Omicron is HERE!  Now What? – Feast of the 7 Fishes – #2 Stuffed Calamari

Kenny Polcari Uncategorized

Things you need to know –

  • CNN has first mover advantage as the networks allow them to announce the arrival of Omicron to help take the pressure off Chris and Andy
  • Patient #1 is in California – where will it show itself next?
  • Stocks go from Buy to Sell in a heartbeat. And end on the lows of the day
  • This morning though, the tone has changed, and stocks are UP as the volatility continues and will continue to plague markets.
  • Feast of the 7 Fishes – #2 – Stuffed Calamari

Stocks were rallying strongly yesterday….everyone seemed to be ‘ok’, investors were trying to put it all in focus…..the FED, the pivot, inflation, political drama in DC and covid 19, and it’s cousins – Delta and Omi……Stocks were up nicely…the Dow gaining more than 300 points, the S&P up 80, the Nasdaq surging by 280 pts – you get the picture right?  And then – it hit the tape – in fact it was CNN that was the first to report it…. (Conveniently helping to divert the attention surrounding CNN away from Chris Cuomo and his brother Andy – but that is another story…)

And it’s here!  Omicron arrived in California – and suddenly the tone changed……the algo’s went to work, cancelling all inline buyside orders and flooding the system with sell side orders…. the vacuum in prices causing stocks to fall……and the ‘hysteria’ began….

First, I ask, why is anyone surprised? Because it’s almost a given that it’s in NY, Chicago, and other big cities that have direct flights in from South Africa or other parts of the world – which by the way – is almost every major city in the country.  Next – news that this variant has doubled in cases in South Africa and that at least 23 countries have now reported cases of Omicron only added to the angst. But what did you think was going to happen?   OK, next?  I mean, lets just think about this again…. Why is anyone surprised? And more so, why was the market surprised?

I say that because we’ve been talking about this…. we managed to ‘deal’ with the Delta variant and reawaken. We have vaccines and new therapeutics and we have some of the drug companies telling us not to panic,  the economy is supposedly strong, inflation is surging and the FED tells us that that is ‘good’ (as they try to control the narrative) and Joey told us that inflation suggests that demand is strong, people have money to spend, wages are up,  the job market is strong so we should be celebrating the idea that we have inflation vs. fearing it and investors took the market higher….everyone seemingly buying into this narrative….

So why again did the market psyche change?

The reaction in the markets was, I guess typical, considering EVERYTHING else going on, but it seems to me was once again this was a huge overreaction…. IF it sold off because of the discovery of this variant in California. As noted yesterday – Covid and all its cousins are not going away and in fact – we can mostly expect that every 6 months or so another cousin will come across the border from somewhere else or maybe the ‘mutation’ will originate here – Who knows?    So, again, did the market really collapse yesterday afternoon because Omicron was found or is it because so much of the FED conversation has changed?

I’m going out on a limb here – in my opinion – the reaction yesterday was more about the realization that monetary policy (maybe around the world) is about to change….the FED leading the way – the massive pivot by Jay Powell that we saw on Tuesday confirming what we all knew is at the root of it – higher inflation – the expected swifter taper response leaving the FED to move on interest rates now as early as April (vs. the expected June/July timetable),  ongoing drama in DC as we are about to hit the debt ceiling (which is really a non-event because we all know that won’t happen) in addition to the drama surrounding the BBB bill….let’s not kid ourselves….’Omi’ is a convenient excuse – that allows the talking heads to cloud the story…. period the end.

By the end of the day the Dow lost 460 pts – (that was nearly an 800-pts swing), the S&P down 55 pts, the Nasdaq down 280 pts, the Russell down 51 pts and the Transports losing 350 pts.  All the indexes ending on their LOWS of the day…. yes, it was ugly…. but it is what it is…. the algo’s that control so much of what goes on once again creating the moves that we saw.

The 10 Yr. treasury rising in price sending bond yields down to 1.43%!  Oil – again got slammed on the Omi news…. think demand destruction and the upcoming OPEC meeting considering all this perceived demand destruction…. falling from a 6 am high of $69.50 to a 4 pm low of $65.71!

In any event – that was yesterday and this morning investors are back in the ‘bargain hunting camp’   US futures are taking it all back this morning…. …. Dow futures up more than 300 pts, the S&P’s up 30 pts, the Nasdaq up 65 pts and the Russell is up 25 pts.  The Biden’s came out with a 9 point ‘Omi’ plan – tightening requirements on all incoming travel to the US, tightening requirements on all US citizens requiring masks on all public transportation thru March – think trains, planes, and buses and all their terminals…. fines to double for non-compliance – now starting at $500 and going to as much as $3000 for those repeat offenders.  They are encouraging all business to require workers to be vaccinated or tested weekly and free at home tests will be more readily available.  So, I guess all the angst from yesterday is once again being pushed to the back burner.

In the end – the turbulence that I and many others have been talking about is also here to stay for a while and in my opinion could get worse in January….…. we are in the final stretch of the year….4 weeks left for investors to do their year end tax planning and positioning for the new year.  Many asking if Santa Claus is coming….I think he already came…remember – the market rallied by 10% in the last 2 months – going to new highs across the board….….right up to thanksgiving….in what I think was the Santa move…..and now, I think it churns…..its hard or me to think we could test new highs in the next 4 weeks when we have all of this drama and uncertainty…because in the end – the market does not like uncertainty….it can deal with bad news, it can deal with the facts, what causes the angst is the uncertainty and speculation about the what ‘if’s’  Which is exactly why we have these daily big swings….it is all about the ‘if’s’.

Eco data today includes the usual suspects…. Initial jobless claims of 240k and Continuing Claims of 2 million.  Tomorrow will be another ‘data’ day…we get the NFP report and all of its data points…unemployment, wages, underemployment, sector job growth and sector job weakness…so enjoy the ride today…because tomorrow could be another down day (more so because it is Friday and so much can happen over the weekend) ….Yesterday’s ADP report was slightly better than expected, IHS Markit Manufacturing PMI was a bit disappointing but not a disaster, ISM Manufacturing PMI remains above the 60 mark…(bullish), but we’ve seen how so much can change so quickly…so you need just understand it.
Again, nothing was immune yesterday…. Every sector except for Utilities were down.

European markets are down in contrast to what US investors appear to be doing…. There is no eco data out of Europe to drive the action so the focus is on the variant….as well as what that means to ECB monetary policy.  At 6 am – markets across the region are down between 0.6% – 1.2%.

The S&P closed at 4513 breaking down and thru short-term support (50 dma) at 4539.  The Dow broke its LONG TERM trendline (200 dma) and that is not so bullish….The Russell is well below all 3 of its trendlines – again not bullish and the Nasdaq just pierced it’s short term trendline along with the Transports….so from that perspective – it looks tough….the Dow, S&P, Nasdaq are all down 4% in one week….the Russell and Transports are down 7% in that same time….and individual names are down even more…..with all of these trendlines being pierced…we can expect continued volatility……..btw the VIX surged by 14%  yesterday but this morning is down 9%…as futures surge.

So, are there bargains out there?  Sure.  Could we go lower still, sure.  So again, it depends on who you are and where you are on the life cycle scale and the risk scale…If you are a day trader you are loving this and if you are a long term investor you are getting a chance to get your shopping list together – no need to rush in, but pick you stocks, pick you entry points and sit back.

I am still in the camp that this new variant will NOT prove to be the disaster that they want you to think it is…. nor do I think the next variant will be either…. I am operating under the assumption that this too shall pass….and now that the FED has shown its true colors – you need to be ready for more volatility in the weeks ahead…. I think it comes more in January than December…. but it’s coming…

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


Feast of the 7 Fishes – #2 Stuffed Calamari

This is outstanding…you must like Calamari’s because this one is a bit of work…. but the result – to die for.

For this you need:  Calamari bodies for stuffing – so you want the big ones… (You don’t need or use the tentacles so just specify “bodies for stuffing”), homemade Italian style breadcrumbs (recipe below), wine, olive oil, toothpicks, homemade marina sauce (same as the lobster sauce w/out the lobster.) s&p.

So here is the deal – you order the calamari from the fish store – “cleaned”.  This means that they trim the tentacles and take out the membrane from the inside…. but here is reality…. you still to make sure that they are clean – so when you get home – you need to wash them and confirm that the membrane was in fact taken out.  If not – you must turn the calamari inside out – and then rinse well and then turn it back again – this is the trick…you must be very careful as you do not want to rip the body otherwise you cannot stuff him.  Capisce?

Now take a bowl of breadcrumbs – add enough olive oil to make them moist but not “wet”, now add a splash of your favorite white wine – not a chardonnay.  Mix well.  Can you make a ball with the breadcrumbs?  Do they hold in place?  Perfect.

Now – carefully stuff the calamari using a teaspoon and your index finger…. careful not to overstuff as they will explode in the sauce when you cook them.  You need stuff them just enough so that you can pin them closed with a toothpick…  Repeat until you have stuffed all the calamari’s … (I usually cook about 6 lbs. of them on Christmas Eve, so it takes a couple of hours to clean, stuff and cook).

Once you have stuffed them – drop them into the marinara sauce that you have prepared and turn the heat to simmer – DO NOT BOIL the calamari!
They will begin to plump up and turn white then take on the color of the sauce.  They will cook in all about 30 mins (max).  Turn heat off and let rest.

Again – you should make this the day before and let it sit overnight. The next day – take it out of fridge and let warm up to room temp and then heat up on simmer.  When you are ready to eat them – serve them in a large bowl with plenty of tomato sauce.  You can also make this and serve it over linguine if you prefer.  The other option – if you make both the lobster and calamari sauce – then mix a couple of ladles of each and serve that over the linguine….

Buon Appetito.