PPI Surges, Delta Creates Chaos, FDA Approves the Booster – Try the Shrimp Scampi

Kenny Polcari Uncategorized

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Things you need to know

  • PPI surges yet NOT one comment about the pressure
  • Initial Jobless/Cont Claims improve -so that was the focus
  • Delta continues to create chaos – all while stocks move up
  • FDA now approves a Booster….The bio-techs respond nicely
  • Oil traders lament covid while stock traders ignore covid
  • Try the Shrimp Scampi

And stocks go up again….as if this is only a one way street – stocks can only go  up……this all even in the face of a surge in the PPI report that shows inflationary pressures are building just beneath the surface….Yesterday’s Producer Price Index – came in well ahead of the estimates and the expectations….and that is not considered bullish at all…in fact – quite the contrary…..a rise in the PPI suggests that price pressures continue to threaten the US economy…..so what  was that report….. Well Core PPI m/m rose by 1% (vs. the exp of +0.6%) and Ex Food and Energy of +1% (vs. the exp of +0.5%) and the Core PPI y/y rose by 7.8% (vs. the exp 7.2%) and Ex Food and Energy rose by 6.2% (vs. the exp 5.6%) – and this is not something anyone wants to hear – and funny but when Wednesday’s CPI report came out in line with the expectations – suggesting that prices increases are moderating and in fact inflation is transitory…. – everyone took to the airwaves to make sure and tell us that…including Joey…even he jumped on the wagon to tell everyone that inflationary pressures are under control….

Yet – yesterday’s report fell on  deaf ears – no one addressed it, not Joey and not one FED official and not even the WSJ chose to include it in their market report…..BUT they did focus on the in line and better than expected jobless claims and continuing claims along with some last minute earnings reports from Palantir that reported better than expected earnings and all of the vaccine makers – because the FDA was rumored to be close to approving Covid booster shots for everyone (and in fact they did approve that last night for anyone that has a compromised immune system) …and that means that Moderna +1.6%, Pfizer +1.9%, BioNTech + 4.% and Novax +5.5% should do and will do better.   This as the Delta variant is taking its toll on the US healthcare system and 91% of the current cases involve those that are unvaccinated…. There was also a headline that suggested that the new Lambda variant is even more resistant to the vaccine causing only more chaos and confusion which should be good for the WFH (Work from Home) stocks and the pharmaceutical names.  In fact, the WFH ETF was up 1% yesterday and is now up 16% ytd.

By the end of the day – the Dow ended up 14 pts, the S&P up 13 pts, the Nasdaq up 51 pts, while the Russell lost 6 pts.  The 10 yr. yield ended the day at 1.34%, the Dollar index fell to 92.91 and the VIX continues to fall – ending the day at 15.57 raising the flag as investors continue to become even more complacent but on the other hand investors ARE buying plenty of downside protection in the broader market, as it trends higher….as they look for a safety net in the event of a change in psychology.
There was no real standout in the broader 11 S&P sectors – TECH – XLK was the leader of the pack up 0.6% while the industrials – XLI – led the way lower down 0.2%. Everything else was in between – so nothing dramatic. The Value trade – SPYV was unchanged while the Growth trade – SPYG was up 0.55%.

The Proshares S&P Short Equities – ticker symbol SH –  VOLUME has surged recently suggesting that many more people are buying that downside protection…because you see – by buying SH you are buying protection against a decline in the S&P…..Essentially makes you short the market… and this is the clue that while investors want to be in the market they are concerned of the coming risk to the market in the months ahead.  So, they protect themselves – and that is good risk management.

This morning US futures continue to thrash around…. Dow up 61 pts, S&P’s up 3, Nasdaq up 4 pts and the Russell down 2.  While there is a roster of eco data today – none of it will really drive the markets…the chatter will be more about the FED and the coming Jackson Hole Summit in 2 weeks and the idea that this market will never see another down day….

Recent comments by some of the street’s more popular analysts suggest that there isn’t anything that could or derail this ongoing rally….and that is exactly the issue…..Some even saying that no matter what the FED does, investors have no place to go so money will flow into stocks….And while the Delta variant is threatening the re-opening of the US economy, no one seems to care at the moment…..it’s a non-event – UNTIL it isn’t….

We are hearing about companies putting off the return-to-work calendar event now until at least January 2022 vs. the Labor Day target and we are hearing about more slowdowns at the ports in California because of outbreaks of Delta across Asia.

And that led the retailers and some analysts to ‘tell’ us to make sure you go out and BUY all your holiday presents NOW otherwise you risk not being able to buy them later…. (It’s disgusting what they are doing…. creating more chaos and angst and panic.)  I say – let’s boycott the whole thing this year and spend time with our families vs. buying all that.  We can cook, cuddle on the couch, stream movies and play games….and if you are in a warm climate – you can go to the beach, play golf, swim, sail, fish, etc.  Sounds so much better, no?

In any event – it is what it is…. Stocks in Europe are higher as well this morning – There is not eco data to drive the mood, so investors continue to go with momentum and the idea that year end S&P targets suggest that we still have another 5 – 7% to go….so jump in…. At 6:30 European markets are all up about 0.30%.

Oil – is churning at $68.80 – down 20 cts as the traders in that market are screaming about how delta will destroy oil demand so they are selling oil…. all this while investors in stocks are brushing the delta story aside….and buying up everything they can…. It’s illogical……  How can one group focus on the negatives while the other group is completely ignoring the warning? Delta and the coming variants will either destroy demand or not, oil traders think yes, while equity traders apparently think not….

Bitcoin is holding its own at $46.500 and Ethereum is hovering around $3,250.  All the lobbying efforts (some $2.4 million ytd – vs. the $2.8 million they spent in 2020) and headlines surrounding cryptos of late have done nothing to scare away investors, in fact you can argue that it has emboldened investors and therefore has helped to support the prices of these two headliners. LOok, Crypto’s are not going away anytime soon, so if you have a portfolio – you should be dipping your toes (not diving in – dipping is a good place to start)  into this asset class.

The S&P ended the day at 4460 – just a hair below it’s daily high  We are now up and thru 4455 a level that I thought should have provided some resistance for the market – but remember – we don’t have any hard data….we are in unchartered territory and right now it is all about the momentum trade which is UP – but remember that trade can reverse quickly and will most likely do just that when it happens – just because we are so stretched – so, go in with your eyes open and you won’t be surprised.

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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Chief Market Strategist, Consultant
kpolcari@slatestone.com

Shrimp Scampi

This takes all of 12 mins to prepare and serve….an easy dish that appears harder than it is….
 
You need only a couple of things….1 lb. of large cleaned, deveined shrimp, butter, olive oil, garlic, lemon, white wine, chopped parsley, s&p….and a lb. of linguine….

Bring a pot of salted water to a rolling boil and add linguine…. cook for about 8 mins or until aldente….

In a sauté pan – melt butter and add a splash of olive oil, add crushed/sliced garlic……and sauté…. keep heat on med so that you do not burn the butter or garlic…. add the juice of one lemon, complement with some white wine…about 1/4 cup…in pan – and a wine glass full for you – turn heat up to high….
Next add shrimp, s&p, and sauté quickly until nice and pink on both sides…no more than 5 mins……strain pasta – reserving a mugful of water – add pasta to sauté pan – mix and serve…. You may need to add back a bit of the pasta water to keep moist -as the pasta sucks up the juice….  Serve in warmed bowls with fresh grated cheese at the table.

A side of garlic bread never hurts!

Buon Appetito.