Truth Eludes in Tariff Tussle, Palantir Pushes Up, Semiconductors Surge
Here's why a pause in the upside action will not ruin the technical set-up and ... will we get auto parts relief?
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How am I supposed to know
Hidden meanings that will never show?
Fools and prophets from the past
Life's a stage and we're all in the cast
- "I Don't Know" Ozzy Osbourne, 1981
Seeking Truth
Training mission. Mojave Desert. Mid-1980s. Enemy reconnaissance elements were supposedly operating in the area. Curled up in my poncho liner, I woke up and could see the stars so clearly. A slight chill. A mild breeze. So many stars. Such a clear night. Exactly why I chose to sleep in a small depression that I had found and put my guys in similar nearby holes. Sure, in such a depression, there is the minute possibility of a flash flood that comes out of nowhere, but it keeps you and your equipment invisible to anyone scanning the desert horizon. Especially on a clear night.
Wait. What is that? A dog. No, a coyote standing on the edge of the depression, looking at me. Just looking. Eye contact. Just for a second. I don't want to dare him. Not growling. Not aggressive. Simply watching. Is he friendly? Maybe he's the lookout? Exactly. I reach for my Ka-Bar (fighting knife), which I always kept stabbed into the dirt over my right shoulder when I napped. As I went for the knife, I noticed another coyote across the maybe 12-foot by 12-foot hole from me. Then another desert dog jumped clean over me, as I swept the air with my blade in an awkward motion that failed to hit anything.
It was then that I noticed several other coyotes above my hole in the ground as the two who had been in that depression with me scampered away. I crawled out of my hole as a few of my nearby comrades crept out of their holes in the ground having experienced something similar.
No, nobody was attacked by a coyote that night. I still think of that one moment that I saw that one dog atop the precipice and wondered if he was friendly. How foolish we mortals can be. Especially when young. They were obviously after whatever rations or water they could find and had experience in running into our kind before.
As for the end of this story, I had to go find the private who had the watch that hour and had let a pack of coyotes invade our perimeter. There were many pushups to be done before the sun would make an appearance. I never enjoyed "smoking" privates, but a lesson had to be taught. As always, I got on the ground and did the push-ups with the younger man. If one of my guys screwed up, then so did I. As a man, I had somehow let three coyotes sneak up on me while sleeping. Still disgusts me 40 years later.
What Is the Tariff Truth?
On Wednesday, the Wall Street Journal reported that the Trump administration was considering reducing its schedule of tariffs on Chinese imports in what would be a bid to de-escalate what had become a trade war between Washington and Beijing. The article claimed that "One senior White House official said the China tariffs were likely to come down to between 50% and 65%." A tiered approach was supposedly also under consideration. Financial markets added a significant Wednesday rally to Tuesday's positivity that had all but taken back what was an ugly Monday session.
Ironically, it was Treasury Secretary Scott Bessent, the hero of the Tuesday rally that splashed some cold water on Wednesday's run. Bessent stated that there had been no unilateral offer by the Trump administration to remove or reduce U.S. tariffs on Chinese goods. Bessent also said that he believes that tariff levels will more than likely, have to decrease mutually. The comments tempered the rally and while nice gains held into the closing bell, most U.S. equity indexes closed near the bottom of the day's range, which can be a negative omen concerning the overnight session and next day's open.
China Says: 'Fake News'
U.S. equity index futures have traded lower through the zero-dark hours as Chinese officials have apparently denied reports that trade negotiations with the U.S. had begun. On Thursday morning, the Dow Jones Singapore bureau reported that Chinese foreign ministry spokesperson Guo Jiakun had called reports of China-U.S. talks "fake news" and said, "China and the United States have not held consultations or negotiations on the tariff issue, let alone reached an agreement." Chinese commerce ministry spokesperson He Yadong added, "Any claims about the progress of China-U.S. economic and trade negotiations are groundless and have no factual basis."
On The Bright Side... Auto Parts Exemption
The Financial Times is reporting that the Trump administration is preparing to exempt auto parts from the tariffs on Chinese imports over that country's production of the fentanyl drug in addition to exempting tariffs on steel and aluminum products in a de-stacking of such duties.
Should the president deliver some kind of relief for U.S. automakers, it would most likely be done in fashion similar to the recent exemption granted for smartphones and other consumer electronic products.
Marketplace
Another "two-day" day one? Sort of. Treasuries sold off mildly. Gold sold off harder. Equities rallied nicely. The Nasdaq Composite ripped off a gain of 2.5% for the session as the S&P 500 added 1.67%. The Philly Semiconductors led the league, popping for a gain of 3.96%. led by Marvell Technology MRVL and Intel INTC as news broke about significant payroll reductions at Intel. The smaller-cap indexes all performed in line with broader markets.
Nine of the 11 S&P sector SPDR ETFs ended the day in the green, with Technology XLK and the Discretionaries XLY leading the way at +2.9% and +2.23% respectively. Only the Energy XLE and Staples XLP sector funds closed out Wednesday in the red.
Breadth was outstanding for a second consecutive day. Winners beat losers by more than 3 to 1 at the NYSE and by less than 3 to 1 at the Nasdaq. Advancing volume again took a commanding 81.5% share of composite Nasdaq-listed trade and a 71.1% share of composite NYSE-listed activity. The trading volume was exceptionally supportive as well. Aggregate trade was up 15.1% on a day-over-day basis across NYSE-listings, and up 22.7% across Nasdaq-listings. Trade was up sharply for a second straight "up" session across the membership of the S&P 500.
Plenty of positives to look at here. Increased trading volume that implies greater manager participation is just one. Making a move on the 21-day exponential moving average is another. Improving relative strength and an improving daily Moving Average Convergence Divergence are two others though neither is yet truly bullish in posture. Lastly, the closing pennant appears to have closed with a breakout to the upside. Yes, that could change, but that's what the chart says this morning and that would be a clearly positive technical development.
What Do Stocks Need?
Actually, to be honest, a pause in the upside action that will not ruin the technical set-up, but instead, preps the market for a bullish day of confirmation late this week or early next week. We get that, and we'll have a ballgame.
One More Thing... Palantir
I updated the technical picture for Palantir Technologies PLTR and several other key "Stocks Under $10" names in a piece for that series on Wednesday afternoon. I could have written it then, but wanted to wait for Market Recon's larger audience. As loyal readers may recall, on Dec. 31, I named Palantir Technologies as my stock for the year for 2025.
That was the second consecutive year that I named PLTR as my stock of the year and as they say... "so far, so good." For 2025 year to date, after last night's close, PLTR is up 33.3% year to date vs. an S&P 500 that is down 8.6%. For the full year 2024, PLTR was up 340.5% versus an S&P 500 that was up 23.3%. I don't want to jinx myself and I am heavily invested in the name, so this is my book... but it had to be said. PLTR has continued to kick some tail in 2025. All hail Alex Karp.
Economics (All Times Eastern)
08:30 - Initial Jobless Claims (Weekly): Expecting 218K, Last 215K.
08:30 - Continuing Claims (Weekly): Last 1.885M.
08:30 - Durable Goods Orders (Mar): Expecting 1.6% m/m, Last 0.9% m/m.
08:30 - ex-Transportation (Mar): Expecting -0.1% m/m, Last 0.7% m/m.
08:30 - ex-Defense (Mar): Expecting -0.3% m/m, Last 0.8% m/m.
08:30 - Core Capital Goods (Mar): Expecting 0.2% m/m, Last -0.3% m/m.
10:00 - Existing Home Sales (Mar): Expecting 4.13M, Last 4.26M SAAR.
10:30 - Natural Gas Inventories (Weekly): Last +16B cf.
11:00 - Kansas City Fed Manufacturing Index (Apr): Expecting -2, Last 1.
The Fed (All Times Eastern)
5:00 p.m. - Speaker: Minneapolis Fed Pres. Neel Kashkari.
Today's Earnings Highlights (Consensus EPS Expectations)
Before the Open: AAL (-.67), BMY (1.52), FCX (.25), HAS (.67), KDP (.38), LHX (2.33), MRK (2.14), PEP (1.50), PG (1.53), UNP (2.73)
After the Close: GOOGL (2.02), INTC (.00), TMUS (2.47)
At the time of publication, Guilfoyle was long PLTR equity.
