This post was originally published on this site
The S&P closed at 2728.12 – So today’s circuit breakers are:
Level 1. 190.96 pts (7%) or 2537.16
Level 2. 354.65 pts (13% total) or 2373.47
Level 3. 545.62 pts (20% total) or 2182.50
Global mkts under pressure – it was RISK OFF overnight after Gary Cohn – Director of the National Economic Council and Chief Advisor to the President – QUITS…. The official news came after the mkts closed…. with both Donny and Gary taking turns fawning over each other…. Donny praising Gary for a ‘superb job’ in his role as Chief Advisor (on economic issues) – calling him a ‘rare talent’…. While Gary did the right thing – thanking the President for the opportunity to serve the nation – blah, blah, blah……
Uncle Lloyd (Blankfein) took to Twitter within in minutes of the announcement praising Cohn for his commitment to the country and the administration saying
“I’m sure I join many others who are disappointed to see him leave”
(Remember Gary was Uncle Lloyds replacement at GS……and when he took the job at the WH – Uncle Lloyd got to breathe a sigh of relief…..what happens now?).
Traders took advantage of the official news and immediately hit the SELL button on their hi-speed computers – trying to beat out the next guy – as they created turmoil…..then the smart algo’s got wind of it and BOOM the bottom fell out…..US Futures sh*t the bed……Dow Futures collapsed – falling over 400 pts in the mins after, the S&P – not to be left behind – the S&P futures also plunged by nearly 40 pts…sending the index down and thru 2700…..to an overnight low of 2682 – before spiking higher back to 2705 before falling once again leaving us down 28 pts at 6 am or just below the century mark…..
OK look – British Rock Band – Queen put it so aptly back in 1980 – ‘Another One Bites the Dust’……this now makes the 19th person to either quit or get thrown out of the WH since the Trump Presidency began 14 months ago…. (I still think the prize goes to ‘the mooch’ who lasted all of what? – Two weeks? Going down in FLAMES! I mean how entertaining was that?)
And so, the drama began in earnest yesterday late morning…. the mkts were enjoying a RISK ON tone – global mkts all marching higher – US futures pointing to another UP day…. about to test resistance at 2737…. on news that the tariffs talks were easing and that Chubby (Kim Jung on) suddenly decided it may be a better idea to come to the table and give up….
As the day began – investors and traders pushed the index – causing it to kiss resistance – unable for it to push thru…and so the mkt backed off – and then rumors of the Cohn resignation hit the airwaves…..the media already prepared had written his obituary…..talking of his wins and losses…..In the WIN column they put – tax and regulatory reform, in the LOSS column they put trade tariffs and his trillion dollar infrastructure stimulus program…financial mkts began to shudder – going from risk on to risk off……. – Could this be true? Is Gary calling it quits……with no word from the WH or from his former employer GS – the mkts stabilized and ended the day just on the north side of flat…. with the Dow up 9 pts, the S&P clocking in at +7 pts and the Nasdaq the clear winner at +40 pts….
And then after the mkts closed – at about 4:30 pm…. Gary made the announcement…. he was calling it quits…. frustrated to say the least with a President that had little regard for his advice or expertise…. Chaos inside the WH between the left and the right found Gary on the losing side of the argument…and like Joshua Bolten (Chief of Staff to George Bush 2) said:
“I don’t think he suddenly lost the argument. He just never won it. He’s done a very effective job through rational argumentation ad maybe through bureaucratic maneuvering in staving off the day of reckoning.”
And so here is the kicker – Donny knew all along (as did so many others) that Gary would quit if he pushed ahead with the trade tariffs….so you see – here is where it gets dirty – Trump wanted him out so – he pushed ahead – knowing that it would be Gary who resigned vs. Trump having to say, “You’re Fired!” This way they both save face – Trump thanking him for a job well done and Gary getting to take ‘his stand’ on the way out the door of the WH back into the front door at 200 West St. NYC (The GS global HQ).
So now the question is – Is this just another example of traders OVER REACTING to the news – or is it just another example of traders trying to EXPLOIT the drama of it all – creating panic in the mkts where none belongs…I mean look – Gary is a good guy – but he is not the only one who could ‘advise’ the President – already there are at least a half dozen names being tossed around as the Cohn resignation WAS EXPECTED……I think the most comical one is Andy Pudzer – remember him? He is the ‘fast food guy’ – We are going to replace Gary Cohn – former President of GS with a fast food guy who was CEO of Hardees? Can you just see it on SNL? Other names rising to the surface include my friend Larry Kudlow – who is so against the tariffs – so I guess he’s out….and Economist Peter Navarro – who is very much in favor of these tariffs……
So, look – US Futs are still pointing lower at 7 am….and while the formal announcement of Gary’s departure is a bit unsettling – it was NOT a total shock in and of itself, and nor do I think it is a real gamechanger. The only eco news today is ADP employment report and that expectation is for 200K jobs created…at 2 pm we will also get the FED’s Beige Book report which will detail the state of the union – region by region…. This is a great report but not a catalyst or game changer.
Now – what could be a bust is the news that the EU is prepared retaliate…. the headlines say it all: (Look at the picture of Cecilia Malmstrom – EU commissioner of trade – on the CNBC website – she is angry and has no intention of sitting back while the circus goes on.)
“The EU Threatened Tariffs on US Products like Peanut Butter as Trade War Escalates:
“Global Stocks Drop on Trade Gloom”
European mkts are mixed…. on all this news…but by no means are they falling out of bed. There were no mkt moving reports to drive the action so the drama is all about the chaos being created by the Trump administration. FTSE flat, CAC 40 -0.24%, DAX +0.26%, EUROSTOXX -0.06%, SPAIN -0.08% and ITALY + 0.16%
Oil – is down by 33 cts/barrel on the back of the Cohn news…. toss in the rising US production and rising inventories and you ask – Why should I pay UP?
The VIX index (fear index) which fell yesterday is on the rise this morning…. currently up 8% as the mkts digest the news….
The dollar index – DXY – is flat and Gold is off $3.
Take good care –
Pork Cutlets Wrapped in Prosciutto Adorned with Pine Nuts
Today’s recipe came to me from a dear friend – Margaret P… who found this in “La Cucina” (The Kitchen). It is a great recipe and one that you should try ….
For this you need:
Pine nuts, Raisins – plumped in hot water and then drained, capers – rinsed and soaked in cold water, finely grated Grana Padano Cheese, chopped flat leaf Parsley, butter, chopped garlic, pork cutlets (pounded thin), prosciutto, s&p.
Pre- heat the oven to 475 degrees.
Chop the nuts, raisins, and capers and mix well. Add in the grated cheese and parsley – set aside. Season the cutlets with s&p.
In a non-stick pan – melt some butter and sauté the garlic over med heat…. Now add the seasoned cutlets and cook for no more than 2 mins per side. Now remove from heat. Next dress each cutlet with the nut/cheese mixture – roll it up and wrap in a slice of Prosciutto di Parma (you can use a toothpick to hold it together). Place in a baking dish and top with a touch of butter. Bake in the oven for 5 mins and remove.
Serve immediately with a tossed green – simple – Arugula & spinach dressed with s&p, oregano, squirt of fresh lemon, touch of olive oil and red wine vinegar.
“The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions. This commentary is not nor being it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O’Neil Securities, Incorporated or its affiliates”