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Things you need to know.

  • Stocks remain mixed as we wait for the FED – What will Jay say?
  • Oil continues to advance – as summer kicks off
  • Bitcoin pushes up and through $40k as Lonnie tweets again
  • Nasdaq makes a new high as the rotation into tech begins anew
  • Try the Pappardelle w/leeks and peas

Stocks were mixed in trading on Monday…..with the Dow ending the day down 85 pts or 0.25%, the S&P up 7 pts or 0.18%, the Nasdaq scoring big points and rising to a new record as investors once again go all in on tech and ‘growth’ names….added 105 pts or 0.74% while the Russell gave back 9 pts or 0.4%.  Industrials, Basic materials, Financials, Consumer Staples all just a touch weaker while Energy, Consumer Discretionary, Communications, Utilities were a touch higher…but it was Tech that once again stole the show with the XLK (Tech ETF) gaining 1% as investors appear to be accelerating their push back into this sector – after they abandoned ship over the last couple of months after last week’s CPI report suggested that there is nothing to worry about in terms of inflation and that any drastic move by the FED is not happening.
Treasury prices were weaker as money moved out of bonds and back into stocks sending the yield back to 1.5% – which hurt the big recovery plays but added to the excitement for a new look at the sexy growth names. Yesterday though, it was clearly Growth over Value and that was evident in the SPYG which gained 0.9% and the SPYV which lost 0.5% – but lets not get crazy – on the year Value is still outperforming Growth by a wide margin – 17% vs. 11%.

The recent rotation – being credited to thoughts that inflation has peaked, a weaker than expected NFP report a week ago, a stalled commodity rally that has seen a sudden reversal of fortune for lumber and other commodities and a complicated path for infrastructure spending.  The FED has done an outstanding job of ‘jawboning’ the idea that inflation is transitory allowing investors to feel more comfortable that there will be no change in policy as a result of the FOMC meeting today and tomorrow.  Although there is still a lot of concern about the potential for a policy mistake.  The big question is whether or not Jay will say that the Fed has begun to think about thinking about a change in plans or worse yet that they have actually started ‘informal discussions’ on tapering and whether the dot plot will continue to show no rate hikes THRU 2023.

Gold ended the day at $1,865 as it continues to digest and consolidate its recent surge higher while Oil (WTI) pushed ahead adding 19 cts to end the day at $71.07!

And not to be outdone – Bitcoin surged by 8% pushing up and through $40,000 – this after Lonnie Musk made some positive comments over the weekend that Tesla would start accepting Bitcoins again after the Bitcoin miners make it clear that they are using renewable energy to power the super computers that discover the coins rather than the fossil fuels that has caused much of the uproar over the past couple of weeks.

And the weekend news was also a non-event…..Nothing significant out of The G-7 other than photos, nothing on infrastructure spending despite the excitement over the bi-partisan discussions leaving many to believe that the Democrats will go it alone and force thru spending via the reconciliation process.  The NY FED released a survey that flies in the face of the FED that suggested that many in the country do expect a broad based increase in inflation expectations highlighted by the fact that shipping and freight costs are surging did little to dampen the mood.

And as noted – all eyes will be on the FED starting today as the men and women on the Federal Open Market Committee go behind the Iron Curtain to create policy going forward.  The expectations by some are for the FED to admit that they are hinting at tapering and at the pace of which that may happen – but will stop short of providing any formal starting date – sentences that include – ‘some time before there is substantial further progress is made’ are expected. Others say it is too close to call while the Dot Plot is expected to remain unchanged thru mid 2023 – which is a bit different than the end of 2023.  Inflation expectations are expected to move a bit higher yet Jay will counter that with the word ‘transitory’ at least a dozen times saying that it is the ‘bottle necks’ that appear to be causing the latest surge and once those are cleared up then the threat of inflaton will dissipate…remember if you say it enough, it must be true.  In any event  – he is also expected to say that the FED takes any overheating very seriously and has plenty of pots and pans in the kitchen to keep it simmering on the back burner vs. boiling over on the front burner.

This morning we wake up to see that European markets are all higher and US futures continue to advance.  Dow futures are up 25 pts, S&P’s are up 5 pts, the Nasdaq ahead by 20 pts and the Russell up 5 pts.

Eco data today includes the PPI report (Producer Price Index) – expectations call for and increase of 0.5% m/m and +6.2% y/y (a strong number) while Ex food and energy increase of 0.5% m/m and 4.8% y/y. This report details the costs associated with manufacturing the products at the input level that ultimately get passed onto the consumer at the retail level.   Retail sales down 0.5%, Capacity Utilization of 75% and Industrial production of 0.6%.

Billionaire investor Paul Tudor Jones telling us on Monday that this meeting is KEY for Jay Powell and his career……warning us that tomorrows press conference could spark a ‘big selloff in risk assets’ if he doesn’t do a good job of explaining the mindset of the committee.  And while I do agree that is possible – I do not expect that to be the case….Jay has done a great job of sending the message and I can’t see that he screws it up now.  But hey…..wierder things have happened.

European markets are also trading up –  as they await the Fed news.  German inflation data came in at +2.4% while figures in France reveal that French inflation is running at 1.8%.

Oil!  Is trading at $71.29 /barrel as those talks with Iran are fading.  So any extra supply worries are a non-event and that is helping prices rise as demand surges around the world and its not even the 4th of July yet….

Bitcoin is trading at $40,000, Ethereum is trading at $2,600 while Doggey Coin is at 0.32 cts.

The S&P closed at 4255 – A new high!  And with futures up again this morning and European markets higher, expect it to test higher still as investors push the envelope.  But watch for conviction….will any advance be weak or will it be more broadly based- that will be the clue you need to understand what investors think will happen tomorrow.  Any sense of cautiousness may suggest that investors are not convinced that the road ahead is clear…..Look – 4 members have been openly talking about tapering – they have been floating the balloons, so any conversation that does NOT recognize this will cause confusion….Just sayin’

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Take Good Care

Chief Market Strategist, Consultant

Pappardelle w/ Leeks and Peas

From the Piemonte region of Italy.  Piemonte – is one of the 20 regions of Italy, located in the north western part of the top of the boot – it borders France, Switzerland to the north and Liguria, Lombardy and Emila Romagna – (other Italian regions)  to the south and east.  It is surrounded by the Alps, its capital is Torino – site of the winter Olympics in 2006.  The name – Piemonte – comes from the Latin – Pedemontium – meaning  at the foot of the mountain.. Pede (foot) and Montium (mountain).  Much of the food from this region has both French and Swiss influence and as such – uses a lot of butter and cream, very French.  This dish is easy to make and one that you will enjoy – again – I like it for spring and summer  but feel free to cook it all year…..Enjoy this with a crisp chilled white wine

You will need:  Parppadelle Pasta, 6 leeks, garlic clove,  onion, butter, lite cream, frozen petite peas,  fresh grated Parmegiano cheese and s&p.

Bring a pot of salted water to a rolling boil.

Using the bottom part of the leek – up to where it turns dark green.  Cut the stalks at that point.  trim the bottom and then slice the stalk in half.  Now slice lengthwise into thin slices.

Next peel and slice the onion,  In a sauté pan – melt the butter with a splash of olive oil, sauté 1 sliced garlic clove*(optional), the onion and the leeks.  Sauté slowly on med low so that the leeks and onion brown, no burn.  After about 10 mins – add the frozen peas.  Sauté for another 10 or 15 mins.  season with s&p.   Now add the lite cream and stir.

In the meantime add the pasta to the pot and return to a boil.  Cook for about 8 mins or until aldente.  Now add one ladle of pasta water to the onion and leek mixture.  Strain pasta – reserving a mugful of pasta water.  Return the pasta to the pot and add back 1/4 cup of the water to re-moisten.  Stir to absorb.  Now add the leek, onion, pea mix to the pasta – Add a handful or two of grated Parmegiana cheese and toss.  If it is not moist enough – add back some more of the pasta water.  Serve immediately in warmed bowls with toasted garlic bread.

Buon Appetito.