Level 1. 195.06 pts (7%) or 2591.51
Level 2. 362.25 pts (13% total) or 2424.32
Level 3. 557.31 pts (20% total) or 2229.26
The gov’t reported a super strong employment number – 313k new jobs vs the expected 205k and the kicker was that they also reported reduced pressure on wages showing an annual pace of + 2.6% y/y vs. last on months +2.8% rate – and this took the air out of the inflation argument (at least for this month) ….and that is all traders and investors needed to hear…. Futures exploded in the seconds after the report was published on Friday setting us up for a RISK ON day…. Stocks jumped, the VIX fell, gold fell, dollar fell, bonds fell as stocks continued to recover – and the angst & nervousness that has been front and center is now a distant memory.
The Dow soared by 440 pts, the S&P added 47 pts, Nasdaq tacked on 132 pts and the Russell joined in the fun surging by 25 pts……the Nasdaq is the first index to break out of its January high – ending the day at 7560.81 – a new all-time high. YTD – the Dow is up 2.5%, the S&P is up 4.2%, the Nasdaq a whopping 9.5% and the Russell up 4%. All the fears that gripped the mkts last month after a disappointing NFP report along with wage and inflation concerns are nothing but a distant memory.
Toss in the latest chatter about how Chubby (Kim Jung On) wants to come to the table to negotiate a peace treaty and that only continued to add fuel to the fire….A May meeting is in the works – whether or not it really happens is yet to be seen, but the doors are now open to what appears to be a move towards denuclearization on the Korean peninsula….to be clear – this isn’t happening anytime soon, but it does appear the ball is in motion – so let’s hope that cooler heads prevail. While this event does not price stocks in the long run – it is a significant headline – there is nothing bearish about it – if it moves down the path of success – then that eliminates another threat to humanity.
And if that is not enough – the tariff talk continues to dominate the conversation…. …. As we questioned in this blog last week – Did Trump raise the stakes and impose a broad tariff across the steel and aluminum industries to do nothing more than bring nations to the negotiating table? Were his threats of further tariffs enough to cause a range of nations to reconsider current trade policies? It certainly appears so – considering that Mexico and Canada have now been exempted from any tariffs as ongoing discussions surrounding NAFTA (North American Free Trade Agreement) continue. Reports (Tweets) suggest that Donny and Australian PM Malcolm Turnbull are also working towards trade policies that will ensure that our friends down under do not get hit with any tariffs…….so we must ask: What about other countries? Will we see them reconsider their initial reactions and come to the negotiating table to discuss 21st century trade policy vs. 20th century trade policy? My gut tells me YES. So – like him or not – he has delivered on many election promises – Less regulation, lower taxes and better trade policies that will benefit the US vs. leaving us as the doormat to the world… .and investors are loving it.
Now central bank policy is also at the core of the mkts reaction – and after Friday’s NFP report – the FED is off the hook a bit – the idea of having to get more aggressive to combat rising inflation has once again been put to the side – and the current policy path of gradual but consistent rising interest rates and less stimulation appear to be the prescription of choice.
Earnings in the 1st qtr were fabulous and estimates for the 2nd qtr remain in the high double digits as well – all while job growth remains healthy and inflation remains under control….so as they say – “The Skies the Limit” …….
Over the weekend – the talk shows were abuzz……talk of the improving and strong economy, solid fundamentals, a compromise over trade tariffs, a possible peace agreement with Chubby – were just some of the discussion points and these points helped the new week to get off to a strong start.
Mkts in Asia soared as they reacted to the strong US jobs report, subdued inflation and a sense that trade policy is not as rigid as many first suspected. And while there was no economic news, no unsettling geo-political news or central bank policy announcements – the focus is squarely on the reduced anxieties over Trump Tariffs, and the improving global economies. Japan + 1.6%, Hong Kong + 1.9%, China + 0.46% and ASX + 0.55%.
European mkts are also up nicely….in early trading as they too are celebrating the US jobs/inflation reports. Over the weekend – the German trade minister Brigette Zypries – did bi*ch and complain over the tariffs saying that
“the order of a free global economy is at risk”
BUT she is working hard to ensure that the 28 countries in the EU are excluded from the new tariffs…. Hmm…. see how this works…. Donny has succeeded in bringing nations to the table to discuss the lopsidedness of current trade policies. And in the end – that is a good thing…. I mean – if it isn’t please tell me why it isn’t…Happy to engage.
EZ (Eurozone) finance ministers are meeting in Brussels today to discuss the next disbursement for the Greek recovery (a subject that we haven’t discussed for years now) along with banking reforms. Remember when the mere mention of Greece sent mkts into a tailspin? Today – we mention Greece and the mkt yawns…. Wow – what a difference a decade makes! FTSE flat, CAC 40 + 0.31%, DAX +0.76%, EUROSTOXX +0.55%, SPAIN +0.68% and ITALY + 0.46%
US Futures are up 9 pts in early trading as the party continues…. Eco data today includes CPI – exp of +0.2% m/m and 2.2% y/y. Ex food and energy of +0.2% m/m and +1.8% y/y. If this is true – then the inflation conversation continues to get pushed aside. If we see the EX food and energy y/y reading breach 2% – then the conversation turns on its head as every analyst will try to figure out how that happened. We ended the day at 2786 on Friday – and expect that today – we will test 2800 early on – a level last seen two weeks ago…. My sense is that we kiss it and then pierce it – clearing the way for the mkts to run back to the January highs of 2885 ish. If we fail – then look for the mkt to test support at 2741 before the 3rd attempt to break thru. Remember – this will be the 2nd time that we test 2800 since the break back in early February – so we may have to test it 3 times before we succeed – but either way – the path of least resistance appears to be UP and not DOWN at the moment.
Now remember on Wednesday when news of the Gary Cohn resignation hit – mkts sold off a bit – but that is not important – what was – was Uncle Lloyds reaction – how proud he was of Garry etc….
“I’m sure I join many others who are disappointed to see him leave”
recall that Gary was on the path of replacing Lloyd when the time came….and boom – on Friday – word leaked (thank you the WSJ) that it may be Lloyds turn to step off the podium….so what does that mean for GS and Gary Cohn? Just a question…. that’s all…. nothing more…. but it is curious how that happens. The stock did rally 1.5% or 4 pts on that ‘rumor’…. hmmmm…. just sayin’
Oil – is down by 26cts/barrel at $61.77. A Bloomberg story about record US production and exports to Asia causing disruption to the OPEC planned production cuts…. causing investors to once again ask – Why should I pay UP? Oil now remains just below resistance at $62.48 and most likely will test support at $59.41 next.
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 $7 remaining solidly in between support and resistance of $1,307 and $1,331/oz. And with all this good news – don’t be surprised to see gold test lower first.
Take good care –
Rigatoni Rigate in a Classic Bolognese Sauce
What exactly is Bolognese sauce? It is a meat based thick, hearty sauce for pasta –that originated in Bologna. Now Bologna is the largest city in the region of Emilia-Romagna in Northern Italy and is the 7th largest city in all of Italy. It is a very cosmopolitan city rich in art, history, music, culture and food. It is also home to many of Italy’s finest universities. This particular sauce has numerous variations – but no matter how you make it – you cannot go wrong at all….
For this you need:
Equal parts, ground beef, veal & pork, 3 lg cans of plum tomatoes, fresh basil, whole milk, olive oil, s&p, onions, carrots, celery and garlic.
Begin by sautéing sliced garlic in some olive oil over med hi heat. Next add in the sliced onions, diced carrots and diced celery – stir and cover – allow to cook thru and soften up, stirring every 5 mins or so. Once the veggies have softened – add in the equal parts of meat…and brown nicely. Season with s&p.
Next run the plum tomatoes thru the blender – quickly – you want some chunk left to them…..so do not liquefy. Add to the meat and simmer.
Next up – you want to crush your plum tomatoes in a food processor – but do not puree them – let them remain a bit chunky…. Now you want enough tomatoes so that you have sauce and not all just meat – capisce? But this is supposed to be a hearty sauce – so keep that in mind. Add in some fresh chopped basil, s&p and bring to a boil. Now turn it down to low and let simmer for 45 mins…Now turn off the heat – let it cool for 10 mins and add in 1 cup of whole milk and stir. – taste and adjust if necessary.
Bring a pot of salted water to a boil and add the Rigatoni pasta – cook until aldente about 8 – 10 mins.
Before straining – remove a mugful of the pasta water to remoisten. Drain the pasta and return to the pot….add back ¼ c of the pasta water and stir. Allow the pasta to absorb the water – do not make a puddle on the bottom of the pan….Add a ladle or two of the sauce to the pot and mix well to coat.
Next – serve in warmed bowls…..add a ladle of the Bolognese sauce on top and sprinkle with fresh grated Parmegiana cheese. Always have more cheese on the table for your guests.
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