Things you need to know –
- Santa is out of Quarantine! Markets surge
- Try the Pollo Agridolce
On Dasher, Dancer, Prancer and Vixen, Go Comet, Cupid, Donner, and Blitzen and the favorite one of all – Go Rudolph….and Booooomm! Stocks surge higher…. this as the CDC CUT the quarantine time that you must observe if you have covid or any of its cousins – down from 10 days to 5 days IF you’re vaxxed and boosted…. suggesting that the risks associated with Omicron may not be as severe as initially feared….
In addition, the latest reports on holiday sales showed that consumers were not going to be held back – and in fact sales surged by 8.5% y/y……with both instore and online sales gaining nicely. It’s as if – none of the hysteria (2 weeks ago) ever happened…. As the algo’s run over each other to buy stock sending the averages higher leaving the S&P kissing another new century mark – 4800! – bringing its performance to +27.5% ytd! By the end of the day – the Dow gained 351 pts or 1%, the S&P up 65 pts or 1.4%, the Nasdaq up 217 pts or 1.4%, the Russell up 20 pts or 0.9% and the Transports up 200 pts or 1.2%.
Remember – moves are amplified during this week – many participants have closed shop for the week – leaving inline liquidity weaker than what it might normally be. Voids in prices levels can force moves in either direction to be more exaggerated and that is what I think is happening, but no matter – it is happening….and stocks are rising, and portfolios continue to benefit. So, enjoy the ride while it lasts.
All this while we are seeing are huge losses on the worker front as more and more people apparently ‘test’ positive for Omicron – even though they show no signs of sickness – Airlines cancelling thousands of flights, Wholefoods and other large grocers under pressure as employees check out, restaurants unable to meet customer demand as servers all test positive…so while stocks are surging – there are some businesses that are not feeling the love.
The algo’s looking for anything positive to help fuel the advance – its as if anything negative has been cancelled….The brewing inflation story -a nonevent, the brewing FED policy change – a non-event, brewing interest rate increases – a nonevent, well, that is, until they are…and that my friends happens in the new year – it has to, because it isn’t going away….inflation and interest rates increases are coming and with that will be some turbulence that will offer some opportunities if you are ready. By now – it seems that most analysts are in the same camp – when it comes to FED policy – how can they not be – the FED has made it abundantly clear what the next moves will be. Stimulus is being withdrawn and many expect it to be withdrawn even faster in the 1Q of 2022…. while others are still in the camp that the FED will be methodical and cautious – so they don’t upset the apple cart…. I’m in the first camp – and I still think that Jay will surprise everyone and become much more aggressive right after his official re-appointment. Inflation is not expected to slow – if at all – for at least 6 more months…. which I think is generous…. I think inflation is here to stay for the whole year….and won’t subside until 2023….and that is what will cause the FED to become more aggressive as they try to control and reign it in! And it will be those aggressive moves that cause the coming turbulence. Valuations will suffer – they must- again – it’s a math problem…. nothing more. As you change the inputs the answer must change. And if the economy slows – as is also the thinking – those slower inputs added into the changing FED inputs will only accentuate the -revaluations – that are sure to come.
But let’s be honest…. with rates still at zero – even a move to 2% is no longer the threat that it appeared to be in February of 2021…. remember what happened then? Rates surged over a 3 week period going from 1.25% to 1.7% and stocks fell by about 6% before the whole thing cooled off….but also recall that January and February CPI was 1.4% on an annual basis – there wasn’t even a whiff of those brewing pressures…..Today – 10 yr. yields are at 1.48% and CPI is running at 6.8% on an annualized basis…..so something is mispriced…..either yields have to go substantially higher – think 2.5 – 3% causing valuations to go lower or inflation has to suddenly fall back to the 1.4% range….which is NOT happening……So – expect rates to go up as inflation remains an issue sending stock valuations (especially the sexy hi-growth names) lower. Which is why I say – don’t panic – but build yourself in some protection…become a bit more defensive – add consumer staple names, add energy names (as energy is only going higher) add industrial names and add to your financial names (banks to benefit in a higher rate environment). Don’t go throwing your tech out the window – just to toss it – but I wouldn’t’ be adding to tech at this moment. I am willing to see how this plays out over the next 3 months…
US futures are up again this morning…. As Santa makes his way across global market centers…. Dow futures are up 73 pts, S&P’s up 10, Nasdaq up 75 pts and the Russell is ahead by 3 pts. European markets are also all up across the board by about 0.7%…and Asian markets ended their Wednesday higher as well…rising between 0.5% – 1.4%.
The 10 yr. is yielding 1.49%, Oil is up 1.5% or $1.15/barrel to $76.71! Natural Gas surged by 8.5% yesterday as cold winter weather whips around the world and is up another 1% this morning…
Bitcoin is down 4% trading at $49,100 while Ethereum is down 3.6% at $3900.
The S&P is kissing 4800….and if you draw a trendline from February 2021 – to now – it suggests that we should hit resistance at 4863!!! Which is a 70 pt. move from here…. But again – this is a holiday week – many are away from their desks – much of the trading being done by algo’s….so go with it and get ready to get back to work in January.
Remember investing is dynamic not static…it requires at least a bi-annual exam – I suggest a quarterly exam, but some are happy to have an annual exam…. whatever your comfort level, it is…and that is different for everyone – so talk to your advisor.
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
Pollo Agridolce
This is not a difficult dish to make and once you simmer it – treat yourself to a bubble bath then come down and set the table, break open the wine, turn on some dinner music and enjoy the night.
You need: Chicken pieces – legs, thighs and breasts, olive oil, s&p, diced onion, chopped carrots, chopped celery, plenty of sliced garlic cloves – 6+, ¼ c sugar, 1 c Chianti, ½ c red wine vinegar, ½ c orange juice with pulp, *sliced almonds – optional.
Season the chicken pieces with s&p – set aside. In a heavy frying pan – heat up some olive oil, – now brown the chicken on all sides. Remove and place on a platter.
Now add the garlic, carrots, celery, and onion – sauté for 10 mins on med heat…. Now add the sugar, wine, vinegar, orange juice, and almonds…. bring to a boil – add back the chicken – skin side up. Place a lid off center and turn heat to simmer. Cook for about 30 mins. (This is where you take the bubble bath, get into something comfortable and kick back….)
Now remove chicken and place on a platter, – turn heat up to high and stir until it is nice and thick…not long…maybe like 4 mins max……taste – adjust seasoning with s&p. Spoon the sauce over the chicken pieces and serve.
This dish works well with a green veggie – like French cut green beans or broccoli. Make a large mixed green salad with tomatoes, red onion, and cucumbers. Dress in a balsamic Vinegar and Olive oil dressing. Keep it simple – as the chicken and marinade carry the dish.
Buon Appetito.
