Inflation is a NON-EVENT – Capisce? – Try the Pasta Limone

Kenny Polcari Uncategorized Leave a Comment

Things you need to know.

  • Inflation remains transitory – investors take the markets higher
  • Lonnie Musk Tweets about renewable energy sources for cyrptos causing them to surge in the afternoon
  • Oil – rallies another 3.5% taking it up and thru $66/barrel – an 8% move in 3 days…
  • US futures edge higher as the S&P is just 1% below all time highs
  • Try the Pasta Limone (Lemon Sauce – delish)

Good morning – US stocks rallied yesterday, while the 10 yr. treasury yield fell to 1.58%…..….Tech +1.8%, communications +1.85%  and the ‘disruptor growth’ names +2.7%,  leading us higher as investors appear to be putting the whole inflation conversation on the back burner again……At 4 pm the charts revealed that the Dow added 186 pts or 0.5%, the S&P’s up 41 pts or 1%, the Nasdaq gained 191 pts or 1.4% while the Russell added 12 pts or 0.5%….

Commentary from some FED officials, street analysts and the BoE (Bank of England) downplaying any of the recent risks – telling us once again that all the talk of inflations concerns are overdone and that by the fall – they won’t exist…..

(challenge!)…..….Transitory has now become the word of the year….as we can find it in almost every sentence when talking about the markets and the market drivers – inflation will be ‘transitory’, and the effects of the most recent price spikes are expected to be ‘transitory’, talk of FED hikes are transitory, rising house prices are transitory, the rise in food prices are transitory, oh and the price of lumber at Home Depot that went from $1.75 for 1 – 2×4 and is now $9.25 for the same 2×4 is transitory (a 400+% increase) is transitory ……..Get it?  It is transitory…. I want to know what the definition of transitory is because when you look it up – all it says is ‘not permanent’ – it does not give you any time frame…so I am expected to live for 77.8 yrs.…. which is just transitory….

Cryptos once again stealing the spotlight…..Bitcoin and Ethereum making big gains after the Sunday night collapse and after another Lonnie Musk tweet that said bitcoin miners are committed to publishing their data on the use of ‘renewable energy’ to mine Bitcoins, Ethereum, Doggey Coin etc.…and this was seen as a positive because it would silence the critics that are screaming about environmental concerns over how much energy (fossil fuels) we are using.  This morning we see Bitcoin trading at $37,000, Ethereum at $2,500 and Doggey Coin at 0.34 cts.

The Dollar index continues to come under pressure, Gold was steady,  the VIX has fallen back to the most recent lows (suggesting complacency)  and crude oil (WTI) soared….up another 3.8% or $2.62 cts to end the day at $66.03…in a move off of the last weeks low of $61.56/barrel after the media created all the hysteria over the potential addition of 1 million more barrels per day on the market if the US lifts sanctions on Iran which helped to send oil down $5…….something I said I thought was overdone and in fact was….This is Memorial Day weekend 2021 and the world is awake and Americans are travelling and demand is way up….so hold on – because there is more room to run….and this is helping the energy sector – XLE is now up 40% on the year and is up 13% since April 1st….Keep you eyes on the XLE which closed last night at $52.68/sh – a breakout above $55/sh will see it surge higher to about the $65 range if demand is what we think it is…..Remember there are calls for crude to hit $75/barrel by year end.

Look – last week I told you that if they can dampen the inflation story then they will push the markets higher and that is what they are doing…..I am still in the value over growth trade this year so would be adding to the cyclicals and the recovery names….tech, energy, industrials, consumer staples….while keeping growth and disruptive growth as underweight positions…..because I keep seeing a split among the brain trust at the FED…with Rosengren, Harker and Kaplan all voting for at least ‘talking about tapering’ while the others are holding the line…so in my opinion – where there is smoke there is fire….and that is sure to create ongoing volatility in the months ahead…
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US futures are up this morning – trying to build on yesterday’s gains…Dow futures are up 67 pts, S&P’s up 11 pts, the Nasdaq up 64 pts and the Russell adding 2 pts.  The rumors that crypto margin calls would force selling in the broader market are not proving to be true…(yet) but there are still calls for further weakness in the crypto space so that concern is not over.

Eco data today includes: Housing Price Index exp of +1.2% New Home sales of -7%, and the Richmond Fed survey of 19.

European markets are all slightly higher in what appears to be a cautious tone…. German IFO business survey did climb to a 2 yr. high of 99.2 from 96.6 and that is positive while German GDP contracted by 1.8% – which was not unexpected – helping the DAX to jump to a record high…. all at 6:30 am – the FTSE -0.04%, CAC 40 +0.06%, DAX +0.73%, EUROSTOXX +0.45%, SPAIN +0.20% and ITALY -0.38%.

The S&P closed at 4197 – leaving us once again just 1% below all-time highs……Amazing really, this market just does not want to go lower in a TINA trade…. (there is not alternative) ……We remain in the 4087/4230 trading range…. I am still in the camp that the volatility is NOT over so take advantage of any price moves to trim and rebalance into names that have underperformed.

Text INVEST to 21000 to get my digital business card – give me a call if you want to discuss the markets or a plan.  You can now get a video version of this note on my YouTube Channel.

https://www.youtube.com/channel/UCI-MTlH2FdbMNvpZ2b_ELrg

You can follow me on Twitter – @kennypolcari

Take Good Care

Chief Market Strategist, Consultant
kpolcari@slatestone.com


Pasta Limone

The quintessential summer pasta dish…This dish hails from the Amalfi coast – Sorrento to be exact –Sorrento is the coastal town overlooking the Bay of Naples in Southern Italy – the region of Campana and is at the beginning of the Amalfi Drive – this is that long narrow roadway with 110 hairpin turns, carved into the mountains that plunge into the Tyrrhenian Sea.  If you have never been there – it is a MUST do experience – Trust me when I tell you – it is spectacular.

From the Sorrentine peninsula – you can see the Isle of Capri, Mt. Vesuvius, and the whole of Naples.  Sorrento is also the region where they grow exquisite lemons – this is where they get the lemons to make Limoncello – that delicious after dinner drink that you drink out of the freezer – do not worry it never freezes – but it is a great ending to a perfect meal.   This dish is the best served during the summer when you get the best, juiciest Meyer lemons around.  Begin by setting your table outside, add the candles and the linen napkins….be sure to include both a fork and a soup spoon for twirling.   Complement this with some Frank Sinatra on your Spotify.

For this you need: lemons, preferably organic, linguini, 2 cloves of garlic, slightly crushed, Olive oil and butter, 2 cups of heavy cream, fresh grated parmigiana cheese, s&p, and a few sprigs of fresh mint, finely chopped.

Take the lemons and grate off the zest – do not take the pith…. (the white layer under the zest).  Set the zest aside and now cut the lemons in half and squeeze the juice out – set aside.

Bring a pot of salted water to a rolling boil.

While the water is coming to a boil – it is time to make the lemon sauce: heat a bit of olive oil and one stick of butter over moderate heat in a large skillet.  Add the sliced garlic and sauté for about 3 or 4 mins.  Now remove the garlic and add the heavy cream – remember – keep the heat at medium – you do not want to curdle the cream.  Once the cream is warmed – slowly add the lemon juice – a little at a time……tasting as you go – so that you do not ‘overpower’ the sauce.  Once satisfied that you have just the right amount of lemon flavor – and the right amount depends on your tolerance – err on the side of less – you can always add more if need be.  Turn the heat to low – Now add the zest and a handful of the parmigiana cheese, and the pepper – (only add salt after you taste it – the cheese may provide enough salt, so you do not want to overdo it.)

Boil the pasta – When the pasta is al dente – about 8 mins, using a spaghetti server – transfer the linguine to the skillet with the sauce – taking the pasta directly out of the pasta water and putting it in the large skillet.  (You are not straining the pasta in a colander) Mix well, allowing the pasta to absorb the flavors of the sauce, if it appears to thick – add a bit of the pasta water to thin it out.

Serve immediately, topped with a sprinkling of lemon zest, and chopped mint.  Always have extra parmigiana cheese on the table for your guests.  Enjoy this with a chilled summer Rose.

Buon Appetito.