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Things you need to know
- NFP report does little to rattle the market
- Oil continues to rise…today is trading at $81.21/barrel and going higher
- Kraft Heinz CEO says – brace yourself for higher food prices
- It’s Columbus Day – banks and bond markets are closed – No treasury action
- Try the Grilled Boneless Chicken Breasts
Stocks ended the day just slightly lower, hovering around the flat line most of the day……this after the latest Non-Farm Payrolls report on the top line looked disappointing but when you tear it apart – maybe it wasn’t so much. We saw private payrolls rise by nearly 400k jobs while gov’t jobs fell by 130k – which is something I suppose we should be celebrating…. any reduction in the size of gov’t jobs is always a good thing…. but in fact – what some economists think is that this anomaly was the result of some ‘statistical errors resulting from flaws in the way the gov’t adjusts for data for seasonal factors’…. Much of what we heard is the continuing blame being put on Covid 19 and the Delta virus that led to temporary closures of some gov’t offices…whatever the reason is for the overall weaker report – it is what it is…and analysts/strategists and investors spent all day trying to figure it out….and explain it away as ‘transitory’.
What we are going to have to recognize next is the fact that we may get a wave of employees that would rather quit work than comply with ‘mandated employer requirements to get vaccinated. …or even more of an issue are the companies that are letting go of workers who refuse to be vaccinated… United Airlines being just one…. And over the weekend – Southwest Airlines cancelled more than 1800 flights due to weather and lack of pilots . …. Pilots that have chosen not to be vaccinated against the company or gov’t mandate…. And this is sure to cause a ripple effect across many industries. (Will we start to hear of this as earnings season sets to begin tomorrow.)
By the end of the day – the Dow fell 9 pts, the S&P’s down 8 pts, the Nasdaq lost 75 pts, the Russell lost 17 pts while the Transports bucked the trend and rose 130 pts.
The yield on the 10 yr. treasury ended the day yielding 1.61%…. did you see that? 1.61%….and today is Columbus Day – banks and the bond markets are closed – so we will have to wait until tomorrow to see what the next move is……. The VIX lost 4% on Friday but is up 6.6% this morning as futures looks weaker. Oil – which continues to rise, rose 1.6% on Friday and is up another 2.3% this morning is now trading at $81.21/barrel – taking oil up 72% since Biden took office and up 30% since the August lows of $62 ish…. when so many street analysts were screaming about how the delta variant was going to destroy demand for oil…. (Yeah, how’s that working?)
While the overall market was weaker on Friday – Energy – XLE rose 3% and Financials – XLF rose 0.5%. The other 9 sectors ended the day a bit lower…. with Real Estate – XLRE and Utilities – XLU suffering the most – falling 1% and 0.7% respectively.
Stocks in Europe are all lower….as the day starts…. concerns over spiraling inflation in the energy sector being blamed for the weakness. On Friday – some ECB policymakers discussed the possibility of halting both the monetary and fiscal support measures that they launched during the pandemic…. And that is causing some angst and caution for investors. An ECB decision is due out in December….and remember – ECB President Christine Lagarde has said that they wouldn’t’ t move until the FED moves first. There is no eco data this morning to drive sentiment as investors across the region also await the official start of earnings season. At 6 am – markets across the region are all down between 0.1% – 0.4%.
US futures are down across the board…. Dow futures down 70 pts, S&P’ off 14 pts, the Nasdaq down 67 pts and the Russell lower by 9 pts. OIL is the story here and around the world today….and this just as earning season kicks off on Wednesday… JPM, BLK, DAL – will set the tone. Later in the week – we will hear from BAC, C, MS, GS, USB, and the list goes on….and this season – future guidance and intonation will be key for investors…. What will they say about the future? What will they say about the supply chain issues, what will they say about inflation…?
On Sunday Kraft CEO Miguel Patricio told the BBC that you better get used to paying higher prices for food…. this as Kraft/Heinz began raising prices in many countries.
“We are raising prices where necessary around the world” ….
That about sums it up, how many times will we hear this line? Contributing factors include rising energy prices, less available raw materials, labor shortages, logistics – think input prices….and again – when you change the inputs the output must be different. So, think about changing the inputs at the FED…. what happens then? Prices adjust. Period.
Today is a bank holiday – It is Columbus Day – so expect lower volumes overall and since the bond market is closed – do not look for treasuries to drive the tone or action. That will have to wait until tomorrow. There are also no economic reports due out today either….so trading should be muted and if the global tone is any indication – I suspect the day will end lower.
Bitcoin – like oil is UP….and this morning it is up 1.8% at $56,400 while Ethereum is up 1.8% at $3575.
The S&P ended the day at 4391…. after trading as high as 4412…. well below trendline resistance at 4438. The NFP report doing little to rattle investors or markets…. Today’s weakness is due to the rise in oil prices and the continued uncertainty surrounding the FED’s next move. In addition, markets are cautious in front of the start of earnings.
I do not expect the recent volatility to subside anytime soon….and expect more turbulence in the weeks ahead…. Remember during earnings season – the devil will be in the details – future guidance, input prices, rising dollar, supply chain issues, and how future FED policy may help or harm all these projections – so stay close to your desk….
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Take Good Care
Chief Market Strategist, Consultant
kpolcari@slatestone.com
Grilled Chicken w/Arugula, Cherry Tomatoes and Grana Padano
This is a simple yet colorful and delicious dish – it should take you no longer than 30 mins or so…and is a no brainer.
For this you need:
Boneless Chicken breasts – thin sliced, fresh lemon juice and lemon zest, olive oil, s&p, Arugula, Cherry Tomatoes, garlic cloves, red onion, and a thick balsamic vinegar.
Begin by placing the chicken in a bowl – add the lemon juice, zest, s&p, and some olive oil. Mix and massage the breasts to make sure that they are all coated. Let rest for 20 mins or so.
Slice the cherry tomatoes in half and place in another bowl. Add the chopped garlic, sliced red onion, S&P. Toss – now dress with oil and the balsamic vinegar – set aside – do not refrigerate.
Now – when ready – heat up a grill pan – add a dab of butter and some olive oil to the pan…allow it to heat up… Now add the chicken breasts until lightly browned – turn over and repeat. Thin breasts will cook quickly – do not dry out.
To present – Place the chicken on the plate and top with the Arugula. Now spoon the tomato salad on top and finish with shaved slices of Grana Padano Cheese. (You can also use shaved Parmegiana if you prefer). A nice chilled white works well with this.
Buon Appetito