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Things you need to know:

  • Powell’s comments help to send stocks higher
  • “Here comes Santa Claus (Again)!
  • Moderna gets FDA advisory panel approval – expect their vaccines this weekend
  • TSLA joins the S&P as of tonight’s close – expect frenzied trading today in both TSLA and AIV at the close of trading.
  • Try the Candied Almonds – so good and additive.

It’s Friday and only 2 more weeks until we kiss 2020 Good ‘Buy’…! Cute right – Good BUY!

Stocks rallied again yesterday as the algo’s celebrated the latest FED statement and appeal by Fed Chair Jay Powell for ‘Santa to come back, come back…’ after he said that he didn’t think stocks were undervalued at all considering where interest rates were!

And then when the market opened – the media focused on all of the hard work that legislators are doing – (think stimulus) rewarding stock investors by sending stocks up again leaving the Dow, S&P and Nasdaq to not only make new intra-day highs, but then make new closing highs… with all 3 closing closer to their intra-day high than not and that suggests that stocks will continue to try and push a bit higher over the next couple of weeks if the old adage holds true – New highs beget new highs! By the end of the day the Dow added 149 pts or 0.49%, the S&P rallied 22 pts or 0.58%, the Nasdaq surged 106 pts or 0.84% and the Russell gained 25 pts or 1.3%! Just a note – the Nasdaq is now UP 42.26% ytd! This compares to the Dow +6.1%, S&P + 15.22% and the Russell up 18.55% ytd.

There was nothing really new in the talks yesterday at all – Legislators are under pressure to get it done. The country is about to go into gov’t ‘shutdown mode’ tonight at midnight as it is about to run out of the ‘stop gap’ funding (money) measure they passed two weeks ago so they will have to pass another ‘short term extension’ to carry them thru the weekend to finish this deal… What is it about this that they don’t understand? Yes, it’s all very dramatic – you can feel the tension – but isn’t it all a bit overdone? They could have had this all buttoned up weeks ago… they could have all acted like big boys and big girls and been done with it. But for some reason they wanted it to come down to the wire – to the 11th hour so each side could claim a ‘win’ and demonstrate to their constituents how hard they are working on their behalf.

Hopefully – we will get that ‘win’ today (but don’t hold your breath) … and if not we may have to wait through the weekend as Mitchy McConnell told us yesterday… he expects it to be a ‘working weekend’ for congress (which tells you that we won’t get a final deal today…) and to think – they all should have been home by now – celebrating the holidays with their families (oh wait, we’re not supposed to do that either…), so then maybe it all works out anyway.

Yesterday we learned that Moderna’s – MRNA – vaccine got approval from the ‘advisory board’ at the FDA – leaving it up to the full FDA to grant Moderna EMU (Emergency Use Authorization) status and if that happens then we can expect to see their vaccine starting to ship this weekend with all the same pomp and circumstance that we saw last weekend as the PFE/BioNTech vaccine left the lab. This was not unexpected, and it surely helped the mood yesterday as the stock rallied another 5% bringing its ytd performance to +635%!   Yes, this stock was a $19 number in January – today it is a $144 number. This morning the stock quoted flat at $144/$144.50.

FedEx – FDX – reported earnings and they killed it! Blew both the tires off the bus and the roof off the house! Revenue surged by 19% to $20.6 billion while Earnings rose 114% to $1.23 billion or $4.55/share from $2.13/share one year ago. Analysts were expecting $4.01/share. This is good right? Well, not so fast – costs for the ground unit increased a bit more than expected sending profit margins down to 7.5% (vs. the 11.8% in the first qtr). You see they needed to ramp up their ground personnel to deliver all of those Black Friday, Cyber Monday online sales that made new records…even as the gov’t tells us that retail sales slowed! Again, this is just another disconnect between what the data shows us VS. what the data shows us! This morning the stock is quoted down $10 at $283/$284/share, but don’t despair – FDX is up 96% ytd… not so bad!

And Robinhood makes the headlines again… this time they agreed to pay $65 million to settle an SEC probe claiming that ‘they didn’t sufficiently disclose’ (read FAILED to disclose) the business deals about selling YOUR order flow to the high-speed trading community (think Virtu and Citadel) … so while you think you are trading for free – Robinhood is cleaning up on your order flow. Now to be clear that happens all over the industry – how do you think these firms can let you trade for ‘FREE’?  The difference here is that Robinhood failed to disclose it (until 2018 – when this investigation began) … the others – Fidelity, TD, Schwab, etc. tell you that is what they are doing, then ‘sell’ your order flow in order to give you a ‘FREE’ experience – which reminds us all that NOTHING IS FREE. You are paying and you don’t even know it… Because your order flow is worth a lot of money – otherwise these high-speed traders wouldn’t be interested in buying it!  Just sayin’… just so everyone is on the same page…

And today TESLA -TSLA – joins the S&P 500 family! Again this is a known event….well, actually – it officially joins on Monday – but tonight at the closing bell is when all of the frenetic trading will take place…..You see the addition of TSLA into the S&P 500 will force dozens of index funds that track the S&P to have to buy tens of billions of dollars of  TSLA stock tonight – while also selling tens of billions of dollars of AIV (Apt Investment Management) – the stock coming out of the index – at the close today in order to ‘track the index’.  Now to be sure -much of this has been happening… funds have been preparing for this event but tonight will mark the ‘big do over’.   So don’t think anything sordid is happening at all, it will all be over with a flip of a button at 4 pm (Nasdaq hopes) … but it will be the excitement of it happening all day long…

This morning – US futures are flat….and that is not a surprise at all… after the surge yesterday…and while the old adage does say – New Highs Beget New Highs – it does not say that that next new high has to be right away…I mean – when the S&P made the last new closing high of 3702 – on 12/8 – (it made an intraday high of 3712 on 12/9) – it took 10 more days before it made another new closing high of 3722 yesterday. So while it is all very ‘end of year’ exciting… there are still two weeks to go… and so much can happen.

Eco data today includes – absolutely nothing – so expect the chatter to be about TSLA, the next stop gap funding bill and the ongoing ‘discussions’ surrounding the stimulus package.

Early voting has now begun in the Georgia Senate Race – and the heat IS on… President Elect Joey Biden taking to the airwaves – telling us two things.  1.  A virus/vaccine success depends entirely upon a Democratic win in this Senate race… which means – I guess – that if the GOP succeeds in keeping control of those seats and the majority of the Senate then the virus will continue to invade the country… That is the first time I heard that the virus is a ‘partisan’ virus!  And 2. – while on the Steven Colbert show – when asked about Hunter – told us that the tax probe is ‘foul play’ and that Hunter is the ‘smartest man I know’ – which leaves me to ask – What would you expect a Dad to say – ‘He’s the dumbest man I know’…? If nothing else – it’s good for a laugh… I mean you can’t make this stuff up – who would ever believe it?

European stocks are up even as British PM BoJo warns the nation and the world that the BREXIT talks are at a ‘serious situation’ and that the prospect of deal with the EU is unlikely if the EU does not change their view of the fisheries.  Michael Barnier – EU Chief Negotiator saying:

“We have little time remaining, just a few hours, to work through these negotiations in a useful fashion if we want the agreement to enter into force on the 1st of January”.

So will the UK and the EU get that 11th hour deal the way the US is getting an 11th deal on the stimulus package?  We are about to find out…At 7 am – the FTSE + 0.14%, CAC 40 + 0.13%, DAX +0.15%, EUROSTOXX +0.30%, SPAIN -0.47% and ITALY +0.21%.

Gold is off small – trading at $1,888 while Bitcoin continues to surge – trading at 22,775.

Oil is under a little teeny bit of pressure – the headlines today?  Surging Covid 19 cases suddenly stoking demand concerns!  Please stop already… Oil is trading down 9 cts at $48.27 – and this is because of surging virus cases – it’s ludicrous… maybe if it were down $5, I’d agree, but 9 cts is nothing more than a churn – as investors and the markets digest the recent surge higher as oil markets expect demand to surge in the new year. Again – we remain in the $40/$50 range and could make an argument for $55 if you forced me to.

The S&P closed at 3722 – new closing high!  Yahoo… Here comes Santa Claus, here comes Santa Claus right down Santa Claus lane (also known as Wall Street!). Well, maybe not, but the latest Fed comments did surely help the algo’s go nuts… taking stocks higher after Powell told us that stocks are not undervalued!  (I wonder what his S&P option positon was going into the press conference… thoughts?)

In any event – his comments were unforeseen by me weeks ago when I thought we made the highs at 3700 ish… Who knew that the FED chair would opine on whether or not stocks were over or undervalued! In any event – it is what it is… and I still think it is overdone in the short term, that is it pricing in a GOP win in Georgia and I think that is a bit pre-mature… because if the Dems win – then we can expect a pullback… a pullback that will be swift and painful for those paying top prices right now. In any event – I would not be chasing stocks… peeling some off (some means just that – some not all) and putting the cash aside may be more appropriate right now… this way you have to re-invest when the pullback happens. If not – then stick to the plan and hope for a GOP win…

Take good care – Have a great weekend.

Kenneth Polcari
Consultant, Market Strategist

candied almonds

Candied Almonds

This is also another great Christmas treat. It is simple to make and enjoyed by all… they are addictive – so make sure you make enough.

For this you need – 1 c of white sugar and 1 ½ lbs of raw almonds.

Roll out a sheet of tin foil on the table.

In a large heavy bottom pot – pour in the sugar, add the almonds and heat it up – constantly stirring to help liquefy the sugar and coat the almonds.  Stirring, stirring and stirring. The sugar will turn golden brown and the almonds will begin to glisten.

Once you are sure that all of the sugar has melted and there are not lumps in the almonds you are done… (this should take about 10 mins…) Now bring the pot over to the table and spread them out on the tin foil – leave them alone and let them cool and harden. When they do – you can break them up and place in candy dishes around the living room or you can package them in cellophane bags and tie with a ribbon and give them out to your Christmas eve/day guests.  Even you neighbors will be happy to get one.