This post was originally published on this site

Things you need to know

  • NFP blows it out of the     water – at 240K jobs
  • Unemployment falls to     3.6%
  • Oil still under pressure     after yesterday’s beating
  • More FED Speak today –     will they agree with Jay?

The mkt closed lower yesterday for a couple of reasons –

  1. Recent API (American      Petroleum Institute)  and IEA  (Int’l Energy Admin) both      revealed that crude oil stockpiles surged last week and word that OPEC      may increase production come June. 
  2.  Russia is sending      ‘clean’ oil to Europe thru a pipeline that was previously contaminated
  3. And apparently – US is      increasing our EXPORT capacity via a web of new pipelines running from      the Permian Basin in TX (which is the World’s largest shale oil basin) to      the refineries along the coast  and onto the global oil mkt.

Both of these issues just gave some the excuse that they needed to take some money off the table….by the end of the day the Dow gave up 122 pts (although at one point it was down by 220 pts) the S&P gave up 6 pts after being lower by 15 pts, the Nasdaq lost 13 and the Russell 2000 actually rose 6.25 pts as investors committed to dollars to US centric names.  For the most part is was an uneventful day as global investors await today US macro data including the star of the show – the NFP (Non-Farm Payroll) report.  Estimates are for +180k new jobs to be created and if Wednesday’s ADP Employment report is any indicator then the number should be much better…..and that is causing US futures to rebound this morning with S&P futs up 8, Dow futures up 70, Nasdaq up 42 and the Russell2000 is up nearly 6 pts. 

 Next up – Beyond Meat – BYND  the IPO (Initial Public Offering) that swept the mkt yesterday. If you haven’t heard (yet) – BYND is a company that is trying to turn meat eaters into plant eaters – they develop ‘plant based protein food products’  They offer what they call burgers, sausage and other food products that are all created from plants – so there is no ‘meat’ in the product.  It is an interesting story – and I have not tried one yet – but the action alone in the mkt is making me very curious…..

 But here is the rub (again)…..This company led by CEO Ethan Brown came public yesterday…..the investment banking (IB) team led by non-other than JPM, GS, and CSFB -names that deserve a place on the mantel……..I mean it is JPM, GS and CSF – priced the issue (9 mil shares – a very small IPO)  on Wednesday evening at $25/share.   That is what the IB’s told the company it was worth in the mktplace – after all the road shows, after all the effort put into this event….OK – that great – but guess what?  It was a repeat performance (even better) than the  ZOOM (ZM) IPO last week….. How could these guys do their due diligence and then come up with $25/share for this company when clearly there was so much demand?  (And don’t go telling me that it was all retail)   The stock opened at $46/share or +84% and then rocketed higher – at one point trading at $75.22 or +200% to close at $65.75 or +163% all in 4 hours…because it never opened until 12 pm. 

 So again – the question:  How could these ‘guys’ have made such a mistake in pricing the issue?  BYND and the insiders who cashed out yesterday left a HUGE AMOUNT OF MONEY ON THE TABLE….Money that BYND could have used to help it grow, produce, and innovate…I mean the stock shot up 84% on the opening and then closed up 163% by the close… you have to assume a couple of things.

 1. The Institutional road show completely missed the mark.

2.  The institutions that wanted stock – weren’t clear in the book building process. 

3.  The issue was too small – they only brought 9.6 mil shares public  – which then begs the question – if you’re only bringing 9.6 mil shares public you better be sure that you understand the demand – and if the demand was that strong – maybe you should think about bringing more stock public or you need to raise the price just a bit more – because one thing is very clear – $25/share was NOT the right price by a long shot.  Again – it was if you were the institution that bought it on Wednesday evening at 8 pm and flipped it on Thursday morning (less than 15 hrs later) but it was not if you were part of the selling contingent that was looking to cash out on a venture capital investment made a few years ago when it was just a ‘dream’.   One way or the other – someone needs an explanation about how they could have missed the signs.  Now – again you could say that the bankers told the company about all the demand and they still wanted to price it low so that it ‘popped’ on day one – creating all the excitement it did…or you could say – someone dropped the ball.  BTW –  the mkt is pricing it like it is a ‘tech’ startup…..and not like a food company….so let’s see…..

 Now case in point…ZOOM (ZM) last week was priced at $36/sh and within 12 hrs was trading up 72% at $66/share…and has continued to trade even higher….which tells you that the $36/share price that the bankers came up with was nowhere near the price that the mkt assigns to it – and the institutional demand would have signaled that.  The underlying demand for this company would have been known in the book building process…..because if it was just the one day excitement – the stock would have backed off in the days following and it hasn’t.  LYFT on the other hand was more fairly priced (although some may argue that is was overpriced) …as it did pop a bit on the IPO – Priced at $72 – opened at $86 (+20%) – so everyone WAS happy, but is now trading some 24% below the opening price and 14% below the IPO price……which I would say is because so much of that pricing was all about the ‘excitement’ it was overhyped……… is this UBER UNICORN, blah, blah, blah……  which is different for BYND and ZM……the risk here is that they left way too much on the table and while some may not fault them for a successful deal – I would argue that the sellers of the IPO – are not so happy – but take a poll….

 Overnight mkts in Europe are all higher… investors there monitor more earnings and await today’s NFP report.  European eco data included:  EU Core HICP (their CPI) was stronger than expected, rising 1.2% vs. the est of  1.0% . A stronger HICP number could ignite the hawks again as they will begin to say that inflation is about to pop and that maybe they should stay in front of the ball vs. behind it.  FTSE +0.78%, CAC 40 + 0.30%, DAX + 0.45%, EUROSTOXX + 0.48%, SPAIN + 0.11% and Italy +0.23%   

 Today the headline number is the NFP and they just reported that we created 253k more jobs vs the +180k jobs …or 40% MORE than expected.  Unemployment dropped to 3.6% and avg hourly wages rose by 0.2% – all very strong numbers and that has caused futures to move a bit higher as we move closer to 9:30.  But the strength could cause the mkt to retreat –  given Powell’s somewhat hawkish surprise on Wednesday.  Remember – we are going into the weekend….

 Today we will hear from Fed Vice Chair Richie Clarida (11:30 a.m. ET) and NY’s Johnny Williams (1:45 a.m. ET).  Investors will be looking to see whether they echo Powell’s “transitory” comments about inflation or not.  If they do agree then we could see more pressure on stocks and if they don’t we could get a brief relief rally.   

Take good care.


 Vegetable Paella

 Like traditional paella – this dish is relatively easy to make and you can easily increase the amount of ingredients to feed a large number of people.  It features no meat or fish is only veggies and rice – made with the traditional paella seasoning.  Try it – You’ll like it.

 If you do not have a Paella Pan – no worries…you can use a large nonstick frying pan to accommodate this typical Spanish rice dish.

 You will need: Olive oil,   1 red & 1 yellow bell pepper, chopped,  6 scallions thinly sliced,  5 cups vegetable broth,   3 cloves of garlic – minced,   1 tsp. crumbled saffron threads,   1 cup short-grain white rice – like Goya, or Vitarozz,  3 cups broccoli florets,   1 cup fresh (or frozen) baby peas,   1 cup halved grape or cherry tomatoes,   12 pitted green olives – cut in half,  12 pitted black olives – cut in half,   1 lemon, cut into wedges,   ¼ cup chopped fresh parsley

Begin by heating olive oil in the large nonstick skillet over medium heat.  Add bell peppers, garlic and scallions, cook 5 minutes. Next add the broth.   Stir in saffron, bring to a boil.  Add rice and stir – reduce heat to medium-low, cover and cook for about 10 mins.

 Next – add the broccoli, peas, tomatoes, and olives over rice. Cover, and cook for about another 10 mins…or until rice is fluffy and tender. Remove from heat.  Let rest, covered, 5 minutes.  Taste and adjust for seasoning.   You can present this on a large family style platter garnishing with lemon wedges and chopped parsley.

 Buon Appetito.

General Disclosures

Information and        commentary provided by ButcherJoseph Asset Management, LLC (“BJAM”),        are opinions and should not be construed as facts. The market commentary        is for informational purposes only and should not be deemed as a        solicitation to invest or increase investments in BJAM products or the        products of BJAM affiliates. The information contained herein        constitutes general information and is not directed to, designed for,        or individually tailored to, any particular investor or potential        investor. This report is not intended to be a client-specific        suitability analysis or recommendation, an offer to participate in any        investment, or a recommendation to buy, hold or sell securities. Do not        use this report as the sole basis for investment decisions. Do not        select an asset class or investment product based on performance alone.        Consider all relevant information, including your existing portfolio,        investment objectives, risk tolerance, liquidity needs and investment        time horizon.
       There can be no guarantee that any of the        described objectives can be achieved. BJAM does not undertake to advise        you of any change in its opinions or the information contained in this        report. Past performance is not a guarantee of future results.        Information provided from third parties was obtained from sources        believed to be reliable, but no reservation or warranty is made as to        its accuracy or completeness.
       Different types of investments involve varying        degrees of risk and there can be no assurance that any specific        investment will be profitable. The price of any investment may rise or        fall due to changes in the broad markets or changes in a company’s        financial condition and may do so unpredictably. BJAM does not make any        representation that any strategy will or is likely to achieve returns        similar to those shown in any performance results that may be        illustrated in this presentation. There is no assurance that a        portfolio will achieve its investment objective.
       Definitions and Indices
       The S&P 500 Index is a stock market index        based on the market capitalization of 500 leading companies publicly        traded in the U.S. stock market, as determined by Standard &        Poor’s.
       BJAM is an investment advisor registered in        North Carolina and Arizona. Such registration does not imply a certain        level of skill or training. BJAM’s advisory fee and risks are fully        detailed in Part 2 of its Form ADV, available upon request.