Things you need to know
- JOLTS reports show a decline, HOOD slashes its work force
- Uber is laughing all the way to the bank, shareholders enjoy the ride
- Conflicting messages out of NON-Voting members of the FED…. Jimmy B is the star of the show today – and he IS a VOTING member.
- Oil retreats ahead of the OPEC+ meeting
- Gold kisses resistance and backs off – getting ready to move up
- Try the Pork Capriccioso
**There will not be a note tomorrow…I will be travelling. See you on Friday**
Job openings – (JOLTS report) fell in June to their lowest level in 9 months – falling by 605k jobs, hiring also declined, in addition – HOOD announces that they are slashing 25% of their ‘full-time’ workforce (which I find interesting that they made the point of defining the people getting canned – they are ‘full-time’ which leaves me to ask – does HOOD have a large ‘part-time workforce?.
This is the second round of layoffs at HOOD this year – I guess things there are not as strong and robust as many would have you believe. UBER on the other hand – reported a 100% increase in revenues as customers continue hailing rides and taking advantage of ‘Uber Eats’ (which grew by 25% y/y) even in the face of rising inflation…. CEO Dara Khosrowshahi telling investors that the ‘the business is hitting on all cylinders’ pointing out record gross bookings and revenues of $8.1 billion in the quarter. In addition, he was happy to announce that both US and Int’l businesses are growing at +40% describing that as ‘super healthy’. That stock surged by 19% to end the day at $29.25.
JBLU on the other hand reported a large loss – citing rising costs and ‘operational difficulties’ for the reasons…..forcing them to make sharp cuts and untold flight cancellations – essentially abandoning travelers…..but CEO Robin Hayes telling us that ‘they got this now’….begging customers to come back – I for one will not go rushing right back to JBLU at all….by the end of the day – traders, algo’s and some investors took 6.3% out of the stock – leaving it down 50% off the February high of $16.25.
And then we heard from San Fran FED President Mary Daly – who confirmed what we heard from Minneapolis’s Neely Khashkari on Sunday…..saying that the FED’s work on inflation is ‘far from done, that they are ‘nowhere near finished’ fighting inflation…..Then Chicago’s Charlie Evans chimes in saying that ‘another 50 bps increase in September is reasonable, but a 75 bps hike is OK too’! Now to be clear – none of these three are VOTING members of the FOMC committee – but you have to ask – are they sending the message on behalf of voting members? Are they floating the balloon to take the temperature?
Stocks sold off…. (And we didn’t even mention Pelosi yet….) …. By the end of the day the Dow lost 402 pts or 1.25%, the S&Ps off 28 pts or 0.7%, the Nasdaq lost 20 pts or 0.2%, the Russell ended flat while the Transports lost 350 pts or 2.4%.
Look – no matter what you think -the inflation monster is not dead yet by any means – there are still too many unknowns out there….….the latest reads in CPI, PPI and the PCE Deflator are all at 40 yr. HIGHS….and have continued to trend UP, not DOWN…..now next week on the 10th and 11th – we’ll get another swing at it…..We will hear what the latest read is on inflation is….many expecting it to ‘plunge’ which makes no sense……Plunge suggests a collapse in inflation rates…that is not happening….a small decline of 1 or 2 tenths of one percent – maybe? That’s hardly a plunge as it would leave inflation at historic levels.
Listen, I have said this – inflation didn’t just happen overnight – it took years of stimulation and then months of pretending it was transitory to get to levels not seen since 1980…..Why anyone thinks that we’re getting back to the 2% target anytime soon is mind boggling to me…..not happening…..so pay attention to what the FED heads say today…..
And guess who that is? St Louis FED President who IS a voting member – and he will be all over the media today opining on what’s next…and his view is that we need to see fed fund rates at 3.75% – 4% by year end….currently they are at 2.25% – 2.5%…..Jimmy also said that ‘inflation has come in a bit higher than he expected’ so he has adjusted his year end target to reflect that. He also thinks that they can navigate a soft landing! Hmmm? On Thursday – we will hear from Cleveland’s Loretta Mester who is also a voting member – and we know how she feels…. think higher rates.
OK – so now the elephant in the room…..Nancy Pelosi and her trip to Taiwan….there are mixed messages here – members of congress support the trip – Joey – who opposed it last week has now done an about face and supports it, while Pentagon spokesman – John Kirby tells us that ‘the US will not be intimidated by China’ while he reaffirms the fact that we do not support Taiwan independence.
Funny – but Nancy delivered a different message this morning – when she got an award from the President of Taiwan saying that ‘the US wouldn’t abandon Taiwan in the face of China threats. So where are we? Do we support independence or not? When China goes in to take Taiwan (which you know is happening soon) – what exactly is Nancy (or the US) going to do? I mean – it’s just confusing and that added to some of the angst in yesterday’s trading. On a travel note – she has left Taiwan and is now on her way to South Korea.
Remember – in the long term – geopolitical issues do NOT price stocks, but they do create chaos in the short term and that provides potential long-term opportunities.
Treasury yields reman inverted, so nothing new to report there other than the gap between the 2’s, 5’s and 10’s did narrow – and many will point that out as a positive event…. Great! But it still remains inverted and has been inverted for 6 weeks now and that is always an indicator of a coming recession….
Recall the hysteria over the inversion that happened for less than 1 day back in the spring…. you had all the talking heads on CNBC telling us that a recession is now signed, sealed and delivered, funny how it has been inverted now for 6 weeks and they don’t even discuss it any longer…. because it doesn’t fit Sorkin’s narrative.
Oil continues to retreat – this morning it is down 60 cts at $93.83. OPEC + is meeting today (the + includes Russia) and many are awaiting the news…. Will they vote to increase production in September or not? Consensus says that they will not because of the coming recession and demand destruction. It also says that the Saudi’s do not want to ‘beef up production at Russia’s expense’ (think sanctions). The outliers say the best we can hope for is a slight increase.
Oil remains in the $88/$100 trading range. Further weakness will test the trendline support at $88 – if that does not hold – the commodity would potentially hit a void – leaving it vulnerable to test the $80 range. But let’s not get excited just yet….
Gold – nearly kissed the trendline (resistance) on Monday before backing off just a bit. This morning it is down $12 at $1777/oz as it digests it recent surge higher. Gold is up 6% since mid-July…. talk of a recession and the global geo-political situation helping because that move. Remember – Gold is considered an inflation hedge, and a store of value when political tensions heat up.
It has also tested the $1700 level 3 times over the past 24 months…holding firm each time….Gold now appears to be ready to surge….Key prices to watch include $1811, $1860 and $1872…As it moves up and through these trendline resistance levels – it will gather steam to push higher and IF inflation remains elevated and geo-political tensions remain HOT – then I’m a buyer of gold. Names in the space to consider include – GLD, NEM and GOLD all down 40% or so off the march highs…. they look interesting…just sayin’
This morning we’ve already gotten 9 earnings reports and 3 have missed – suggesting again that 70% of the reports will beat – that’s been the trend…. all while they offer cautious forward guidance.
Today is all about the ECO data…. Mortgage apps +1.2%, while S&P Services PMI is expected to come in at 47! This would mimic last months and keep us in contractionary territory – and this is important why? Because the US is a 75% SERVICES economy…Now the ISM Services PMI is expected to be 53.5 – which contradicts the S&P….so, I guess the question is – who will investors trust? In addition, look for Factory orders expected to be +1.2% and Durable Goods orders of +1.9%.
Dow futures are up – trying take back some of the losses. The Dow + 125 pts, the S&P’s +14, the Nasdaq +35 and the Russell +11.
European markets are all higher…. not big, but higher. Markets across the board are up about 0.10% – 0.4%. It’s a busy day for earnings. Eurozone retail sales dropped by 1.2% m/m and 3.7% y/y as rising prices continues to dent demand.
The S&P closed at 4091 piercing the 4100-century mark…. – after trading at a low of 4079 and a high of 4140…. We are now in the 3925/4120 range.
In any event – keep your eyes focused on the end game…. Stick to the plan.
Take Good Care
Chief Market Strategist
kpolcari@slatestone.com
Pork Cutlet Capriccioso
This is a great dish – easy to make and a pleasure to serve. You start by making the Tomato Bruschetta – get some nice ripe plum tomatoes – maybe 7 or 8… dice and add to a glass bowl… 3 or 4 cloves of garlic… now crush two of them and then slice the other two – add to bowl… fresh basil – chopped, s&p, olive oil and diced red onion… (I love red onions so the more the merrier – but you figure it out…) Cover and let marinate… do not refrigerate…
Next the Pork Cutlets – Pound thin then Rinse and pat dry. Beat a couple of eggs and set aside. Prepare a bowl with Italian seasoned homemade breadcrumbs – set aside. Prepare a bowl with flour – set aside. Make the assembly line – Flour, Egg wash then breadcrumbs.
Pour some olive oil in a broiling pan and turn broiler on high. You want enough so that you cover the bottom of the pan – but you do not want the cutlets bathing in oil… place the rack on the second level below the broiler.
Dredge the cutlet in the flour then dip in the egg wash and then dredge in the homemade breadcrumbs making sure to coat well on all sides. When the oil is hot, place the cutlet in the broiler pan and turn over so that the seared breadcrumbs are now under the broiler. Cook for about 5 mins or until a nice golden brown. Flip the cutlet and broil the other side – another 4 / 5 mins or so. Remove.
Now the presentation… You need to make a bed of greens on the plate – maybe fresh spinach, or arugula, or Boston bib – you can mix or use just one… Next place the broiled cutlet on top in the middle – looks good, no?
Now – using a spoon – add the bruschetta on top of the cutlets – this is a colorful dish…you have the green from the greens and you have the red from the tomatoes… It is like eye candy…
Serve with a red wine of your choosing… I like a Chianti Classico with dish – but you can choose whatever makes you happy.
Buon Appetito.
