Things you need to know
- Stocks close higher and are struggling to go higher today
- Today starts the big boondoggle – Jackson Hole – expect that to dominate the airwaves today and tomorrow and then next week as we digest it all
- Oil – trades higher – Nat gas and Coal in demand
- September is coming – and history suggests volatility ahead.
- Try the Rigatoni
Stocks closed UP on the day (and futures are suggesting that the rebound will continue today)….breaking the downtrend seen over the past 5 days….Energy led the way – the XLE up 1.3% – helping to take every one of the other 11 sectors slightly higher…..As the closing bell rang – the Dow rose 60 pts, the S&P gained 12 pts, the Nasdaq rose 50 pts, the Russell gained 16 pts and the Transports added 68 pts.
Oil continued to push higher after the Saudi’s suggested (on Monday) that production cuts might be the answer to falling oil prices (this after Joey’s visit to the Kingdom when he went hat in hand begging for them to increase output) ….while energy supplies in Europe prepare for the Russian shutdown of Nord Stream 1 next week……Coal and Nat Gas stocks continue rise -up 1% and 4% respectively….on the back of increasing demand and the ongoing war in Ukraine.
Eco data showed us that Pending Home Sales are down 22.5% y/y while Durable Goods are flat – estimates expected to show an increase of 0.8%. Economic data across the spectrum is falling – causing many to continue to suggest that Powell will pivot and go soft…. Don’t go betting the ranch on that….Treasury yields rose across the curve but remain inverted – which continues to flash RECESSION ahead…. many still suggesting that IF it comes, it won’t be until sometime in late 2023…. I’ve got news for you…. it’s here already….
Today starts the long-awaited Jackson Hole Boondoggle….and the WSJ features this article
“Jerome Powell’s Dilemma: What if the Drivers of Inflation are Here to Stay?”
The first paragraph lays it out….
“Central bankers worry that the recent surge in inflation may represent not a temporary phenomenon but a transition to a new lasting reality……. central bankers might lift interest rates higher and for longer than in recent decades, which could result in weaker economic growth, higher unemployment and more frequent recessions”
And this is now the new reality……btw – I tried to tweet this article and I got a message that said my tweet failed – that the story couldn’t be sent – please try again later…. which is interesting. Twitter had no problem allowing me to post other WSJ articles that had nothing to do with this new inflation dynamic. Maybe it’s just a ‘glitch’ – I’ll try again later….
Eco data today brings us the usual suspects – Initial Jobless Claims of 252k, Cont. Claims of 1.44 mil – both UP over last week. It also brings us the 1st revision to 2nd qtr. GDP and that is expected to be -0.7% – up from the initial estimate of -0.9%. Now do not expect that any of these to drive the action. Tomorrow’s data is much more important….it is the PCE deflator report – the FED’s favored inflation indicator…. Will it show that inflation remains stubborn and is not reacting to slowly rising rates? And if that is the case – should we expect JJ to be even more hawkish? Remember – he has to choose – is it inflation that he has to tackle or is it the (possible) recession that he is focused on? He can’t do both – so he has to make a choice and you get to make your bet.
I am still in the camp that he goes for 75 bps….Recent comments from FED members have been very clear about that ….and investors reacted fairly quickly….taking stocks down hard in just a couple of days…..Look – he has to do something…..inflation is not responding and the fear is that if oil runs up again – (which it appears as if it will) then the slight downtick in the CPI will turn into an uptick and it will be off to the races (again). Remember – this isn’t going to be over in 2 or 3 months…. get ready for this to continue for the foreseeable future…. Do not expect him to lay out the pathway in explicit detail……he can’t because the data remains cloudy….and the FED remains data dependent.
US futures are up this morning – but a bit lower than they were overnight….…..bouncing back from the beating stocks have taken over the past 3 days….all eyes focused on Jackson Hole……It is the end of August – trading volumes are down and that is causing exaggerated moves in both directions….(no surprise – we talked about it at the beginning of the month). Do not expect to get a ‘more normal’ read until after the Labor Day holiday. At 6 am – Dow futures are up 100 pts, S&P’s up 21, the Nasdaq up 75 and the Russell is ahead by 12.
Today and tomorrow will be all about what we hear out of Jackson Hole….and next week is the final week of summer – do not expect that much…. look for stocks to bounce around right in here…. with 4080 support and 4310 resistances.
European stocks were up but have turned down as morning turns to afternoon….at 6 am est – European markets are now flat to down….by 0.2% as investors there await all of the speeches from a range of global central bankers over the next 3 days.
The S&P ended the day at 4140…. Up 50 pts…. We remain in a tight trading range and will most likely do so until after Labor Day. Then we hit the September/October time frame – which is usually a seasonally difficult time for the markets and this year – Remember – September has been the worst month for stocks…. we usually see a decline of about 2% in the averages….
We have a market under pressure, we have a FED that is becoming more hawkish, we have a divisive tone across the country ahead of what is proving to be a contentious mid-term election that is both a referendum on the current administration and also a referendum on the prior administration. We have gov’ spending completely out of control, taxes rising across the board all while the economy is beginning to roll over. So, brace yourself and strap in – there is more chop ahead and while I do think that the lows of the year are in (3625 ish), I would not be surprised to see us test S&P 3800 ish before the elections in November. If the eco data continues to deteriorate and the Fed continues to raise rates aggressively, then I think we test the lows of June…. So – don’t rush to put all of your money to work….be strategic and be smart.
Take Good Care
Chief Market Strategist
kpolcari@slatestone.com
Rigatoni w/Cannelloni Beans, Sweet Sausage and Arugula
This is a great dish, and you can make vegetarian by just eliminating the sausage.
Bring a large pot of salted water to a boil.
In a sauté pan – heat up some olive oil, crushed garlic and a sliced/chopped “red” onion. Sauté until the onion is soft and translucent. Now add the crumbled sweet sausage and sauté until browned.
Put the pasta in the pot and cook for 8 – 10 mins.
Back to the saute pan – add a can of cannelloni beans – juice and all and stir to heat up… about 4 mins or so. Now add the arugula and stir. Arugula will wilt – no worries.
Drain the pasta – saving a mugful of the pasta water… add the pasta directly to the sausage and beans and mix well. Add a handful of Parmegiana cheese and toss. If you need to add back some of the pasta water, now is the time to do it. The dish should not be soupy, but it needs to be moist.
Serve immediately in warmed bowls with freshly toasted garlic bread.
Buon Appetito.
