Summer doldrums, markets stay flat amid Trump tariff talks and bond auctions

• It is the summer doldrums…..markets were quiet.
• Trump teases new tariffs on copper and pharma.
• We’ve got 3 bond auctions this week – stay tuned.
• Oil up, gold down.
• Try the Italian Style Pork Chops.

It is the doldrums of summer…. stocks did not do much yesterday – even as Trump delayed the imposition of tariffs from July 9^th to August 1^st, after he toyed with the idea of imposing a 50% tariff on copper and a 200% tariff on pharmaceuticals….

The Dow lost 165 pts, the S&P down 5, the Nasdaq added 6 pts, the Russell added 15 pts, the Transports added 135 pts, the Equal Weight S&P added 20 pts, while the Mag 7 gave back 30 pts.

Now look, the tariff headlines are heating up again, yet investors are not panicking like they did in April because there seems to be a confidence that we and other countries will negotiate in good faith and the drama will not be as dramatic and that is evident in what US futures are doing this morning – they are again – flat.

However, if that changes over the next couple of weeks and investors suddenly get anxious then markets (S&P) will also get nervous and pull back…..How much? That’s anyone’s guess, mostly because the algo’s operate on mathematical models that have zero sense of loss – it’s just numbers to the model, but it is real money for investors….which is why the action by algo’s gets amplified by human behavior and that was clear in the move down when the headlines caused undue panic from Feb- April when we lost 21% AND then the move up after the headline drama subsided and the algo’s (and investors) tripped over each other to get back in from April to now when we took it all back and then some – gaining 29%!

So, let me give you some perspective - A 3% move would take the S&P to 6,050, 5% would rate us at 5,900 while a 10% pullback could see us test as low as 5600. Now, just to be clear – the February/April selloff in the S&P saw us test as low as 4835 or a 21% move lower, today, 21% would take us to 4,915.

The view amongst some analysts on the street is that while tariffs will remain elevated, compared to historical levels, they will not be at levels that today’s headlines suggest and nor will they trigger a recession. Now of course there are others that dispute this argument and are calling for disaster just around the corner…. The same way they did in April, how’d that turn out? In the end – it’s about having that plan, making sure you are well balanced and making sure you understand your portfolio risk. If the risk is more than you are comfortable with, then you need to change it -it’s not anymore complicated than that.

Bonds continued to be weak – the TLT and the TLH both down 0.15%, while the AGG ended flat. There are 3 treasury auctions this week. Yesterday saw $58 billion of 3 yr notes and demand was ‘soft’ (that’s not a positive) – 3 yr rates have gone from 3.67% in June to 3.86% yesterday. Today we have $39 billion of 10 yr notes – current 10 yr rates are 4.39%, up from 4.20% just 2 weeks ago, if demand for these is ‘soft’ then expect to see rates rise. And tomorrow we have $22 billion of 30 yr bonds…again – 30 yr rates are now 4.92% up from 4.75% on July 1^st. Any weakness in demand will push the 30 yr closer to 5%.

Oil interestingly enough, continues to push a bit higher…this morning it is up 30 cts at $68.65/barrel…. The EIA came out and said that the US will produce less oil per day in 2025 than they previously expected. That along with record ‘demand’ last week over the holiday and ongoing attacks on bulk carriers in the gulf off the coast of Yemen seem to be causing the move higher. Meanwhile OPEC + is set to approve another big production increase for September, this on top of the increase they approved last Saturday for an August jump.

Gold lost $32 yesterday and is down another $20 this morning…. now trading at $3,297/oz. We are now well below trendline support at $3,342 suggesting that a test of the June low $3,250 would not be a surprise. If that fails to hold- then that test of $3,220 (intermediate trendline support) would be next. A change in tone – from complacency to panic would see gold surge, barring that, it thinks we test a bit lower.

Eco data today includes Mortgage Apps this morning, then wholesale trade and then at 2 pm we will get the latest FOMC mins – where I do not expect to hear anything new.

This morning US futures are flat. Dow futures +68, S&P’s up 9, Nasdaq up 22 while Russell is up 3..

European markets are all higher – Defense and banking stocks are kissing new highs, Italy is in the lead – up 1.45%, France +1.35%, Euro Stoxx +1.15%, Germany +1.1%, Spain up 1% while the UK is lagging - up only 0.25%.

The S&P closed at 6225 – down 6 pts. This morning futures appear to be discounting all of the tariff talk…and all the uncertainty around trade, geo-politics and earnings….…. the RSI remains just below the overbot line – but still suggests some weakness ahead. A move higher will only cement that the ‘overbot’ narrative. The market does feel a bit tired to me, and I would not be surprised if we saw the S&P trade down to the 6150 range. No need to chase stocks, be a buyer on pullbacks.

Italian style thick cut pork chops

These are great if you are a pork person......fall right off the bone…..juicy and delicious.

For this you need: 6 thick-cut pork chops (bone-in), All-purpose flour (for dredging), 4 eggs, beaten (for egg wash), Italian-style seasoned breadcrumbs (homemade if possible – with grated cheese, parsley, garlic powder, salt, pepper), butter, olive oil, 1/2 cup dry white wine (not fruity), 1 cup chicken stock (just enough for the pan sauce)

Preheat your oven to 325 degrees.

Rinse the pork chops under cold water and pat dry thoroughly with paper towels.

Set up your dredging station: 1 bowl with flour, 1 bowl with beaten eggs, 1 bowl with seasoned breadcrumbs.

Dredge each chop in flour, then dip in egg wash, then coat well in the breadcrumbs. Set aside.

In a large skillet, melt butter with olive oil over medium-high heat. Once hot sear each pork chop for 3–4 minutes per side, until nicely golden.

Transfer seared chops to a large baking dish in a single layer.

In the same skillet, deglaze with white wine, scraping up any browned bits from the bottom. Add the stock and let it simmer for 2–3 minutes to combine.

Pour this sauce into the baking dish with the chops, do not drown the chops—just bathe them halfway.

Cover the baking dish tightly with foil or a lid and place it in the oven. Bake for 2 to 2.5 hours.

These chops will come out fork-tender, juicy, and rich with flavor. The longer they go (as long as they’re covered), the better they get.