Markets hold breath for CPI as bonds signal rate cut, Oil and Gold await summit outcome

• Markets churn and wait for the latest CPI.

• Short Duration bonds are now inverted – screaming for a cut.

• Oil & Gold steady ahead of summit – Stakes are high.

• Try the Sun Gold ‘Jammy’ Rigatoni.

And the good times keep rolling… until they don’t……stocks struggled yesterday – albeit near all times for the S&P and Nasdaq - as traders and investors stepped back – refraining from making any more big bets ahead of today’s CPI and tomorrow’s PPI reports……Earnings are all but about over – although the Biggie – NVDA - won’t report until the 27th and so investors are once again turning to the economic data to decipher the next move out of the FED…..Now, let’s not kid ourselves – the next move is a cut – the question now is will it be a 25 bps cut or a 50 bps cut? And that answer will depend on what we learn today and tomorrow on the inflation front.

And while stocks began the day kissing new highs – that quickly faded, and stocks lost ground. The Dow down 200 pts, the S&P down 16, the Nasdaq lost 65 the Russell gave back 2 the Transports lost 158, the Equal Weight S&P lost 24 while the Mag 7 churned in place only losing 6 pts.

News that both AMD and NVDA are back in the game — They are now allowed to sell chips to China (with the U.S. government conveniently pocketing 15% of the profits) — didn’t exactly light up the tape. Why? Well, because China immediately dismissed the chips as “subpar” and raised “security concerns” — oh, and let’s not forget they also called them “environmentally unfriendly.”

But here’s the kicker: one of Beijing’s more serious accusations is that the NVDA H20 chip and the AMD MI308 chip have a “backdoor” allowing for “location tracking and/or remote shutdown capabilities.” Does anyone else see the irony here? The Chinese accusing someone else of location tracking is hysterical — considering tracking everyone, everywhere, all the time is basically their national pastime. TikTok, anyone?

And that whole “environmentally unfriendly” bit? Priceless. Suddenly, China’s worried about the environment? They are building several dozen coal burning plants in 2025 – this on top of what they built in 2024 – never mind what they built in the decade before…. Please. This is the country that burns coal like it’s going out of style. You can’t make this stuff up, because no one would believe it! At the end of the day both NVDA and AMD lost 0.3%.

New that INTC’s CEO Lip-Bu Tan flew to the WH to address those ‘conflict of interest’ comments by Trump on Friday did raise some interest in the stock….Trader types taking advantage of the ‘news’ jumped into the pool to splash around and by the end of the day the stock had gained 3.5% ending the day at $20.65 – right at all 3 trendlines….

AAPL which had surged by 14% last week – did see some profit taking yesterday as the trader types hit the sell button sending the stock down $2.17 or 1%. This morning Lonnie is threatening to sue Timmy over accusations that the App Store favors Sammy Altman’s OpenAI over Lonnies xAI ‘making it impossible for any AI company to reach #1 in the App Store, which is an unequivocal antitrust violation.’ This morning the stock is down another $1 in pre-mkt trading.

Onto the eco data… at 6 am we got the NFIB Small Business Optimism report, and it came in at 100.3 — a strong reading, and one that doesn’t get nearly enough attention. Historically, the index tends to live in the 90s, so anything above 100 signals that small businesses are feeling upbeat about the future. It suggests they’re expecting stronger sales, better profits, and improved business conditions ahead — and that speaks volumes. That’s good.

CPI at 8:30 — The Mixed Bag.

Headline m/m: +0.2% (down from +0.3%).

Core m/m: +0.3% (up from +0.2%).

Y/Y headline: +2.8% (from +2.7%).

Y/Y core: +3.0% (from +2.9%).

Unless the number veers meaningfully off expectations, my gut says the market won’t make a big deal out of it. But if CPI surprises to the upside, it just makes life harder for JJ to cut rates at all — which I don’t think is happening anyway. Remember, the market is already pricing in a cut, so an inline report is no reason to go chasing stocks.

You’re already invested — so you’re participating. It’s mid-August. Sit back, enjoy the last weeks of summer. Remember: August movies are often exaggerated in either direction (right now, it’s up). And if you’ve got cash to put to work, no need to rush — keep it in your government money market fund earning ~4% until the picture clears.

Bonds did very little the TLT and TLH both advancing by 0.1% leaving rates essentially unchanged. The 10 yr is yielding 4.28%, the 30 yr is at 4.85%. Now what is interesting is the 3-month T-bill is yielding 4.12% while the 6-month T-bill is yielding 3.95%...that inversion suggests that investors are screaming “future rate cut.”

Oil is trading up 13 cents at $64.09 this morning, hugging the trendline at $63.60. We know the story — prices have fallen about 10% since August 1 as OPEC+ continues to raise supply and the U.S. has stepped into the role of swing producer. This is about oversupply, not waning demand.

Now, all eyes turn to Friday’s big meeting in Alaska — which carries plenty of implications. Remember, Alaska was Russian territory until we bought it on March 30, 1867, for $7.2 million — roughly 2 cents an acre — paid in gold. And now, here we are Donny and Vlad, meeting on American soil. (Just to be clear – Donny and the Europeans have been planning this for weeks now).

Zelensky isn’t currently invited, though a trilateral session is being considered if the initial talks produce meaningful progress. If this meeting leads to a ceasefire and paves the way for the Russians and Ukrainians to finalize an end to the war, oil prices could fall further (think easing geopolitical tensions). But if it ends in stalemate, all bets are off.

One thing to remember: Vlad wanted this meeting with Donny. He wants to be at the “big boy table.” Let’s hope that means he’s ready to deal — because Donny is not likely to back down.

Gold prices remain south of $3400 – after that surge up and thru $3500 on Friday. Like Oil – Gold is waiting patiently for Friday’s summit as well. A deal will see gold decline – my sense is we could see it back off to the low $3300’s… while increased tensions will see gold challenge the recent highs. I’m being optimistic and betting that gold goes lower.

US futures are churning as the market awaits the 8:30 CPI report. …..Dow up 5, S&P’s down 3, Nasdaq down 3 and the Russell is up 2. My gut says more churn….

European markets are mixed as well. Germany and Euro Stoxx lower while the UK, France, Italy and Spain are all slightly higher.

The S&P closed at 6373 – down 16 pts….Again, take a look at your portfolio…..While the media keeps telling you that we are ‘making new highs’ – look at your portfolio – Is it making new highs or is it churning and digesting? Remember – look past the Big, Sexy names to really see what is going on under the sheets….and right now, well, let’s just say, it’s boring.

I remain in the camp that we are toppy. 6200 is KEY support….... If it tests and HOLDS then I think we're ok (for now), but if it tests and FAILS - then the move to 6000 will be swift. I'm gonna wait to see what happens next.

Sun Gold summer ‘Jammy’ rigatoni

This is also so simple yet so good.

You need Sun gold Cherry Tomatoes, Whole Garlic Cloves, diced shallots, diced onion, fresh grated parmegiana cheese, white wine, butter and of course pasta water.

Bring a pot of salted water to a rolling boil until you need it.

In a large sauté pan – add the olive oil – shallots, onion and whole garlic cloves. Sauté for 5 mins. Now add in the sliced Sun gold cherries and let them sauté for 5 mins. Season with s&p. Next add in enough white wine to just bathe the tomatoes – do not drown them. Turn the heat to med and let it cook down.

Now – while those are cooking down – add the rigatoni to the water and cook for 8 mins (until aldente).

When the pasta is done – strain – saving a mugful of pasta water.

Remove the garlic from the pan and smash with the back of a knife and return it to the tomatoes. Now add 3 dollops of butter and mix well to melt. Toss in the pasta and plenty of fresh grated cheese - add in a ladle of the pasta water and stir to mix well. It will become nice and creamy and delicious… Serve immediately. Enjoy the chilled white wine.