(Justin Vaughn, Editor, Options Trading Report)
Friday’s market was all peaks and valleys, with the indexes finishing the week slightly higher. A flood of news; tariff threats, the end of earnings season, and stubborn inflation, all add up to a heavy burden on investors and traders. Chris Zaccarelli, chief investment officer at Northlight Asset Management said, “You can really tell we’re in a bull market. All bad news seems to have been overlooked, and really good news is celebrated.” As the week ended ‘market watchers’ were appeased by President Trump’s not enacting more tariffs and seemingly taking a step back. Also movement on the initiation of peace talks between Russia and Ukraine has given the market something positive-for a change. Coming up for the week ahead, earnings season is nearly over, the FOMC (Federal Open Market Committee) will release the latest minutes from its January meeting and the NAR (National Association of Realtors) will update sales for January and other pertinent Real Estate numbers.
Stocks were jittery Tuesday after Monday’s closure in honor of President’s Day. The S&P 500 revved up the last 10 minutes and finished with a new record, hitting 6,129.58, while the Dow Jones Industrial Average struggled to close just above flatline. The 10-year Treasury yield ended the day at 4.54%, as stocks were unsettled. As mentioned above, the minutes of the FOMC, due Wednesday, and the Russian -Ukraine peace talks stalled any chance of a market rally. The Dollar, stronger the past 6 months, has impacted many companies earnings both domestically and internationally. “Historically a strong dollar adversely impacts companies that do most of their business overseas. That’s because it leads to slower revenue and earnings growth over time, due to unfavorable foreign exchange conversions,” as noted by Yahoo Finance. As stocks wandered all day Tuesday, indexes closed just above flatline. “It seems like we just bounce around from one thing to another, and that sort of knocks people off course,” said Jamie Cox, managing partner at Harris Financial Group.
The Federal Reserve gave signals–strongly–that it most surely will not be cutting rates in the near term. That news jolted the market Wednesday, with investors and traders alike backing off and heading to the sidelines. Adding more fuel-to-the-fire, President Trump, through Pete Hegseth, Secretary of Defense, announced that a major 8% cut in military spending was recommended for the next 5 years. Newly released Retail Sales data noted that January sales declined 0.9%, setting the trend for possible more negative numbers to follow in the coming months according to economists. The positive December retail sales were up 0.7%.
Some Notable Jamie Dimon Quips…….
“I’ve been working seven days a goddamn week since Covid, and I come in and–where is everybody else?” “A lot of you were on the f____ing zoom…and you were doing the following: looking at your mail, sending texts to each other about what an ass the other person is, not paying attention, not reading your stuff, and if you don’t think that slows down efficiency, creativity, creates rudeness–it does. When I found out that people were doing that–you don’t do that in my goddamn meetings.”
“Don’t give me this s___ that work from home Friday works. I call a lot of people on Friday and there’s not a goddamn person you can get a hold of.” “We’re just going to put a little bit of discipline in place to do our push-ups, sit-ups, and eat our spinach. That’s it.”
RUMBLINGS ON THE STREET
Peter Berezin, BCR Research, Barron’s “The best gift that the U.S. government could give investors is to cut spending. All things equal, modestly tighter fiscal policy would cool the economy, allowing the Fed to bring down rates. Lower rates would push demand back up.”
Torston Slok, chief economist at Apollo Global Management, Barron’s “If the Fed cuts interest rates too early, it increases the likelihood that we will see a repeat of the 1970’s.”
Scott Bessent, Treasury Secretary, laid out three goals for the IRS, WSJ “Collections, privacy and customer service” adding, “The administration was going to do a big IT upgrade.”
Stephane de La Faverie, Estee Lauder’s new Chief Executive, WSJ “Our intent… is to meet the consumer where they are with the right product, but also at the right price point.”
