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Things you need to know.

  • Google smashes it on EVERY metric…..stock up $110 in pre-mkt
  • MSFT beats and traders are unhappy – stock quoted down $6 in pre-mkt
  • FED to release FOMC mins at 2 pm – Listen for any change in anything he says
  • Joey to address the nation and drop another $1.8 trillion bomb on us
  • Apple and FB due out after the bell….expectations are running high
  • Try the Sweet /Sour Chicken – Italian Style

The churn continued…. the markets did little yesterday…as they marched in time – awaiting the FED minutes today and the Biden speech tonight.  Earnings continued to impress – yet some stocks go in reverse while others zoom higher….….

TSLA beats by 16% yet the sell the stock off $33 or 4.5%
MMM beat estimates by 20% – they sell the stock off $5 or 2.5%
SYF beats by 26% and they sell it off by 1.6%
CNC beats and the sell it off by 6.6%
UPS beats by 58% and they take it up 10%
TRU beats by 15% and they take it up 4.3%

And then during the day –

GOOG sold off $14 or 0.7% during the day – then they reported earnings after the bell at 4:05 pm…. coming in at $26.29/sh vs. the expected $15.64/sh…. A 68% beat!!!  A $50 billion share buyback, 1st Qtr Total Revenues coming in at $45.6 billion, advertising revenues, cloud revenues, YouTube ad revenues, Google search revenues, and operating margins EXPLODING higher – traders taking this stock up $90 in the minutes after the announcement…. …. leaving Bernie Sanders spinning in his hammock while napping in Vermont… while Lizzy Warren is going apoplectic….and meanwhile.

MSFT reports a beat of 14% – total revenues, Intelligent cloud revs, productivity revs, personal computing revs all beat as well yet the stock gets hit – down $8 or 2.85% in the post market…. because the trader types were not happy…. Wah, wah, wah…. Please….
If you are the trader type, it is all very exciting…. the noise, the chatter, and the fast-paced reactions….by the end of the day the Dow and S&P ended flat, while the Nasdaq lost 48 pts and the Russell gained 3 pts.  Today we will hear from Apple and FB after the bell….and expectations are running high for both…. in addition

The FED kicked off their 2 day policy meeting yesterday and will report those results today at 2 pm….so markets will continue to march in time until we get confirmation that nothing has changed inside the walls of the Federal Reserve….Expectations for inflation are elevated but temporary and rates to remain at zero for the next 33 months….with no plan to change that strategy now – but – will he hint that it may change in the not so distant future…..remember that the Morgan Stanley group is suggesting that the FED may talk tapering beginning in June…. So, look – tapering or papering or anything that sounds like that will cause the algo’s to implode…I mean – can you imagine if he even hints of such a thought???  We would see the S&P fall 7% (293 pts) within minutes which would cause the first round of market wide circuit breakers to engage…. Just fyi – that level would be 3,893 on the S&P – so I guess that is a level to watch today…. just in case….

I mean think about it for just one minute…. what have we been hearing for months now?  What has Jay Powell been telling us and the whole world?  What have so many analysts/economists been saying about inflation all while the FED has been telling us its not true…..So all I’m saying is hold onto your hat and strap yourself in…..If Jay Powell should even suggest that inflation could be a problem or that  he is changing his tune – I would expect investors and traders to have a bit of a visceral reaction….Now the futures markets continue to suggest zero interest rates thru 2023 but the chatter is saying something different…..so hurry up and wait..

The 10 yr. yield says what? Well, that has quietly risen to 1.64% up from the low 1.5% range for the last two weeks…. while the Schwab US TIPS ETF has also quietly risen 2% since the lows of February.  (This ETF looks to track the results of the Bloomberg Barclays US Treasury Inflation Protected Securities Index otherwise known as a TIP). And what these two data points suggest is building inflationary pressures…. that is all – nothing to see here…. move on.

And then we have the 1st official 9 pm Presidential address (for the Sanders/Warren administration) to the country and to 50% of elected officials in a move to operate per covid rules… (Do not even get me started.)  In this address we will all hear Joey plead his case for huge tax increases to pay for all kinds of new infrastructure expenses…. This plan is separate from the $2.4 trillion ‘Infrastructure Plan’ announced weeks ago and is asking for an additional $1.8 trillion plan called the ‘Family Plan’.  Not sure about you, but they are throwing around ‘trillions of dollars’ as if it were billions of dollars – I mean, is it me?

In any event – US futures are lower….as the sun makes its way across the globe and begins to rise over the Atlantic…. Dow futures down 31 pts, S&P’s flat, Nasdaq down 26 pts and the Russell off 3 pts…. Now, this is not anything to write home about, but it is suggesting some level of concern…. right?  Because if no one were concerned and earnings continue to blow the place apart and rates to remain at zero for another 33 months and inflation is not a problem, and the recovery is on target to produce massive economic improvement then – futures would be spiking higher – especially after that ridiculous Google report…. But they are not….so sit tight….

Eco data today – besides the important FOMC minutes, includes nothing that will drive the conversation at all…. Wholesale Inventories and Retail Inventories and Mortgage Apps – a big nothing….

European markets are slightly higher…. ahead of the FED’s policy announcement. More earnings, no eco data.  At 5:30 am the FTSE +0.22%, CAC 40 + 0.42%, DAX +0.37%, EUROSTOXX +0.06%, SPAIN -0.04% and ITALY -0.18%.

DXY – is trying very hard to hold onto the trendline at $91.04 as it awaits the FED announcement as well.  Remember– a failure there could take the dollar down to the 89.90/90 level.

Oil is up – trading at $62.97/barrel.  The API (American Petroleum Institute) reveals a build in crude stockpiles that was bigger than expected – yet traders are taking oil higher…. Hmmm?  Wonder what is going on there…. Demand anyone?

The S&P closed at 4186 – after testing as high as 4193 – closing 1 point lower and testing 1 point lower than it did on Monday…. again, inching closer to 4200 but failing each time…. as investors are feeling just a bit tired…. unable or unwilling to push it up and through 4200 with any conviction just yet.  Talk of stretched valuations once again causing some to pause as investors remain unsure of what is next.  Apple and FB due out after the closing bell.

The Biden address tonight also seems to be holding some investors in place as speculation builds around what he is about to say to a congress as Nancy is only allowing 50% attendance in what feels a bit odd right?  I mean they have all been vaccinated, and the vaccine is 95% effective while survival rates are about 99%.  Yet, she is still not convinced it is ok…. which then sends another message….

Remember – the broad channel remains 3960/4400 – but my sense is that 4200 will prove to be a bit more difficult to pierce.  Any sense that the FED is changing policy will create an immediate reaction….and then the focus will turn onto everything that is negative…. higher federal taxes, higher capital gains taxes, out of control spending, stretched valuations, rising rates, higher inflation – need I go on?

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
kpolcari@slatestone.com

Sweet/Sour Chicken – Italian Style

Sweet and Sour (Italian style) Marinated Chicken Thighs (you could always use breasts, but the dark meat is always better.)  –

This is not a difficult dish to make and once you simmer it – you have time to take a shower, set the table, break open the wine and enjoy the night.

You need:  olive oil, s&p, diced onion, chopped carrots, chopped celery, plenty of sliced garlic cloves – 6+, ¼ c sugar, 1 c Chianti, ½ c red wine vinegar, ½ c orange juice with pulp, *sliced almonds – optional.

Season the chicken pieces with s&p – set aside.  In a heavy frying pan – heat up some olive oil, – now brown the chicken on all sides.  Remove and place on a platter.

Now add the garlic, carrots, celery, and onion – sauté for 10 mins on med heat…. Now add the sugar, wine, vinegar, orange juice, and almonds…. bring to a boil – add back the chicken – skin side up.  Place a lid off center and turn heat to simmer.  Cook for about 30 mins.  (This is where you run up and take a shower, get into something comfortable and kick back….)

Now remove chicken and place on a platter, – turn heat up to high and stir until it is nice and thick…not long…maybe like 4 mins max…. taste – adjust seasoning with s&p.  Spoon the sauce over the chicken pieces and serve.

This dish works well with a green veggie – like French cut green beans or broccoli.  Make a large mixed green salad with tomatoes, red onion, and cucumbers.  Dress in a balsamic Vinegar and Olive oil dressing.  Keep it simple – as the chicken and marinade carry the dish.

Buon Appetito.