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Things you need to know.
- Investors go on a buying spree – Russell up 2.3%
- Guggenheim suggests a big BOND Rally – Stocks to follow
- Earnings growing 38% on avg beating the 25% expectation.
- Bank of Canada? The first to move. ECB stays put.
- Crude Inventories rise – putting pressure on the recovery story.
- Try the Lemon Chicken
Investors went on a shopping spree yesterday after what one headline suggested that the ‘ROUT’ that happened on Monday and Tuesday presented big buying opportunities……! It is so funny – you mean the 1.4% drop in the S&P? Or the 1.8% drop in the Nasdaq? That was the rout? (Rout: A disorderly retreat) Not sure about you, but a 1.4% pullback or a 1.8% pullback would hardly be described as a rout….a rout would be a market that sold off in panic and lost 10% + in a day, prices under pressure as buyers chose to step aside leaving a void in demand causing stocks to collapse – THAT would be a rout….a 1.4% move off the most recent high is nothing more than a pimple…..period.
In any event – continued better earnings and news that Guggenheim’s Global Chief Investment Officer and Managing Partner – Scotty Minerd – thinks that we are entering another bull market for BONDS, that yields are expected to plummet and inflation will be a non-event, sent stocks on a tear – again remember – low rates leave little alternative for investors hungry for yield and growth…..….Now, this opinion is in complete contrast to so many other ‘Chief’s’ around the street – but it is in line with the FED thinking and it was enough to send the algo’s into a frenzy. By the end of the day – the Dow rose 316 pts or 0.9%, the S&P’s up 38 pts or 0.9%, the Nasdaq rallied 163 pts or 1.2%, the Russell surged by 51 pts or 2.3% while the Dow Transports carried up the rear – rising 145 pts or 1%.
Now notice the Russell – it once again outperformed and that is because it is also the one that has gotten beaten up the most…. losing nearly 7% since its high on March 13th when the index was up 20%. By far the biggest loser of all the indexes during the past month yet it is in second place still up 13% ytd just behind the Dow Transports which are up 21% ytd. So, when the mood goes from negative to positive – traders and investors will look for the opportunities that have been recently created….and so many of them found that opportunity in both the small and mid-caps (SMIDS) and the high growth names which will continue to benefit in a low-rate environment. So, if Scotty is correct and rates plummet – then we can expect more upward pressure on stocks…. So, sit tight and let us see how this plays out. BTW – just an fyi – Scotty lives in California – but announced that he was leaving that state and moving to Miami, Florida – hmmmm I wonder why? LOL….
Mixed news on the virus which did create a bit of angst – for some investors over the past couple of days – was not even on the radar yesterday……. Worries that new variants hitting India, Japan and a range of other Asian countries that are raising some concerns over the global recovery appeared not to be top of mind yesterday.
Eco data today includes Initial jobless claims of 610k, Continuing Claims of 3.6 mil, Leading Economic Indicators of +1% vs. the +0.2% last month….and Existing Home Sales which are expected to be down 1.8% m/m.
Earnings include: T, DHR, LUV, ALK, BIIB, NUE, POOL, BX, AEP, FCX, HCA, DGX, and after the bell – SNAP, INTC, SIVB, STX.
US futures are lower this morning….in this game of volleyball. Dow futures down 5 pts, S&Ps off 4 pts, the Nasdaq down 25 pts and the Russell off 7 pts. The story today? More of the same…. mutating virus, better earnings and 10 yr. yields which remain at 5-week lows….at 1.55%. Those mounting concerns about a flare up in virus cases in Asia are once again stealing the headlines causing a more neutral mood. 1st qtr. earnings continue to tell the story…. with earnings rising nearly 38% – far better than the expected 25% prior to the start of the season….
The Bank of Canada announced that they will be the first major central bank to pull back on its stimulus and are expected to move up their timeline for possible rate hikes! The ECB (European Central Bank) is due to make a policy announcement later today…there is NO change expected from them. And we know that Jay Powell has promised to keep rates in this country low for another 32 months…. a promise I think will be very hard to keep – but – Guggenheim’s Minerd will be happy to debate me on that subject.
European stocks are all up about 0.5% across the board in reaction to yesterday’s rally. Credit Suisse is passing the hat – looking to raise money in the public markets after reporting a $275 million loss -so much of it tied to the Archegos fund scandal. Other earnings included Renault – disappointed but that is not a surprise while Nestle handily beat the estimates reporting its strongest quarterly sales growth in over a decade! Comments from Christine Lagarde (ECB President) due out at any time now…and while no change is expected – investors will be listening intently to what she has to say.
DXY – while boring is important……. found support at $91 traded up and then tested support once again…. remember – the weak dollar helps the big multi-nationals…because when the sell products abroad in foreign currencies and then bring that money back to the US and convert it into dollars – they get more dollars and that is good…. $91.02 is support – a failure there could take the dollar down to the 89.90/90 level.
Oil is off another 40 cts at $60.95……. after the EIA (Energy Information Agency) reported a surprise build in US crude – mimicking the finding by the American Petroleum Institute…. once again suggesting that surging virus cases around the world will dampen demand……Oh well…. Oil remains in the $60/$65 range.
Bitcoin is trading at $53k down another $1200 while Ethereum is trading up $115 at $2,521…. Doggy Coin fell by another 18% overnight – leaving it at 26 cts as the ‘red hot rally’ in this joke crypto comes apart at the seams….
The S&P closed at 4173…. Rising nearly 1% yesterday taking back almost all the 1.4% it lost earlier this week…. when some journalists described it as a ‘rout’.
We are once again teasing all time highs in the broader market – 4,191 – and while the news remains positive – my sense is that it will be more churn today. Remember – the broad channel is now 3960/4400 – but my sense is that 4200 will prove to be a bit more difficult to pierce….
Remember – investing is dynamic not static…- pay attention to the price action and do not allow yourself to get way out of balance. Trim where necessary and re-allocate or just add more money to the underrepresented sectors! Adding more money is always the preferred method…. this way it keeps growing and growing.
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 (https://www.instagram.com/kennyp1961/)
Take Good Care
Chief Market Strategist, Consultant
This is a great dish if you are planning a party….it is easy to prepare and goes along way. You can make it ahead of time and just heat it up in the oven when ready. Served with another entree in a buffet style along with a large mixed green salad, Rice Pilaf and some sautéed broccolini – it makes a great presentation.
You will need to start with boneless/skinless breasts, and thighs. rinse, drain and pat dry….
To prepare – you need: – 4 lemons – sliced into 1/8-inch slices…. seasoned flour (s&p), beef broth, butter, and bit of olive oil.
Cut the chicken breasts/thighs into bite size pieces – dredge in seasoned flour and set aside. Next – in a large sauté pan – melt the butter and a bit of olive oil to prevent the butter from burning – make sure it is hot before adding chicken. Add enough to fill the pan – but do not overcrowd. Keep the heat on med high/high. brown the chicken all over….it will take on a golden hue…. should be about 5 mins or so……
next add enough beef broth to bathe the chicken pieces – lay lemon slices on top of chicken and cover.
Turn heat to med and allow the lemon and broth to permeate the chicken. About 3 / 5 mins more. Keep your eye on it and turn the chicken so that it does not burn. The broth will begin to thicken so make sure to not overcook. Transfer to a baking dish and repeat process for the balance of the chicken. You can cover and keep warm in the oven until complete.