Maybe there IS a Santa Claus? Stocks Surge, Omi Fear Subsides/Feast of the 7 Fishes – #5 Mussels Posillipo

Kenny Polcari Uncategorized

New York Stock Exchange, Wall Street, New York City

Things you need to know 

  • Stocks go Risk on as Omicron Fears are Overblown
  • Treasuries Fall, Yields Rise
  • Oil continues to advance – now up $9 in 4 days…
  • Fed to announce a doubling of the taper schedule
  • Feast of the 7 Fishes – #5 – Mussels Posillipo

“Yes Virginia – there is a Santa Claus…” At least there was yesterday and again this morning…. As stocks around the world shoot higher……

Stocks jump as the Omicron variant appears to be less than what all the talking heads told us it was going to be…. The variant is now in more than 40 countries and as noted yesterday – it is NOT causing all kinds of hysteria…. Hospitals are all functioning fine and not overrun, death rates remain in decline, as more and more people decide that they are going to get vaxxed.  The latest data out of the CDC and WHO is not to panic, take precautions and be aware of those around you.

It was a Risk Off day for some of the bio-techs –

Moderna – which shot up 67% in the days right after the announcement of the new variant, has fallen 35% since we learned that the symptoms remain mild – yesterday alone, the stock fell 13.5%.  You can believe that CEO Stephan Bancell is not as happy as he was 2 weeks ago (when the stock was soaring) when he took to the airwaves telling us that the current MRNA vaccine would not be enough and that we all needed another boost to protect us as he rang the fire alarm….…. (Think ongoing ringing cash register sound) …. PFE, REGN etc. are all following in the downdraft.  The Biotech ETF – XBI also unable to recover is now down 19% over the past 4 weeks and is down 23% ytd.

Interestingly though, Glaxo Smith Klein (GSX) revealed that it’s covid 19 antibody treatment is effective against a FULL combination of mutations of this virus….it rose 1.3% yesterday and is up another 1% this morning….

And it was a Risk On day for everything else….  The Dow ended the day up 646 pts or 1.9%, the S&P’s up 54 pts or 1.2%, Nasdaq added 140 pts or 0.9%, the Russell up 45 pts or 2% while the Transports gained 340 pts or 2.25%.  Not one sector in the RED…. Home Builders – XHB taking the lead up 2%, Retail – XRT up 1.8%, Consumer Staples up 1.8%, Financials XLF up 1.5%, Energy – XLE +1.5%, Communications – XLC + 1.6%, Industrials – XLU +1.7%, Utilities -XLU +1.5% and Tech – XLK up 0.9%.  and Disruptive Tech – ARKK +1.5%.  and the list goes on.

Crypto’s held in after the beating they took over the weekend and this morning Bitcoin is up 2.3% at $51.200, Ethereum +1.6% at $4400…the range of others continue to trade erratically – but if you are in it, you signed up for it and the volatility and it is not causing you anxiety…. (Or maybe it is….)

10 Yr. treasuries were in retreat as investors moved money out of the Risk OFF trade into the Risk ON trade….Yields spiking – moving up from 1.34% to end the day at 1.43%….and the talk of what will happen at the December Fed meeting on Wednesday the 15th is all top of mind….Expectations now are for the FED to increase the rate of the taper from $15 bil/month to $30 bil/mo – which should see the end of this program by late April – leaving the door open to part 2 – rate hikes…that’s if Jimmy B doesn’t get his way and raise rates while they taper…..which is exactly what Jay told us would not happen…but the narrative has changed very quickly since Jay was re-appointed – so nothing is off the table in fact EVERYTHING is on the table.

Oil – continues to advance…. rising 5.3% alone yesterday and is up another 3% this morning – now trading at $71.64/barrel…. up $9 since last week.  This after it is becoming clear that ‘Omi’ will not disrupt the economy and nor will it destroy demand – as so many were ranting about only two weeks ago….The global economy is fine…..and will continue to hum along as long as global central banks can control the narrative….I don’t think they can any more….I think that it has gotten away from them and they will be forced to move – faster than what is priced in for much of the market and that is what the issue will be in the new year.

This morning we are waking up to a stronger Asia – Hong Kong which got clocked on Monday rose 2.5% overnight…. Japan +1.9%, China +0.6% and Australia +0.95%.  By now you know that the PBoC (Peoples Bank of China) cut the reserve requirements (which is stimulative) after Evergrande missed it bond payment – saying that it could not guarantee it has sufficient funds for its repayment obligations – sending shivers thru the markets.  Additionally, the communist party did say that they will stabilize the economy is 2022 – sending the message that they will remain stimulative.  November trade data for China has imports above expectations at 31.7% while exports missed expectation rising by only 22%.

European markets have taken the lead from Asia and are strongly rallying this morning…. all markets across the region are up better than 2%…. the credit begins given to ‘receding Omicron fears’……German Industrial Output grew by 2.8% in October after a 0.5% decline in September.  While that number is good – it remains 6.5% below pre-pandemic levels.

US futures are up again…. Dow +370 pts, the S&P’s + 62 pts, the Nasdaq is ahead by 290 pts and the Russell is up 40 pts.  Again – you can thank the latest take on Omicron…. which is ‘no big deal’.

Eco data today includes nothing really…. the real data won’t be out until Friday when we get the latest read on the CPI (Consumer Price Index), and it is expected to be strong…. (Which is not good) …. CPI m/m of +0.7%. ex food and energy of +0.5%.  CPI y/y of 6.8%, ex food and energy of +4.9%…. This along with the latest PPI report on Monday will help to frame the FOMC conversation on the 15th.
The S&P closed at 4591 – leaving it 4% below the 2021 intraday high of 4743…. It is now once again up and thru trendline resistance at 4547 so that now becomes support – look for resistance at 4715 ish…. The Dow which had broken down completely – falling thru all 3 trendlines…has now regained most of it and is challenging to move up and thru the final resistance level.  The Nasdaq continues to struggle and will remain the most volatile as we move thru the next 6 months.

I am still in the camp that the FED is driving the conversation and the action and what we hear from them on Wednesday the 15th will dictate the next move.  I will say that they are doing a good job of telegraphing the range of options so investors can’t say they were kept in the dark…the data is there for all to see -how you interpret it, is what is important.  I still think the risk to the downside is greater than the risk to the upside in the 1st quarter of 2022.

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 and TikTok @kennypolcari and on IG @kennyp1961.

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Take Good Care

Chief Market Strategist, Consultant
kpolcari@slatestone.com

 

Feast of the 7 Fishes – #5 Mussels Posillipo

This recipe comes to us from the suburbs of Naples – Posillipo is a well to do suburb of Naples; it was built during the 19th century by the very affluent – high on a bluff with a view of that famous Bay of Naples.   Posillipo is a recipe that you can use for both clams and mussels – I am suggesting that you use the mussels for the Christmas eve dinner.
 
You need: Mussels….3 doz… thoroughly washed of any sand.  White wine, Clam juice, garlic, olive oil, s&p, 1 28 oz can have imported Italian Plum tomatoes – (Not in Puree), Fresh Basil

In a pot – heat the olive oil and sauté the garlic – until lightly browned – do not burn.

Add 1 1/2 c of dry white wine – nothing fruity – stir and let come to a boil – after about 2 mins…rough crush the tomatoes and add to pot with the juice.

(When you rough crush – you literally crush them in your hand – over a bowl to catch the juice. – you can also use the blender – but do it quick – do not puree) Add enough of the tomatoes to give it some substance and color – you do not need to add the whole can if you are not serving it over linguine.

Add the small bottle of clam juice and fresh basil leaves.  Season with s&p. Turn heat down to simmer and cook for about 15 mins or so.  Now add the mussels to the pot and cover tightly.  Cook until the shells open – should be maybe 8 to 10 mins more…. Discard any mussel that refuses to open.

Present this dish in a large bowl with the mussels bathing in the Posillipo sauce.  This dish demands toasted garlic bread to dip in the sauce.

Buon Appetito