Things you need to know ~
- NKE and FDX please the algo’s – Mkts push higher
- MU disappoints post the bell, ruins the tone…futures lower
- Oil kissing $80, Gold holds steady at $1824/oz
- The kids (FTX) are singing like canaries…SBF on US soil…
- Try the Shrimp Scampi w/broccolini
Existing home sales – plunge…down 7.7% vs. the -5.8% that was expected – making it 10 straight months in a row….while housing prices fell for the 5th month in row…… – Consumer confidence surged higher…. 108 vs. the expected 101……NKE and FDX both beat earnings and offered hope going forward….NKE making it clear that they are confident in the consumer, raised their outlook for 2023 – Amazing right? The global economy is about to enter a long and deep recession (the UK just the latest to report ‘slower than expected’ growth is warning of tougher times ahead) – yet NKE tells us that ‘it’s all good’ – selling sneakers like they are going out of style….….FDX on the other hand – warned of difficulty in their FEDEX express business (not sure how that is, as I see those brown trucks EVERYWHERE) vowed to cut another billion dollars out of their budget bringing the latest cuts to nearly $4 billion. Investors went all in taking both stocks higher….NKE +12% and FDX +3.5%.
In the end – the algo’s took the whole market higher – celebrating what is now expected to be a ‘not so bad’ earnings season….if NKE and FDX are any indication at all. But remember – both beat estimates that had been slashed and burned – so go slow and don’t get drawn in that fast….The season officially kicks off on January 13th…..so we have some time to consider what happens next.
By the end of the day – we saw the Dow up 526 pts or 1.6%, the S&P up57 pts or 1.5%, the Nasdaq rose by 165 pts or 1.5%, the Russell gained 29 pts or 1.6% while the Transports added 180 pts or 1.3%.
And then there was Micron….
Now Micron Tech – MU had a different outcome (after the bell) warning that 2nd qtr. revenues will be weaker than expected….causing them to announce a ‘headcount cut’ of 10%. (headcount cut is a fancy way to say – they are throwing 4000 people out on the street) ….apparently there is a GLUT of memory chips (we know this) – in fact the worst glut in more than a decade (which is also confusing) – and that will make it difficult for them to return to profitability, but the CEO told us that the glut should peak in the coming quarter and then go into decline – helping to push their profits higher in the latter half of 2023….……when the news hit – after the market closed – the algos went to work – and MU came under pressure – trading down 2.8%……This morning – the stock is trading lower in the pre-mkt – quoted down by 3% – taking this stock down 47+% ytd…. and that is casting a pall over the whole group (and the market)…. Again, I ask why? The market has been pricing in this negative news all year long….
The SOXX- Semi ETF is down 36% ytd, NVDA – 43%, AMD – 53%, QCOM – 37%. (They all report in February). This I think is a seminal moment for chips….this news is not new – why do you think the group is down? So, is MU announcement the bottom for the group? At $50 – MU is trading back at 2020 levels – a level where it traded for most of the year ($45/$52)….my sense is there is plenty of support right here….thoughts?
Treasury yields moved higher…the 2 yr. now yielding 4.2%, the 5 yr. – 3.7% and the 10 yr. at 3.64%….while the 3 month T-bill is now getting you 4.18%….keeps you liquid and protects your capital….
Oil – marches higher…..US inventories shrink and now they tell us that Russian exports have declined…which makes no sense – since yesterday they told us that China (and India) are importing record amounts of Russian oil….in any event – yesterday we learned that US crude inventories fell by 5.9 million barrels – leaving us about 7% BELOW the 5 yr. average. This morning – WTI is trading up $1.50 or +2% at $79.80…..trendline resistance is just a hair higher at $80.92….
And then to fill up the airwaves – the conversation turned to SBF and the FTX drama…… and what’s next – since he gave himself up to the FEDS – so that he can get ‘vegan’ meals in prison in the US….Even his lawyers are lawyering up as they look for a way to get the judge to grant him bail – allowing him to go home with Mommy and Daddy. Really? The guy (or kid) stole $10 BILLION from the likes of big VC firms, celebrities, family offices, Pension systems and very large well known asset management firms and he wants to be able to sleep in his own bed? Actually – maybe they should let him go home and arrest the idiots that ‘gave’ him all that money…. Clearly no one did any due diligence at all….Amazing…..! In any event – the kids are all turning on each other – singing like canaries – pointing fingers at in any direction that does not include them….Can’t wait for the NFLX original….
This morning – US futures are down…..just a bit….but that makes sense after yesterday’s move higher….Dow futures down 70 pts, S&P’s down 7, the Nasdaq down 20 and the Russell is down by 2. Eco data today includes final revision to 3rd qtr. GDP, and it is expected to be +2.9%, Kansas City FED Survey – 7.
European markets are also mixed….the FTSE is higher while the rest of the continent is lower…..as mentioned above – the UK reported weaker economic growth and a decline in household disposable income….and warned of a ‘longer and deeper’ recession than many expect….
The S&P closed the day at 3878….up 56 pts…..leaving us rangebound as we move into yearend….I still expect Santa to take us to S&P 4000 ish…by year end and then the fun starts again with the new year.
Remember – have a plan and stick to your goals, take advantage of DCA (Dollar Cost Averaging) in your long term account over time.
Take good care,
Chief Market Strategist
kpolcari@slatestone.com
Shrimp Scampi w/Vidalia Onions, Broccolini and White Wine
This takes all of 20 mins to prepare and serve….an easy dish that appears harder than it is…..
You need – 1 lb. of large cleaned, deveined shrimp, butter, garlic, lemon, white wine, chopped broccolini, diced Vidalia onion, s&p & 1/2 lb. of linguine…..
Bring a pot of salted water to a rolling boil.
In a sauté pan – melt butter, add crushed/sliced garlic……and sauté….keep heat on med-hi so that you do not burn the butter or garlic, next add in the onion and broccolini – sauté that for another 5 – 8 mins.
Now add the pasta to the water and cook for 8 mins.
Next add the shrimps to the sauté pan and let them turn pink and then flip them to the other side. Now add the juice of one lemon, ¼ c of white wine…(and a wine glass full for you) – turn heat up to high and let it reduce a little strain pasta – reserving a mugful of water – add pasta to sauté pan – mix and serve…..You may need to add back a bit of the pasta water to keep moist -as the pasta sucks up the juice…. Serve in warmed bowls with fresh grated cheese at the table.
Buon Appetito
