Federal Reserve Faces Internal Tensions as Retail Sales Surge, Crypto Scores Major Stablecoin Win, and Markets Rally Amid Mixed Earnings/Try the Linguine

July 18, 2025

Things you need to know.

- JJ is safe for now, but there is turmoil within the walls of the FED.

- Retail Sales explode higher, suggesting the consumer is just fine.

- Crypto’s score a win. Expect all kinds of winners across industries.

- Earnings season is in full swing.

- Oil higher, Bonds steady, gold teases resistance.

- Try the Linguine w/Guanciale, Orange Zest and Pistachio’s.

** I will be on with Stuart Varney - Fox Business at 9 am and on with Maria Bartiromo’s Wall St tonight at 7 pm.**

Well, it’s all very exciting – JJ is not losing his job (at least that’s the narrative today), Chrissy Waller (who wants JJ’s job) basically demands that the FED cut rates in July saying that tariffs are NOTHING to worry about, San Fran’s Mary Daly chiming in calling for 2 rate cuts this year all while Adriana Kugler says that rates should remain where they are! Retail Sales rose significantly, at first more than expected at +0.6% - vs. the estimate of +0.1% but an even more significant increase from last month read of -0.9%. Ex autos and gas rose by 0.6% vs. the expectation of +0.3%. Jobless claims and Continuing Claims sank (that’s a positive), while the Philly FED business outlook surged at 15.9 vs. the expectation of -1.

Next was the excitement in DC - the Crypto industry got a MAJOR win after congress passed the stablecoin bill and that is setting the industry up for a huge stampede into the sector. Think banks, brokers, asset managers, fintech companies, payments all expected to benefit. (A stablecoin is a type of cryptocurrency designed to have a steady value, usually pegged to a stable asset like the U.S. dollar. Unlike Bitcoin, which can be very volatile, stable coins aim to avoid big price swings by being backed by reserves, such as cash or Treasury securities, held by the issuer.) Bitcoin ($118k) and Ethereum ($3600) along with some others have been surging higher in anticipation of this bill. This is a developing storyline, so I expect to hear more about this in the weeks ahead.

TSM (Taiwan Semi) surges by 3.4% after raising their full year forecast – a positive signal for AI demand - and that helped drag the whole industry higher…..SOXX up 0.4% - leaving it up 14.5% ytd.

Earnings season is in full swing now…. Of the 4% of the S&P 500 reporting so far it is off to a mixed start with 71% beating earnings estimates (below the 5-year average of 78%) while 81% exceeding revenue estimates (above the 5-year average of 70%). The magnitude of surprises is also lower, at 4.6% above estimates compared to a 5-year average of 9.1%.

The current season's earnings estimates have been revised downward by 4.1% since the start of the quarter, a steeper decline than the 5-year average of down 3.0%. Yet none of this seems to be causing investors to sit this one out and here’s why…..The action is a direct result of all those asset managers and retail investors who panicked in April and sold stocks that now realize they need to get back in.

And stocks continued to push higher…the Dow up 229 pts, the S&P up 33 pts, the Nasdaq gained 155 pts, the Russell added 26 pts, the Transports added 152 pts, the Equal Weight S&P up 57 pts while the Mag 7 gained 84 pts.

After the bell – NFLX reported, and they beat, and they raised their forecast – the stock closed higher in the trading session – up 2% or $23 but is trading a bit lower in the pre-mkt – down 1.7% or $22.

Of the sectors – Tech, Financials, Consumer Staples, and Industrials all led the way higher closing up 0.9%, Basic Materials up 0.7%, Energy +0.6%, Utilities +0.4%, Consumer Discretionary & Communications +0.3%, while Healthcare got whacked – falling 1.1% and Real Estate fell by 0.1%.

Homebuilders surged by 1.4%, Retail added 0.5%, The value trade (SPYV) added 0.5% while the growth (SPYG) trade added 0.7%, Metal And Miners surged – rising by 2.8%, Robotics and Automation up 2%, while Quantum computing continues to surge….IONQ + 3%, QBTS + 13%. Aerospace and Defense advanced by 2.5% while Big Pharma lost 1.5%.

Bonds were essentially unchanged. The 10 yr continues to hover at 4.44% while the 30 yr is at 4.99%.

Oil rose $1.25 or 1.9% to end the day at $67.55 - appearing to want to break out…..the most recent high of $69.65 is within striking distance. We remain in the $65/$70 trading range.

Gold is up $13 kissing the upper end of the recent trading range ($3360) as it continues to hug the trendline.

US futures are up! Dow futures up 60, S&P up 8, Nasdaq up 30 and the Russell is up 3 as the celebration continues. The VIX is quiet while the RSI on the S&P is kissing overbot…..which doesn’t mean much if the data and the mood continues to be positive but watch out for that one negative headline – because that is all we will need.

Eco data today includes Housing starts – expected to be up 3.5% and Building Permits which are expected to be down 0.5% and of course – we will get the U of Michigan data….Sentiment is expected to be 61.5 up from 60.7 while 1 yr inflation expectations remain at 5% with the 5 – 10 yr expectation of 3.9%.

Earnings include: SCHW, SLB, AXP, ALLY.

European markets are all higher – It also is about earnings – Danske Bank, SAAB and Burberry are the ones to watch. Mkts across the zone between 0.3% - 0.6%.

The S&P closed at 6297 up 33 pts. Now yesterday we did pierce 6300 if only for a min, but we did trade as high as 6304 before settling back. We are in uncharted territory – you can draw a trendline that suggests we are topping out and you can draw one that suggests we’ve got room to go….I’m going with topping out for now….and while it all feels very good, it just feels a little too good for me to chase anything up here…. So, I’m just going to stick to the plan and remember the process – give me a call to discuss a free (no obligation) portfolio analysis. 561-931-0190

Take good care,

Kp

Fresh made Linguine with Pistachio, Guanciale, and Orange Zest.

This is so good and so simple to make.

For this you need – Fresh linguine, Guanciale, Pecorino Romano Cheese, Orange zest and crushed pistachios.

Start by bringing a salted pot of water to a rolling boil.

In a large sauté pan – add the diced guanciale and cook until crisp. Remove and set aside. Leave the oil (fat) in the pan.

Add a ladle of the pasta water to the sauté pan with the fat from the guanciale and then add the linguine.

Toss in 2 handfuls of fresh grated Pecorino Romano and mix well.

When serving place, add the pasta in the bowl, add a bit of orange zest, crush pistachios and then top with the crispy guanciale. You can thank me later!

Buon Appetito

Source: Bloomberg, CNBC, Reuters, Wall Street Journal

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