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Things you need to know

  • Stocks  continue to build a base
  • Two more Unicorns take the mkt by storm
  • Many  mkts Closed today for Easter Monday

  Stocks ended the holiday shortened week on an upbeat – better retail spending numbers, better Initial Job Claims, better Continuing Claims, better Consumer Comfort and more earnings that continue to ‘beat the estimates’ all adding to the pre-holiday celebration………..the Dow added 110 pts, the S&P tacked on nearly 5 pts the Nasdaq advanced by 2 pts and the Russell 2000 lost 2 pts…. Industrials were the big winners ( thus the Dow up 0.42%) as we heard from a couple of the manufacturers (Snap-On Tools +6% – SNA and United Rentals – URI + 8%) – that ‘beat the number’ helping to push the S&P Industrial ETF – XLI – up over 1%.   Healthcare names which have gotten clobbered of late – down 7% in 5 days managed to try and find a bottom here and attempt to rally…..the ETF – XLV ending the day up slightly – but it was up….and that’s good.  Most of the other sectors gained only fractionally – which speaks to why the broader mkt ended slightly higher….

 Trading remained light ahead of the holiday weekend and with only about 20 S&P companies reporting so far – investors continue to play it close to the vest….waiting for this week and next to assess the state of the union as the bulk of the S&P 500 reports hit the tape….… far nearly 83% of those reporting have beaten the estimates ( that is about 10% ahead of normal) but don’t forget – estimates have been slashed so the bar is quite low…..

 The broader action on Thursday was relatively muted…but there were two IPO’s that drove the excitement…. Pintrest (PINS) and Zoom (ZM)– both were successful launches and the media latched right onto their performance……suggesting that the appetite for  ‘Unicorns’ continues unabated….In the financial world a Unicorn is any tech startup company that has reached a $1 bil value based on private investments….and on Thursday two more of these Unicorns hit the big time. 

 Pintrest (PINS) – brought 75 mil shares at $19/sh debuted on the NYSE……the stock opened up 25% at $23.75 and ended the day even a bit higher at $24.40… investors went all in –  and then ZOOM (ZM) – which brought 20 mil shares at $36/sh  listed on the NASDAQ mkt place  and we saw that IPO surge by 81% opening at $65 share as investors apparently couldn’t get enough of it………which begs the question… investors know more than the bankers – who were paid big bucks to represent and sell this issue? Didn’t  the bankers tell them that $36 was a fair price on Wednesday evening?  Or did the sellers want to sell their shares a an artificially lower price so that the first day of trading would see the stock explode higher – giving the impression to the mktplace that you ‘have to have this unicorn’ in your portfolio? (Part of the game is about optics and a stock that surges 81% on the first day gathers a lot of attention) –  Yes – Zoom does actually make money – they earned $7.58 mil in net income in 2018 and Revs surged to $330.5 mil – but the assumption was that the bankers knew that and so their pricing would have reflected that and investors willing to buy this IPO also knew that – SO – if that’s the case – then why the mispricing?     I mean if you were the seller and you sold your stock at $36/sh on Wednesday evening and then less than 12 hrs later investors were willing to pay $65 share does that wreak of bankers being out of touch or the sellers not understanding?    I mean the whole investment banking process is supposed to gauge demand at a range of prices to properly price the issue (leaving some ‘pop’ in the stock) – but an 80% pop on day 1?  It feels to me that someone didn’t do their homework…and while you say – what’s the big deal – the sellers that sold stock – still own more so they are happy, no matter what….and I say that’s a total crock….…..but hind sight is 20/20…..and while it feels a bit ‘irrational’ –  it was a small deal (20 mil shares) … there are a number of factors at play here….. Only time will tell… stay tuned.

Is this mania surrounding all of these ‘unicorns’ feeling a bit “dot comm’ish”  – remember 1998/2000?  When anything that had dot com in its name caused investors to go into a frenzy?  Remember how that all ended?   Or how it undermined the economy and it  destroyed trust in the system – recall how the Nasdaq index soared by  258% between October 1998 – March of 2000 as the craze went full tilt  before completely coming unglued and falling  68% between March 2000 and April 2001….just sayin’.  I hope I’m wrong and that the company and the insiders who sold the stock on the IPO were willing to accept a lower price for the benefit of watching the stock POP!  

Asian mkts traded mixed overnight with Australia and Hong Kong closed for Easter Monday.  Volumes were light in post-holiday trading.  Japan +0.08%, China came under pressure and fell 2.31%  as chatter over the path of future monetary policy rages on.  The message here is that the PBoC (Peoples Bank of China) won’t be so stimulative.  Japan’s Prime Minister Shinzo Abe is travelling to Europe to meet leaders of the EU and then to the US to meet with Donny later this week.

European mkts are also closed for trading for the Easter Monday Holiday.

US futures were up overnight but are down 5 pts this morning.  Eco data today includes Chicago Fed Survey – exp of 2.55 and Existing Home Sales – exp -3.8%  Later in the week we will get Richmond Fed, New Home sales, Mortgage Apps, Durable goods, Capital Goods Orders and Cap Goods Shipped and on Friday we get first release of 1st Qtr GDP – exp of 2.2%. Analysts will be watching this report intently for clues about how the gov’t shutdown that lasted for 33 days might have affected the economy. 

It is sure to be another week of big earnings…with nearly 100 companies reporting – highlights include tech names AMZN, FB, TWTR, MSFT……  On the back burner we still have trade talks that are progressing and as long as we move the ball down the field – it’s all good.  A range of central banks around the world are due to make monetary policy statements – BoJ (Japan), BoC (Canada), Riksbank (Sweden) and BoR (Russia) – none are expected to surprise or move the mkts at all. 

The S&P tried to break out last week, but kept getting derailed at the 2915 ish level…and while she never really backed off she is finding resistance there and she found it again overnight.  If this week – she succeeds in piercing up and thru then expect the bulls to challenge the October intraday highs of 2939 swiftly – especially if we keep ‘beating the estimates’.  A change in tone (if at all possible) could see the mkt back off to the 2850 level where I think it will find support.

On a side note –

I am pleased to announce that my partners, Nancy Tengler and Ron Insana and I will be hosting an event in Boca Raton this Thursday – April 25th – “The Politics of Investing”  It is sure to be an interesting evening.  Click on the link to see the invite – limited seating still available

Take good care


Chicken Amatriciana Style

Amatriciana tomato sauce originates from the town of Amatrice – province of Riete in the Lazio region…..Lazio is in central Italy  – and it borders the Tyrrhenian Sea and includes Rome as its most famous city….. You will see this recipe on a menu (all’ Amatriciana)  – featured over pasta, chicken even over steak….it is made with guanciale, crushed tomatoes, pecorino, garlic and onions…..It is one of the most famous tomato sauces in Italy. 

For this you need:  Olive oil, bone in chicken thighs, s&p, whole canned tomatoes, guanciale (dried pork cheek – you can substitute with pancetta if you have to), Vidalia onions, garlic, red pepper flakes (optional), dry white wine – like a pinot grigio, peeled carrots,  butter, pecorino cheese and finely chopped Italian parsley. 

Preheat your oven to 350 degrees

Season chicken with s&p – set aside.

Hand crush the tomatoes – set aside.

Using a large dutch oven (or some other ovenproof pot) heat up some olive oil.  When nice and hot – add two or three pieces of the chicken and sear until golden brown on all sides – maybe 10 – 15 mins in total to do all the pieces.  Remove and place on a large plate and cover with tin foil.

Next reduce heat to medium and add the guanciale – scraping off any of the browned bits on the bottom of the pan.  Cook until nice and crisp – maybe 5 mins….Add  in the chopped onions and cook until soft – 5 mins….now add the finely chopped carrots and cook for about 5 – 8 more mins…Next up – the garlic and red pepper flakes….cook for 2 more mins and then add in 2 cups of the wine – to help deglaze the bottom of the pan…..Now add the hand crushed tomatoes – season with s&p and then reduce heat to simmer. 

Now add back the chicken – cover with an oven proof top and place in the oven and bake for about 1 ½ hrs or until the chicken just falls off the bone.  Now transfer the chicken to a large serving platter – Add 2 tblspn of butter to the sauce – stir to melt and then spoon over chicken – sprinkle with some fresh grated pecorino and serve. 

**Now if you want to – you can boil up a ½ lb of fusilli or bucatini and serve on the side as well. Make sure to toss with cheese as well -before you serve. 

Buon Appetito.

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