Here we Go!  Strap in for NFP!  T-90 mins – Try the Pasta Allo Scarpariello

Kenny Polcari Uncategorized

New York Stock Exchange, Wall Street, New York City

Things you need to know

  • Stocks rallied and Goldy ups the ante!
  • Non-Farm Payroll at 8:30 – estimates span the globe
  • Oil – rallies back a bit, building tensions in the Mid-East
  • JPM – offers access to Crypto funds for their ‘best clients’
  • Try the Pasta Allo Scarpariello

Stocks rallied hard on Thursday…after taking it on the chin on Wednesday – Banks, Energy, Travel, Consumer Discretionary, Communications, Retail and even Utilities all surge by better than 1%… Tech while higher seems to be tiring a bit…. up 0.5% while Healthcare and Basic Materials ended the day in negative territory.

The day began with Goldman Sach’s Chief US Equity Strategist Davey Kostin announcing that they (GS) have raised their year-end 2021 S&P target to 4700 – joining Oppenheimer who changed their target earlier this week. And they raised their year-end 2022 target to 4900. (So, to be clear they are looking for a 26% return on the S&P this year and only 4% next).    In addition – the economic data was better than expected and while Initial Jobless Claims remained at 350k – Continuing Claims made a dramatic move….piercing the 3 million mark ending at 2.95 million and THAT is also a big positive…..Continuing claims haven’t been this low since I don’t know when……Toss in the better than expected earnings from some of the disruptor names – think ETSY, ROKU, UBER, LYFT and once again you have the recipe for higher prices…

And higher they went – by the end of the day – the Dow gained 270 pts or 0.8%, the S&P up 27 pts or 0.6%, the Nasdaq up another 115 pts or 0.8% while the Russell gained 37 pts or 1.6% and the Transports added 180 pts or 1.25%.

Causes of the recent angst took the day off yesterday…. …. The delta variant, possible economic slowdown and supposed demand destruction in the oil patch, inflation concerns, uncertain FED policy, China crackdown – all took the day off!  None of this was much of a concern as the focus turned to anything positive – and yesterday that was the better eco data, the better earnings data, the better yearend target data by our friends at Goldy and the idea that Jay Powell isn’t going to announce anything at the Jackson Hole central bank boondoggle on August 26th – 28th.

According to Goldy – “There was nothing to see…. Don’t be ridiculous…. move on…”   You see, you could argue that if the delta variant or a FED move was really a concern for the economy and the markets – Goldy would not be upgrading their yearend target by an additional 7%.  My sense is that Davey and by default Goldy has a direct line to the FED, the Treasury the WH, the Pentagon, the Capitol, and the Senate, – which is what makes me think that they (like Blackrock, JPM, C, MS, BAC and WFC etc.)  know something WE don’t know……so you see……it’s all good…. there is nothing worry about….

And this is exactly why you need to be awake…and not asleep.   Because, first I don’t trust GS…(although I do trust JPM) …But GS talks  out of both ends…..so I’m going with my gut……They say one thing and do something completely opposite…..I am still in the camp that the FED will announce the beginning of the taper by year end at the earliest which then sets up interest rates increases by the 3rd qtr. of 2022 at the earliest…..and that is what I think the market is confused by…….I think too many people are in the other camp….no taper and no rate increases…..and dare I say – I think that is shortsighted.

Think about it…..How many FED members have come out and indicated that they think it’s time, that we need to move on, I mean Ricky Clarida- the Vice Chair of the FED said it on Wednesday while San Fran’s Mary Daly said it two weeks ago….They were just the latest two to float that balloon… Toss in  St. Louis’s Jimmy Bullard, Chicago’s Chucky Evans and Boston’s Eric Rosengren and you have half of the committee playing for the other team…..…. . So, caveat emptor……Just sayin….

This morning US futures are churning in place…. Dow futures -13 pts, S&P’s +2 pts, Nasdaq down 18 pts and the Russell is flat.

Today is all about the Non-Farm Payroll report – (NFP) and by now you know that the expectation is for 875k new jobs to have been created and that has been the estimate for a while…Street estimates run the gamut – from +350k to 1.15 million new jobs created (in fact some bank in Zurich estimates US job creation at 1.6 million – give me some of what that guy is smokin’)  Once again our friends at Goldy had this to say late yesterday afternoon…..

We estimate non-farm payrolls rose to 1.150 in July – above the consensus target of 870k.  Labor supply constraints eased further due to the wind down of federal unemployment top-ups in some states and the addition of over 2 million youth job seekers in June and July.”

Youth job seekers?  Those are by definition ‘summer jobs?  Part time and not long term? Jobs that will disappear in September when school starts again? No?

In any event – the clock is ticking down to 8:30….so strap in….

Today’s market driver IS this report – oh yes along with all the ‘better than expected’ dozen or so earnings reports.  Now if the NFP should somehow disappoint – then expect all the negatives to come to the front burner and all the positives to be pushed to the back burner.

I would be remiss if I didn’t at least mention the ongoing drama in HOOD……the news that some of the insiders want out after the explosive surge that gave the stock a $70 billion valuation only 6 days since it’s Goldman led IPO valued the company at $30 billion.   These insiders aren’t stupid you know…. how do you think they got to be insiders?  Once they saw the lunacy – they are happy to exit because you don’t look a gift horse in the mouth….  This news which will bring an additional 97 million shares to market sent the Reddit boys scrambling as the stock tumbled 28%…. this after the 60% rise on Wednesday.  This morning the stock is quoted up 2% at $52.51/$52.66.

Oil – which got assaulted on Wednesday falling some 3% to test as low as $67.50/barrel rose nicely yesterday – closing out the day at $69.10/barrel or +1.4%.  The decline on Wednesday was blamed on the delta virus while yesterday’s rise was credited to building tensions again in the Mid-East region.  You see – someone struck a tanker in the Gulf of Oman that Israel blamed on Iran – Iran quickly denied…and then Israel struck some Lebanese military rocket launch sites that had fired two rockets toward Israel territory…. once again, the thought is that Iran is behind that attack as well. When asked if Israel was prepared to strike back at Iran Defense Minister Benny Grantz said ‘Yes!” – and here we go….

And just an observation….I flew back to Florida from Nashville, TN last night – the airports in Nashville, Atlanta and West Palm Beach were bustling with travelers….twice on two different flights – Delta air appealed for passengers to give up seats because they were overbooked….so if you ask me – there is NO demand destruction in the oil patch – planes like ships don’t operate on solar power or battery packs….nor do trains, trucks and most auto’s….….and I fully expect oil to regroup and settle in at $75/$80 barrel.   Now cut the baloney – demand destruction – really????  Wake up… Remember – Goldman still has an $80 target by September…. And $100 by year end….

The 10 yr. treasury yield is now at 1.23% up from 1.13% earlier this week… and this morning is yielding 1.25% as we wait for the results of the NFP report.  The VIX fell a bit yesterday and this morning is down another 12 cts breaching it long term trendline support…suggesting that everyone remains complacent….and gold confirms that mood as well…. falling $10 to end the day at $1,799…. also, below all 3 trendline supports suggesting that we could see it test the June lows of $1,765 ish.

Bitcoin is trading at $40k, and Ethereum is trading at $2750.  Neither seemed fazed at all with the recent SEC comments about more regulation – and that’s a positive…In addition we learned that JPM is ‘very quietly’ launching access – for their HNW and UHNW clients – to 6 different crypto funds offered by Greyscale, Osprey Funds, and a new name on the block – NYDIG.  This only adds to the building legitimacy of this asset class – and is being viewed as a huge vote of confidence.  While Jamie remains a bit skeptical – the fact is that clients have demanded access, so he is listening.

The S&P closed at 4,429 – once again teasing the most recent highs….and wondering what to do next…. Recall that I drew a trendline for you earlier this week – and have targeted 4455 as the next interpreted trendline level of resistance – since we don’t have any hard data because we are in unchartered territory.  So, everyone is flying by the seat of their pants.  Any disappointment today will see the market back off, but there appears to be plenty of support down 1 or 2% and any upside surprise will see us test 4455 in a heartbeat….

In any event – stick to the plan…remember – investing is dynamic…keep some cash ready to deploy, but don’t be so quick on the trigger just yet…

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
Take Good Care

Chief Market Strategist, Consultant
kpolcari@slatestone.com

Pasta Allo Scarpariello

Now this recipe comes to me from a friend of mine – Claudio that lives in Sono Di Meda – Provincia Di Monza outside of Milan…., He is a member of the Morning Thoughts Club and loves to cook…. (Surprise!).  I have enjoyed my friendship with him, because he speaks to me in English, and I respond in Italian.  Works out great……While Claudio and his family live outside of Milan, this recipe is traditionally Neopolitan – and he was taught how to make it by his Neopolitan wife……. I hope you enjoy it as much as I did.  Salute!

For this you need:  1 lb. of spaghetti, 2 of those containers of sunburst cherry tomatoes, fresh grated Parmegiana cheese, Basil, 1/2 of 1 chili pepper (seeded and cut into strips), garlic clove, s&p, and olive oil.

Set a pot of salted water one the back burner and bring it to a rolling boil.

Rinse the tomatoes and set aside.

In a large sauté pan add the olive oil – go around 2 or 3 times.  Now add the sliced chili peppers and the whole clove of garlic… Sauté for 3 – 5 mins –

Now add the sunburst cherry tomatoes and cook on med hi heat for about 10 mins…making sure to stir occasionally.  Some of the tomatoes will ‘burst’ open while some will just soften and cook.  Season with S&P.  If you want to, you can use the back of a fork to ‘break open’ some of the tomatoes, but not all of them.

Add the pasta to the pot of salted water.  Cook for 8 mins or until aldente.

Next – while the pasta is cooking – remove the garlic clove and add in one ladle of the pasta water.  Add some rough chopped basil leaves and stir.

When the pasta is aldente – about 8 mins, using a set of tongs – take the pasta out of the water and add to the sauté pan.  Repeat until you have all the pasta in the sauté pan. Mix well.  Now if the pasta sucks up all the sauce – feel free to add some more of the pasta water to keep it moist – but do not water it down.
Remove from the heat and toss in two handfuls of the fresh grated parmegiana cheese – mix well to create a bit of a ‘creamy’ sauce.

Serve immediately in warmed bowls – always having extra cheese on your table for your guests. Now you can go two ways with this.  A nice light red – maybe a pinot noir or a chianti goes well, or you could always go with the Pinot Grigio Santa Margherita.  See the posted picture on my twitter of the finished dish.

Buon Appetito.