Trump’s tariff threats, Bitcoin surges, stocks and Bonds slide as Gold and Oil climb

• Stocks and Bonds Stuggle.

• Trump turns up the heat on Tariffs leaving GS surprised!

• Both Kevin’s vying for position.

• Bitcoin kisses $120k – it is Bitcoin Week in DC.

• Oil up, Gold up, Yields up.

• Try the NE Clam Chow-Dah!

Here we go again – Trump turns up the heat on tariffs, the VIX rallied by 3%, the RSI signaled overbot, and don’t forget that Goldman raised their outlook on US stocks telling clients to buy (which I said on Thursday was a SELL signal), they turn up the heat on JJ to cut rates (Trump again telling us yesterday that the US should have the lowest rates on earth) while Kevin Hasset (himself a potential FED chair) tells us that Trump can in fact fire JJ, Bitcoin continues to push up (this morning it is trading at $120,000), remember – this is crypto week in DC so the focus is squarely on that industry. Oil rose on the idea that the US is trying to stop Russian energy exports to put pressure on Vlad to stop his assault on Ukraine, and gold rallied. Of course it rallied – the tone is becoming more anxious – what did you think was going to happen? And with that stocks and bonds sold off.

The Dow lost 280 pts, the S&P down 20 pts, the Nasdaq lost 45 pts, the Russell lost 28 pts, the Transports gave back 107 pts, the Equal Weight S&P lost 56 pts, while the Mag 7 bucked the trend and rose by 104 pts.

Now again, for me – the media needs to pick a reason for why stocks declined and yes you can point to all of the noise – but I’m only pointing to the chart…and the chart is telling us that stocks are overbot – period the end. All the negative headlines just support the move.

Bonds moved lower on Friday as well, the TLT down 1.4%, the TLH down 1.1% and the AGG down 0.4% and that has sent yields surging. The 2 yr is now yielding 3.88% up from 3.7% just 2 weeks ago. The 10 yr is yielding 4.42% up from 4.19% and the 30 yr is yielding 4.96% up from 4.73%. Recall – that 4.5% rates on the 10 yr and 5% rates on the 30 yr will cause more anxiety for stock investors.

Oil as noted is trading higher and you can point to a couple of reasons…One is that Trump is threatening increased sanctions on Moscow, while the EU is about to agree on more sanctions as well. Two is the news that Chinese crude imports are now 12.14 million bpd – up 7.4% y/y. Suggesting that demand is just fine. This morning oil is trading at $69.10 leaving us above all 3 trendlines and smack in the middle of the $65/$75 trading range.

Gold also as noted is trading higher as well. This morning gold is up $14 at $3,377 putting us within striking distance of the June highs of $3,460. Again, if the tone becomes more anxious gold will continue to rise…my sense is that the tone is going to remain elevated thru the summer causing stocks to retreat.

The VIX is up another 5.7% and appears ready to test short term trendline resistance at 18.66. A failure to pierce it will suggest weakening anxiety and a halt in falling prices while a push up and thru will mean higher anxiety and a risk off tone. My sense is that intermediate resistance at 19.66 is the level to watch to really understand the next move.

Eco data this week is all about the June CPI and PPI due out tomorrow and Wednesday. Remember – the conversation has been all about what the tariffs will do to inflation. Many in the market, including the Fed, have been expecting to see tariffs increase inflation but that has not happened and the recent CPIs, including the ones post Liberation Day, have been cooler than expected. Now estimates this month are expected to be a bit hotter…..top line CPI to be up 0.3% m/m and +2.6% y/y – both higher than last month. Core CPI m/m of +0.3% and + 2.9% - again up over last month. This while PPI m/m and y/y for both top line and core are expected to be a bit lower, so what does that mean for the FED? It means – they are in a tough place.

Expect the WH to turn up the heat and jump up and down about how JJ is missing the boat and costing the country billion of dollars in interest payments. Also expect to hear more from potential candidates as they too vie for the nomination. Both Kevin’s (Warsh and Hassett) took to the airwaves all weekend – telling us why JJ and the whole cast of characters at the FED need to go.

I am still in the camp that the FED is not cutting rates at month end but pay close attention to what Nicky T and our friends at Goldman say over the next 2 weeks. If we see a story in the WSJ or see a ‘Special Report’ put out by Goldman about how CPI and PPI remain muted and that the FED is reconsidering the ‘plan’ that will mean that the FED is about to change their mind and cut rates….so stay tuned.

US futures are lower this morning…. Dow futures – 146, S&P’s -20, Nasdaq down 75 while Russell is down 7. News over the weekend we learned that Trump is slapping 30% tariffs on Mexico and the EU and that is what is top of mind this morning causing markets to come under pressure.

Earnings start on Wednesday with the release of JPM, BLK, WFC, STT, C & BK. Just fyi – they are expected to report strong numbers. The financials as a group are up 8% ytd…. outpacing the broader market this is up 6.4% ytd.

European markets are lower after Trump slapped those tariffs on them and Goldman sent a letter to clients saying that the tariff letter was a surprise doing nothing but raising concerns! Come on! Goldman was surprised. Really? Stop! In the end – the tariffs only suggest a deepening near term contraction – but this is not over…. negotiations continue as Trump tries to force them to focus before August 1st. Mkts across the zone are down between 0.4% - 0.7%. The UK is higher – up 0.4%.

The S&P closed at 6259 – down 20 pts. It is a new week and there is plenty to digest – and while the eco data is important I think the focus turns to earnings. How many times will we hear the C-suite warn us about all of the ‘uncertainty’ out there. How many times will they blame tariffs if they disappoint investors? Keep your eyes on the ‘loan loss reserve’ accounts at the big banks. This will reveal what they really think about the consumer and the future. Higher allocations to this account would suggest that they are all expecting higher default rates (and that’s a negative!).

New England clam chowder

I’m up in Cape Cod (my happy place) so have some Chow-dah!

For this you need: Bacon, Celery, Onion, Garlic, potatoes, water, clam juice, s&p, flour, 1/2 & 1/2, chopped clams.

Crisp the Bacon: In a large heavy-bottomed pot or Dutch oven, cook diced bacon over medium heat until crispy. Remove with a slotted spoon and set aside on a paper towel-lined plate.

In the rendered bacon fat, sauté the chopped celery and onion until soft and translucent, about 5–7 minutes. Add the minced garlic and cook for another 1–2 minutes until fragrant.

Add cubed potatoes to the pot. Pour in 2 cups of water and both bottles of clam juice. Season with s&p. Bring to a boil, then reduce to a simmer. Cook until the potatoes are fork-tender, for about 15 minutes.

In a small bowl, whisk together the flour and 1 cup of half-and-half until smooth—no lumps. Slowly stir this mixture into the chowder. Simmer gently, stirring occasionally, until the chowder thickens, about 5–7 minutes.

Stir in the chopped clams along with their juice and simmer for another 5-8 minutes. If the chowder is too thick, add more half-and-half to reach your desired consistency. For extra richer flavor – add a knob of butter.

Stir in the crumbled bacon. Taste and adjust seasoning if needed. Serve hot in warm bowls with plenty of oyster crackers on the side.