Things you need to know:
- It’s all in the presentation – both for the headlines and for the food
- Markets digesting yesterday’s surge
- Trump tells the country ‘Be not afraid’ as he takes his mask off
- Pence and Harris prepare for their debate – which will be keenly watched
- Oil – surges and teases $40/barrel again
- Try the Stuffed Baby Pumpkins for the holiday – so good
Again – So many questions… and not sure we’ve got many answers…
Yes, Donny was released from the Walter Reed Medical Center last evening – the team making sure to show him leaving the hospital – unassisted, walking down the stairs – waving to the crowd (and the camera) as he marched across the lawn to board Marine 1 which took him back to the WH… where he exited the helicopter – again unassisted – marching across the south lawn as he made his way up the stairs and onto the balcony – where he promptly removed his mask for a photo opp – telling Americans ‘Be not afraid’ (he must have been reading the bible over the past 3 days as that phrase is repeated over and over in Exodus, Numbers, Deutoronomy, Joshua, Judges, 1 Samuel, 2 Samuel, Kings, Chronicles… etc.) as he went onto say – “Don’t let it dominate your life…” This as he then turned around and walked back into the WH sans his mask… leaving the media to once again scream and yell about how he has continued to infect 1600 Pennsylvania Avenue. (we’ll come back to this).
Word all day that the doctors were preparing for him to return to the WH helped to send the markets higher… This on top of the excitement surrounding the Biotech industry (think drug regimen given to Trump) and the possible stimulus package being negotiated by Nancy and Stevey (which once again failed to materialize post the close) … all helped to send stocks surging. Treasury yields rose as prices fell (remember the inverse relationship) and the dollar weakened helping to send some commodities higher. Oil – which had gotten crushed last week – made big gains rising 6% yesterday closing at $39.22/barrel… Gold – which initially sold off ended up rallying closing up $13 at $1919 as the dollar weakened.
And then there is the election issue… the sense is now that Joey is moving solidly higher – extending his lead over Donny… and all this means is that maybe, just maybe – the election results on the November 4th will be so definitive (in what some are saying will be decisive) that it will be ‘impossible’ to contest – so that takes the angst of an ugly 7 weeks post the election OFF the table… which means we will have ‘certainty’ of the result and that will help markets find its new direction… remember – there are a couple of options – a complete Democratic sweep – which will cause the markets to ‘correct’ swiftly… then there is the split result – Biden WH, GOP Senate, DEM House – that will cause the markets to churn (think gridlock) and then there is the Trump WH, GOP Senate, DEM House – sending markets up and then there is a Trump WH, and DEM Senate and House – which cause the market to ‘churn and correct’ as well – but just not as much as it would under a sweep.
By the end of the day the Dow gained 465 pts or 1.6%, the S&P added 60 pts or 1.8%, the Nasdaq rocketing higher – adding 257 pts or 2.3% while the Russell was the star of the day – gaining 42 pts or 2.77%.
As I pointed out in yesterday’s note – Expect the Biotechs to surge and surge they did… Regeneron +7.1% and Gilead +2.3%, (and the whole bio-tech industry – IBB ETF +4.3%) surging as investors plowed money into that sector after Trump’s successful therapeutic treatment – although he is not out of the woods yet – he has one more Remdesivir treatment today and then the Drs. tell us that he has at least 5 more days of observation before anyone is signing off on his complete recovery… And his commentary about ‘Be not afraid’ – “Don’t let it dominate your life” – fell on deaf ears… leaving many in the media and the country to question his lack of understanding/compassion for the 200k+ US deaths of people who could NOT get the same treatment that the President of the US got. (and that is a fair argument). And Trump’s return to the WH is leaving more questions than answers… and doubts about his commitment to abide by the rules is keeping markets on edge.
Expect to hear both sides debate this and what he meant vs. what it sounded like… so stay tuned – because this is sure to get a lot of airtime over the next 5 weeks as we close in on the election. Again while this will NOT price stocks in the long term (thus do not make any investment decisions based on this rhetoric but pay attention to the election outcome because THAT will price stocks in the longer term) – this latest ‘event’ will create a heated conversation in the short term which has the ability to create chaos in prices… Which in the end is the silver lining for the investor as well as for the day trader. In the end – global markets did breathe a sigh of relief.
So back to reality… Absent any real breakthrough in a vaccine treatment and absent any new stimulus package – we have an economy that has rocketed off the lows of March – in what was a boomerang reaction to the economic shutdown of the economy… but at some point this too will begin to weigh on the action… word that Pelosi and Mnuchin talked for more than an hour yesterday and still failed to come to a ‘deal’ is causing renewed angst this morning – but hold on – they are due to come back to the table today and drill down on the details… but remember – any deal will be viewed by the DEMS as helping Trump – which is why Nancy is dragging her feet… while ‘no deal’ will be blamed by Trump squarely on the DEMS. It is a tangled web we weave…
This morning US futures are a bit weaker – with Dow futures down 30, S&P’s off 8, the Nasdaq lower by 40 and the Russell up 1. European markets are also mixed while Asian markets ended the day higher… The momentum of yesterday’s move is fading – now that Trump is back in the WH and his virus is under control. Threats to the global recovery looming large – after Germany reported the biggest jump in cases since April. This on top of the surging cases in Spain, France and the UK as well as here in the US. Concerns are rising as winter approaches – and if the virus rears its ugly head again causing lockdowns around the world then expect talk of another economic disaster and any recovery to take center stage again.
There isn’t any real economic news here in the states today that will drive the action… Over the next 4 days – we will hear from more than 12 FED governors/representatives either in direct speeches or on panel discussions… Today Chair Powell and ECB Chief Economist Philip Lane will deliver keynote address at the NABE conference. (National Assoc of Business Economics) – nothing here to learn… Tomorrow brings us the September FOMC minutes – and again – nothing here to learn either… we already know what they said… But tomorrow does bring us the VP debate and in light of what just happened – this debate has taken on new meaning… so expect this to be keenly watched and expect it to very different than what we saw last week.
There isn’t any real global macro data happening that is driving the markets this morning. In Australia, the RBA (Reserve Bank of Australia) kept rates unchanged, China was closed again for a holiday while Japan and Hong Kong reacted to our surge yesterday.
In Europe – continued talks between the UK and the EU over BREXIT simmer on the back burner… Markets across the continent are digesting the surge yesterday that resulted after the weekend and Trump diagnosis/treatment. At 7 am the FTSE -0.10%, CAC 40 +0.32%, DAX +0.18%, EUROSTOXX +0.12%, SPAIN +1.01% and ITALY +0.61%.
The S&P closed at 3408 – busting thru resistance at 3361 – as expected… Again, the action driven by the Trump headlines… and talk of a relief package – My sense yesterday that we would challenge 3400 if they sent Donny home and he came out dancing… did come true – so what happens today? Will 3400 remain near term resistance? We are about to find out… remember – with rates at zero – TINA (there is no alternative) in the long run… if we get any indication that Nancy and Stevey are getting closer to a deal then yes – look for a move up again… but let me be clear – I do not think that they will announce a plan today… just doesn’t feel like it… And so – I continue to believe that the markets will remain volatile… but I still believe that it can all turn on a dime… Stay tuned… and talk to your advisor if you get anxious… a well-defined plan will do you good.
Take good care –
Chief Market Strategist, Consultant
Stuffed Baby Pumpkins
Ok – so get this… what a great dish for the holiday that is only 5 weeks away. Use the pumpkins to stuff with the Butternut/Pumpkin Risotto.
You get the little pumpkins – you know the ones – take them home – slice off the tops – discard the seeds- save the tops. – place a dab of butter in the center and then place in a roasting pan with the lids on. Drizzle with oil and roast in a 400-degree oven until they soften some – but do not collapse – maybe 35/40 mins.
Remove and let cool. Once cooled using a spoon, scrape the ‘flesh’ away from the outer skin… careful not to pierce. Place in a bowl to use in the risotto.
Now make the Pumpkin/Butternut Squash Risotto –
You will need: Chicken Broth, Arborio rice, Butternut squash, 1 1/2 cups of pumpkin puree (not the pie filling that you buy in the store – you need real pumpkin puree), large diced onion, chopped fresh basil, plenty of fresh grated Parmegiana Cheese, olive oil – and the kicker – 3 tblspn of Mascarpone Cheese.
Preheat the oven to 400 degrees.
In a baking dish – combine the rice, cut up butternut squash, the pumpkin puree, diced onion and the chicken broth. Season it with a bit of s&p and mix well. Cover it tightly with a lid or with tin foil and place in the middle rack in the oven. Re-visit it in 10 mins intervals and stir. It will be done when most of the broth has been absorbed and the rice is no longer hard. This should not cook any longer than 40 mins max.
Remove from the oven and add – the Parmegiana, the Mascarpone and the chopped basil and the flesh from the pumpkins. Mix well. Now fill each pumpkin with the risotto so that it is overflowing a bit, place the lid back on and set in a large serving platter for the presentation.