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Things to know
- Trump Tweets Again – halts tariffs (for now) He’s concerned about the Holiday’s
- Algo’s go psychotic
- Gold backs off (expected)
- And this morning – the Yield Curve inverts – sending futs LOWER
Trump Tweet Tirade……which two weeks ago set off a global re-pricing of stocks, bonds, gold, oil, bitcoin, interest rates, home prices, office prices, rents, gasoline prices, (you get the picture right?)…..and that was because Donny surprised the mkts while also surprising his US/China Trade Negotiators – Stevey Mnuchin and Bobby Lighthizer, Chinese President XI Xi, (he even caused Mao Tse Tung to roll over in his grave) – by announcing a new set of tariffs to be imposed on September 1st – that now included everything that comes from China – Mkts shuddered, China expressed complete dissatisfaction with this announcement and then announced their own retaliatory measures – think weakening Yuan….which then set in motion a cascading effect around the world…..mkts from Asia to Europe, to the US got blasted…..Trump then accused the Chinese of currency manipulation and of not playing fair in the playground – (funny how that is….) which then set off a number of days of heartburn….algo’s took the mkt down nearly 5% one day only to reverse course and take it up 2% the next day…..then down 3%, up 1%, down 1%…blah, blah, blah…..
And then Monday and Tuesday as investors/traders were dealing with the continued lack of trade news and the chaos taking place in Hong Kong and Argentina – mkts moved lower….……the tone was clearly negative and investors were re-pricing the assets… – stocks under pressure, gold soaring, oil falling, bitcoin rising (as some are now calling this the new safe haven asset – it is NOT) , treasuries rising – sending yields lower again…..and THEN……
Trump decides to – once again – surprise the mkts…..all in the name of the ‘holiday shopping season’…….(are you kidding????) At about 9:45 am – the mkt went berserk, sell side interest lining the books at S&P 2900 suddenly vanished….nothing offered of any consequence in line…..the buyside algo’s launching into a psychotic episode as nearly every ETF scrambled to be the first one to react……So react to what you ask?? Good question…..at 9:45 – Trump announces that he is ‘temporarily halting the imposition of SOME of the September 1st tariffs (now scheduled to go into effect on Dec 15th) ….all in the name of the US consumer and the holiday shopping season….. In fact – in a brief interview just outside of Marine 1 – Trump said that he was ‘rethinking the move to impose tariffs JUST IN CASE it had an impact of US consumers’. I mean you can’t make this up….I just want to know who in the administration has access to these daily tirades that cause outsized moves in the mkt…..(think SELL the indexes ahead of the surprise announcement and then BUY the indexes ahead of the next surprise announcement….oh like that has never happened…..) It’s an abomination……but it is what it is… SO – stocks rallied, gold sold off, oil surged (because suddenly there is this latent demand that analysts didn’t know about) ….Bitcoin got crushed (so much for the ‘safe haven’ moniker), treasuries were caught in the crossfire…and the VIX surged……It’s just another day…..
Tech was by far the biggest beneficiary – because of the holiday shopping season – smartphones, video games, toys, computers, laptops, all items that are big sellers during the next 3 months…..and all items that were set to be hit with the new tariffs – but which now will be offered a reprieve until December 15th – so you are on notice – go out and BUY that stuff now before prices rise in December……It’s comical really – this tariff / trade war stuff is about wearing out it’s; welcome….but the algo’s don’t recognize that…..all they do is react to words…..We can discuss this later.. by the end of the day – every index was green…..the Dow added 372 pts or 1.4%, the S&P surged by 43 pts or 1.5%, the Nasdaq rose by 152 pts or 1.95% and the Russell surged by 17 pts or 1.15%……
Overnight the feel good tone took Asian mkt up as investors there ignored the noise in Hong Kong and celebrated the idea that Trump has backed off . Now Chinese Ind Prod and Retail Sales both missed the estimates but that did little to cause investors to get worried…- The PBoC set the Yuan at 7.0312 vs the dollar – the 5th straight session above the 7 level…..(the higher it goes the weaker it is and that is helpful for China) …. Japan +0.98%. Hong Kong +0.08%,. China +0.45% and ASX +0.42%.
In Europe this morning the tone has once again turned sour…..Eco data in Germany was not good…GDP for the April to June time frame fell by 0.1% – and GDP for the Eurozone as a whole rose by 0.2% which is DOWN from the rise of 0.4% in the 1st qtr….and this is once again fueling fears of what? A recession across the zone…. In[Jon Curley] addition the Europeans are paying attn to the weak China data and that is adding angst to the mood. FTSE -1%, CAC 40 – 1.4%, DAX – 1.5%, EUROSTOXX – 1.4%, SPAIN -1.4% AND Italy -1.98%
And in the US – the Yield curve has now inverted…..and this is flashing another ‘warning sign’ of a recession coming to America…..(not to worry – the recession is still 14 months away according to legend). And this move is on top of the weaker China data and the Eurozone data…..Now understand – the inversion is not the cause of the recession it is the symptom of the coming recession……Now don’t get yourself in a tizzy just yet…..this is dynamic…..not static….do not make an emotional move. As a result – US futures are LOWER…..Dow futs suggesting a loss of 300 pts….giving back yesterday’s gains…the S&P lower by 32, Nasdaq off by 100 and the Russell losing all of yesterday’s gains and then some as it is lower by 18 pts….Let’s see what Trump Tweets Today to stop the bleed……
Eco data shows that Mortgage Apps shot up by 21% over last week…..I guess the fall in interest rates and clearly mortgage rates is having the desired impact at least on creating activity – it may not be causing prices to rise – in fact I don’t see how prices can rise in this environment….
Watch for the S&P to once again break intermediate term support (again) at 2905 – leaving it vulnerable to test the 200 day at 2795 before this is over…..Any strength will be met with selling pressure…..
Take good care.
Considering all of the turmoil….it’s time for some Ratatouille – (Rat – ta – too – ey)…..comes from the French word – Touiller – meaning to “toss food”…….because when you make this you – literally “toss” it all together…..now this can be a side dish, or a main dish…you can serve it over Pasta or Rice – you can even use it as a stuffing in a pastry type filo dough. It is a great kind of “stewy” meal…..thick and delicious yet not overpowering at all….It is also a comfort food and in today’s mkt – who couldn’t use some comfort?
Key Ingredients – garlic, onions, zucchini (green and yellow), eggplant, bell peppers (green, red and yellow), carrots, celery, basil, crushed tomatoes, s&p, oregano and olive oil.
Peel and cube the eggplant – layout on paper towels on the counter for about 30 mins or so… You can also slice the onions, peppers, chop the carrots and celery and cube the zucchini – set aside.
Begin by heating up the olive oil – about ½ c or so…..now add the crushed garlic and sauté for a bit. Next add the onions and sauté until translucent, now the peppers, carrots and celery – continue to cook on med heat….until they feel soft – about 15 mins or so…..finally add the cubed zucchini and eggplant – mix well and season with s&p.
Cook for another 10 mins or so…..now add a can of crushed “kitchen ready” tomatoes – NOT PUREE. (Depending on how much you are making you may need two cans of tomatoes). Now add fresh basil, a bit of oregano and cover – allow to simmer for about an hour – while stirring occasionally. Feel free to taste in case you need to adjust the seasoning. At this point the Ratatouille is complete. You decide how to serve it – over pasta? – Use Rigatoni. Make sure to have fresh grated Parmegiana cheese!
Over white rice? As a main dish? As a side dish? You cannot go wrong!