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Things you need to know.

  • Tick Tock – as the clock counts down to 8:30
  • Jimmy Bullard floats a balloon – very coy
  • Is 2024 even really realistic?
  • Bitcoin kissing $63k – ahead of the Coinbase IPO tomorrow
  • Oil is back above $60
  • Try the Orange/Brandy Chicken Parts

Stocks hovered all day…and did essentially nothing……as investors, traders and algos await today’s CPI (Consumer Price Index) report and the start of earnings season……By now you know how important this number will be…. will it explode higher like PPI did on Friday – or will we get another months’ reprieve?  More and more investors/traders think the number will be hot…. for a couple of reasons…. 1.  They go back to how Fed Chair Jay Powell has been positioning himself during the past 2 weeks…. cautioning the markets at every opportunity.   2. Friday’s PPI report was so strong and 3. Expectations continue to build…. ….and if you just go into any Home Depot or Lowe’s you will recognize that something is just a bit different…… prices continue to go higher on everything…even as the brain trust tells us not to worry…. Which leaves us to wonder – when will those higher prices that we all know exist -begin to show themselves in the data???  It might just be today….

Estimates call for +0.5% and +0.2% (ex food and energy), but whisper numbers suggest we will get stronger numbers…. essentially more inflationary numbers….and then we will see how successful Jay Powell was in ‘jawboning’ the reaction…. Will investors take it in stride, or will they hit the sell button?

At the closing bell – the Dow lost 55 pts, the S&P gave up 1, the Nasdaq lost 55 pts and the Russell gave back 10 pts…. The 10 yr. treasury ended the day yielding 1.66% while the VIX gained 22 cts but ended the day at 16.91…still in very complacent territory…. suggesting that no one seems to be that concerned about what this report is going to reveal….

Look – even Biden administration economists are joining in the fun…. telling us that we can explain it away by recognizing that there is plenty of pent-up demand, for everything……that there are supply chain disruptions and increasing prices at the producer level – which we confirmed on Friday and that expectations are rising – that it is all true…….and then….

Yesterday Jimmy Bullard – you remember him, right? (St Louis Fed President) Takes to the airwaves dropping this bomb….’when we get to 75% vaccination rates, it will be a signal that the crisis is ending – and that is a necessary condition for the FED to consider a change in policy…. they could consider tapering…!  Oh boy……

My sense is that he doesn’t think that will be at the end of 2023…..which flies in the face of what Jay Powell has been selling us…..Again – it is a way for the FED to ‘float a balloon’ – test investor reaction…..have someone else come out and make a statement – someone that has some insight but is not considered the main man……right….he is a member of the FED, but is not the Chair……he is one of the more popular FED Presidents and one that the FED uses to test the waters like this…..and so – what was the reaction…..not much – yet……but that could change.

If the report is benign – then I would expect stocks to continue to move upward.  If the report is slightly stronger – than I would expect stocks to churn,  but if the report is much stronger then I suspect that it will cause investors to think twice….as they then dissect the report to understand where the pressures are building….although I suspect – we all know where they are building….in any event – what Jay Powell is trying to do is prevent a tantrum, a meltdown – because the market is just looking for a reason to correct – just a bit… sit tight – 8:30 is coming……

And then tomorrow begins the quarterly beauty pageant….and all expectations are for much better numbers across the board….which shouldn’t be too hard considering where we were one year ago…….estimates call for y/y growth of better than 25%….and we already know that JPM is getting ready to set the tone…..and if you think that BAC, MS, GS, C etc.….will not follow suit- think again…..but again – we know all this….none of this should be a surprise – unless of course the numbers are so significantly stronger than the expectation that investors get caught off guard…..

In any event the financials have been strong….the XLF is up 22% ytd…..and is up 51% since the September lows….the individual names also outperforming….JPM up 26% since January and up 70% since September, GS up 29% and 80% respectively, BAC up 31% and 71%… you see a pattern here????  But this should not be a surprise, I have been discussing this for months now…. it is called the value trade and while these banks are not the sexy hi-growth names – there is nothing wrong with those returns…. And watch what happens with dividends………!  Capisce?

So – we are at a crossroads….and the macro data coupled with the micro data are about to collide….so sit tight….and follow the money….

And that is true when considering your portfolio…..Biden expects to spend all kinds of money on clean energy, on roads and bridges, on schools, ports, broadband networks etc……so regardless of your political bent – think about who is about to benefit if this massive plan is passed – and there is little question that it won’t be passed…so think – basic materials, energy companies, utility companies,  construction companies, banks, cement/concrete, networking, installation, semi’s and suppliers of everything and of course disruptive tech… that just about includes everyone!  And that is reflected in ytd performance across a range of industries…. Industrials +14%, Financials +20%, Consumer Discretionary +11%, Communications +13%, Energy +26%, Basic Materials + 11%, Semi’s +17%, Travel (airlines) +25%……

Now US futures are cautiously higher…. teasing just a bit ahead of this morning’s report…Dow futures +26 pts, S&P’s +3 pts, Nasdaq flat and the Russell is ahead by 5 pts.   Again – the talking heads are reminding us to sit back….do not shoot first and ask questions later -rather ask questions first and then decide what to do…. because rising prices will be temporary……or maybe they will not…….and that is what makes a market…. Look – a jump in the CPI – while well publicized – should still be a wakeup call…. and today’s 30 yr. bond auction may reveal underlying sentiment…. although yesterday’s 3 and 10 yr. notes did attract decent interest…This morning – the 10 yr. is a bit lower – sending yields up to 1.69% – up from yesterday’s close of 1.66%….

European markets are up – small – UK GDP grew by 0.4% a bit less than the +0.6% expected rate…. Manufacturing output was up 1.3% – surging past the +0.5% expected rate…. while services only grew by +0.2% missing the +0.6% expectation.  German ZEW economic indicator due out at any time….in addition it is also the start of European earnings season…. LVMH to report post the close today….and all eyes will be on what this consumer discretionary reports indicates…. (LVMH – is Louis Vutton, Moet, Hennesey) Capisce?  At 6 am – the FTSE -0.06%, CAC 40 + 0.33%, DAX + 0.28%, EUROSTOXX +0.31%, SPAIN +0.14%^ and ITALY +0.52%.

Oil is up….back above $60/barrel……..tensions in the Mideast along with expected drawdowns in US crude inventory driving the action today….Leaving us in the $60/$65 range…..Expectations of surging demand in the US are being offset by continued lockdown concerns in China and parts of Europe….as different variants continue to wreak havoc on those economies…..never mind increasing supplies out of OPEC and Iran…..but do not despair…..demand is strong and higher prices are coming.
Bitcoin is trading at $63,000 and Ethereum is trading at $2200….

The S&P closed at 4127 – just one point below Friday’s close….as the wait continues…..S&P futures are cautiously higher…….but the direction for today – will be dependent on what happens at 8:30…so sit tight….Again, if it’s benign then the focus turns to earnings….because once those start – the macro data will take a back seat to the micro data that will dominate the headlines for the next 4 weeks…..If it is stronger, then the chatter for today will be – just how strong is it?  Does it reflect ‘hot’ or not….and like we know – everyone hears what they want and then redefines words to fit their agenda…. I mean – just think of what infrastructure means today vs. what it meant one week ago….

The trendline suggests that we are kissing resistance – but I keep saying that and we keep pushing higher…. the broader trading channel is now 3930/4150.

Text INVEST to 21000 to get my digital business card – give me a call if you want to discuss what I can do for you.  You can now get a video version of this note on my IG (Instagram) feed – my handle is Kennyp1961 (

Take Good Care

Chief Market Strategist, Consultant

Pan Seared/Oven Roasted Chicken in an Orange/Brandy Sauce

This is a simple dish that sounds elegant…. should take you about 40 mins start to finish.

For the sauce you will need:  4 tbls butter, 1 shallot, 2 tbspn of brandy, 1 cup of fresh squeezed orange juice, 3/4 cup of chicken broth, 1 navel orange cut into segments, Italian Parsley, s&p.

For the Chicken – you need:  boneless – skin on breasts and thighs, 2 cups of orange juice – fresh is better, orange zest, olive oil, s&p. water.

First combine the orange juice, zest, 4 cups of water, and about 2 tblsp of salt in a bowl and stir to dissolve the salt…. when ready add the chicken and refrigerate for a couple of hours.

Now – when ready – Preheat oven to 400 degrees.

In a large “oven proof” sauté pan – heat up some olive oil over med hi heat – add chicken – skin side down and cook until the skin is golden brown – about 5 mins.  Turn the chicken over and season with s&p.  Place in oven and roast for 15 mins… (do not throw out the juice from the chicken – pour into a measuring cup and let cool so the fat comes to the top)

Remove the chicken and put on a plate and cover with tin foil.

Now for the sauce – use the juice from the chicken – skim the fat – once it rises to the top.

Melt 2 tbls of butter over med hi heat – add the chopped shallot and cook until soft.  Remove from heat and add brandy – then return to stove and scrape the bottom of pan – brandy will evaporate.

Now add the orange juice…boil it until it turns thick and syrupy about 4 or 5 mins…Add chicken broth and the pan juices and cook for about 3 mins.  Remove from the heat and add the orange slices, parsley and 2 tbls butter and stir until the butter melts…season with s&p.

When serving – cut the chicken in slices and place in a fan like presentation then top with the orange Brandy sauce.

Buon Appetito.