Let's get to the big story breakdown.
US stocks kicked off the month deep in the red, a weak jobs report and new Trump tariffs dragged on the market.
The unemployment rate in the US ticked higher to 4.2% while non-farm payrolls missed expectations with downward revisions for May and June totaling 258,000.
Now this week all eyes are on trade deals as well as earnings reports.
So far this earnings season, nearly 300 S&P 500 companies reporting results.
With second quarter earnings growth now tracking at 9.8% year over year, a big jump from the 5.8% estimate at the start of July.
Well, joining me on this Monday morning is Peter Tuchman, senior floor trader at Trademoss.
Well, good morning, Peter.
Thank you so much for joining me.
Well, here we are.
We are looking at a higher open, and we were just remarking on how it's almost the anniversary for August 5th.
So what do you make of what we've seen so far?
Actually that volatility on Friday, you know what I find it a little bit curious.
Look, there's so many moving parts in this scenario right now.
Obviously all eyes were on the Fed, right, and then I'll be eyes on earnings and then the ability of the companies to actually give guys.
So there's positive news why we're trading at record highs, and I think one of them is the fact 81% have beat on earnings and we're able to give guidance.
Last quarter we were not able to do things and that was one of the biggest drawdowns on the market was the inability.
Because of the uncertainty around tariffs to basically give guidance going forward, and that left a very skittish market and people kind of fearful.
So but on Wednesday we had GDP that was better, right?
We had enough in my opinion we had enough economic data where the Fed maybe could have pivoted to a cut or at least given us a little more clarity about a September cut, but they did not.
Now so you're wondering, you know, I mean there's Sides of the coin.
One is, are Mr.
Trump and J.
Powell butting heads, or is it he's holding firm on it being an economic data driven decision and Mr.
Trump just wants what he wants and so there that's where the line in the sand is drawn.
However, what ended up coming up on top of that were the numbers that came out on Friday, right?
So if that information had come out on Tuesday, maybe we'd be in a different scenario right now.
What ended up coming up on Friday. which people should know is that the jobless rate and numbers were disappointing and unemployment ticked up from 4.1 to 4.2 and the readjustments on past jobs numbers were way worse.
And so what you end up doing is you're setting the stage for way more economic data that does point to a cut and it does give green lights in a way the Fed's ability to cut in the near future.
Yeah, and we're looking at the Fed funds' futures in terms of what we expect from the September rate meeting.
It does price in at least a 25 basis point cut.
We'll have to watch all the other data, and we have Jackson Hole coming up very soon for the Fed reserves.
So what do you expect to see in the near future out of Washington DC?
You know what, look, I mean, it's a matter of how much, how much controversy Mr.
Trump wants to have.
I mean, you know, we know, and I think he's matured a lot. in the way he handles a lot of, a lot of the different nations and a lot of the different companies and in fact Mr.
Powell itself, you know, at the end of the day it's a matter of it's a negotiation, right?
And so I'm hoping that we don't butt heads, that we end up, look, we need to get these deals done.
That's super important and I believe that we're not kicking the can down the road any longer, whether it was August 1st or August 9th whenever we have these these deals etched in stone.
I think once we get That done, then we're going to start seeing a little bit more of a breather in the marketplace.
Look, we're bouncing back today and as you and I spoke before, you know, why is that the case?
And the bottom line is if we are pricing in a cut by, you know, not pricing it, but if we are predicting a cut based on the poor economic data that came in on Friday, well then the market likes that, right?
The market always loves when you know the net net reaction of a price of a.
Interest rate cut is to pour fuel on the fire and give the market a little bit of a boost.
And so I think that's probably where the positivity lies now.
It's also a little bit of a function of super solid earnings and guidance, and it's also the fact that we do have deals done.
We did settle a deal with Japan with the EU, and there's a lot of backdoor diplomacy going on.
So a lot of work is being done by the administration.
I think while we were focused on other things, they were getting a lot of getting the job done, so.
Yeah, and finally, Peter, before I let you go, what does all of this mean for retail investors out there and for Americans who are wondering what is going to happen as a result of these tariffs?
OK, so we are starting to see, and we saw with Amazon.
Amazon had good earnings, but they what they what they illuminated to us all is that they are absorbing a lot of the cost of tariffs and so some companies are going to pass it on.
Everyone needs to understand this because it's going to impact your lives, right? you know who is impacted by the tariffs.
Some companies are absorbing the cost like Amazon, and that's why there was, even though the earnings were good, they had a disappointing reaction to their.
Earnings and then some companies are going to be passing the tariff expense on to the consumer and so we're going to be up against that and there are a lot of people out there who feel that, you know, that that's what people don't understand is that people who maybe should be a little more upset about the fact that we are going forward with these heavy tariffs with countries that are our biggest trading partners when in fact it is going to cost us all money and higher costs, higher prices for anybody is not good and so.
I think we're going to have to see how this unfolds.
We are still in the middle of it, you know, you know, every day we see you don't like the weather, just wait a minute.
We do see that Mr.
Trump, you know, I think we're getting closer to a lot of deals being done and that we are not going to kick that can down the road that much more.
And so once that happens, it's a matter of are the deals good deals and we're hoping that that's the case.
Well, Peter, we are looking at green ahead of the open, so let's see how all of this shakes.
Cash is king.
It's a great thing.
Have a great trading day.
Thanks.
