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Good morning….it’s Tuesday, April 16th… the morning after a horrific night in Paris….that rocked the world – the fire and destruction at the historic Notre Dame Cathedral is only beginning to be understood and the people of the world continue to grapple with its devastation – the loss of this historic site can be felt deep within…..and in this time of tragedy (as so many other times) – we see the people of world come together to not only mourn, but to commit to restore and rebuild this iconic and historic piece of history…….and while it may take a decade – the French will persevere and the cathedral will rise again from the ashes……

Stocks ended the day lower yesterday (as the focus remains on earnings) – after having opened lower, trading even lower before trying to stage a comeback rally – as both FED Governors – Evans and Rosengren made dovish comments about inflation and future FED policy – as they tried to stop the bleed……… the end – it did help to turn the mkt around but failed in their attempt to help it go positive – by end of day…..…the Dow lost 27 pts, while the S&P gave back almost 2 pts, Nasdaq lost 8 and the Russell 2000 lost 5….all in all – nothing to worry about as investors, traders and algo’s try to discern individual earnings reports and what it means for the broader economy and the broader mkt.

It was another day of bank earnings….GS – while beating the lowered estimate – still lost 8 pts or 3.8% after it became clear that 1Q profit fell by 21% y/y and revenue fell almost across all of the product lines… then how did they beat on the number?  Easy – cost cuts and lower taxes…..but that was not enough to assuage investor concerns at all……CEO Davey Solomon got on the phone and announced to street analysts that GS is in the middle of a ‘multi-year effort to diversify away from trading’…..(almost sacrilegious) as they look to build out their consumer bank, credit card and data services businesses as he looks to create ‘value’ over the next year ……Stock trading in particular took a big hit – as revenue plunged by 18%….remember JPM reported a 17% drop in trading revs, while C reported a 5% drop in trading  revs….but unlike his cohorts – Solomon pointed out that GS does NOT have big retail & lending books (but that is about to change) leading Davey to release a list of financial targets over the next year – becoming more transparent than GS ever was – causing GS’s founders to roll over in their graves… as Davey pled for patience as he tries to create value over the next 4 or 5 qtrs….so will investors embrace him or punish him?    On Friday – GS kissed it long term resistance at $208.95… some trader types the idea that on Monday – they were gonna pull a Jamie Dimon – and surge up and thru….but that was not the case – resistance proved to be stronger than he thought – at least for yesterday….and the trader types began the assault…..

Other companies that reported included C, and SCHW – and while both also ‘beat’ the number – the overall negative tone for the banks could not be broken…..both lost ground as investors ‘Sell the news’.  And while some asset managers want to say – ‘but they beat the number – that’s good’ you have to ask – How did they manage to do that in the face of declining revenues?  And if the reason is because of cost cuts – that is not a growth story at all….that should be a reason for caution as companies struggle with top line revenue growth……

Energy – represented by XLE (Energy ETF) – fell by .6% as the Russians started making noise that they might increase production (as oil has catapulted higher) as they try to regain mkt share….and transports took it on the chin – falling by 0.85% as the airlines continue to sort out the BA issue – as they make clear choices to ground their MAX 737’s – resulting in more flight cancellations and confusion…..BA – too – continues to get punished falling by another 1% – taking its total loss to nearly 15% since the late February crash. 

( Note that ButcherJoseph Asset Management currently holds positions in GS, JPM, and BA. The discussion above does not affect our current recommendations and should not be construed as a recommendation to buy or sell the securities referenced).

And while there is plenty of eco data to go around – it is all about earnings….because analysts expect earnings to decline by 4% this qtr – y/y and while the mkt expects it – we won’t know what happens until we get further into the reporting season…. And if yesterday’ reports were any indication – it doesn’t feel very encouraging – causing the general outlook to deteriorate further before the FED speak promises continued support for the economy.  And while it has only been two days of earnings – the banking results have been far from overwhelming – in fact you can say that they are more ‘underwhelming’.  And if the tone of coming earnings do not change then investors will become frustrated and will begin to put more pressure on the broader mkt.  Again – While the macro data points are holding steady – investors want to see positive news in the earnings reports – remember in the face of negative earnings growth this qtr – it is more important that the forward messaging be more upbeat and encouraging…..

Eco data today includes Ind Production – exp of +0.2% and Capacity Util of 79.2 – which would be up from last month and approaching the range (+80)  that should ignite more talk of inflationary pressures building….and on that note – we will hear from Dallas Fed Gov Bobby Kaplan at 2 pm….. But no matter what – EARNINGS will remain the focus and today we get numbers from JNJ – they beat – stock quoted up $2….in early trading….BAC  just announced and guess what?  They beat too…..reporting the consumer banking dept way outperforming – while trading revs dropped 13% in line with the others……Net Interest income – a key measure – rose by 9.7%……in line with both JPM and C – affirming what Davey Solomon (GS) had to say yesterday……  BAC is quoted just pennies higher than yesterday close…..but remember – they took 1% out of BAC yesterday on the back of the GS news… the question is – will they punish her again today?   After the bell we will hear from NFLX and IBM . 

Overnight – Asian mkts surged a bit higher -with China the clear winner gaining 2.7%  – more on trade talk than eco data points…Trump now raising some concerns with Japanese Trade  and the Japanese Economic Minister is set to meet with Bobby Lighthizer today. Japan +0.24%, Hong Kong + 1.07% and ASX +0.67%.

European mkts are slight higher as they too digest earnings.  In Germany – the ZEW index weakened again, but business expectations rose for the 6th straight month. FTSE +0.50%, CAC 40 + 0.07%, DAX + 0.08%, EUROSTOXX +0.27%, SPAIN -0.05% AND ITALY -0.04%

S&P futs are up 9 pts in pre-mkt trading – while the Dow suggests a higher opening of +140 pts, Nasdaq up by 32 pts and the Russell 2000 showing a gain of 5 pts.  ….if this holds – then the S&P would vault past its most recent high of 2910 (Friday) – taking it on its way to challenge the all-time intraday  high of 2939 – back in October…..If she fails to break out then we could see pressure building as the bulls remain cautious causing the bears to become more aggressive.  Either way – the chatter will now move from the banks to tech, industrials, consumers, energy and healthcare in the days ahead….Stay tuned…..

Take good care.


Grilled Shrimp on a Bed of Orzo

Spring is here and Summer is coming….so get ready to try the Grilled Shrimp. 

For this you will need:  about 2 doz large, clean & deveined shrimp,  10/12 skewers, olive oil, oregano, fresh lemon juice, minced garlic, s&p, feta cheese and some Orzo ( Orzo is a rice shaped pasta – used in many types of pasta salads or soups or in this case as a bed for the shrimps) .

Now we are going to grill the shrimps using skewers –
if you are using wooden skewers – you must soak them in water for at least 20 mins so that they do not light on fire and burn.

Now – pierce the shrimps onto the skewers – maybe 4 at most per.  Set aside in a deep pyrex dish.
Next mix the olive oil, garlic, oregano, some lemon juice, s&p – shake well and then pour ½ over the shrimps.  Place in fridge and let marinate.
Heat the grill – using a grill brush –clean the grill rack.
Bring a pot of salted water to a rolling boil and add the orzo…cook for about 8 mins or so…do not let it get mushy….keep it a bit aldente.  Strain and mix with the feta.  Now pour the remaining mix into the pasta with the feta and stir well to coat.  Place the orzo in a large family style platter and make a bed.

Next – remove the shrimps from fridge and place on hot grill….be sure to not burn….should take no more than 5 mins max.  Now place the skewers on top of the orzo and feta.  Take a picture to remind yourself of this great and simple dish.

Buon Appetito.

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