Stocks rally as earnings kick off strong, bonds slide amid more tariff chaos and Yellen’s debt mistake

• Stocks rally into the end of the week.

• Confusing tariffs announcements all weekend.

• They are on, then off then recategorized!

• Gold in retreat, Oil a bit higher on Chinese DEMAND.

• Bond yields are a breaking point as they kiss 4.5%.

• Try the Cheese Ravioli in a Spinach Lemon Cream.

So stocks ended the week higher….The Dow up 620 pts or 1.6%, the S&P up 95 pts or 1.8%, the Nasdaq added 340 pts or 2%, the Russell up 28 pts or 1.6%, the Transports rallied by 84 pts or 0.6%, the Equal Weight S&P up 100 pts or 1.6% while the Mag 7 got came in in second place up 426 pts or 1.95%!

On the economic front we got the March PPI report and that came in much better (weaker) than expected- suggesting that inflation is continuing to retreat…..PPI m/m down 0.4% vs. the expectation of +0.2% , while PPI y/y came in at +2.7% vs. the expectation of +3.3% and PPI Ex food and energy m/m at -0.1% and y/y of +2.7% both better than the expectations of +0.3% and +3.3% respectively.

And then we had the official launch of the ‘Beauty Pageant’…..otherwise known as earnings season and as usual Jamie (Dimon) CEO at JPM did NOT disappoint – as I noted on Friday he CRUSHED it on every metric and that caused investors to go ‘running in’ to buy stock and by the end of the day – JPM added 4% or $9/sh – leaving it still down 1.5% ytd. Now – we also heard from BLK +2.3%, WFC -1% (they beat on eps but missed a bit on revenues) and BK +1.5%. Today brings us GS -and they also CRUSHED IT on all metrics, but Davey warns investors about escalating trade tensions (do you think?)……..stock is quoted up $12 or 2.5% and MTB before the opening…. tomorrow – BAC, PNC, C and an outlier – JNJ.

So, buckle down and get ready for what we will hear and while earnings are expected to grow y/y – this quarter will (really) be all about what they say going forward…..How many companies will opt out of giving guidance (due to the ongoing chaos over trade) and how many will not and then what does that mean for investors? We are about to find out….

Bonds tanked while yields surged on the back of all this chaos – the TLT giving back the years gains of 6.5% and now down 0.5% while the TLH also gave back 6% leaving that ETF down 0.1% on the year….10 yr’s are now yielding 4.5% - up from 3.85% while the 2 yr is yielding 3.95% up from 3.45% and this is pushing up borrowing costs on Americans never mind what’s going to happen to yields once we start refinancing all of the debt that we accumulated under the prior administration (something I have been screaming about for 2 yrs) that then Secretary of the Treasury Janet Yellen chose to refinance at ultra-low short term rates vs. low long term rates - 10-year bonds were at 0.7% vs. 2-year notes at 0.15%. You can credit that idea to anticipation of low rates for longer, Flexibility in Debt Management, Political considerations and/or yield curve dynamics. On the flip side - many have called this a massive historic blunder, arguing that issuing long-term bonds (e.g., 10- or 30-year) would have locked in near-zero rates for decades, saving billions as rates rose sharply in 2022–2023. They suggest Yellen completely underestimated inflation risks or misjudged JJ’s rate hikes, forcing us now to refinance short-term debt at 4–5% instead of 1–2%.

Oil surged by 2.4% or $1.40/barrel to end the week at $61.48/barrel. This morning it was up another 60 cts at $62.10. All while our friends at Goldman warn us of ‘large surpluses within the next two years’. Now remember when they tried to tell us that demand is waning (specifically China) – which is why prices are lower? This morning Oilprice.com – reports that China’s oil imports hit a 20-month HIGH as Iran and Russia flows rebound….China’s imports are topping 12 mil bpd in March – the highest it’s been since August 2023 and much higher than the Jan- Feb level of 10.38 mil bpd. So, again – any weakness in oil prices is more of a supply issue rather than a demand issue…. Now, after testing $55 last week – during all the commotion and chaos – oil is back above $60 and is settling in the $60/$68 range for now.

Gold? Well that traded as high as $3263 on Friday before ending the week at $3244. This morning it is down $14 at $3230/oz….as it settles down after its exponential move higher this year +22% ytd… (and last!). It feels a bit toppy at $3260 and I would not be surprised to see it retreat back into the $3000 range as it consolidates the move.

And so, it was the week that was…..and the weekend has now only added more chaos to the conversation…

Saturday began with this:

"Tariff exemptions" on electronics and semiconductors are being announced.

Which then sent Dan Ives – MD at Wedbush Securities, Senior Equity Analyst and always a street favorite to tweet that?

“Finally, the news US tech investors were dreaming of…. chips/smartphones/computers are exempt from tariffs. US Big Tech spoke and the WH made the right move at the right time. Massive relief for market and tech stocks into Sunday night”. Adding that tech would see a monster rally….

(He sent this after it was reported that those tariffs were exempt – or at least that was the understanding)

But then the headline changed and became this:

‘Refunds on all tariffs in these categories dated back to April 5th’.

Which then become

‘Electronic and semiconductor tariffs are delayed "for a month or two."

Which then became,

‘Tariffs were simply being recategorized’.

Which is now?

‘Tariffs are "just moving to a different tariff bucket," per President Trump’.

Trump saying that.

“NOBODY is getting ‘off the hook’ for the unfair trade balances, and non-monetary tariffs barriers that other countries have used against us, especially not China which by far treats us the worst. There was NO tariff ‘exception’ announced on Friday. These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different tariff ‘bucket’”.

And then yesterday on ABC News this Week – Howie Lutnick only added to the confusion…. telling us that

“Reciprocal tariff exemptions for some electronics may be short lived’ – they are exempt from the reciprocal tariffs, but they are included in the semiconductor tariffs, which are coming in probably a month or two….”

So, the question remains – are we on or off? Is it yes or no? Does anyone really have a handle on what’s happening? I mean you can’t make this up! (or maybe you can!)

On a side note - here is my appearance on Fox Business with Maria Bartiromo’s Wall Street – aired on Friday evening….

This morning stocks around the world are all higher…. on the hopes that something is happening…. Stocks in Asia ended Monday higher…Japan + 1.2%, Hong Kong + 2.4%, China + 0.25%, Australia + 1.4%, South Korea + 1% while Taiwan ended the day flat.

In Europe – investors there are going on a shopping spree (scooping up names that have been artificially mispriced) – Euro Stoxx + 2.1%, UK +1.8%, France + 2%, Germany + 2.4%, Spain + 1.9% while Italy is in the lead – gaining 2.2%.

And US futures? They are all higher as well – (but not as high as some expected – but the day is young) only because the headlines remain very ‘fluid’. Dow futures up 390 pts, the S&P’s up 78, the Nasdaq up 315 pts while the Russell is ahead by 18.

There is not Eco data today to speak of, but later in the week – we will get Empire Manufacturing, Mortgage Apps, Retail Sales, NY Fed Services Activity, Industrial Production, Capacity Utilization, Housing Starts, Building Permits, and the usual Initial Jobless Claims & Continuing Claims.

Congress is now on the Easter/Passover vacation – two weeks –So, we will get nothing….but House Speaker Johnson did tell us that that ‘Big Beautiful
Tax Bill’ will be on Trumps desk in May – House Dems voted against the bill, they voted for raising taxes across the board – let see what happens in the Senate – right now it appears that it will pass and if it does – that should also offer stability/certainty to the markets.

In the end –. the markets are very anxious and will react dramatically to every headline… Just to be clear - this is not over yet….Earnings will cause some distractions - investors will try to focus on the broader economic conditions, the earnings data and more importantly – the earnings guidance – BUT the news out of DC will continue to dominate the headlines, so expect the turbulence to continue.

The US dollar has also been collapsing…..it is down 10% off the January high and is down 4% since April 2nd …trading at 99.50 – bouncing off the lows of last week at 99, It remains at a critical point…..leaving it without any ‘real’ support until we get to the 96 level. For now – it feels like we are in the 99 (shaky)/103 range.

The S&P closed at 5363 – up 95 pts….Today feels like it should be a good day, but do not discount the chaos that the algo’s can create….My sense is that we are closer to a bottom than not – which only means we (should) retest the lows of 4835 at some point….to see if the buyers defend the position (not happening today)…We remain in the 4835/5775 trading range…Yes that is wide…and yes you can drive a Mack truck thru it…but there is still a fair amount of instability in the trade talks, never mind all of the internal damage done to the markets over the past 2 weeks, so expect the volatility to continue until such time we get clarity on trade, clarity on economics, clarity on earnings and clarity on FED policy….

This morning the news is positive – so markets are higher…..but there are still a fair number of bargains out there…. some are more obvious than others - think AAPL, NVDA, PLTR, MSFT, IBM, JPM, BAC, GS, HD, etc.

From a sector perspective – Consumer Discretionary and Tech are under pressure for the year – down 15.5% and 14.7% respectively. The Growth Trade – SPYG is down 11%, Semi’s down 20%, Bio-Tech down 17%, Retail – 18%, and the list goes on….

Cheese ravioli in spinach, lemon cream sauce

For this you need: The Ravioli, Olive oil, butter, spinach, white wine, lemons, s&p, parmegiana cheese, shallots, garlic and heavy cream.

Bring a pot of salted water to a rolling boil – leave it on the back burner until you’re ready.

In a large sauté pan – Add a bit olive oil - add in the sliced lemons, shallots and sliced garlic. Sauté – now add in ½ stick of butter…. the juice of one lemon, and ½ cup of white wine. Allow the alcohol to burn off.

Drop the raviolis into the water and let them float to the top – that’s when they are done.

Now – back to the sauté pan - add in some chopped spinach and sauté. Once the spinach melts a bit – add in the heavy cream (like 1 cup), season with s&p, taste and adjust if you need to. Now add in a handful of fresh grated parmegiana cheese – mix.

Toss in the cooked ravioli and mix to coat. If the ravioli sucks up all the sauce – feel free to add a ½ ladle of the pasta water (tears of the Gods). Serve immediately in warmed bowls.