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Financial, Analytics, Blur, Business, Close-Up

Things you need to know 

  • Eco data is strong – the consumer is fine
  • Philly Fed Survey is strong, manufacturing is healthy
  • Oil demand is up, sending prices higher (imagine that)
  • It’s the Weekend – Try the Green Tomato Bruschetta

My appearance with Charles Payne on Making Money yesterday on Fox Business….(Click below) – We talked about how FED members (and members of Congress) have trading accounts and never seem to lose – funny how that happens, no?  I mean – REALLY?

So – the eco data suggests that the consumer is ALIVE and WELL…. expectations of a negative Retail Sales report gave way to a very positive Retail Sales report – exp of -0.7% came in at +0.7% and if you look at Retail Sales EX Auto’s and Gas – the expectation was for flat, and the report came in at +1.8%!  Not too shabby…. So where is all of this ‘the consumer is anxious’ feeling?  Not at the retail (online) store for sure….and not at the gas pump either – because demand for oil and gas is UP as well……something I have been screaming about for months…..the ‘selloff’ in August was a head fake…I hope you didn’t bail on your energy names and in fact used that hysteria to buy more….…..Yesterday oil ended the day at $72.57/barrel – (this is up from the August lows of $61.60). 

In addition, both the Empire Manufacturing and Philly Fed Survey reports were also stronger than expected and that speaks directly to manufacturing in those parts of the country – so it feels good…. yet stocks struggled a bit……

By the end of the day – the Dow lost 65 pts, the S&P off 7 pts the Nasdaq up 20 pts, the Russell down 2 and the Transports up 35 pts.

And why?  Because all the good data is priced in…and investors remain concerned about what is next for the FED, what is next on Capitol Hill – in terms of taxes and spending……what’s next for the ECB (European Central Bank), the BoE (Bank of England), RBA (Reserve Bank of Australia) and the list goes on….

Look – we are 5 days away from the next FOMC (Federal Open Market Committee) meeting and are wondering what the commentary will be at the press conference due at 2:30 pm next Wednesday…. Now – no one expects a change in rates – they will remain at 0% – 0.25%, but many are asking – what will he say about when to taper?  Will he continue his narrative from Jackson Hole – that made it very clear that the committee was set to pull the trigger, or will he now hide behind what ‘could’ be considered weaker employment and CPI reports…. neither of which I believe should be a reason – at this point- to slow any plan to initiate a move.   But – the tone did change….and many are now expecting him to remain dovish and remain with the status quo – that is $120 billion/month in support.

For the record – I am not in that camp, I am calling for the start of a taper – sooner is better….and while I thought it would be a November/December event – I am now thinking that he will push it into next year…. But – let’s see.

This morning the weakness continues…. Dow futures are down 75 pts, the S&P off by 10, the Nasdaq is down 30 pts, and the Russell is giving back 7.

Eco data today includes nothing dramatic…. U of Mich Sentiment Survey – exp of 72….and U of Mich 1 yr. and 5 yr. inflation expectations….and the survey is expected to show that over the next year – inflation is expected to be at 4.7% while the 5 yr. rate is expected to be 2.9%…. The one year – I get, the 5 yr. I don’t…. not possible to forecast inflation out 5 yrs.…. it’s nothing but a guess – so I pay more attention to the one year.

European markets are all just below the unchanged line….all down about 0.1% – nothing dramatic….Eurozone inflation rose to 3% y/y and +0.4% m/m – a 10 yr. high….UK retail sales fell 0.9% m/m vs. the +0.5% estimate….German elections are on Sunday, September 26th….Germans will elect members of the 20th Bundestag – which is the same as when we elect member of Congress…..Remember that Angi Merkel will be out….but she will not be forgotten….she is right up there with Maggie Thatcher…..Surely – Netflix will be producing the Angela Merkel ‘Rise to Power’ story….So sit tight.

There wasn’t really anything so dramatic yesterday at all…. the 10 yr. treasury ended the day yielding 1.33%, Gold tested $1750/oz as I suggested it would and is now trading at $1765…. Oil – as noted ended the day at $72.57 and this morning is down 50 cts at $72.07.  The VIX rose by 2.8% and is up another 2% this morning as the overall tone appears to be a bit negative….

Bitcoin continues to trade right here at $47,500 while Ethereum is at $3400.

The S&P ended the day at 4473 – as it continues to churn and consolidate……or is it?  A test of the trendline at 4434 is most likely next…. a look at the chart suggests that right now it is holding…. but if we test it and the buyers back off – will the sellers become anxious, or will they stand pat?  This is the KEY level to – a failure will give the algo’s a reason to turn up the heat and send prices lower….and while the buyers are alive and well, they too want to see more of a pullback so expect them to lower their bids…. let’s go….

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.

You can follow me on Twitter @kennypolcari and on IG @kennyp1961.

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Take Good Care

Chief Market Strategist, Consultant

Green Tomato Bruschetta on Ricotta Toast

So – here is one of the other dishes we made on Sunday….

It’s regular bruschetta – except we used ripe green tomatoes. So, the look is different, but the taste was just as good.  Now yes, these tomatoes were home grown, and they don’t turn RED, they are GREEN.

For this you need:  Green (Cherry sized) Tomatoes, red onion, garlic, olive oil, s&p and a splash of balsamic, fresh ricotta and sliced toasted baguette.

Dice the tomatoes, garlic, and onion.  Mix.  Season with s&p, a splash of olive oil and Balsamic.  Let sit for a couple of hours to marinate….

Now slice the baguette, brush with olive oil and toast (both sides) under the broiler.  Remove – add a spread of the fresh ricotta and then top with the bruschetta.  So good…See the picture on my Twitter (@kennypolcari).

Buon Appetito.