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Things you need to know:

  • FED does not disappoint! He suggests that stock prices may be ‘undervalued’!!!
  • Part 2 is another issue
  • DC still in the stimulus discussion game – appears to be getting closer (yawn)
  • Joey, Barack and Billy all ready to get the ‘vaccine’… (or will they get the placebo?)
  • Gold pierces resistance on stimulus hopes and Bitcoin pierces $22k
  • Google, FB and Robinhood all in the news – as they flaunt the law
  • Amazon being challenged by a unionization push.
  • Try the Butterscotch Clusters

Stimulus, stimulus and more stimulus… investors were held in check yesterday as legislators in DC all promised to ‘not go anywhere until this is done’… Not sure they had much of a choice – and in fact – I would say it’s their own fault… They could have had this all done months ago – but each side chose to play the partisan game vs. the right thing to do… Whatever. In any event the markets churned – neither surging nor falling as it awaits a final outcome… hour by hour – we waited as little bits of information got leaked to see how the markets and investors would react. The Dow gave up 45 pts and the Russell gave up 7 pts while the S&P gained 7 pts and the Nasdaq rallied by 63 pts. Even the vaccine failed to ignite a rally – which speaks volumes – as the market has already priced that in…

In terms of stock action – it was a boring day. The part 1 deal which was being bandied about as a $740 billion deal is suddenly now a $900 billion deal – with more money for ‘direct’ payments to Americans and increased unemployment benefits. The headlines suggesting that the ‘elements expected in the package should support consumer spending and that leads to a better GDP for the 1st qtr of 2021… No one is even talking about part 2 right now.

Now here is where it goes off the rails a bit for me. Eco data yesterday focused on Retail Sales – and while the expectation was for a reading of -0.3% – it came in at -1.1% – a big miss, right? The media raised alarms… “What a big miss!” Congress has to do something quick! OMG! What does that say about the health of the consumer? It’s laughable… (almost)… But think about this for one minute… do you remember the chatter surrounding Black Friday, Small Store Saturday and Cyber Monday (or Cyber week)? Do you remember the headlines? Is it me?

Black Friday 2020 (November 27th) sales surged by 22% to a record $9 billion (most of that online – think covid) – which makes it the second largest online spending day in the history of the US… and then there was Saturday – where it continued and then it was Cyber Monday! Do you remember the hype around Cyber Monday? (November 30th) Just to remind you – Americans set a record for the BIGGEST shopping day EVER in US History – ringing the cash register $10.8 billion times… Headlines screamed – ‘record breaking’, ‘phenomenal’, ‘unbelievable’… and the list goes on… and the shopping went on… the media had a party as they reported how incredible it was, how Americans were not going to let a virus ruin the holidays… that they were happy to sit at home and go online and ‘shop till you drop’ – it was almost offensive – right? Deals, Deals and more Deals – Retailers have been preparing for this since the summer and who is kidding who – the shopping began following Halloween and I didn’t even point out those numbers – it would be a November to remember followed by a December to remember season… So, I’m just sayin’ – I am not so sure I believe it… it makes no sense… there is a glaring disconnect between what the data shows us and what the data shows us! Oh – and btw the way – the Retails Sales data yesterday was for November and the last time I checked all of those shopping days happened in November… Now they spun the story as a restaurant, dept stores and auto dealerships story… as they all reported ‘sharp declines’… dept stores reported sharp declines? I just told you Americans spent a record number of dollars… but none of it in the physical store – so I guess since store traffic was down (think covid) they can get away with saying that dept stores saw sharp declines – Its semantics… but it helps to spin the story. In any event – it’s ridiculous.

And then – we heard from Fed Chair Jay Powell at 2 pm… as expected – there was no change in the plan, rates to remain low through 2022 – and he reminded us that the FED is prepared to let inflation run a little ‘hot’ before they would even consider changing their plan – He also said that ‘stock prices are not necessarily highly priced given how low interest rates are’!  Essentially telling Santa Claus to ‘come back, come back…!

This morning – the headlines in the WSJ continue to entertain us…

“US Shoppers Pull Back at Start of Holiday Season” (isn’t this fake news?)

“Ten States Sue Google, Alleging Deal with Facebook to Rig Online Ad Market” – now that’s an interesting story – and one that should not surprise anyone… at all… Maybe Lizzy Warren is right – break them up and throw the book at ‘em!

“Massachusetts Regulators File Complaint Against Robinhood” – suggesting that the online trading platform took advantage of and exposed inexperienced investors – and I use the word investors cautiously – to ‘unnecessary trading risks’. ‘They aggressively marketed to inexperienced traders and failed to implement controls to protect them’.

I guess the surprise here is that regulators (or anyone else) ARE surprised… and when you get guys like Davey Portnoy (CEO at Barstool Sports) swinging around millions of dollars, saying that it’s like taking ‘candy from a baby’ proving Mailkiel’s decades old claim that a ‘blindfolded monkey’ throwing darts at the financial pages could select a portfolio that would do just as well as one selected by experts  – it only accentuates the stupidity especially when the media features him  on a daily basis using scrabble pieces to select stocks and discuss his latest ‘investment’ while he lights up Twitter with his ‘buy’ and ‘sell’ signals.

“Amazon Faces Unionization Push in Alabama, a Test in Labor Organizing Bid” – And this is sure to gain some traction as it is the nation’s second largest employer ‘testing the potential for additional labor organizing at the retailing giant’.

US futures are up… after Jay Powell promised everyone that he isn’t going anywhere and the FED will continue to feed the beast… and as the focus remains squarely on the stimulus plan. Dow futures +127 pts, the S&P up 20 pts (and if that holds – the S&P will make a new high at 9:30), the Nasdaq is up 62 pts and the Russell is ahead by 20 pts! News that a couple of people who got the vaccine had allergic reactions – is not dampening the story at all… Dr. Fauci – suggesting that if you usually get a reaction to any vaccine then you should either not get it or make sure you’re in a hospital ‘just in case’. President Elect Joey along with former Presidents, Obama, and Clinton all promising to line up and get the vaccination in public – so that everyone can see that it is safe – I guess my only question would be – Is that really the vaccine in that little vile or is it just a saline solution? I mean – it’s a fair question – they are and were the Presidents – Can you imagine if something ‘went wrong’? Oh boy!

Eco data today includes:  Initial Jobless Claims of 815k, Cont. Claims of 5.7 mil, Housing Starts of +0.3%, Building Permits of +1%.

European markets are mostly up… on the back of the FED’s commitment to stay the course and on further hopes of that stimulus deal is just around the corner… like I said yesterday – the 11th hour is right around the corner. The BoE (Bank of England) is set to publish their latest monetary decision (no change expected – rates to remain in place). Other macro data includes ‘new car registrations for the EU’ – oh boy… that’s what we’re looking at now to give us clues on the health of the economy? New car registrations?  Let’s think about this for one minute… what are new car registrations really going to reveal? Are you going to make a decision to buy or sell stocks on new car registrations?  In any event – at 6:45 am – the FTSE +0.03%, CAC 40 + 0.44%, DAX +0.77%, EUROSTOXX +0.15%, SPAIN +0.02% and ITALY +0.43%

Gold is up $23…at $1,882 – taking it up and through trendline resistance at $1,880… as talk of a deal gets closer…. If it continues to advance then the next level that should provide any resistance at all is $1920.

Bitcoin exploding higher… this morning trading up $1500 piercing up and thru 22k about to test 23k.

The S&P closed at 3701 and this morning appears as if it is going to blast right up and through this year’s high of 3712… And why not – Fed Chair Jay Powell re-iterated his commitment to easy money – there is nowhere else to go! As I have been saying we are in uncharted territory – trendlines reveal a wide channel of 3450/4020… a tighter trendline might suggest that 3790 is possible before year end… a level I am not supporting… I remain a bit cautious in the short term.  I would not be chasing stocks here right now. Talk to your advisor, design your plan and stick to it… Remember – it is year end, investors will make year-end decisions based on a range of personal factors and stocks will come under year-end tax planning pressures – which does not define what the markets will do in the new year.

Take good care.

Kenneth Polcari
Consultant, Market Strategist


Butterscotch Peanut Clusters

Here is a personal favorite of mine – they are Butterscotch/Peanut clusters (all in 10 mins) and are a Christmas favorite… My grandmother used to make these every year and every time I eat them – it brings me back to an earlier time… Today it is something that I do with my girls – and it always brings them back to their childhood…

For this you need – Nestle Butterscotch morsels, salted peanuts, and Chinese noodles… (you know the crunchy ones).

Begin by setting up a double boiler – when ready add in the butterscotch morsels… stir until melted… now add in the noodles and the peanuts… stir to coat really well. When ready – remove from the heat and with a tablespoon – take scoops of the mix and plop them onto wax paper… They will harden into clusters in about 10 mins…

They make a great addition to the other holiday deserts at the table.