PPI beats expectations, Powell’s fate sparks noise, OPEC+ pumps more Oil

• PPI is better than expected. Tariff ‘inflation’ is a non-event.
• Will JJ stay or will he go? It’s all noise.
• OPEC+ breaks the rules and pumps MORE oil.
• Bonds steady -the 30-yr kissed AND pierced 5%.
• Gold hugging the trendline.
• Try the Herb Roasted Pork Loin.

“I am not planning on doing anything” ……is what Trump said when asked about the fate of JJ Powell and stocks which had been churning lower, found a bottom rallying into the end of the day.

The Dow up 231 pts, the S&P up 20 pts, the Nasdaq gained 53 pts, the Russell added 22 pts, the Transports lost 20 pts (you can point to the latest PPI report), the Equal Weight S&P up 30 pts while the Mag 7 gained 75 pts.

On the economic front – we got some good economic news……Top line PPI came in better than expected….m/m coming in at unchanged, y/y up 2.3% which was below the expectation of 2.5%, while Core PPI (Ex food and energy) came in flat m/m and up 2.6% y/y – which was also below the expectation of +2.7%....That’s all good (because inflation is subsiding), but of course you had the naysayers telling us that the decline in ‘services prices’ like transportation (thus the decline in the index) and warehousing suggests an economic weakening which demands a rate cut…All this while the hard economic data remains robust.

And the other hot topic of the day wasn’t tariffs or any looming trade deal—it was and continues to be (until someone stops fanning the flames), the fate of Fed Chair Jay Powell.

The question is: Will he or won’t he be fired?

As you’d expect, there’s no shortage of opinions. Some argue that firing the Fed Chair would rattle markets by undermining the independence of the central bank pillar of credibility. (That’s assuming you still think it has credibility!) Others suggest it might be bullish, since a new Trump-appointed chair could be more dovish and willing to fall in line with the administration’s agenda. But then you have to consider – would markets (investors) begin to price in higher inflation and a steepening yield curve (higher long-term rates?)

But here’s the problem: while the Chair may be the public face of the Fed, monetary policy decisions are made by the Federal Open Market Committee (FOMC). It’s a committee for a reason. Even if the Chair pushes for rate cuts, he/she does not decide policy alone—decisions are a collective effort within the FOMC’s voting structure.

So, if you're implying that the Fed Chair alone controls interest rate policy, you’re effectively questioning the entire framework of how the Federal Reserve is supposed to function. And if that’s the case, you have to ask: why do you even have a process, if it doesn’t actually work? In the end – you have to ask yourself – is this all noise or is this a potential fundamental change that should cause you to reconsider your investment thesis?

For me, it’s just noise. And when there’s noise, there’s volatility—and that’s the opportunity. The key is to take advantage of the noise, not get rattled by it.

Think about it: what does it really mean to NVDA, AAPL, JPM, VZ, IBM, GE, KO, JNJ, and the like if Trump fires Jay Powell? The answer: nothing. These are strong, well-run companies with real businesses, and a Fed personnel change doesn’t alter that. Now some investors may not like it and so they will sell stocks, but you have to ask - has that decision changed the fundamentals of the company?

I’d say no and if that happens, I see it as a chance to buy quality at a discount. On the flip side, if markets celebrate the move, well—you're already invested. Stocks go up, so you stand to benefit either way.

Bottom line? Stop letting the noise out of Washington throw you off. Remember “Liberation Day”? That was the perfect example—manufactured drama that caused market chaos. And those who let emotion take over and sold into it now realize that mistake. I discussed this very topic (Risk management/Process and Focus) with Dan Payne – CIO at Slatestone Wealth yesterday on my Yahoo Finance Podcast – Trader Talk. The episode is due to drop next Wednesday (July 23^rd) on the Yahoo Finance channel.

In the end - stick to the plan, stay focused and disciplined. Use the noise (volatility) to your advantage.

Bonds were essentially unchanged. The 10 yr continues to hover at 4.46% while the 30 yr is at 5.01% - a level that has proven to be a headwind for stocks. The last time the 30-year period pierced 5% - we saw the S&P lose 3.5%. Capisce?

Oil continues to hug the trendline at $66.70 as it considers the next move. Yesterday we learned that OPEC+ increased production BEYOND the output quotes for a fifth consecutive month. They pushed out 35.3 million bpd – an increase of 853k bpd over the expectation and oil prices rose! What does that say? What it says is that DEMAND is strong, not weak and that continues to support the idea of a strong global economy. We remain in the $64/$70 range.

Gold is also hugging the trendline at $3,334. It has been trading in a very tight range for 7 weeks now…. $3270/$3360. It feels a bit tired to me and unless we get a big negative headline my gut says that gold will churn a bit lower – not dramatic but a bit lower as it digests the ongoing tariff news.

Speaking of the latest tariff news – Trump told us yesterday that he is sending 150 countries letters telling them that their tariff rates will be between 10-15% - hardly the disaster that many were predicting. I expect markets to see this as positive but understand that they are not big countries and they do not do much business with the US. But, it is clarity on trade and that is good for the markets. Markets like certainty – good or bad, it just wants to know the rules.

Survey data from 22V Research showed that investors expect the average effective tariff rate to land near 17%, not near the 30% plus that they are at now. And if this happens that will give stocks room to run.

US futures are mixed…Dow futures down 60, S&P up 4, Nasdaq up 35 and the Russell is down 7. The VIX remains well below all 3 trendlines and that suggests complacency while the RSI on the S&P is just below the ‘overbot’ line – coming in at 66.4341. So, if the headlines remain calm and earnings continue to ‘beat’ then we could see stocks churn here to catch up with the surge off of the April low.

European markets are all higher – France up 1% while Italy carries up the rear at +0.4%. It’s an earnings narrative…. EasyJet is down 7% on a tough quarter hurt by higher fuel costs – taking it down 12% ytd, while Novartis beat the expectations, announced a $10 billion stock buyback program and raised forward guidance. With all that – the stock is down 0.3% - but it is up 7.2% ytd.

The S&P closed at 6263 up 20 pts. As noted the RSI is just below the overbot line and if the headlines do not cause angst – then stocks should churn. I think investors are now numbing to the whole FED drama – the same way they are numbing to the whole tariff drama – and all this means is have a plan and stick to it.

Herb‑roasted pork loin with gremolata

An elegant weekday dish that’s surprisingly straightforward to prepare.

For the roast you need: 1 (3-lb) boneless pork loin, trimmed, fresh rosemary, chopped, 5 garlic cloves, roughly chopped, 1 tsp fennel seeds, s&p, olive oil.

For the gremolata you need: fresh parsley leaves, chopped, 1 tsp lemon zest (from 1 lemon), 1 Tbsp lemon juice (½ lemon), s&p, olive oil.

Preheat oven to 400 degrees.

Remove pork from fridge 30 min before cooking.

Make herb paste: Finely chop rosemary, garlic, and fennel seeds together. Mix with salt and olive oil to form a paste.

Make ten 1″‑deep slits around roast. Rub paste over and into slits. Roast at three places with butcher’s twine. Place in a baking dish.

Roast the pork - Cook until the internal temperature hits 145 degrees. It should be about 40 min. Remove and rest 10 min before slicing.

Meanwhile, whisk parsley, lemon zest, lemon juice, salt, pepper, and olive oil in a bowl.

Slice pork into thin slices and serve with gremolata spooned on top or on the side.