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Things you should know
- Xi fires a shot prior to lunch – just to set the stage
- European mkts move higher in anticipation
- 1st half of 2019 has mkts up solid double digits –
So stocks meandered for most of the day as investors/traders and the algo’s tried to figure out what’s next on the trade front……..by the end of the day – the Dow was the only index that failed to rally. It ended lower by 10 pts, while the S&P surged by 11 pts, the Nasdaq rose by 58 pts and the Russell gained 28 pts…..Leaving the 1st half of the year’s performance at +13%, + 16.6%, +20% and +14% respectively. Eco data yesterday revealed that 1st qtr GDP remained at 3.1% annualized – a healthy number for sure, but one that appears to be coming under pressure as we move thru the 2nd qtr and into the 3rd. Atlanta’s GDPNow forecast is suggesting that 2nd qtr GDP will be weak at 1.9% – but it’s still early and that could change. Either way – there are some sectors of the US economy that are struggling……..as a result of the ongoing trade war and slowing global economic activity – and this as we know has given way to the conversation about lower rates in the coming months – which was recently called in to question when Fed Chair Jay Powell suggested – ‘not so fast’….and this left investors and algo’s on the edge – NO lower rates???? What’s up with that – and that is when we saw the mkt back off Tuesday……but that was then, this is now……
Look, either way – it is the excitement over trade and the excitement over ‘the meeting’ that will continue to be the driving force today…… – as it is now less than 24 hrs before Donny and Xi Xi – have lunch. Remember it was yesterday morning when we got word that the Chinese have a list of demands that we must agree to – in order to move the ball forward (think the blacklisting of Huawei and other Chinese tech companies) ……both the WSJ and the South China Morning Post reporting this headline…….and then yesterday afternoon – Larry Kudlow disputed that claim saying that ‘no preconditions were set ahead of Trump’s meeting with Xi’…..he then went onto say that the US ‘may move forward with additional tariffs’….Which is what caused the mkt to back off (before recovering) . …so now you ask – How could there be the confusion? Either there were or there weren’t a list of demands – it’s no big deal either way – it’s just how the headlines create the confusion….. I’m thinking it’s about causing the algo’s to have a stroke…..!
For the most part – the mkt rebounded – ahead of the close and ahead of the massive Russel Rebalance trade happening today at 4 pm……Overnight we got more headlines that are sure to create the mood today….. ……Bloomberg runs with this headline…..
“Xi Fires Shots at US Before Trump Meet”
in this article Xi is quoted as telling African leaders that ‘Any attempt to put one’s own interests first and undermine others will not win any popularity’ – this clearly meant to put Donny on the defensive – but is this really mkt moving? Not at all – because in the end – that is exactly what they are all trying to do…. Each side is arguing for their own interests – who is kidding who? So the answer lies somewhere in the middle and it is called compromise – So what is the best we can hope for? How about a pause in the rhetoric? A pause with the threats? How about we move towards a deal – since Stevey (Mnuchin) told us the other day that we are 90% complete….so while a temporary truce is the most likely outcome – there is the possibility of a deal – but the odds on that are small and if you are betting on a deal – then I have a bridge in NY I’d like to sell you. I’ll say it again – the mkt expects something…..so if we get nothing – then expect stocks to come under pressure. Remember – we are talking about revising trade agreements that date back to 1987…..or 32 yrs ago when the world was a very different place – and while the process can be difficult – it has to happen – the mkt just wants to see progress….
Remember – the 3 concerns that have been driving the mkt action remain front and center……The FED, The Trade War and the performance of the Global Economy…….In my opinion it is the trade war that is in the 1st position for now. The other two issues will fall into line once we get clarity on trade – if we remain murky on trade then yes – the FED (and other central banks – think ECB, BoE, PBoC, BoJ) will move to the 1st position as they try to calm the mkts…..and prevent a global slowdown – but they too (the banks) want the trade issue to be resolved first – so let’s see what happens.
US futures are up this morning…..Dow futs up 95 pts, the S&P up 8, the Nasdaq is ahead by 15 pts and the Russell is adding 2……Eco data today includes Pers Income and Pers Spending – exp of +0.3% & 0.5% .
My guess is that the mkt remains in a tight range today…….as the qtr and 1st half come to a close. My guess – 2920/2950…..Remember the Russell Rebalance happens today as well – which will create huge trading volumes on the closing bell.
Asian mkts struggled overnight – as the G20 kicked off….while European mkts are all higher in early trading…….with little else to focus on – expect the speculation to continue….it is in the best interest for both sides to move forward given the economic damage that has been done and will be done if this drags on much longer…..but it is also not out of the question that China digs in and bets that Trump loses in 2020 leaving the negotiations to the new president – and if that is the case – it is going to be a very long 18 months…..
Oil – oh boy….just look at the chart…..it is about to break out…..it has now tested, backed off and tested resistance again…..trading at $59.45 – it is right there…..$59.50 is the level that needs to be broken……and next Monday and Tuesday has OPEC meeting in Vienna to decide what’s next…..and no matter what happens in Osaka this weekend – OPEC is expected to extend the cuts that are in place already – the question is will the Saudi’s and the Russians push for bigger cuts for a longer period of time? When oil breaks out (not if, but when) then look for it to move fairly quickly to the $65/barrel level – which is where it seems to settle down. Again – unless there is a complete breakdown at the G20 – expect oil to push higher.
Take good care
4th of July Short Rib Burgers
A 4th of July Favorite – I repeat this recipe because it is so good……and is so much more than just a ‘burger’
This is a bit of work – but if you have the time and you really want to impress – go for it. Refer back to the Short Rib recipe below. Make ½ dozen ribs – cool and then shred the meat off of the bone….Now – mix the cooked short rib meat with the ground chuck (like 25% fat) for the burgers……form the burger and cook on the grill. You can also add in a bit of the ‘juice’ when you are mixing the burger.
Top with sautéed onions and Monterey jack and serve on a butter toasted Brioche bun to complete. Outstanding.
Make sure to have traditional cole slaw available for anyone who wants to add the slaw to the burger – Have a happy 4th.
Braised Beef Short Ribs –
You will need 6 beef short ribs, carrots, celery, onions, garlic, tomato paste, red wine, beef broth, s&p, olive oil…..
Preheat oven to 325 degrees.
Start with the ribs at room temperature. Rinse and pat dry. – season with s&p on all sides. In a large frying pan – add the olive oil turn heat to high until the oil gets hot….add ribs – turn heat to med/med high and brown the ribs on all sides. Place ribs in a large baking pan – on their side – just line them up. Next – chop – not mince – but rough chop, onions, carrots, celery and garlic. Do not be afraid to use garlic…..it just gets sweet. Cover the ribs with the veggies.
Back to the frying pan – add beef broth – tomato paste (small can) and your favorite red wine. Bring to a boil and then simmer until the sauce reduces to ½. Once done – pour the juice over the ribs in the baking pan. Make sure you make enough juice so that the ribs are bathing in the juice. Do not cover the ribs in juice – just let them bathe. Cover tightly with tin foil. Place in oven and bake for at least 4 hrs….the longer they stay tightly covered the softer and juicer and tender they will be.