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Things you need to know
- The churn continues – stocks edge higher as the VIX retreats
- Oil now trading at $72.64/barrel – as demand is alive and well
- The FED is now in the blackout period – announcement due next Wednesday
- Negotiations continue in DC – Democrats tell us it is NOT about redistributing wealth or punishing innovation….
- Try the Grilled Halibut
So, concerns over a FED tightening were replaced by concerns over a slowing economic recovery were replaced by it’s all nothing to worry about…. stocks rallied nicely on Wednesday…. with the Dow gaining 238 pts, the S&P up 38 pts, the Nasdaq up 124 pts, the Russell up 25 pts and the Transports up 134 pts….
The 10 Yr. treasury bond yield rose to end the day at 1.30% up from 1.27%, the Dollar fell leaving it struggling to hold onto the trendline…at 92.63….and this morning the dollar is up by 22 cts at 92.771. The VIX lost 6.5% – once again suggesting that fear is subsiding. Gold – is falling as it becomes just a bit clearer that the FED isn’t going to move anytime soon on rates leaving it to test the June lows of $ 1750 most likely….
Oil gained 3% to end the day at $72.64/barrel – suggesting that demand is strong – (note the EIA report) all confirming the Goldman call earlier in the week that ‘oil was on the verge of spiking’…..(everything I have been saying for months)….Oil has now gained back ALL of the losses (15%) suffered between July/August as the naysayers were trying to blow it up….As of last night oil is now up 18% off the August lows and is higher again this morning.
All eyes are now keenly focused on next week’s FOMC (Federal Open Market Committee) meeting – where Jay Powell is now expected to say – nothing….other than the same narrative he has been saying….which is – we are making progress, but recent eco data is suggesting that there are some bumps ahead so ‘we’ are maintaining the status quo – BUT will be looking at all data points in the months ahead to see if we should ‘tweak’ the plan…..so do not expect any definitive announcement just yet about a November/December taper….which doesn’t mean it still can’t happen, it just means we won’t hear about it next week.
Remember – Jay has made it very clear that taper does not mean rate hikes…. the two events are mutually exclusive and that is helping him maintain stability – that is if investors believe him. And that depends on which day it is because we have seen how that can change from day to day…. One day we are concerned and the market retreats, then the next day we are not concerned and the market advances…. which is exactly why you need to eliminate the noise and stick to your plan.
This morning US futures are DOWN…. not much, but it goes to my narrative…. yesterday it was all roses and today – there is just some lingering concerns…. Dow futures are down 33 pts, the S&P off 7, the Nasdaq off 40 and the Russell is down 6…as the churn continues….
Investors trying to assess what not only Jay will do, but what elected Democratic officials are going to do with the $3.5 trillion infrastructure plan and the associated array of new taxes that they are trying to impose upon Americans and the country. Right now – there is lots of chatter and headlines in the news cycle as both sides prepare for the fight……so while it is interesting, it only serves to create daily angst as the headlines swing back and forth between the pluses and minuses of the complete plan…. with the Chair of the Ways and means committee – Representative Richard Neal (D, MA) telling us that the point of this plan and associated taxes is
‘Not to redistribute wealth, not to punish innovation…but to expand opportunity for the American people and support our efforts to build a healthier, more prosperous future.”
In any event – the conversation continues and will clearly remain a focus for investors and markets over the coming weeks…. but in the end – it will not price stocks in the long term but can and will create some chaos in the short term.
Eco data today includes: the usual suspects – Initial Jobless Claims of 323k, Continuing Claims of 2.7 mil, Philly Fed Survey – exp of 19 and the all-important numbers today – Retail Sales…..and m/m they are expected to be down 0.7%, ex autos and gas they are expected to be flat…now expect the talking heads to detail how this report speaks to how the consumer feels….while CPI was ‘hot’ it was not HOTTER than expected this month – but with the PPI running at 8.3% (as of Friday’s report) – the expectation is that next months CPI will reflect the upward pressure….and that will serve as the catalyst for continued angst….
And we still have the FED to deal with – while many think, myself included, that he will now not lay out a definitive plan this month – he will have to at some point…. Again, I wish he would but I am not on the committee so I can’t force the call….
Tuesday and Wednesday’s test of the 50 dma did reveal that buyers are defending that position for now….We have tested that trendline 6 times in the past 5 months – and have always been rescued by the FED….and it appears that is the case again….let’s see what Jay says next week….We are now in the blackout period – so do not expect to hear from any of the FED committee members in the next week – although it would not surprise me if we heard from the non-members of the committee – as they take the temperature…..
European markets are up today – in defiance of the weakness in Asia – (weak retail sales) and the weaker US futures – which are waiting for today’s Retail Sales report….No eco data to speak of across the Eurozone, but there is a fair amount of political back and forth going on….Boris Johnson reshuffles his cabinet in the UK and German Finance Minister Olaf Scholz is facing questions about the failings at the federal anti-money laundering agency…this is important why? Because he is the favorite to succeed Chancellor Angi Merkel in the end of the month elections…. At 6:30 am – markets across the region area all up between 0.5% – 1.5%.
Bitcoin continues to trade right here at $47,800 while Ethereum is now above $3500. Threats by SEC Chair Gensler to regulate the asset not doing much to cause a pullback. And the latest news that Cathie Wood is predicting Bitcoin to trade at $500k in 5 yrs. is helping to create all kinds of interest…. All while Ray Dalio (Bridgewater Associates) is convinced that the SEC will ‘kill it’ because they have ways of doing that. (Now to be transparent – Dalio is an owner of the asset).
The S&P ended the day at 4480 – as it continues to trade in a very tight range….4430/4575. The 50 dma at 4430 is the level to watch….and this will be important if we hear something from the FED that we do NOT expect to hear…. (Think a definitive plan to taper).
Remember you can text the word INVEST to 21000 on your cell phone to get my digital business card. Feel free to download it and send me off an email or text. Happy to engage and talk markets, planning, thoughts, concerns, and ideas.
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Take Good Care
Chief Market Strategist, Consultant
kpolcari@slatestone.com
Grilled Halibut in a Lemon/Olive Oil Marinade
Ok – so this was the grilled fish dish from Sunday night…So easy – and so good.
For this you need: 4 – 6 oz Halibut steaks – skin on, 2 fresh lemons – squeezed for the juice, 2 tblsp of the olive oil, 2 minced garlic cloves, lots of fresh basil – rough chopped, 2 tsp drained capers.
Heat the grill – and then clean with your grill brush.
Brush your halibut with olive oil – season with s&p. Set aside
In bowl – mix the lemon juice, the olive oil, the garlic, basil, and capers. – set aside.
When ready – place the halibut on the grill – skin side down – cook for 8 mins, flip, and cook the flesh side down for another 7 mins.
Remove from grill and place on a serving platter – Now pour the marinade over the hot fish – dress it up with slices of lemon. (See picture) Cover with foil and let sit for 4 mins….
Now – serve buffet style along with the honey glazed roasted carrots and roasted fingerling potatoes. Always have a nice salad to assist. Dress in olive oil, fresh lemon, s&p, and some oregano. Simple – yet delicious.
Buon Appetito.