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Things you need to know.

  • Get ready ‘cause “Here I come” …. Earnings and inflation data out soon
  • Dow, S&P and Nasdaq all make new closing highs.
  • Treasuries steady, Oil is up, VIX is down.
  • JNJ Vaccine tied to Guillain Barre Syndrome?  FDA says, ‘not sure.’
  • PFE is pushing for a 3rd round….
  • Try the Grilled Apricot/Honey Dijon Chicken Thighs

Buckle up and buckle in – because as the Temptations told us in 1966 – Get Ready ‘Cause Here I Come” ….

The Dow, S&P and Nasdaq all scored new closing highs – on the eve of the 2nd quarter earnings announcements…. The Dow adding 130 pts or 0.37%, the S&P up 13 pts or 0.3% and the Nasdaq up 32 pts or 0.20%…. all while the Russell lost 2 pts and the transports gave back 32 pts.   As of last night – ytd performance – This is how it lays out…… the Transports are now up 18.5%, the S&P’s +16.7%, the Russell up 15.4%, the Dow up 14.35% and the Nasdaq up 14.32%.

And this morning at 6:45 am – the beauty pageant begins.…JPM, GS, (both Dow names) will be joined by PEP, FAST, CAG…. Wednesday will bring us BAC, PNC, DAL, BLK, WFC, & C….  Get the picture?  The walk down the runway begins in just hours…. giving investors/traders and algo’s a chance to gauge whether or not the ‘stretched valuations’ can be justified by the coming reports….

Look – investors, are excited and that is obvious based on what they have done to stock prices….as they wait for what is expected to be ‘blockbuster earnings’ that will most likely also be peak earnings as well….and once again – earnings are history, they are what they are, good or bad, you cannot rewrite corporate performance…. so investors will be listening intently to what all of these CEO’s have to say….about the future…and since most of these are banks this week – expect to hear lots about interest rates, commercial loans, mortgages, sales and trading margins, Investment banking fees, FICC (Fixed Income, Commodities and Currency) trading and so on….Now, I’m just sayin……don’t be surprised if we see a pullback when these companies announce…..even if only for a brief minute….or maybe not….if they say something we don’t expect. (Think weak forward guidance….)

Financials – led the way higher on Monday with the XLF gaining 1% ahead of today’s earnings reports…. Real estate was up next gaining 0.87% and Communication stocks were solidly in 3rd place…. the XLC gaining 0.7%.   Consumer Staples and Energy were the only two sectors that registered losses…and even those were muted….Value and Growth ended in a tie…..SPYV/SPYG both  up 0.35%.

The US treasury had both a 3 yr. and 10 yr. note auction…. the 3’s ended with yields (0.4%) slightly higher – forcing prices lower, while the 10’s ended up yielding 1.36% slightly lower than their intraday high – forcing prices higher…. The dollar index was up small at 92.231.  Gold held steady at $1,805/oz and the VIX backed off as equities continue to march ahead….

Oil fell by 38 cts which is nothing….and there has been no movement by OPEC so we are still operating with reduced production which will continue to support prices up here.   And this morning oil is up again – trading at $74.66 as expectations of further declines in crude inventories (think increased demand) continues to support higher prices. Any fears of the covid variant disrupting the recovery appears to be overblown.  The only thing that will cap prices (at least temporarily) is an OPEC agreement that increases production, and I am not even sure that the additional 500k barrels/day will do it any longer…. If the recovery continues at its current pace – demand will overwhelm the current rate of supply and prices will continue to accelerate.

At 8:30 am – we will get the CPI (Consumer Price Index) survey…and expectations are running high at +0.5% m/m and 4.9% y/y.  Ex food and energy are slightly lower, but all that reveals is that the stuff we need every day (food and energy) continues to surge, taxing everyday Americans.  So, we wait….and wonder – Will it be stronger than the already strong estimates?  And if so, then what will they say?  How will they explain it away?  Will they continue to tell us that it is all just transitory? And if it is weaker then expect the conversation to celebrate the Powell narrative.  Tomorrow brings us the monthly PPI (Producer Price Index) report and investors will pay close attention to that as well.

This morning its all the anticipation….

US futures remain confused as the excitement builds….…Dow is down 21 pts, S&P’s up 1, the Nasdaq is up 42 and the Russell is down 5 pts all this as investors set themselves up for what is sure to be a busy morning….….  JPM earnings due out at 6:45 am and the estimate is $3.15/share – while Goldman is due at 7:30 am and estimates there are $10.15/share…. It is almost laughable because the whisper number expected to be some 40% higher…. ytd…JPM is up 28% while GS is up 48%…. Remember – the FED has given all these banks a passing grade on their most recent stress tests and excess reserves will be added back into the earnings number and that will give it the impression of ‘stronger than expected,’ and then expect them to reiterate increased dividends and large buyback programs to fuel the ongoing excitement…

JNJ stock quoted down 1% as news over their covid 19 vaccine is raising concerns about a rare nerve syndrome…. known as Guillain Barre…. which has turned up in about 100 people…mostly men over 50 about 2 weeks post the shot.   Interestingly enough, it is only getting a passing mention in the main street media…. the FDA adding that it not ‘sure’ if the shot has any connection to the syndrome (of course not) …all while PFE is pushing for everyone to get a 3rd shot in the fall….

European markets are all a bit lower as investors there await the start of earnings and tomorrow’s Capitol Hill appearance by Fed Chair Jay Powell….  A rise in the  Delta variant across some parts of the world is simmering on the back burner but  is not causing all out panic.  At 6 am – all markets are down about 0.3% – 0.5.

Bitcoin is flat at $33,000, Ethereum is trading at $2,000 and doggey coin is at 0.21 cts.

The S&P closed at 4,384 – a new closing high…. – after testing as high as 4,386 and as low as 4364.   What else can you say?  We can only hope that the earnings season will cause some revaluations in prices…that will be orderly, vs. a sudden shock that will cause a disruptive revaluation in prices…the higher we go though, the more likely it will be that we encounter a shock move lower…. Only time will tell….

In any event – sit tight…

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Take Good Care

Chief Market Strategist, Consultant

Grilled Apricot/Honey, Dijon Chicken Thighs

Easy marinade and works well with chicken on the grill.

For this you need:  6 thighs, (bone in), Apricot Jam, Honey Dijon mustard, s&p, onions and butter.

Sauté the butter and chopped onion in a pan on med hi – until translucent.  Now add 2 tblspn of the apricot jam, and stir….after about 3 mins – remove from heat and add some honey & Dijon mustard and s&p – taste to adjust.  Let cool for 10 mins.

In a large bowl – add the thighs and the marinade – let sit for 30 mins.

Heat the grill – place foil on the grate and then place the chicken on top of the foil.

Turn heat to medium and cook until nicely browned and the juices run clear.

Serve this dish with corn of the cob and a large mixed green salad.  Great for an evening BBQ.

Buon Appetito.