In this May‑29, 2026 market‑commentary video, Kenny Polcari reviews the U.S. equity rally that pushed the S&P 500, Nasdaq and Dow to new closing highs on the last trading day of May. He explains the market’s reaction to a reported 60‑day U.S.–Iran cease‑fire, outlining both the supply‑side relief (re‑opened Strait of Hormuz) and the unresolved nuclear‑enrichment issue, which he calls an “oil‑for‑time” trade. Polcari then examines the macro backdrop: April PCE inflation at 3.8% YoY (well above the Fed’s 2% target) and a downward‑revised Q1 GDP growth of 1.6% annualized, arguing that higher energy costs keep inflation sticky and could delay or cancel expected Fed rate cuts – a “Fed inflation trap.” He breaks down sector performance (tech +13.3%, consumer discretionary +5%, etc.) and highlights the concentration risk of the “Mag 7” mega‑caps versus lagging transports. He assesses commodity and fixed‑income markets – oil slipping to $87.72, bond yields falling (2‑yr 4.01%, 10‑yr 4.44%) but real yields remaining thin, and gold flat‑lined around $4,540 while the dollar weakens. European markets posted modest gains, and he warns that over‑bought momentum and thin breadth are caution flags, urging investors to stick to their plans and consider a portfolio risk review (contact 561‑931‑0190). The segment ends with a personal touch: a step‑by‑step recipe for fettuccine alla pappalina, a Vatican‑style pasta dish, presented in a relaxed, friendly tone.
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Well, good morning. Yes, it's me, Kenny Polcari, your host of the party. And look where I am, back in Florida. And look at how big this plant keeps getting, it's just unbelievable. Anyway, today is May 29th, 2026. It is the last trading day of May. Another month has come and gone. We're now into June starting on Monday. Well, here are the things you need to know. The S&P and the NASDAQ, well, they kiss another new high. We've got a new 60-day ceasefire, uh, in hand. Now, does the April PCE and the GDP suggest an issue? Oil is down, bonds are up, gold is up, and the VIX is way in the complacent zone. And what do we have for dinner tonight? We're gonna have the fettuccine alla pappalina. It's a Vatican favorite, so we'll talk about that in a minute. But let's talk right now. Today is the last trading day of the month. The VIX continues to fall, suggesting everything is just fine, and the Dow, the S&P, and the Nasdaq just won't stop making new closing highs. At the end of the day, here is what we got. The Dow added 24 points, the S&P was up 43 points, the NASDAQ added 242 points, the Russell was up 16, the transports lost 142 points while the Equal Weight S&P added 31 points. The Mag 7 gained another 318 points, and we're going to hold on to that, uh, because we're going to come to back to those in a minute because they do tell the whole story. So what gives? Well, it's really not that complicated. On the one hand, we got Treasury Secretary announcing a 60-day ceasefire deal between the US and Iran, but even he is not completely convinced that it's going to hold, saying that the teams have been going back and forth. The deal, now, if it happens, means that the strait is reopened and remains free of any tolls, right? Remember, it's an international waterway. Iran can sell oil on the open market, and within 30 days Tehran has to clear all the mines that it laid out in the waterway. In exchange, we're going to lift the naval blockade, but only in proportion to shipping coming back online, and issue some sanction waivers so that oil can flow. That's the half that the market fell in love with yesterday, because that's the half that takes the supply shock out of the crude trade. But here's the half that conveniently got ignored, the hard stuff, the highly enriched uranium, the dismantling of the nuclear program. That doesn't get resolved by signing this, this memorandum. It gets kicked into the 60-day window as the very first item to negotiate. And as you know, the two sides are at odds on this issue. Iran insists on its right to enrich uranium at home. Trump wants the whole program torn down and the uranium destroyed. Sources say that Iran has already said, "Mm-mm, no deal." And Bassett, well, he drew a line in the sand. No broader sanctions relief until the Iranians agree that they have to turn over the highly enriched uranium, period, the end. Okay, so let's call it for what it is. This is an oil-for-time trade. Iran gets to sell crude, and in return we get a 60-day truce and a pledge to discuss giving up nukes. So the thing that actually started the war and the thing that can end it is the exact thing that they punted into the negotiating window. And by the way, it still needs Trump's signature, Gabish. Okay, on the other hand, we had economic data. The April PCE, the Fed's favored inflation gauge, came in at a +3.8% year over year. The hottest since 2023 and well above the famed 2% Fed target. It's a worsening environment, not an improving one. We also got the second revision to first quarter GDP and it got revised down to 1.6% annualized pace on softer investment and consumer spending. Again, that should suggest caution. So, so pause right there and let's just sit with that for a second. We've got an ongoing conflict in the Middle East that is at best a stalemate. We've got cooling growth, which might argue for a rate cut, while inflation is reaccelerating, which argues at least for a rate hold, if not a hike. That is what the data shows. It's not complicated. It is what it is. The culprit? Higher energy costs. And that's exactly what might keep Kevin Warsh backed into the corner. Remember, he's an inflation hawk, and hotter inflation does not scream for a cut. It pushes those potential rate cuts and the ones that we were all expecting since we started the year further out into, into the horizon and maybe off the table completely. And the longer oil stays elevated, the more embedded inflation becomes and the further out those cuts go. A 3.8% PCE print into a, a war Fed is not a backdrop for easy money. It's a trap. And the trap is that everyone's watching the wrong thing, right? They're fixated on the short end of the curve waiting for the cut. But here's what they're missing. If Kenny cuts the Fed funds rates to satisfy somebody, then he's going to— he's going to have to drain the balance sheet at the same time. He's already said it. That is not speculation, right? And that keeps the long end elevated and financial conditions tight. The cut the market cheering for doesn't actually loosen anything. And that's the trap. And so we wait. Okay, so let's look under the sheets now and see which sectors really carried the month of May. And I guess there's no surprise, tech is up 13.25% for the month, way, way out in the lead. Then there's consumer discretionary up 5%, healthcare up 4.75%, communications up 4.5%, industrials up 1.6%, real estate up 0.9%, consumer staples up 0.1%. The losers: basic materials down 0.5%, financials down 1.25%, energy down 2%, utilities down 4%. You see the problem here? Tech is up double digits while everything is fighting for low single digits, and 4 sectors are flat out underwater. Now go back to those 2 numbers that I told you to hold on to. The Mag 7 added 318 points while the transports bled 142 points. That's right, that is the whole month in one line. A handful of mega-cap names dragging the averages to records while the cyclical, economically sensitive stuff quietly begins to roll over. Even with the S&P at a record yesterday, only 249 out of the 500 names finished in the green. Snowflake's 37% blowout reignited the AI trade after Wednesday's cooling off, and the index got lifted on the backs of a few giants. Here's another potential trap. Breadth is thin while we're at all-time highs is not a sign of strength. It's a sign of concentration. And everybody loves concentration risk right up till the same concentration risk bites you in the ass. Now, this morning oil is trading at $87.72. It's down $1.20. So that's a positive. We've now broken through the first trend line at $91.25. The next one sits down at $80. My read: we stay between these two with a bias towards declining as long as the negotiations continue in good faith. Any disruption to those talks and oil is going to burst higher again and fast. Now let's talk about bonds for a minute because they're whispering something that the stock guys are too busy celebrating to hear. Yields fell across the curve. The 2-year is now at 4.01%, the 10-year is at 4.44%, and the 30-year is at 4.97%. And on the surface, That's the peace trade. Oil's rolling over, inflation begins to fade, bonds rally, all good. But bonds rallied on the same day that we actually printed 3.8 PCE, right? So a 4.4% 10-year against the 3.8 inflation rate is a real yield of barely 60 bps. That is not a bond market bracing for embedded inflation. If it truly believed that inflation was a problem, then the 10-year would be kissing nearly 4.75%. So right now Bonds are voting with the bulls, not against them. But watch the shape of the curve, not the level, right? If the cuts actually start— and that's a big if— you have to watch the long end. If Kenny trims the front end and the 2-year comes down but the 10-year refuses to follow, that's not easy, my friends. That's the curve steepening, conditions staying tight. That's the trap. Showing up in a different asset. Now, what's gold up to? Because here's the funny thing, it's done basically nothing all month. It started the month at $4,545, and this morning it's trading at $4,539. It was dead money for the month, right? And yet yesterday it jumped $50, and this morning it's holding those gains, and it's actually up another $40, all while stocks tick at new highs and the VIX sits at fresh lows. So it's risk on everywhere, and And the world's favorite panic asset, gold, suddenly wakes up. Doesn't really, mm, doesn't make a lot of sense. But now some of that's just the dollar, right? The piece headline crushed the greenback yesterday and gold's priced in dollars. So it gets that mechanical lift because lower dollar causes commodities to rise, stronger dollar causes commodities to fall. But if you take the dollar out, there's still a bid underneath. So here's what I think is gonna happen. Gold isn't buying it. Somebody out there is hedging the other outcome, the one where the 60-day handshake falls apart. Oil rips higher again, and the 3.8% inflation rate keeps eating their lunch. Bonds are voting with the bulls, but gold— gold is quietly raising its hand at the back of the room, asking the one question nobody at the stock party wants to hear: what if it doesn't hold? Now, European markets are ending the month on an up note. Spain's up 1%, Germany's up 2/10, everyone else is somewhere in between. Around up 0.4%, 0.5% of a percent. US futures are higher. Dow futures up 110, S&P's up 10, the NASDAQ's up 45, while the Russell is up— is down 2 points. The S&P closed yesterday at 7,563, up 43 points. As noted, it is month end and it is Friday, and it's a ceasefire deal is still alive. There is no economic data to consider, nor are there any earnings that are going to make a difference. Momentum does remain stretched. The RSIs across the indexes, all of them, remain near or are kissing the overbought line. And all that is is a caution flag. It's not like your hair on fire, it's just a caution flag. And all that says is don't get forced into making a decision, stick to your plan. Remember, markets can stay overbought longer than you expect, but eventually they need to either pull back rotate or just consolidate and digest the move. That's healthy, that's normal, you want to see it happen. Give me a call to discuss your goals and your timeline. Let's assess the risk in your portfolio and the tolerance for volatility. Give me a call at 561-931-0190. I'm always happy to do a complimentary review and risk assessment just to see where you're at and maybe enlighten you. Okay, so Now, what do we have in the dinner tonight? This is one of my favorites, fettuccine alla pappalina. It's a favorite pasta in the Vatican. Pappalina here refers to the Pope. It really means a skullcap, but essentially we're talking about the Pope. Now for this, you need the fresh-made fettuccine. You can use box if you have to. Peas, fresh or frozen, prosciutto, scallions, egg, fresh grated Pecorino Romano cheese, and salt and pepper. Now begin by blanching the peas in a pot of salted boiling water. Do not overcook them, just blanch them in a big pot because you're going to use it for the pasta as well. Remove the peas, set them aside. Don't throw the water out because like I said, we're using it for the pasta. Now slice the prosciutto, cut it into small pieces, then add it to a big sauté pan and let it crisp up. While that's happening, take the scallions. You want to cut off the little end there and you want to cut off the green part. You want to use only the white and light green part of the stem. Add that to the sauté pan when the prosciutto is all nice and crispy. Also add in the blanched peas with a little bit of ladle of that water. Turn the heat to low. Right now in a bowl, you're going to add the egg or two, depends how much you're making. Season it with salt and pepper, scramble it. Now add in the fresh grated Pecorino Romano cheese. Stir it so that it becomes pasty, not dry, pasty. Now add the fettuccine to the pot. Cook it for 3 minutes if it's fresh, or 8 or so minutes if it's boxed fettuccine. When it's done, add the pasta and the egg mixture to the sauté pan with the prosciutto and peas, and then stir it. You're going to have a nice creamy sauce. If you need to, you're going to add a little bit more of the pasta water to obtain that right delicious creamy consistency. Serve this immediately on warm plates. Make sure that you're going to top the fettuccine with the peas and prosciutto that get left behind in the sauté pan. And as always, have extra cheese on the table for your guests. Here it is, it is Friday. It is an absolutely gorgeous day outside. Blue skies here in South Florida, probably about 90 degrees, but it is what it is. Summer is here. Until Monday, take good care.
