In this July 21, 2026 market commentary recorded on Cape Cod, Kenny Polcari walks viewers through the day’s most consequential macro‑ and market‑level signals. He opens with a rapid $5 swing in crude oil (from $80.40 to $85.50 and back to $83.25) and ties the volatility to ongoing Middle‑East conflict, a fragile cease‑fire, Iranian‑backed Houthi threats to Red‑Sea shipping, and recent U.S. strikes in Iran. He explains how the oil swing reflects deep uncertainty about future inflation, noting that June’s softer CPI numbers were largely a one‑off benefit of a $30‑per‑barrel oil price drop. Polcari then shifts to the bond market, detailing how the 20‑year (TLT) and 10‑20‑year (TLH) ETFs fell, pushing 2‑year yields to 4.19%, 10‑year yields to 4.58% and 30‑year yields to 5.11%—all in the “danger zone.” He argues that higher yields pressure equities and that the Treasury’s back‑end will dominate market direction if oil stays elevated. Next, he interprets Goldman Sachs’ warning that “Momo” hedge funds are exiting tech at the fastest rate on record. Polcari contrasts short‑term, leveraged hedge‑fund behavior with the long‑term, risk‑managed buying of institutional managers (Fidelity, BlackRock, Vanguard, Berkshire, etc.), suggesting that institutions are actually buying the dip created by the Momo sell‑off. He reviews the VIX, which fell into negative territory and was down 6‑7% on the day, indicating that panic is not building despite the market’s modest decline. He walks through the day’s equity performance: the Dow fell 307 points, S&P‑500 down 14, Nasdaq down 12, while sector rotation favored energy, communications, and tech‑heavy names; the transport sector and many Dow components lost ground. Gold is flat but up 1.4% in the morning, still trapped in a $4,000‑$4,200 range. Polcari previews today’s earnings calendar—auto, consumer, financial, industrial‑defense, energy, biotech, and mega‑cap tech names—arguing that earnings, not macro data, will drive the market. Futures are up, and a tentative 10‑day cease‑fire in the Middle East is providing a modest sentiment boost. He ends with investor advice: ignore headlines, stick to a long‑term plan, and consider a complimentary portfolio review (phone: 561‑931‑0190). Finally, he shares a Dover sole meunière recipe, describing the ingredients and cooking steps as a light‑hearted close to the broadcast.
Chapters
Well, good morning. It is July 21st, 2026, and I am Kenny Polcari here at Cape Cod, and it looks like it's gonna be a little bit of a stormy day. The sky's a little bit gray, the wind is up, the tide's coming in. Uh, but here are the things that you're gonna need to know to get your day started. Yesterday, oil swung $5 from high to low, creating all kinds of, uh, anxiety. Bond yields moved up further into the danger zone, helping to send stocks lower over the day. Goldman Sachs. Well, they came out and they warned us that the Momo guys are bailing on tech at an alarming rate. Very dramatic, very Goldman Sachs. Institutional managers, though, are not, and that matters. Gold is up, bonds are down, yields are up. And what do we have to do today? We're gonna have the Dover Sole Meunier. Just take the boat, go right out there, grab the Dover Sole. Delish. Okay, so can we talk because I want to talk about what happens when 5— then you see a $5 swing in the price of crude from $80.40 to $85.50, only to finish the day almost unchanged at $83.25. And what does that actually say? To tell you that nobody really knows what's happening next. 5 months of conflict, then an apparent ceasefire deal, and then no deal. And now 9 straight days of US strikes taking out more military installations, roads, and bridges across Iran. 3 American service members dead in the last few days, and Trump vowing to make Tehran pay for it. Tehran is telling reporters that the ceasefire framework is effectively dead, but they're leaving that door open just a crack for mediation to continue to happen. And that contradiction—tough talk publicly, quiet channels privately—is exactly why we saw that $5 swing in oil on the day. Add in the fact that the Houthis, an Iran proxy, are now threatening to block the Saudi shipping lanes in the Red Sea. And you can see why energy traders just can't get comfortable in either direction. So therefore the situation remains fairly volatile. And all of this reminds us that while June's inflation reports looked encouraging last week, they were helped enormously by that nearly $30 collapse in the price of crude oil over the month. Lower energy prices, you know, reduced transportation costs, manufacturing, expenses and relieved pressure across the broader US economy. But markets don't price in yesterday's inflation. They look forward and they price in tomorrow's inflation. And if oil stays in the low 80s or moves higher from here, that tailwind is gonna disappear. Future inflation reports may not look nearly as good. Now, the TLT, which is the 20-year bond ETF, and the TLH, which is the 10 to 20-year bond ETF, both lost ground yesterday, falling 0.75% and respectively. And that pushed bond yields higher, which didn't help the tone and only added pressure to, uh, uh, uh, the situation and seeing stocks close lower. The 2-year is yielding 4.19% after hitting as high as 4.21%. The 10-year now yielding 4.58% after kissing 4.6%, while the 30-year yields at 5.11% after trading as high as 5.12%, leaving the bond market in the danger zone. And that's the problem that Kenny has to deal with. He can't talk about— he can talk about cutting the front end of the Treasury market all he wants, but he cannot control what happens on the back end. And if oil keeps doing what it did, the bond market is going to make that decision for him. Fed Goldman comes out, they tell us that the hedge fund community, otherwise known as the Momo guys, are bailing on tech, saying the exit has been the fastest on record. Not elevated, has been the the fastest. And at first glance you'd say, oh boy, that's not so good. But let's just put it in context, because I did hint about this yesterday. Don't confuse hedge fund action with institutional conviction. Hedge funds, otherwise known as the Momo guys, trade quarter to quarter, uh, they trade week to week, not year to year. They're tactical, they use leverage, they trade around earnings, and they have no problem taking profits after an extraordinary run., right? If they think valuations are stretched, even temporarily, they will reduce exposure without hesitation, and they will do it all at the same time. They get paid to trade, right? So that's what they do. And the algos don't even go there because they're incentivized to create chaos. That's very different from firms like Fidelity and Capital Group and Wellington and BlackRock and Vanguard and Berkshire Hathaway— think, uh, Uncle Warren Buffett— and the large pension and endowment managers. Those firms invest for years, not weeks. They aren't trying to outperform quarter to quarter. They're trying to build wealth over decades. They own huge core positions and trim only around the edges when stocks get stretched, but they don't bail unless, of course, the investment thesis has changed or the fundamental story has shifted. Very much like what a good wealth manager would do, right? If anything, they're buying what the Momo guys are selling. They are doing what they are mandated to do— invest for the long term, manage risk, and buy good stocks that go on sale. And guess what? Right now there's a sale going on across a range of sectors, and that's an important distinction. Now, the VIX spent the day in negative territory, falling as much as 7% before ending the day just down 6/10, which suggests that fear is not building, that panic is not settling in. That investors, not the mobile guys, are not running for the exit door. This morning, the VIX is down another 6% at 17.50, leaving it below two trend lines, sitting just atop another. That is not what panic looks like, right? So, uh, I think that's telling you something, right? By the end of the day, stocks ended lower. And here's the tell that matters most: the S&P and the NASDAQ were both green most of the session yesterday. Chips were bouncing, the broader market and tech were advancing. Then 4 PM hit, CENTCOM confirmed that another round of strikes and just another round of strikes went around and just like that, the tape rolled over into the close. And that's not a broken market, that's an anxious market. One that's looking for a resolution. At the end of the day, the Dow gave up 307 points. The S&P lost 14 points. The NASDAQ gave up 12 points. The Russell lost 19. Nothing really dramatic to see here, right? The transport though did lose 266 points, and that makes sense considering what energy did. The equal weight lost 43 points while the Mag 7 gave back 25 points. 23 of the 30, so 75% of the Dow stocks closed lower. CAT took 95 points off the Dow. Goldman took 60 points. Apple took 42 points. Boeing, UnitedHealth, Johnson Johnson, and American Express all took another 80 points off the Dow. On the flip side, Microsoft itself added 50 points. Points to the Dow, was up 2.2%, now trading at $402, up 14% since the end of June. Google added 31 points. Salesforce, Amazon, Chevron, and Visa all added more than 50 points. That's not rotate— that's rotation, not liquidation. Energy was the winner on the day, up a half a percent, which makes sense when crude is the whole ball game. Communications, tech, semi, software, memory names rounded out the winners on the day. Healthcare, basic materials, industrial, consumer discretionary all lagged, suggesting more rotation. Now, if this were true institutional liquidation, the place would be a mess. Everything would've been sold without regard, and that is not happening. Gold did nothing yesterday, ending the day just about where it started. But this morning it is up $55 or 1.4%. It's 1,062 as the dip buyers wake up and the tension in the Middle East continues to heat up. Even with today's move, however, gold remains trapped in that $4,000-$4,200 trading range that has defined that market now for weeks. I keep telling you that for gold to really make a statement, it needs to break out of that range. If geopolitical tensions continue to build, it could be the catalyst that finally pushes it up and through that resistance. Now, there's no real economic data today to drive the action, so it's going to be about oil, it's going to be about bonds, and it's going to be about earnings. And today's earnings are set to give us a broad read on the US economy. We're going to get consumer activity from, from General Motors, Hasbro, right? That's housing, it's autos, it's discretionary spending. Financials, we're going to get Charlie Schwab, Citigroup Financial, MSCI, which is investing, consumer credit, capital markets. We're going to get industrial defense from 3M and Northrop Grumman. That's manufacturing and government spending. Energy, we're going to hear from Halliburton, which which is oil and gas and capital spending. Healthcare and life sciences, we're gonna hear from Danaher, which is a biotech name. Google, Tesla, ServiceNow, um, uh, all kick off earnings for the mega-cap technology names tomorrow. Microsoft, Meta, Apple, and Amazon follow on next week. But today is not about tech, and that's why today's reports have the potential to move the broader market. Not just individual stocks. And for now, investors appear to like what they see. Futures are up this morning ahead of all of these reports. Dow futures are up, uh, 181 points. S&P's are up 41. NASDAQ is up 400 points while the Russell is up 25 points overnight. Asian markets ended higher and European markets are higher this morning as well. Now, the geopolitical rumor this morning is that mediators are proposing another 10-day ceasefire to allow the temperature in the Middle East to calm down. Whether that gains any traction remains to be seen, but for the moment, it is helping improve the overall market sentiment. Now, the S&P closed at 7,443 yesterday, down 14 points, breaking below that trendline support at 7,454. This morning, the tone is more positive. Investors appear to be focused on the, uh, on the coming earnings any eco data. If the tone stays strong, we're going to take that back, 74.54, and then turn yesterday's break maybe into nothing more than just a head fake. Remember, do not let the headlines force you into making an emotional decision. Focus on the plan, your timeline, and your long-term objectives, not the noise of the day. If you'd like to discuss those goals, evaluate the risk in your portfolio, or simply just get a second opinion, feel free to give me a call at 561-931-0190. I'm always happy to provide a complimentary portfolio review and risk assessment on your current portfolio. Okay, so now what do we have at dinner tonight? Well, I'm here at the beach still, so I'm trying to give you some more fish. So today we're having Dover sole meunière, right? It's classic and it's simple. And for this you need the Dover sole fillets, uh, you need salt and pepper, you need all-purpose You need butter, olive oil, the juice of 1 lemon. You need chopped Italian parsley, capers— they're optional, but I love them and you really should use them— and you need lemon slices for when you serve it. You want to pat the fillets completely dry with a paper towel, season with salt, pepper, lightly dredge them in flour, shaking off any excess. You don't want them really covered in flour, right? Heat a large— up— heat a large sauté pan, add the olive oil and butter. When the butter stops foaming, then you're going to add the fish. Cook it about 2 to 3 minutes on one side, then carefully flip it. Cook for another 2 minutes on the other side. The fish should turn nice and white and begin to flake. When that happens, remove it, set it aside on a warm plate. Now you're going to make the sauce. Reduce the heat slightly, add a little bit more butter, let it foam until it turns a beautiful kind of hazelnut brown. It's going to smell a little bit nutty delicious. You're good. That's when you're going to add the lemon juice, a squeeze of lemon juice, the parsley and the capers. And you're going to pour this brown butter sauce all over the fish. You're going to place the fresh lemon slices on the plate with the fish, and you're going to serve it immediately. With this, you can have whatever you like on the side. You can actually have a big mixed green salad, but for, uh, for a vegetable, you can go with a potato, you can go for a green vegetable, whatever really you feel like. In any event, you can't make a mistake with this dish one way or the other. Maybe it feels like the sun's starting to come out. You can see see it just kind of overhead here. It's getting a little bit more bright, but it's still very windy and it looks a little bit stormy out there. So let's see what happens. Until tomorrow, take good care.
