Things you need to know
- It was all about what Bobby Mueller had to say
- Stocks break down – pierce support and then attempt to rally
- Dow & Russell remain below supports while The S&P/Nasdaq barely hold on
- European mkts find support at trendlines and lead today’s advance
Tuesday evening, May 28th 4 pm – the S&P ended the day at 2,808…….Wednesday morning, May 29th, global investors await the Mueller Report – at 9:30 the S&P opened at 2,790 (down 18 pts) and by 11:29 am – the S&P pierced and broke thru long term support at 2,776 (it was only a matter of time…) – it struggled for 3 or 4 mins….attempting to rally – only to get slammed again as the technically driven algo’s piled on….and by 11:53 am – the S&P was trading at 2,766 – well below the last trendline support…….all happening at about the same time that Bobby Mueller was at the podium – saying that
“If we had had confidence that the President clearly did not commit a crime, we would have said so…and that charging the President with a crime was not an option because of Justice Dep’t rules. The Constitution requires a process other than the criminal justice system to formally accuse a sitting President of wrongdoing”. (the reasoning – based on 2 opinions from the Justice Dept in 1973 & 2000 is that a sitting president cannot be charged with a crime because it would unduly interfere with the constitutional responsibilities of the office. – Period.)
…..sending the message that he is not convinced that there wasn’t some hanky panky going on -but falling short of an outright accusation…. Tossing the ball to the Democrats in Congress while at the same time announcing that the was shutting down his office and returning to private life. .And so the next chapter is about to get written – it is going to be a brutal 18 months – just sayin’….
And so the mkts react – taking it all in stride – testing both technical and operational limits….……having to digest and price in all of the other stuff – China Trade, European politics, tariffs, nuclear bombs, North Korea, Mid-East tensions and then this…..a final push to either begin impeachment hearings or not….which will only add to the political uncertainty that is blowing thru the atmosphere around the world…..(think Italy, Germany, France to name a few….)
Bonds continues to rally sending yields plunging – which then forces us to have the conversation about the ‘inverted yield curve and what it portends for stocks’ ……the Dollar index trading near the most recent highs – putting pressure on commodities, and stocks taking a beating as the investors around the world remain worried about slowing economic growth that is tied directly to a failed US/China trade agreement. Risk Assets (stocks and commodities) plunging as the opening bell began to ring – and by 11:29 the Dow had lost over 400 pts, while the Nasdaq fell by 102 pts….Oil – which has been under pressure of late also tanked falling nearly 3% to $56.90 (right where I suggested it would find support in yesterday’s note) before rallying to end the day almost flat as an industry report revealed a decline in US crude inventories…..(in my opinion – the report has less to do with the move – oil has lost 10% of its value in the last week – it has broken thru technical supports which only ignites the automated trading systems – at some point – the humans realize it’s a bit overdone and stand there to defend the position….Causing the algo’s to back off once they realize there is support. It’s the same story all around….The S&P traded the same way – once It broke support – a wave of selling takes place – the buyers know this – they back off until such time that they feel its overdone….and then boom – they stand there and support the position – causing the selling to abate – at least for now…..but the damage has been done – this latest wave of selling pressure is not over…..It may get a reprieve but there is more to come….both the Dow and the Russell remain below supports and the Nasdaq and S&P are barely holding on….so if you are a long-term investor – hang tight – no reason to pull out now….in fact – you should be looking at your portfolio and taking stock of the most recent moves – what names do you have that are quality names that have gotten beaten up? Talk to your advisor – it’s all very dynamic….
Overnight – Stocks in Asia continued to move lower….increasing tensions between the US and China continue to weigh on investors minds as both sides lob threats at each other – to try and intimidate them to come back to the table….(How’s that working for you?) In China – the People’s Daily – the Official newspaper of the Communist party had this say –
“We advise the US side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!”
And so it goes…..’The Art of the Deal’ is certainly going to be tested in the days and months ahead….Have you noticed that we have not heard from Bobby (Lighthizer) or Stevey (Mnuchin) lately? That can’t be a positive and while it may not be a negative – it is not a positive. Both sides are now dug in – which is why we see global mkts under pressure – the surge higher was because everyone expected a deal – we were all told it was only days away – until it wasn’t……so hold on…..and China’s latest threat about rare earth minerals only adds to the anxiety created after Donny blacklisted Huawei Technologies forcing so many US chipmakers and internet companies to cut ties……..And this morning they announced that they were putting US Soybean purchases on hold as well – hitting the farm belt right between he eyeballs…..I mean this is not where we saw the conversation going at all…..Japan -0.29%, Hong Kong – 0.44%, China – 0.62% and ASX – 0.74%.
In Europe – mkts there are all a bit higher (after suffering a beating over the last couple of weeks). Nearly everyone of these indexes have also fallen right to trendline supports and found support – they have not pierced lower – and that is helping the tone and sentiment. Eurostoxx, FTSE, CAC 40, DAX, IBEX (Spain) are all right there…Italy (FTSE MIB) just broke and is fighting to hang on. Politics and trade, politics and trade…..those are the drumbeats that are driving the mkts in Europe and around the world. In Germany – the heir apparent to Chancellor Angie Merkel – a woman named: Annegret Kramp-Karrenbauer – is not seen as fit to replace Angie – dashing any hopes of a smooth transition in German politics….. so the story remains – Politics and Trade….FTSE + 0.46%, CAC 40 + 0.40%, DAX + 0.58%, EUROSTOXX + 0.57%,. SPAIN +0.97% AND ITALY +0.41%.
US Futs are all up in early trade….(again more of a bounce vs. anything definitive). Trade and Politics, Trade and Politics and that is the story here as well. Eco data today includes the usual suspects….Init Jobless Claims of 214k, Cont Claims of 1.66 mil, and then: Retail Inventories of +0.2%, Wholesale Inventories of +0.1%, Pending home sales of +0.5%, but the biggest data point is the First Revision to 1St qtr GDP – exp of 3% – down from 3.2% – still a very healthy number – but one that is sure to come under attack if the trade/tech war drags on and on.
The S&P is up 11 pts – in what feels like a ‘dead cat bounce’ after the beating it has taken….the index is off 5% from the highs – and that is nothing to write home about – it is still within the normal 10% band – so a bounce here on NO NEW NEWS can only be seen as a bounce – I mean was there a new catalyst that changed the storyline from negative to positive? The S&P is now clearly in a new range – My sense is 2776/2830 – with 2776 being the KEY number……We will test that level once again – maybe tomorrow going into the weekend – unless we get some positive developments – Stay tuned.
Take good care
Rigatoni w/Sweet Sausage & Tomato Cream Sauce
(https://www.youtube.com/watch?v=tqDOOQDduDg&t=13s) – This is my Youtube presentation of this meal.
For this you need: Rigatoni Rigate Pasta, Garlic, Onions, Sweet Sausage, White Wine, Heavy Cream and Crushed Tomatoes
Heat olive oil in a pot…add crushed garlic and one diced onion (Vidalia if you can get it). Sauté until soft and sweet, next add the sausage meat – which you have removed from the casing – until brown. Next add 2 cups of dry white wine and let the alcohol burn off….open 28 oz can of plum tomatoes and rough crush – so that it is a bit lumpy. Bring to a boil and then immediately turn to simmer. Stir and cover. Don’t go too far because you will need to stir again.
Now add 1 cup + a little more of heavy cream (you can use lite cream if you prefer – but heavy cream gives it a richer taste). Let simmer until thickens…only about 4 or 5 mins….
In a separate pot bring salted water to a boil and add pasta –
Cook until aldente – 8 / 10 mins…strain – reserving a mugful of the pasta water….Add the pasta directly into the sauce and stir – making sure to coat well. Add a handful or two of parmegianna cheese and mix. If it looks like it needs some more liquid -add a bit of the pasta water to moisten. Serve immediately – offering more grated cheese to your guests. –
On a separate plate – make some garlic bread – using “Panne di Casa” sliced loaf. Melt butter/olive oil add crushed garlic and heat so that the garlic permeates the butter. Next using a pastry brush – brush the bread with the butter/garlic mixture and place under broiler until golden brown. Turn over and toast. When done – remove from oven – slice in half and serve alongside the pasta…..It doesn’t get any better than this….
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