Things you need to know 

• Omi who?  Markets push higher all while NYC, Chicago & LA go into a self-imposed lockdown
• PFE on the verge of getting FDA approval for a new ‘covid drug’
• Lots of eco data today but none of it means anything.
• Global markets all trending higher awaiting Santa Claus
• Try the Christmas morning “French Toast Casserole”

And we’re off…..stocks moved higher for the second day in a row……all of the fearmongering surrounding Omicron that happened on Monday seems to have vanished as fast as it surged…..the Dow, S&P, Nasdaq and the Transports all tested trendline supports and held and are now pushing to test the 2021 highs….….The Dow tested it’s long term 200 dma, while the S&P, Nasdaq and Transports tested their intermediate trendlines….the Russell – which broke all 3 trendlines – back in late November – is still struggling to come back.

By the end of the day – the Dow added 260 pts or 0.7%, the S&P up 48 pts or 1%, the Nasdaq up 180 or 1.2%, the Russell up 20 pts or 0.8% while the transports ended the day flat.   It is an interesting time….

The 10 Yr. treasury ended the day yielding 1.45% and this morning is up again yielding 1.47%…and this happens as money moves out of the treasury markets…remember – it is an inverse relationship…. yields go up when money moves out and yields go down when money rushes in….  Oil – which they try to tell us is about to collapse (think variant demand destruction) is also back to the mid $70’s – this morning up 20 cts at $73/barrel after testing as low as $63.20/barrel only 2 weeks ago.  It also tested all 3 trendlines….and last week – like early December broke its long term trendline in all the ‘hysteria’….and is now back up and thru both its long term and intermediate term lines attempting to challenge its short term trendline at $75.45 – which would open the door to test the highs seen in October – $81/barrel. The VIX (fear index) which soared up 135% right after Thanksgiving to a high of 35 has now come back to the trendline at about $18.50 as the fear surrounding the latest variant fades.

NYC has once again gone into a new version of ‘lockdown mode’, PCR testing lines snaking thru the city, restaurants choosing to close until the new year, everyone you know has ‘it’ and you’re just waiting to get it as well and that is keeping you ‘in your apt’.  At home tests tell you that you are negative in the morning while the PCR tests tell you that you are positive by 2 pm.  Leaving many confused and frustrated.  What is good about all of this is that it doesn’t appear to be as dangerous as the original version…. we now have vaccines, drugs, and therapeutics…in fact the FDA is about to bless the latest PFE ‘covid pill’!  And this is what is helping the underlying tone lately. 

And that is all good for now – every sector was in the green yesterday…the Value trade – SPYV gaining 0.6% while the Growth trade – SPYG gained 1.4%.  We saw strength in the Consumer Discretionary – XLY, Tech – XLK, Healthcare – XLV – all gaining more than 1%, followed by Consumer Staples- XLP, Energy – XLE, Utilities – XLU and Financials – XLF all gaining about 0.7%.  Industrials – XLI and Communications – XLC were the laggards only gaining 0.2%.

Eco data had 3Q GDP revised a bit higher vs. expectation up 2.3% vs. up 2.1%.  Existing home sales rose 1.9% vs. the expected 2.9% – talk of higher rates in 2022 starting to put a cap on sales…and will most likely continue to do so in the new year even as demand outstrips supply because the cost of owning a home increase with any increase in rates.  Rental rates are also surging to levels never seen before as rental property owners take advantage of the demand shift that will slow housing sales. Mortgage apps fell by 0.6%.

There is a lot of eco data today and it includes:  Initial jobless claims of 205K, Cont Claims of 1.8 mil, Personal Income of +0.4%, Personal Spending of +0.6%, Durable Goods of +1.8%, Ex transports of +0.6%, Cap Goods Ordered of +0.7% while Capital Good Shipped of +0.6%.   But – none of this will really make anyone change their ‘plan’….

This morning US futures are up again…as we move into the final trading day of the week.  Dow futures up 120 pts, S&P’s up 15, the Nasdaq up 38 and the Russell is up 17 pts.  The tone is positive and that is good.  Asian markets ended the day higher while European markets are also enjoying the company of buyers.  It’s the same story……. Everyone is being told that the markets and investors can weather the latest ‘Omicron storm’.  All the hysteria created in the past couple of weeks is nothing but a distant memory.  The focus right now is on – end of year window dressing.

But it is the new year that will bring the concerns…. The main theme will be directly on the FED, on inflation, rates, global central bank policy, the legislative agenda in DC and the November mid-term elections.  Remember, it is an election year for Congress…. we have already seen that 26 Democratic House members are throwing in the towel vs. 8 Republican House members to ‘spend more time with family’ (that’s code for “I’m getting the hell outta here”).  In the Senate we have 5 Republicans and 1 Democrat that will not return in January 2023.  Let’s see how many more abandon the ship….and that will be a sub-plot to the main theme.

The S&P closed at 4696 – just at the high of the day….and with futures up again this morning…. we could test resistance at 4719 – not the high of 4750 – just resistance…. which is only a 0.5% advance from here.  There is nothing more to say now other than Merry Christmas – It’s time to go get the fish!
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.

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Take Good Care

Chief Market Strategist, Consultant
kpolcari@slatestone.com

Christmas Morning French Toast

It is kind of like French Toast – but is not.  You prepare this the night before and let it sit overnight in the fridge. You bake it vs. frying it on the stove –   For this you need a real recipe with measurements so here you go:

You need:  1 loaf of Italian Bread (or Challah bread), 8 lg eggs, 2 c whole milk, 1 ½ c of half and half, 2 tsp vanilla, ¼ tsp cinnamon.

For the syrup – you need:  ¾ c butter, 1 1/3 c of brown sugar and 3 tblspn of light corn syrup.

On the stove – melt the butter – then add in the brown sugar and corn syrup…bring to a boil and stir well to make sure that the sugar is all melted.  Now pour into a 16×20 glass baking dish – making sure to cover the bottom of the dish.

Next – -Cut Bread into squares (you can cut off the crust) – lay flat in the dish on top of the simple syrup.   You can make two layers of bread so that it is nice and thick.  Now blend the eggs, milk, half/half, vanilla, and cinnamon and pour over the bread – making sure that you have enough to allow the bread to soak it all in…. Cover and refrigerate overnight.

In the morning – preheat oven to 350 degrees…. bake for 40 mins or so…uncovered.

When done – remove from oven and let set for 5 mins.  Here is the trick – get a large rectangular plate and place on top of the baking dish…In one motion – flip the dishes over and allow the French Toast to present with the syrup now on top. Cut and enjoy.

Buon Appetito.