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Things you need to know.

  • What’s it all about?
  • Italy in political crisis (again – Yawn)
  • FOMC mins will reveal what?
  • Jackson Hole begins tomorrow

So stocks traded up to 2925 ish and failed…..struggling to understand what’s it all about Alfie? ( – Classic Dionne Warwick – 1967) Is it just for the moment we live?

Stocks waivered – the Dow fell 173 pts or 0.66%, the S&P gave up 23 pts or 0.79%, the Nasdaq fell by 55 pts or 0.68% and the Russell fell by 10 pts or 0.72%,,,,,,None of this should come as a surprise really, we discussed this over the past two days after the rally off the recent lows – for no other reason other than the 4% spike, we would expect the mkt to stall and digest – which is what it is doing…… Now nothing has really changed other than more talk about new stimulus coming from the WH… Payroll tax cuts (first denied by Kudlow and then confirmed by Donny) , Indexing of Capital Gains, fiscal measures designed to continue to stimulate the US economy all while rates remain uncertain, Fed policy under fire, Trade talks stalled, bond yields inverting, Political upheaval in Argentina, Italy and the UK and the ongoing trade war…….yet – wages are rising, manufacturing is strong, unemployment is the lowest it’s been in decades and the consumer is alive and well. So why the tax cuts and fiscal stimulus….think – Election Cycle….  

So while stocks are under pressure they are still well ahead for the year…..with the Dow up 11%, the S&P up 15.7%, the Nasdaq ahead by 20% and the Russell up 11% – so What is it all about? Why the fuss? Why the nervousness? Because this rally has been going on for a decade – from the depths of the lows of the GFC (Great Financial Crisis) to today…we have seen the mkt return more than 335%….so at some point – you gotta ask – What’s it all about?

Last week’s inversion has now set the tone for the next part of the conversation….whether or not its going to happen – it has highlighted the fact that it has been a long time since we’ve had a recession and with plunging rates in the US and the world – the idea that one is coming is now hot…..just to be clear – the question is not Is it coming? – of course it’s coming (will the sun rise today?) The question is how do you prepare for when it comes and that is something to think about…..but to make a decision today for an event that might happen 16 months out may not be the smartest decision….and remember – there are multiple signals that would identify a coming recession – last week’s inversion is but one – the other 5 or 6 signals are solidly in expansion mode – so sit back, assess the moves, speak to your financial advisor and move on.

Now is it a bit toppy here? Maybe – will it struggle here? Again maybe….so much depends on trade talk resolution – which at the moment appears to be NOT happening….so yes – that will continue to create uncertainty and it is that uncertainty that will hold us hostage…..improving US macro data will continue to support the fact that we are the ‘prettiest girl on the block’ and money will continue to come here. I mean besides the equity mkts – Just look at the US treasury mkt – bond prices are surging – why? Because there is safety in the US treasury mkt, but there is also something else – the US has the highest rates of any of the developed countries –(Germany is auctioning off 30 yr bonds at 0% today) ….so money is searching for yield – as global investors continue to look for diversification. The US economy is powered by the consumer and the consumer is strong…..

Ok – so overnight – Asian mkts were mixed – off slightly as investors there reacted to the US weakness…….analysts in Asia citing ‘deep seated worries’….is this guy kidding me? OK – he is assuming that all of the political upheaval is about to ‘blow up vs. blow over’ – and to that I say – not so fast…..The Italy thing will take care of itself, it always does, the UK has until the end of October to figure it out and if October 31st comes and they still don’t have a resolution they will surely ‘kick that can down the road again’ giving all sides more time to reconsider…..and US trade talks – those for sure won’t be settled by then either and it now appears that both sides are locked in – and if the mkt was really concerned about it – we wouldn’t be trading near all time highs at all….The Chinese set the Yuan at 7.0433 – but it did trade as high as 7.0591 and US futures are doing what right now? They are all up….which goes to my point…..the mkt is adjusting…because remember 3 weeks ago – when it first pierced 7 the mkt WENT INTO A COMPLETE MELTDOWN MODE….talk of currency manipulation etc….was all the rage….and stocks sold off. Last night it traded at 7.0591 and the mkts are yawning…..Whatever! Japan -0.28%, Hong Kong +0.15%, China -0.16% and ASX -0.94%.

In Europe mkts there are all solidly HIGHER…apparently unfazed by the move in the Yuan vs. the dollar or unfazed by any of the other issues that create angst…. Elsewhere in Europe – Italian PM Giuseppe Conte has now resigned – and this will set off a new round of discussions between President Sergio Mattarella and the party leaders about what’s next in this latest Italian political drama….(remember – Italy has had more than 65 gov’ts since the end of WWII… 65 govts in 74 yrs – capisce?) UK Prime Minister Boris Johnson is on his way to Germany today to meet Chancellor Angie (Merkel) as he is looking for support and flexibility from the range of EU leaders….and he needs Germany’s support. Germany is also auctioning off 30 yr bonds at 0% interest – which means that investors would be willing to lend the gov’t money for NO RETURN….and the Danes are actually paying homeowners to TAKE OUT MORTGAGES….so you deposit money into the bank in Denmark and pay them for the right to store your money and then you borrow money to buy a house and they pay for doing that….WOW! Is it me?

US futs are all solidly higher…..Dow futs are up 156 pts, S&P ahead by 18 pts, the Nasdaq adding 58 and the Russell up by 9 – so all of them are taking back what they gave up yesterday…leaving us where exactly? Churning….thrashing still within the range identified. Today’s release of the FOMC mins from last month is keeping investors on the edge of their seat – as if this release is going to give anyone any hint of future policy moves…… not sure why – I think it is pretty clear that September will bring another cut – Jay Powell made that clear in the July meeting…..and with Donny screaming for a full percentage point cut (over time) – we’ll see what happens. And speaking of the President – he has cancelled a trip to Denmark because the Danes are not interested in selling Greenland….REALLY? Again – Is it me? Retailers continue to be in the news as it is earnings week for that sector – results have been mixed but not a disaster and it continues to tell us that the consumer is alive and well….

I still think we will trade back up to 2925/2950 and fail…..there is building consensus that the FED should not cut in September and that will keep the roof on the house right here for now.

Jackson Hole Symposium is up next…..and while it won’t speak to the US directly – everyone is waiting for the Jay Powell speech – just because its Jay Powell. And Donny continues to put the pressure on the FED – calling for 100 bp cut!.

Gold is off $5 this morning as the tone appears to be calming….the move from $1300 to $1550 over the past 3 months (+20%) is sure to come under a bit of pressure – a pullback to $1450 would not be out of the question at all if the volatility subsides….

Oil has rebounded nicely… the panic selling to $50/barrel 3 weeks ago….after the Chinese ‘devalued’ the Yuan, new tariff retaliation threats permeated the mkts and talk of declining demand forced that panic selling….This morning it is up 68 cts at $56.82 – hovering just above short term support at $56.25…..the next hurdle is $57.20….. This mornings report on inventories showed a larger than expected drop – suggesting that demand is alive and well….Stocks fell by 3.5 mil barrels vs. the expected drop of 1.9 mil barrels…..or nearly double the expected drop..

Take good care.


Steamed Lobster

Ok – So I am thinking about the sunshine, the ocean and sand between my toes…..Lobsters, clams, mussels come to mind…..Try the steamed lobster

Steamed Lobsters

These are just so simple…..Bring a big pot water to a rolling boil – take the live lobster. cut off the elastic bands that hold his claws shut and plop him in – head first….bring to a rolling boil again and boil for 8 – 10 mins – depending on size and number of lobsters in the pot….Remove – and serve with drawn butter – have the nutcrackers available to crack open the claws –

remove the tail meat by breaking off the tail from the body and then removing the fins on the tail. Place your thumb here and push the meat out the other end…..delish….dip in the butter and enjoy…Make sure to have plenty of corn of the cob to go with it.. This is best eaten outdoors on the deck overlooking the water…..


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