Markets surge as trade deal optimism sparks rally: Stocks, bonds, and Dollar advance

• Stocks take back the losses.

• JD hints at a trade with India while Scotty hints in Japan.

• Scotty gets Donny to re-think the narrative.

• JJ isn’t going anywhere – Donny pledges to play nice.

• Try the Veal Saltimbocca all Romana.

• And then God said: “Let there be light!” … you know the rest …… (Genesis 1:3-5).

And so it was…after Monday’s darkness, Tuesday brought the light…..and stocks surged… posting the ‘best day in two weeks’ on the idea that we are close to ‘clinching a deal with top economic partners’…..JD Vance saying that we have a framework of an outline of a deal with India (that’s a positive) while Scotty Bessent added that ‘talks with Japan are ‘moving in a highly satisfactory direction’. And, as many of us have been saying, all we needed was ONE deal to change the tone, one base hit…..…..and with that, traders and algo’s JUMPED back in…..taking back much of the losses sustained during Monday’s ‘drawdown’.

Stocks rallied, bonds rallied, the dollar rallied, gold sold off (but not until it pierced $3500), all while the contra trades and the ‘fear’ index declined….The VIX fell 10%, the VIXY fell 6.5% while the contra trades all declined by 2.5% and the triple levered SPX lost 7.5%.

When the closing bell rang, and the dust settled – we saw that the Dow had gained 1,016 pts or 2.7%, the S&P up 130 pts or 2.5%, the Nasdaq added 430 pts or 2.7%, the Russell added 50 pts or 2.7%, the Transports up 200 pts or 1.5%, the Equal Weighted S&P up 160 pts or 2.5% while the Mag 7 Index gained 620 pts or 3%.

Of the 11 S&P sectors - it were the Financials that stole the show + 3.3%, Consumer Discretionary a close second up 3.2%, leaving Utilities up 2.7%, Tech +2.4%, Communications + 2.6%, Energy +2.5%, Basic Materials +2.3%, Real Estate +2%, leaving the Industrial +1.75%, Staples +1.4%, Healthcare +1.8% and Consumer Staples carrying up the rear at + 1.4%.

Down the chain – Home Builders + 3.8%, Retail + 2.4%, Airlines +2.3%, the Value Trade gained 2.3%, the Growth trade + 2.7%, Semi’s +2%, Aerospace and Defense + 0.5%, Oil and Exploration +2.4%, Big Pharma +1.8%, Biotech + 2.8% and the list goes on…..It was a party….and no one was left out!.

Bonds ended the day higher – the TLT +0.6%, the TLH + 0.5%, the 2 yr is now yielding 3.84%, while the 10 yr is now yielding 4.33% down from Monday’s high of 4.43%. 30 yr mortgage rates remain at 6.9% while 12-month CDs are paying you 4.6% IF you tie up your money for 12 months.

Oil was up 1.8% yesterday and is up 1.4% more this morning….this after the API reported that US Crude Stockpiles FELL by 4.57 million bpd (think strong demand), markets reacted to ‘the potential trade deals’ (again think more demand), perceptions of tighter supplies and the fact that we tested, kissed and then broke thru the highs at $64.18 see last Friday. Oil is up 80 cts at $64.50 this morning – leaving us just $1.20 away from formal trendline resistance at $66.75… Further indications of more trade deals will only help to support energy prices and demand, so while me may test that trendline resistance, my guess is that we will fail to pierce it on the first go around....for now we remain in the $60/$66.75 trading range. Should we break thru – then $68.50 will become the target – one that will provide lots of resistance as the long term trendline is sitting right on top of the intermediate term trendline at $68.50.

Gold – well that continues to amaze investors…yesterday morning it pierced $3500 – before we got official comments out of the WH concerning trade deals – leaving it to trade as high as $3509 before trading off and closing at $3419 as the positive news hit the tape…and investors digested the news. And this morning – gold is lower again (and this should surprise absolutely no one) down $80 at $3,340 as that same news gets digested and new headlines hit the tape….

And what would those new headlines be? Get ready – Someone whispered into Trump’s ear, and it may have been me – (see my commentary on Yahoo Finance yesterday).

Or most likely it was Scotty Bessent who put his foot down telling Trump to ‘think before he speaks’ causing Donny to rethink his latest commentary on both the FED and JJ and trade with China and XiXi.

This morning, we are waking up to headlines that hint at the details…..and the algo’s LOVE it…..

‘Trump Floats ‘substantial’ China Tariff Cuts in a Trade Deal’

the article goes onto to quote him as saying he plans on ‘being very nice’ that he doesn’t’ need to ‘play hardball’ with China and that tariffs will drop if the two countries reach a deal.

He also responded to his latest JJ bashing telling us and the world that he has no intention of ‘firing Powell, none whatsoever, Never did!’ and with that futures are surging….You see, any indication that the heat between the US and China as well as the ‘heat’ between himself and JJ is abating….will only help calm markets….

Yesterday my friend Scotty (the Cow Guy) Shellady told Stuart Varney we ‘just needed a couple of base hits, not even a homerun, just singles and maybe a double’ and maybe that happened yesterday and again this morning….Because futures are SCREAMING HIGHER…..Dow futures are up 700 pts, S&P’s up 125, the Nasdaq up 500 pts and the Russell is adding 40 pts.

And, again, no one should be surprised about the way the algo’s are reacting….the move lower was overdone (we discussed this) but remember – it was the extreme amount of uncertainty that caused the algo’s and traders to panic and hit the sell button – in the ‘shoot first, ask questions later’ mentality….…and while long term investors felt a bit uncomfortable, the selloff has created (IMO) some greater long term opportunities. I mean how can you not buy AAPL when it was off 34% from the December high…. They earn $100+ billion every quarter…that’s every 3 months…and you want to sell it when it’s down 34%? Talk to me Goose!

And the street is littered with other opportunities…opportunities across all sectors – this isn’t just about tech……I mean think mega cap names across all industries that were sold off as large asset managers ran to raise cash….and as this settles back down – expect those same asset managers to go from seller to buyer and Off we go…..Remember – the pendulum always swings too far to the right and the it compensates by swinging too far left…that is until it settles down swinging back and forth – keeping time…..

So, this is why I keep saying that you need to do a ‘reality check’ and assess your portfolio – making sure that you own fundamentally strong, diversified, stable, high-quality companies that will recover much faster. Talk to your advisor and know your risk tolerance, know what you own and why you own it. And remember – dollar cost averaging and reinvestment of dividends becomes even MORE important during market drawdowns. (You buy more shares for the same amount of money!)

Today’s eco data includes S&P Manufacturing and Services PMI’s – of 49 and 52.8 respectively. Manufacturing is just below the neutral line while services remain in the expansionary zone. New home sales of +1.2% and Building Permits.

We are going to hear from another 20+ S&P companies…and already 12 of them have reported and ‘beaten’ the estimates….5 have reported and missed…but let’s see what the C-suite says about the future.

And TSLA – they reported last night and while it wasn’t a blockbuster – revenues dropped 71% as sales fell…EPS of 27 cts vs. analysts expectations of 41 cts, Sales of $19.3 billion vs. estimates of $21.3 billion while sales growth of 20%-30% in 2025 is no longer assured – offering no guidance but said he would ‘revisit’ it when they report 2nd qtr. earnings…In addition he told shareholders that his commitment to DOGE is about to drop significantly as much of he work is done and that he plans on returning to the driver’s seat at TSLA delivering ‘more affordable, vehicles this year. And with that the stock is surging…. trading up $14 at $254.50. But remember – it is still down 41% ytd. Expect to hear more about his conference call all day long…. FYI – I have never owned it and will still not own it…. I have too much other ‘tech’ exposure…. I don’t need added volatility at my age! LOL. But you do you……

Overnight stocks in Asia ended higher – Taiwan up 4.5% (remember – they got whacked over the past 3 weeks) …. Markets in Europe are higher…all up better than 1% with France, Germany and the Euro-Stoxx up better than 2.5%.

Just a reminder…..- this is not over yet…. While it feels better, investors and markets will continue to react to headlines out of DC…. all while digesting earnings and forward guidance. so expect the turbulence to continue, but EASE over time.

The S&P closed at 5287 – up 130 pts… – filling that gap created on Monday…..Now we need to continue to fill the gap created on April 4th. My gut still says we are not getting any rate cuts, that JJ will not be bullied into doing the wrong thing UNLESS the data suggests that we are in a recession….which we are not right now….individual company CEO’s and market strategists are mixed on the subject and there is no clear consensus…..and so we wait….

**I will be joining Stuart Varney and Company from 9-10 am today on Fox Business – Join us, won’t you? **

Veal saltimbocca all romana

You need 9 things…. Veal cutlets (pounded thin), prosciutto, flour white wine, butter, olive oil, s&p and sage.

Start by laying out the veal cuttles – top with the prosciutto and sage – then take a toothpick and pin it all together. Now dredge in seasoned flour on just the one side (not the side with the sage and prosciutto) and then sauté it in a sauté pan with butter and olive oil – sage side down first. Flip and repeat. Hit it with the wine and when the wine evaporates, remove and set aside.

To that same pan – add another dollop of butter, white wine and a little bit of flour. Blend to incorporate as it turns into a sauce and then serve over the cutlets.