Yesterday markets ordered from the TACO trade menu as equities bounced back meaningfully from Friday’s 2.7% loss (-3.0% for the Russell) by gaining 1.6% (R2K +2.8%), putting weight behind a Sunday night social post from President Trump (“Don’t worry about China, it will all be fine”). If it was a “get right” day, like when the Yankees play anyone in the AL Central after a run of losses, you would need markets to regain the mojo and get back to setting progressive ATHs. Earlier this morning that was not the case despite a relatively strong start to earnings season by the mega banks (Check out our preview). The S&P opened down 0.8% before buyers stepped in around the 50d ma and took index back above yesterday’s close. The S&P is up modestly while the equal-weight outperforms (+1%) and small caps up even more. The initial weakness was triggered by another US-China flareup, this time news that Beijing would sanction S. Korean shipbuilder Hanwha Ocean for its cooperation with a US investigation into China’s shipping industry. Treasury Secretary Bessent’s comments are didn’t help, telling the Financial Times that “this is a sign of how weak their (China’s) economy is, they want to pull everyone down with them.” Financials and Industrials are leading as earnings season gets underway yet again. BLK, C, GS, JPM, WFC all beat top and bottom lines with solid commentary macro commentary overall. Powell spoke a little after noon and his comments focused mainly on the Fed Balance Sheet dynamics.

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