOT staples – remember – they are boring, there is nothing exciting about staples – which is why you may have a smaller percentage of your portfolio allocated to that sector when the sun is shining…but when the clouds appear – watch how fast money moves out of the ‘sexy’ names and into the boring, yet stable names. YTD – Staples are up 2% - not horrendous but not great.

Now, Real Estate lost 0.6% and you can point to the continued weakness in housing (New Home Sales PLUNGED the other day – surprising even me!) and you can point to the drama taking place in NYC and while we are at it, you can toss in ‘high’ mortgage rates as well…remember – when a sector is lagging – they pull out ALL the negatives at once….It helps support the story. YTD - Real Estate is up 0.75% - that’s even worse than consumer staples!

The other 9 sectors ended the day higher with Energy in the lead + 1.45%, followed by Communications and Basic Materials +1.15%, Industrials +1%, Consumer Discretionary + 0.9%, Utilities +0.85%, Financials +0.75%, Tech + 0.7% and Healthcare up 0.25%.

The VIX continued to move lower – taking us further into complacency zone. Look – when Liberation Day hit – the VIX surged by 254% in just about 1 week all while stocks got punched in the face, but since it has all calmed down – the VIX has fallen by 75% and stocks have regained all of the losses and plus some! Anyone who did nothing (held tight) in April is in a better position today and if you bought stocks at a discount – then YAHOO!

In the end – the market and investors are betting on the continued progress of trade and de-escalation in hot spots around the world.

Bonds continue to advance – the TLT and TLH up 0.5% and +0.4% respectively causing rates to churn lower. (and that is helping the investment case).

Oil continues to churn just above trendline support at $64.65 – but below resistance at $66.70. This morning it is up 35 cts at $65.57. The market is now looking past any of the geo-political issues and is now focused on next week’s OPEC+ meeting – where it is expected that they follow thru on their announced production increases. Investors are also watching Chinese imports as trade talks continue. I am still in the camp that oil trades lower in the weeks ahead.

Gold – which has been churning at the trendline ($3,350) has finally broken down…this morning gold is down $55 at $3,295 – Remember what I have been saying for weeks now – If the trendline fails to hold – then I would not be surprised to see gold trade down to $3,290 ish…..and here we are! Now, if – the tensions around the world continue to improve and trade deals get done and stocks continue to move higher, then gold should move lower. Intermediate trendline support is at $3,196 – down 3% from here.

It's the end of the week but NOT the end of the month…. That would be Monday. US futures are up this morning…. Dow + 136 pts, S&P + 15 pts, the Nasdaq is up 66 pts while the Russell is up 6. Now the S&P RSI at 68.2935 edging closer to the overbot line (70) – so while a push higher would not be a surprise, no one should be surprised if stocks begin to struggle a bit as it digests the news, the data and the moves higher. This is NOT the time to be chasing stuff – patience is a virtue. I suspect we will see the S&P pull back just a bit over the next couple of weeks – now thinking 6000 ish.

European markets are all higher this morning. France in the lead + 1.3%, the other market centers are up between 0.5% and 1%. Italy is the laggard – only up 0.3%.

The S&P closed at 6141 – up 48 pts. This morning it looks like another risk on day – We will set a new intraday high on the opening, but it is not clear yet, if we will set a new closing high….right now, my guts says it will – so break out the party hats….. Next week is the July 4^th holiday next week – so expect volumes to decline as we move thru the week – but remember – lower volumes can lead to exaggerated moves in either direction….so stick to the plan.

I believe the focus will be on the ‘big, beautiful bill’ and how those negotiations are going. The world is safer today than it was yesterday.

Pasta fresca

This is a simple yet delicious summer dish and works great at your July 4^th BBQ.

It can be a main course or a side dish to a summer BBQ. You can eat it hot, cold or room temp - it is very versatile and looks great when presented on a striking white dish.

You will need fresh garden tomatoes, basil, garlic, red onion, fresh Mozzarella, grated Parmegiana or Locatelli Romano cheese.....and pasta of your choice.... Penne Rigate, Farfalle, Mostaccioli Rigate, Spaghetti all do very well.... Take your pick.

Essentially - you are making a summer tomato salad and then putting it over pasta....so Dice the tomatoes, slice the red onion, slice the garlic, add chopped basil, chunks of fresh Mozz, s&p, "splash" of water, and a couple turns of olive oil. (you can also add a bit of Oregano - but not too much) try it first without.

Prepare and let it sit out and marinate. It will create its own juice the longer it sits. You want it to be room temp when you mix it with pasta. If you make it the day before then remove it from the fridge and warm it up for about 30 mins.

Now bring a pot of salted water to a rolling boil - add pasta and cook for 8 / 10 mins.... or until aldente. Strain - always reserving a mugful of water.....return the pasta to the pot - add back 1/4 mug of water to re-moisten.

Wait a min or two so that the pasta absorbs the water...you do not want a puddle of water in the bottom of the pan. Now add tomato salad, 2 or 3 handfuls of grated cheese and toss well. Serve immediately in warmed bowls. Again - set the table outside, turn on some relaxing music to set the mood, light the candles and enjoy the setting sun on a great summer eve. Never rush - enjoy the moment.