Things you need to know.
- Powell sends stocks lower in the morning; Joey takes to the podium for the first time since moving into 1600 Pennsylvania Avenue.
- 7 Yr. Note auction sends the 10 yr. up a bit causing traders to whip around stocks.
- The EverGreen Container ship stuck in the Suez Canal is expected to disrupt global trade for weeks.
- China cancels H&M – wiping it off the map – see the WSJ story.
- Oil settles into the $55/$65 range.
- Try the Chilean Sea Bass in a Cream Sherry Sauce
It was another volatile day yesterday…. stocks were up in the pre-mkt and then turned lower ahead of the opening after Jay (Powell) appeared on NPR yesterday morning saying exactly this:
“As we make substantial further progress toward our goals, we’ll gradually roll back the amount of Treasury’s and mortgage-backed securities we’ve bought,”
Suddenly the trader types (the ones that only know a market supported by zero interest rates and massive central bank support) threw a temper tantrum…sending futures into the RED zone causing all the indexes to come under pressure as soon as the opening bell finished ringing…. but I must ask – What exactly did they expect him to say….? Again, he could not have been clearer, and he did not suggest that we are anywhere near making substantial progress toward our goals….so why the hissy fit? Why hit the SELL button?
The angst sent all the indexes lower and by 11 am – the Dow fell by 400 pts….before it found support…the S&P gave up 35 pts to find support at 3853 – breaching its 50 dma at 3868….The Nasdaq gave up 177 more points leaving it just a hair above a 10% decline while the Russell fell 34 pts sending it – for however brief – into ‘correction’ territory – down 11% from its most recent high…..giving everyone the sense that the bottom may be about to fall out…BUT IT DIDN’T…..buyers came in – and suddenly calm took over and stocks began the slow trek higher…brought on by a couple of other headlines discussed below…by the end of the day all of the indexes shot higher and the mood at 4 pm was clearly different than the mood at 9:30 am….The Dow ended UP 199 pts, the S&P’s up 20 pts, the Nasdaq ahead by 15 pts and the Russel up by 48 pts….Now – what is important here is that the Nasdaq remains BELOW the KEY trendline we have been discussing….13,325…..so let’s see what happens today, shall we? And the Russell recovered as well leaving that index only off 8% – keeping it within the ‘normal range’ (if there really is a normal range…).
Now – part of what happened was the anticipation of the Biden press conference and the 7 yr. Treasury note auction…. (the auction being the bigger story) but investors/traders and Americans waited to see What he would he say? How would he say it? Would he get softball questions? Would they be prepared questions and answers? Would anyone really put his back against the wall? Well, when the clock struck 1 pm…. all the cameras suddenly focused on the press room – and we saw all the chairs lined up and the podium standing ready to welcome the President of the US. Reporters wearing masks, while Joey was not….and no one asked him to put on his mask –
He had his notebook in hand, with pictures of the reporters and the question that they were instructed to ask….It was all very orchestrated….and yes – Lots of border questions….and we will get a chance to see what’s going on at the border – when he’s ready to let us see what’s going on at the border…announcing that he has secured 5k beds at one of the local army bases to help alleviate the crush of immigrants coming across the border….Now – that’s great – but hardly an answer – when 6k people are day are coming across the Rio Grande. And the filibuster? Yeah, looks like they are going to legislate that away as well, he is running for a second term in 2024 and has upped the ante – telling us that we will vaccinate 200 million Americans by May 1st (100 days)…..…He also made passing comments on our relationship with China but declined saying much more….and warned that North Korea has violated all international rules regarding missile tests…….and on and on – he spoke for 62 mins…..And I say that because there was a big Over/Under bet on how long he would speak….60 mins was the dividing line….so anyone who bet > 60 mins – was also celebrating….….in the end – investors/traders and even the algo’s were not concerned by anything he said…..Entertained, yes, but overly concerned, Not so much – because we didn’t hear anything that we didn’t already know. There was no talk of taxes, no talk of infrastructure and no talk of climate change….
And then the 7 yr. Treasury auction results hit the tape – you can define as ‘lackluster’ at best….leaving the $62 billion note auction yielding 1.3% or 2.5 bps higher than what the pre-mkt action was suggesting…and this pushed the 10 yr. yield up to 1.64% up from 1.61% – which while not a disaster – did allow for the traders to take profits into the end of the day…stealing just a bit of the shine off of the mid-day move higher. In the end – it was not the issue that many had feared….so it is all good until the next time….
This morning – US futures are higher….and the EverGreen container ship is still grounded in the Suez Canal – blocking all traffic costing the global economy some $400 million an hour….and container ship stocks???? – well they took a hit initially, but are now expected to begin to surge as rates rise and shipping routes get redefined – because this Suez issue may go on for more than a month….….forcing many of these ships from Europe to consider going down and around the tip of Africa to get to Asia adding thousands of miles to shipping while the reverse is also true…and that costs money…..and someone is going to pay….….Do not discount this, while temporary it will cause a real hit to short term trade –
This morning the 10 yr. yield is quoted higher at 1.65% but that is not causing angst in equites…. Dow futures are up 95 pts, S&P’s up 12, Nasdaq up 45 pts and Russell up 18 pts. Yesterday’s eco data saw a big decline in initial jobless claims and Continuing claims (bullish) and 4th qtr. GDP better than expected at +4.3% (and going higher) ….
Today’s eco data includes Retail Inventories – exp of +0.8%, Personal Inc of -7.2% (that is a negative) Personal Spending of -0.8% (another negative) and Real Personal Spending of -1% (negative again) and once again we will get U of Mich 1 yr. and 5-10 yr. inflation forecasts – exp of 3.1% and then 2.7%….
Remember – the end of the quarter is coming….so we will get some volatility in the next 4 days as asset managers ‘window dress’ their portfolio’s….launching some of the high growth names and scooping up some of the newest value names…..and don’t discount the idea, that at some point the high growth names that take a real hit will suddenly become value names…signs of a surging economy, rising interest rates and rising inflation have caused a massive shift into the value sector while taking money out of the growth sector and if capital gains taxes rise to the 40% range that is being discussed – then expect the high growth names to continue to get hit this year….as asset managers figure out what’s next. Expect – lots of chatter and discussion around the Biden press conference today as well as what the stranded ship could do to global trade.
European stocks are higher this morning…. after 3 days of weakness…. February UK retail sales are due out today along with German IFO business climate index for March. AZN under fire again – as they have been unable to supply the contracted deliveries that the EU had negotiated – this as the bloc faces a third wave of infections. And the Suez blockage? Do not discount this as an issue for Europe/Asia…. the Suez Canal is one of the busiest shopping channels for oil, refined fuels, food products and other trade between Europe and Asia. At 7 am the FTSE +0.59%, CAC 40 +0.23%, DAX +0.63%, EUROSTOXX +0.40%, SPAIN +0.48% and ITALY +0.26%.
Oil – which has been volatile of late is up today on the idea that the Suez blockage could go on for weeks…. Now while it is higher today – oil will most likely end the week lower. WTI is now in the $55/$65 range – a level that I think is where it should settle in for now…. once the summer driving season opens and American is begun to travel again, I would then expect oil to push higher once again…Expect near $4/gal for gas in some parts of the country….
Bitcoin – is trading at $53,000. Ethereum is trading at $1622.
The S&P closed at 3909 – after trading in a 67-pt. range yesterday….3853/3919…. with futures looking to send the indexes higher today and with European markets all up about 0.5%, I suspect that today will be a churn day…nothing to move the markets significantly in either direction. Next week will provide some action as the end of quarter positioning is sure to create some opportunities.
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Chilean Sea Bass in a Sherry Cream Sauce
Preheat oven to 425 degrees.
Rinse the fish and pat dry. Marinate in a bit of olive oil, fresh lemon juice and s&p. (if you have a favorite additional seasoning – feel free) Coat the baking pan with olive oil and place fish in oven – bake for about 15 or 20 mins.
While this is baking – prepare the sherry sauce. You will need: Butter, garlic, minced shallot, clam juice, heavy cream, sherry, s&p.
Melt the butter (3 tbsp.) on low heat…smash and then mince 1 clove of garlic – add to butter. Sauté…now add the minced shallot and about 1 tbsp. of clam juice. Stir. Next add sherry – like 2 tbsp. and 1 cup of heavy cream. Simmer for 5 mins – sauce should reduce by 1/4. Taste. Season with s&p… taste again. Good?
Now remove fish from oven and present on a warmed plate on a bed of wild grain rice. Spoon the sherry cream sauce on top and serve immediately. You can complement this dish with steamed string beans and a large mixed salad. Total time to table – 35 mins. Enjoy with your favorite chilled white wine – nothing fruity.