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Things you need to know.

  • Markets continue to churn and wait…..
  • Tech under pressure again – is that telling us anything?
  • Fed remains divided on the next move – Will today’s NFP change that narrative
  • OIL is now in the $69 range, Bitcoin, Ethereum & Doggey Coin are all lower
  • Try the Mostaciolli with Arugula and Cannelloni Beans.

**  I will be live and in color with Stuart Varney today on FoxBusiness for the hour from 9 – 10 am.  Please join us as we chop it up over employment, inflation, leisure surge pricing, AMC and the MEME stocks etc…

Good Friday morning…. Stocks finished lower in Thursday trading, though the major indexes finished off their worst levels on the day.  By the time the bell rang – the Dow was off 23 pts, the S&P off 15 pts, the Nasdaq gave back 142 pts, and the Russell gave back 19 pts.   Value outperformed growth.  The FAANG M complex got slapped with the Tech Disruptors – got smacked.  The ARKK ETF shedding 3.5% as investors once again chose to hit the sell button as the prospect of a monetary policy change becomes more and more real as the hours turn to days and the days turn to weeks.  Meme stocks largely came up for sale and Jeffries has halted all short sales in some of those crazed names. AND AMC’s CEO Adam Aaron – coming out and telling investors to not buy his stock unless you are prepared to lose everything – this after we saw a 96% surge in the stock and the company filed to sell 11.5 million more shares.

Consumer discretionary – XLY -1.2%, tech – XLK – 0.9%, and communication services – XLC trailed – giving up 0.6%.   Energy – XLE extended its rally gaining 0.3%, Financials – XLF outperformed +0.25% as banks will be helped by rising rates and Utilities – XLU added 0.6%.  Treasuries were weaker sending yields higher ending the day at 1.62%. Dollar rallied a bit, Gold finished down 1.9%. losing $37 while WTI (West Texas Intermediate) ended fractionally lower.

The market continued to trade in a very narrow range, marking seven straight sessions as investors continued to push and pull….as everyone attempts to decipher what the next move is on the high-profile themes.  Yesterday’s focus was on employment. ADP private payrolls beat big – coming in at 978k jobs created vs. the expected 638k…. Initial claims fell to 385k – a new post-pandemic low. In addition, ISM non-manufacturing hit a new record high for May at 70.4.

Joey offered a new idea……. a corporate tax rate FLOOR of 15% vs. raising the rate to 28% in his latest $1.7 Trillion infrastructure proposal to Republicans. Politico expects Republicans to raise the size of their counter offer today. However, the two sides remain far apart on so many other areas and Democrats are still expected to go the reconciliation route.

Yesterday I told you that the Fed is about to begin winding down its corporate bond facility saying that it has NOTHING to do with monetary policy.  NY Fed’s Johnny Williams said – in his view – that substantial further progress has not been achieved yet, while Fed’s Kaplan strengthened his stance saying that tapering of bond purchases should begin soon. Again, more confusion…. maybe that is the point???

May nonfarm payrolls report due today – expectations of +674k new jobs…but remember – last month was a disaster, so what will see this month?  A boomerang events.  Will we see an upward revision to last month?  CPI is on tap for next Thursday and the y/y expectation calls for 4.6%!  While tapering seemingly remains the most important issue for the market, Fed officials have us all a bit flummoxed as there is a building split among the paparazzi – with some saying yes while others say no….and that we need to see several more months of employment and inflation data given all the noise.

US futures are flat at 5:30 am as we all await the payroll data….and if today’s report will offer any new clue about how much longer we get to play in this sandbox…. Dow futures -35 pts, the S&P -1 pts, the Nasdaq is down 2 pts, and the Russell is off by 1 pt.  10 yr. Treasuries are flat at 1.62%, the Dollar is trading just north of 90 and gold is down another $2 at $1871/oz.  Oil is up and WTI (West Texas Intermediate) has now pierced $69!  Hello $70 oil!  And right behind that is gasoline at the pump – up again just as the world wakes up……

European markets are also teasing lower this morning as investors across the pond await today’s NFP report.  Eurozone retail data showed a decline of 3.1% vs. the expectation of -1.7%.   In mid-morning trade we see the FTSE -0.30%, CAC 40 -0.09%, DAX -0.08%, EUROSTOXX -0.14%, SPAIN -0.52% and ITALY +0.03%.

Bitcoin is down 4% at $36,200, Ethereum is off 6% at $2,650 and Doggy Coin is off 5% at 0.36 cts.

OIL surging higher…. now trading up and thru $69/barrel…. on expectations of a surge in fuel demand from around the world.  The demand being credited to vaccinations and vacations…. people are driving, planes are flying, truckers and shippers are moving products around the world. Demand is NOT going away anytime soon…. expect to pay more at the pump in the months ahead.

The S&P closed at 4192 – breaking the 4200 psychological level testing as low as 4168 before finding balance.  This after having tested 4200 for the third time in as many days….and everyone knows that the 3rd time is a ‘a charm’ – and if you are someone that wants to see the market back off – then yes, it is a charm and if you do not want to see it sell off – then maybe not so much!  ….it all depends on your perspective……

I have been saying that the markets feel a bit tired, extended and needs some time to digest what is coming down the pike this month – Could yesterday’s action finally reflect that belief?    Today’s NFP data will be the driver of the conversation and the action….so sit tight…. on the back burner are the other supporting actors – inflation, interest rates, monetary policy, and infrastructure policy are all the themes that are front and center and will continue to drive the action until we hear from the FED on the 16th.  So, sit tight…always have your shopping list ready….

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.

You can follow me on Twitter – @kennypolcari
Take Good Care

Chief Market Strategist, Consultant

Mostacioli Rigate w/Arugula & Canneloni Beans

This is a vegetarian dish that is easy and quick to make if you are not a vegetarian then feel free to add some Italian sweet sausage*.

Bring a large pot of salted water to a boil. Add the Mostacciolli  and cook until aldente – 8 / 10 mins.
In a sauté pan – heat up some olive oil, crushed garlic and a sliced/chopped “red” onion.  Sauté until the onion is soft and translucent.  Now add a can of cannelloni beans – juice and all and stir to heat up…about 4 mins or so. Now add the arugula and stir.  Arugula will wilt  – no worries.  Drain the pasta – saving a mugful of the pasta water….return pasta to pot and add back 1/4 cup of the water to re-moisten.  Next add beans and arugula – handful of Parmegiana cheese and toss.  Serve immediately in warmed bowls with freshly toasted garlic bread.

*If you add the sausage – do it this way….grill the sausage…..remove and slice into bite size pieces….add to the sauté pan BEFORE you add the beans and arugula.  Stir and cook for 3 mins or so….Then add beans etc….

Buon Appetito.