Things you need to know.
- Its all about the THEME
- Stocks did a 180 yesterday and are breathing today.
- Dollar continues to weaken – sending commodities up again.
- Dollar continues to weaken – supporting the big multi-nationals too!
- Wil today’s macro data continue to ‘exceed expectations?’
- Try the marinated Pork Loin.
The THEME: Exceeding Expectations…. across the board – the economy, viral infection rates, vaccination rates, (a study out of Israel confirms 95% efficacy rates in a much larger population sample), treasuries, housing prices, relief packages, inflation, and stock action….and then more control by the FED….
Stocks took it on the chin yesterday morning as investors once again appeared a bit nervous – Futures which had been all over the place coming into the morning – had stabilized and pointed higher at 8 am…. but suddenly futures turned lower as 10 yr. yields spiked higher as the opening bell was readying to ring….by 9:35 am…the Dow was down more than 100 pts, while the S&P and Nasdaq followed suit – declining by 35 pts and 176 pts, respectively. The Russell bucked the trend from the opening bell and shot higher, backed off to flat and then surged again…. Mortgage apps fell by 11% w/w while New Home Sales surged by 4.3% – well above the expected +1.7%….and if I am any guide at all – it is all happening in South Florida!! Mamma mia – it does not stop…. And now yesterday’s WSJ – runs with the headline.
“Tax Hikes for the High Earners are on the Table in Some States” ……detailing NY Governor Cuomo and MN Governor Timmy Walz along with a few others are preparing to impose higher income and capital gains taxes on some of the residents….and this is separate from what the Biden Administration and the Democrats want to impose at the Federal level.
And housing prices are sure to surge again….at least in South Florida….
10 Yr. yields spiked up and through 1.4% – rising as high as 1.43% and this set off a bevy of warning bells in the early morning…….and the tone turned sour early on….and then……
Stocks reversed course – and went onto stage a broad rally – why? Because Fed Chair Powell once again – had to get up on the podium and tell the House Financial Services committee that the economy not only needs his support but that they are not going anywhere anytime soon – assuring the markets and investors/traders and algo’s that ‘it’s all good’! And stocks took off as the talking heads all sang the same song…. of a stronger than expected recovery encouraged by all this free money….
So, I must ask – if everyone keeps saying that its going to be stronger than we all expect – raise the expectations! This way it will be in line with the expectations – or is not that what they want? What happens if you raise the expectations and it misses? OH Boy……. exactly!
And those sectors that we discussed in yesterday’s note – the ‘reflation trade’ – soared. Retailers absolutely smashing all the records with the XRT – rising by 5.3%! (suggesting all that pent up demand). Energy – followed closely behind – the XLE (energy ETF) rising 3.5%! Industrials (XLI) +1.90%, Financials – (XLF) +1.9%, Basic Materials – (XLB) + 0.9%…. etc. And Tech – which has gotten beaten up recently found support rising 1.5%…. In fact, 9 of the 11 S&P sectors ended the day in the green – can you guess which ones were down on the day? Come on…you know…. Utilities…(XLU) losing 1.17% while Consumer Staples closed just under the flat line- as you would expect in a rising rate environment and an improving economy. Utes and Consumer Staples while considered safe are not sexy at all.
And the Nasdaq? – the bargain hunters came in and started to go on a shopping spree…. remember what we said – the index was off about 8.5% as of yesterday morning and individual names off even more – so it was time to go shopping…. WFH (or Live at Work) stocks gaining 1.2%.
And not to be missed – the Reddit Rebels are at it again…..news that GME CFO Jim Bell was leaving on March 26th was reported in the morning – as it was presented as if he was choosing to leave – and then at about 3:20 pm – someone in the Reddit room broke the news – Ryan Cohen (newly appointed board member and investor) forced him out and that sent the rebels into a buying frenzy yesterday late in the day ….sending that stock up 104% to end the regular session at $91.71 – only to see the stupidity continue in the after hours session taking that stock up to $190/sh – this morning it is being quoted at $148/149 in the pre-mkt. And the other names in the rebel group surging as well.
US futures are mixed…. Dow futures are up 61 pts while the S&P’s are flat, the Nasdaq is down 45 pts and the Russell is up 17 pts….
10 yr. yield is sitting at 1.434% while the 30 yr. is at 2.287%. The surge in yields is being pushed aside – as rates continue to rise – why? Because the FED would then be expected to come in to control that…. think Yield Curve Control…or Operation Twist – and that would put a lid on rates….so essentially the FED would keep Fed Fund rates at zero and keep 10 yr. yields at 2%…. this would effectively ensure that rates do not become too restrictive thereby disrupting the ‘stronger than expected’ economic recovery. And if they hold rates tight – then maybe the tech will not get wrecked! And we know that tech has been leading the way for years now….
The dollar index (DXY) did as I had suggested….it continues to break down and closed below 90 last night and this morning is trading at 89.717 – and this is helping who? That is right the commodity complex and by the way – the big multi-nationals – why? Because when they convert stronger Euros back into weaker dollars – they get more dollars and that flows right to the bottom line – capisce? So, hold on….
Oil is up 14 cts at $63.40 – taking us back to September 2018 prices…. Gasoline is also on the rise with many places now selling gas for more than $3/gal – up some 35% in the last 4 months…. which should not be a surprise at all to anyone…. Demand was never dead….
Eco data today includes: Durable Good – exp of +1.1%, Ex Transports of +0.07%, Cap Goods Orders of +0.8%, Cap Good Shipped of +0.6%, Initial Jobless Claims of 825k, Continuing Claims of 4.460 million, the final revision for 4th qtr. GDP of 4.2%, Pending Home Sales and the Kansas City Fed Manufacturing Survey.
European markets are marching slightly higher – At 6:30 – the FTSE +0.43%, CAC 40 +0.29%, DAX -0.08%, EUROSTOXX +0.05%, SPAIN +0.69% and ITALY +0.19%.
Bitcoin – is +1100 at $49,900.
The S&P closed at 3925 taking us within 25 pts of the most recent highs of 3950. All this feel-good mood leaving many to jump on the band wagon as many talking heads on TV are suggesting that this run is far from over so ‘don’t wait’! Ok – do what you want – but I would be more methodical and not so haphazard…. We remain in the 3790/4040 channel. As always, I would advise you to stick to the plan, trim where necessary and put money to work in some of the underperformers….
Text INVEST to 21000 to get my digital business card – give me a call if you want to discuss what I can do for you.
Take Good Care,
Chief Market Strategist, Consultant
kpolcari@slatestone.com
Marinated Pork Loin w/Rosemary and Lemon Zest
Roasted pork loin is an Italian staple. Is plentiful, relatively easy to cook and so good. Try this easy to prepare pork loin that will have your guests drooling for more…The list of ingredients is short – but the pork is long on taste.
You need: 3 lb. pork loin, s&p, 5 cloves of garlic, olive oil, 3 tsp. chopped fresh rosemary, lemon zest, beef broth, 1 cup of white wine, and 2 tbls of white wine vinegar…. That is, it.
In a mortar and pestle (a tool used to crush/grind and mix – you can find these at Amazon.com, or William Sonoma or any good kitchen store) – add 1 tbls of salt – (Kosher salt preferred) and 3 cloves of peeled garlic, olive oil and rosemary and about 1 tblspn of lemon zest. Mash well and turn into a paste….
Chop the other two garlic cloves and with a knife make a couple of holes in the pork loin and stuff with the chopped garlic. Now rub the loin with the paste making sure to massage it well into the meat. Refrigerate for about 1 hour – then remove from fridge and let stand at room temp for 15/20 mins….
Preheat oven to 385 degrees.
Place pork loin in a roasting pan with some beef broth and place in the oven – after 20 mins – turn the loin and continue cooking for another 20 mins. (meat thermometer should read 145 degrees in the thickest part) Remove loin and let rest – covered – for 10 mins. In the meantime – add wine and wine vinegar to the roasting pan and place on stove and bring to boil. Then turn down heat – simmer to reduce – making sure to scrape the bottom for any bits. This should only take no more than 5 mins.
Slice the roast and present on a warmed serving platter on a bed of fresh Kale and lemon slices. Remember – it is all in the presentation – it needs to be pleasing to the eye as much as the stomach. Serve with the juice (and applesauce – as you wish). This dish can be complemented with a side of roasted potatoes/peas* and a large mixed salad with tomato wedges, red onion, cucumber, and hearts of palm dressed in a balsamic vinaigrette dressing.
*Roasted Potatoes/Peas….Wash and slice 6 large potatoes – leaving the skin on. Place in a baking dish with a lg sliced onion. Season with s&p, and a bit of olive oil to coat – not drown. Place in a 400-degree oven. Turning every 10 mins…should bake for about 40 mins or until golden brown. Next add a can of peas – not frozen – a can of peas – be sure to drain the water before you add to the potatoes. Toss and let bake for another 10 mins. Remove from oven. Perfect. Enjoy this meal with your favorite cabernet….
Buon Appetito.
