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Things you need to know.

  • US futures are bouncing this morning – but the mood remains erratic
  • Michael Burry makes a big bet against TESLA (and by default ARKK ETF)
  • Gold quietly advances as money moves back into the ‘traditional’ inflation hedge
  • Oil – moves higher – kissing $67/barrel…
  • Focus is squarely on FOMC tomorrow – Clarida and Bostic support current stance.  Bullard to speak tomorrow and he too supports the current strategy
  • Try the Firecracker Chicken Pieces

**Please consider joining me and Ron Insana today at 4:30 pm as we host our bi-weekly Blitzr live event – where we will discuss what’s ahead for the markets…Click here to register and join this FREE event.

Stocks began the week in SELL mode….Tech, Communications, Consumer Discretionary and BITCOIN all leading the way lower…..While Basic Materials, Consumer Staples, Energy and Gold all led the way higher…….The story is the same…..investors once again weighed the risks of inflation, the economic recovery, monetary policy, massive gov’t spending, a possible massive increase in taxes across the board and the latest tweet from Lonnie Musk that caused Bitcoin to fall nearly $8k or 16% before finding some buyers….All this as investors are bracing for further volatility as they await the FOMC minutes on Wednesday.

The sexy high growth names continuing to get hammered as money moves into the more traditional boring defensive names as investors continue to grapple with the uncertainty……Coinbase getting raked over the coals….falling $17 or 6.6% now below the reference price that it used when it went public just weeks ago bringing its total loss from the opening day’s high to 41%…… and TSLA also coming under fire – falling $13 or 2.2% as some investors begin to question the stability of CEO Lonnie Musk who’s behavior continues to create distractions and his cryptocurrency commentary continues to create chaos – and this morning he has something else to deal with – Michael Burry!  And the Cathie Wood ARKK ETF also getting beaten up as well…Every name in her ETF under the gun as investors are choosing to run for the exits in those names in a ‘get me out at any price’ type of move.  It is beginning to feel a bit like capitulation as the waves of selling in those names continue to hammer those stocks…leaving many of them now down more than 40%…. ……. taking them from ‘growth’ to ‘value’!

The selling one day is met with short term buying the next – which is met with more selling the day after as it appears that exhaustion has not set in as both buyers and sellers try to determine fair asset values….and that may take a while longer as the data remains mixed and concerns are mounting…..Yesterday morning – Atlanta FED President Raffi Bostic told viewers that he wasn’t’ ready for the FED to ‘dial back its support for the economy and that it could take ‘months’ to get a good read on inflation!
In fact – what he said was that ‘they were planning on talking to consumers to get a sense of what was going on’….do what??  Talk to consumers???  And then in the afternoon – Vice Chair Richie Clarida told participants in a webinar that based on the April jobs report – we have not made substantial further progress on the FED’s goals for employment and inflation and that is what caused the turnaround off the lows at about 1:30 pm as the assumption is that tomorrow’s FOMC data will offer no new clues on a change in policy or thinking.

By 4 pm – the indexes came off their lows, rallying a bit on the Clarida comments.  The Dow ended -54 pts or 0.16%, S&P gave up 10 pts or 0.25%, the Nasdaq gave up 51 pts or 0.38% while the Russell was UP by 2.5 pts or 0.11%.

And then there is Bitcoin and a fan favorite – Lonnie Musk – who just cannot keep his mouth shut – knowing full well that retail investors and traders react to his daily musings in an almost cult like fashion……which then provides an opportunity for him……Capisce?

Bitcoin collapsed under the weight of the last Tweet….as Elon Musk continues to send cryptic messages about Bitcoin and then by default the other members in the space.  By now you have heard that there was some confusion about what Tesla was doing with their $1.5 billion worth of Bitcoin….and that confusion sent Bitcoin plummeting…. ending the day at $43,000 – well below Friday’s $50k mark…. The media had the usual talking heads discussing what this means …. And why – in an odd way – many are now saying that the Musk noise is good for the asset long term…. Why, you ask?  Because he is drawing all kinds of attention to it, he is forcing the conversation to happen, he is shining a light on the whole sector and that many say is a benefit even though it continues to cause big volatile moves.

Look – this asset class is not for the faint of heart at all….and if you are in it because of what Musk has to say or not – then you are in it for the wrong reasons…. Just fyi – the 200 dma trendline support is at $39,524…..and we are only $4k away from testing it…..If the sellers take it there and then the buyers refuse to support it – the next stop is more like $30,800….in what would be a real dramatic pullback…a ‘technical break of trendline support’ will set off alarm bells causing even more weakness…..and as it gets weaker don’t be surprised to see the broader market sell off in sympathy….because just imagine how many people margined their accounts or refinanced their houses to go long Bitcoin and DoggeyCoin?  Just sayin…. It feels like a disaster in the making….

Eco data today includes Housing Starts….m/m expected to be down by 2%, Building Permits are expected to be up by 0.6% – while tomorrow brings us the most important data point of the week…the FOMC mins…. expect everyone to be listening and dissecting every sentence in the report – looking for the slightest change in language or terminology…. of which I do not believe they will get what they are looking for.

Gold – something we have not talked about recently has quietly made its way back – piercing up and thru all 3 trendline resistance levels – as investors take their money out of Bitcoin and go back to the more traditional hedge against inflation…..since the start of the quarter – gold is up 12% – yesterday it added 1.6% to end the day at $1867/oz….and now appears to want to test the early January high of $1975/oz and if it appears as if the inflation monster is rearing its head – then expect gold to continue to rise.

US futures this morning is up….and that does make some sense after the action yesterday……At 5 am Dow futures were up 84 pts, S&P’s up 14 pts, Nasdaq up 100 pts and the Russell up 7 pts.  The 10 yr. treasury is holding steady at 1.64% and the Dollar Index crashed thru the May lows and is now trading at 89.77.

And this morning – Michael Burry (famous for making a killing on the housing crisis in 2008 and played by Christian Bale in ‘The Big Short’) – makes a clear bet against Lonnie Musk, Tesla and by default Cathie Wood……This morning’s BB reports that he has put on very big ‘bearish’ bet (short position) worth some $534 million- allowing him to express huge skepticism on both Musk and Tesla…..oh boy, I can’t wait to see  how this plays out, because if Burry is right and Tesla collapses – it will be more than Tesla collapsing (this is the Cathie Wood part!)….And we know that his housing bet in 2008 was a big money maker….Capisce?  Tesla is quoted up $2 at 578/579

European markets are up as well….as the tone goes from negative to positive…. Eurozone GDP due out today for the whole region while UK unemployment data is due for March.  At 5:30 the FTSE +0.36%, CAC 40 +0.33%, DAX +0.28%, EUROSTOXX +0.35%, SPAIN +0.35% and ITALY +0.59%.

Oil rallies hard…and this morning it is up another 52 cts at $66.70/barrel… Re-openings around the globe fueling the demand story while fears of falling demand in Asia are being ignored.  The latest outbreak in the Mid-East between Israel and Hamas also putting upward pressure on prices as the tension builds.  Overall – global demand is strong and will continue to be strong as we move into the summer and Americans return to the air, rail, and roads…

Bitcoin is trading at $45,000, Ethereum is at $3,500 and Doggy Coin is trading at 0.49 cts….

The S&P closed at 4163….in what was a churn……and this morning it appears as if it will push higher but will most likely run into resistance between 4180 & 4200….As long as investors assume that nothing has changed with the FED and that tomorrow’s FOMC minutes confirm that then they will be able to reconcile a push higher…..Again – I continue to think the moves will remain erratic as we move thru the 2nd qtr…….so remain prepared….

Text INVEST to 21000 to get my digital business card – give me a call if you want to discuss the markets or a plan.  You can now get a video version of this note on my YouTube Channel.  KennyPolcari.

Take Good Care

Chief Market Strategist, Consultant

Firecracker Chicken

This is a hot a spicey dish…one that causes your head, your brow and then your back to sweat….as you eat it you can feel the sweat begin to drench your body much the same way it does when parts of the market go into free fall…. leaving you scrambling for cover……

This is another easy dish to make – and you can decide just how HOT you want it….
For this you need 1 lb. of boneless chicken breast – cut into bite size pieces, s&p, cornstarch, 2 scrambled eggs, vegetable oil, buffalo HOT sauce, brown sugar, rice wine vinegar, red pepper flakes & scallions.

Begin by preheating your oven to 400 degrees. Grease Pyrex baking dish with some vegetable oil…. – set aside.

In a bowl – mix 1/3 c of buffalo sauce, ½ c of brown sugar, 1 tbsp of the rice wine vinegar, and the red pepper.  – set aside.

Using paper towels – pat the chicken dry and then season with s&p.  Now toss the chicken in corn starch to coat it evenly.

Heat up some vegetable oil in a large frying pan…. keep the heat on high….
Now dip each piece in the egg wash.

Add the chicken pieces to the frying pan…. but do not crowd – otherwise the chicken will not brown right…. Cook for 4 mins and then turn the pieces over…you may have to do these 2 or 3 times to cook all the chicken.

Now place the cooked chicken in the Pyrex dish.  When completed – pour the sauce over the chicken and bake for 25 mins – stirring the chicken at about the 12 min mark to make sure you have the sauce all over the chicken. Once done – dress it with the sliced scallions and serve.  – this is good with plain steamed broccoli – something to withdraw the heat….

Enjoy –

Chief Market Strategist, Consultant