Things you need to know 

• Inflation surges to new heights – But it is ‘peaking’ (Laugh)
• Markets surge – ignoring data as investors go bargain hunting
• 10 yr. yields back off a bit –
• More bank earnings…. watch the guidance.
• Lonnie Musk stirs it up
• Try the Pan Seared/Oven Roasted Chicken Thighs

**BREAKING NEWS – LONNIE MUSK BIDS $54.20/SHARE FOR 100% OF TWITTER** – THIS IS SURE TO REDIRECT THE NARRATIVE – JOEY SHOULD BE HAPPY AS NO ONE WILL BE FOCUSED ON INFLATION. …. STOCK SURGES BY 12% AND TRADES AT $51.50 IN THE PREMARKET AS HE SAYS THE COMPANY NEEDS TO BE TRANSFORMED**

Stocks advanced! The Dow gained 345 pts or 1%, the S&P up 50 pt or 1.1%, the Nasdaq up 275 pts or 2%, the Russell added 40 pts or 2% and the Transports added 290 pts or 2% as well.  This as inflation at the producer level ticked at 11.2% – well ahead of the expected 10.6% – marking the largest gain since 2010.  The administration making sure to blame this spike in inflation on Vladimir Putin’s war in Ukraine and the still disrupted supply chain – which then means, I guess, that we can also blame it on Xi Xi…because of the absolutely insane covid restrictions that he put on his country during the height of the pandemic and still puts on his country as remnants of it continue to float around.

By now we have all seen the video of what is going on in Shanghai and I’m sure Guangzhou  – forced lockdowns bringing those two very important manufacturing AND port cities to a screeching halt again….so you can see how it is screwing up the supply chain and adding to inflationary pressures….but to be clear – NOTHING that the current administration has done is responsible for surging prices.  Forget about how they paid people to sit home, stimulus checks that went into the market vs. being used for everyday expenses….I mean you do remember the stories of so many people who were bragging about finding $1400 in their bank accounts that they never asked for, but were happy to take and invest….Which causes us to ask – Why exactly did we send out all that money to people who didn’t need it?

Now, the FED – that is another issue, right?  The FED remains a separate ‘agency’ – It is not part of the Biden administration – so what they do, has no bearing on the administration.  And like I said yesterday – it is comical how we are now asking the FED to fix a problem that they created!  How they mismanaged or misjudged what ‘coming out of covid’ meant.  12 yrs. or stimulus, bond buying, more stimulus and artificially low rates bred what we are all living with today…..Calls for a slowdown in stimulus months ago fell on deaf ears,  “It wasn’t time, the economy needs more assistance, but no worry we got this…” were all arguments that we heard….How’d that work out?

Yesterday we learned that inflation at the producer level is at rates not seen in 40 years….and while the administration is leaning on the likes of Goldman, Blackrock and others to calm the markets and spin the story that the ‘worst is over’ that prices have most likely peaked, American’s are not so sure and to be sure – we are not stupid.  Food inflation is out of control. Look at costs ytd….  Wheat +45%, hogs +44%, corn +30%, soybeans +25%…. Fertilizer costs are skyrocketing forcing farmers to raise prices, not good for me and you but not bad for the stocks in that group.….CF +60% and MOS +95% ytd.

Energy costs have exploded higher adding more pressure to prices – and while that hurts the consumer – it has been good for the group…  The XLE is up 44% ytd…. names like XOM +44%, EOG +42%, CVX +50%.  Metals and Mining  – XME +46% – names in that group have done well as well….BTU +200%, CLF +50%, AA +49%, X +53% and the list goes on….So – while the conversation is one of concern for future prices and difficult times for Americans, there are opportunities across the sectors – and what we are seeing is that those opportunities  are NOT in the sexy hi-tech, hi-growth names of yesteryear.

And earnings did start yesterday – both JPM and BLK kicking off the party…. JPM missed by pennies, while BLK crushed it 50 cts…. both came under a bit of pressure as the guidance was one of concern for the economy and the geo-political issues that will surely continue to disrupt in the months ahead.  Today we will hear from WFC, GS, COIN, PNC, MS, USB, C, ALLY and I suspect the story will be the same…. it is not about the earnings as much as it is about the guidance…. Capisce.  YTD – financials are -4.5%….and with rates on the rise – I suspect that they will do better once we get more clarity on FED policy.

With all of the excitement yesterday – investor money went into beaten down sectors – as investors went on a bargain hunting shopping spree yet again…. Consumer discretionary +2.5%, Communications +1.3%, Tech +1.3%, Semi-conductors – SOXX +2.1% Artificial Intelligence – BOTZ +2.5%, Retail – XRT +2.2% and Disruptive Tech – ARKK +3.3% – all sectors that are down double digits ytd.

We also saw strength in energy – XLE +1.5% – this as oil rallies 9% off the lows seen last week.  Basic materials – XLB +1.5%, and Industrials – XLI up 1%.  Value – SPYV + 0.75% and Growth – SPYG + 1.6%.  Cybersecurity – CIBR gaining 3.2%.

The 10 yr. treasury backed off a bit and that helped to fuel the excitement in stocks…it ended the day yielding 2.69% down from 2.8% only 3 days ago…..and that is what gave the talking heads an chance to downplay the role of inflation and the expected response from the FED…many now trying to downplay what the next 4 meetings will bear….Fed Fund futures are calling for 4 – 50 bps hikes and then 2 – 25 bps hikes by year end taking up to a 3% rate by December….the naysayers are suggesting that this is ‘hysterical’ thinking – that the FED will not be that aggressive so that then can manage a soft landing…..it’s laughable….a soft landing?  Really? 

Even if inflation peaks here at 11.6% – it is not going down anytime soon….so it will churn at these elevated levels for months leaving Jay Powell little to no choice but to remain vigilant.  I mean you now have EVERY member of the FOMC calling for swift aggressive action….no more bond buying, higher rates, and a reduction of the balance sheet at a rate not expected 3 months ago….so it sounds to me they are concerned, that they know something the rest of us do not….

Now while this is how I see it; I am not suggesting at all that you bail…. absolutely not…. I am just saying do not fall asleep. Let your money work for you.

This morning….US futures are mixed…. ahead of more earnings data.  The talking heads trying really hard to convince us all that inflation has peaked so we can all just sit back and relax…. (Something I think is quite pre-mature) …Eco data today is about Advance Retail Sales of +0.6% m/m and Ex autos and gas of +0.2% m/m.  Initial Jobless Claims of 170k, Cont. Claims of 1.5 mil.

European markets are all higher…the ECB did nothing….no rate hike – but is expected to become more hawkish and prepare markets for a policy tightening as Eurozone inflation is running at record highs. At 6:30 – markets across the region are up about 0.5%.
Bitcoin is trading at $41k and Ethereum is trading at $3100.

The S&P closed at 4446 up 50 pts…. breaking thru short term resistance at 4430 and now expected to challenge 4525…  with futures muted this morning, I do not see that happening as we move into the long weekend…. (Markets closed tomorrow for Good Friday) ….
Take Good Care

Chief Market Strategist
kpolcari@slatestone.com

Pan Seared/Oven Roasted Chicken Thighs in Orange/Brandy Sauce

This is a simple dish that sounds elegant…. should take you about 40 mins start to finish – and should not cost you more than $60 to feed a family of 4.
For the sauce you will need:  4 tbls butter, 1 shallot, 2 tbspn of brandy, 1 cup of fresh squeezed orange juice, 3/4 cup of chicken broth, 1 navel orange cut into segments, Italian Parsley, s&p.

For the Chicken – you need:  boneless – skin on breasts and thighs, 2 cups of orange juice – fresh is better, orange zest, olive oil, s&p. water.

First combine the orange juice, zest, 4 cups of water, and about 2 tblsp of salt in a bowl and stir to dissolve the salt…. when ready add the chicken and refrigerate for a couple of hours.

Now – when ready – Preheat oven to 400 degrees.

In a large “oven proof” sauté pan – heat up some olive oil over med hi heat – add chicken – skin side down and cook until the skin is golden brown – about 5 mins.  Turn the chicken over and season with s&p.  Place in oven and roast for 15 mins… (do not throw out the juice from the chicken – pour into a measuring cup and let cool so the fat comes to the top)

Remove the chicken and put on a plate and cover with tin foil.

Now for the sauce – use the juice from the chicken – skim the fat – once it rises to the top.

Using the same sauté pan – Melt 2 tbls of butter over med hi heat – add the chopped shallot and cook until soft.  Remove from heat and add brandy – then return to stove and scrape the bottom of pan – brandy will evaporate.

Now add the orange juice…boil it until it turns thick and syrupy about 4 or 5 mins…Add chicken broth and the pan juices and cook for about 3 mins.  Remove from the heat and add the orange slices, parsley and 2 tbls butter and stir until the butter melts…season with s&p.

When serving – cut the chicken in slices and place in a fan like presentation then top with the orange Brandy sauce.

Buon Appetito.