Things you need to know.
– JJ takes the stage in the morning while Jo Jo takes to the oval office at night.
– Fed to pause again in November while the President requests $1 billion in aid for both Ukraine & Israel to defend themselves against the enemy while also providing money in humanitarian aid for the Palestinians.
– Stocks sold off and are weaker around the world again this morning.
– The 10 yr. treasury ticked at 5% at 5 pm last night, the 30 yr. is now at 5.10%
– Gold surges and Oil surges – and that should surprise no one.
– Try the Vermont Maple Syrup/Bourbon Marinade
JJ did not send any smoke signals at his presentation yesterday…he sent very deliberate signals….saying that the bank is inclined to hold interest rates steady at the November meeting….(think pause) while leaving open the possibility that we could see higher rates in the future if the economy does not slow down…..he was smart…he did not trap himself…..gave himself an exit if he needs one….
Now, those comments confirm what the market has been expecting and what investors have been expecting…. the FED is prepared to sit tight for the second time in a row….and possibly a third in December. He supported his argument by saying that the recent surge in treasury yields is doing the work on behalf of the FED and could lessen the need for further hikes by the committee.
“Given the uncertainties and risks, and how far we have come, the committee is proceeding carefully. We will make decisions about the extent of additional policy firming and how long policy will remain restrictive based on the totality of the incoming data, the evolving outlook and the balance of risks.”
In the end – we can expect a pause next week – so NO surprise – Capisce?
Now – yields on the 10 yr. creeped right up to 4.998% – I mean come on!!! Where was the guy that could have ticked it? I mean – people get awards for making moves like that…they get to tell everyone – “I was the guy who created the 10 yr. 5% yield!” Well at 5 pm last night – someone ticked it…. the 10 yr. yield hit 5.001% – which means that some bond guy sold the bond at a price that pushed the yield above 5% – so will that person come forward please? Now the 30 yr. yield exploded – rising by 11 bps to end the day at 5.1099% and that sent traditional 30 yr. mortgages on their way to 8%…. remember the average mortgage rate is based on borrowers who put 20% down and have excellent credit…. anything less than that – results in even higher rates and so the impact of rising rates is really going to start to be felt by the borrower and the homebuilders. The TLT (20 yr. bond ETF) lost 2%, the TLH (10 – 20 yr. bond ETF) fell 1.3%,
Oh boy….here we go…..and stocks got hammered yet again….the Dow falling 250 pts or 0.7%, the S&P down 36 or 0.8%, the Nasdaq down 128 pts or 1%, the Russell off 27 pts or 1.5% while the Transports fell by 150 pts or 1%.
Every sector was lower…. Consumer Discretionary down 2.6%, Real Estate down 2.5%, Basic Materials and Financials down 1.3%, Utilities, Healthcare and Industrials down 1%, Consumer Staples and Tech down 0.5% while Energy and Communications lost 0.15%.
Home builders down 2%, Retail down 1.5%, Disruptive Tech down 2.5%, Cybersecurity down 0.7%, Semi’s down 1.5%, Aerospace and Defense down 1% (again makes NO sense considering what is going on in the world).
The VIX rose by 11% on top of the 7% rise on Wednesday. And that has sent the VIXY surging…. up 5% yesterday – taking up 15% for the week. The DOG + 0.8%, the PSQ + 1% and the SH was up 0.9%. And the SPXS – the triple levered short trade – was up 2.8% yesterday.
Now on the geo-political front – we have new problems that are creating short term chaos – we are starting to see US bases in Syria and Iraq coming under drone attacks – while the Houthi Rebels in Yemen launch cruise missiles that fly over Saudi Arabia at Israel – our American destroyer – USS Carney – in the Red Sea has been successful in intercepting those missiles but this is prompting new concerns about how this Hamas/Israel war can spark a bigger conflict in the region – pulling the US into the fight….And that only added to the angst. The Pentagon assuring us that ‘our focus is on deterring a broader regional conflict…not joining it.’
Just to be clear – the US has been sending more military gear and troops towards the region since last week – to do nothing more than keep Iran and Hezbollah from joining in the conflict. Just FYI – we have put 2000 troops on alert for possible deployment.
Gold spiked rising $18.50 or 1% to end the day at $1986/oz…this morning it is up another $16 at $1996/oz,,,,,Again it is the ultimate safety play as the conflict intensifies. We are now up and through resistance at $1985 and this suggests that with further unrest across the middle east we could (will) see gold move higher and yesterday I thought we could test $2000, and we just did that – so what’s next? $2028 – which is the July high…. A push there and through will see $2100 before you can blink an eye. Now to be clear – IF the unrest settles down – then Gold will retrace quickly…. Ahhhh… I just don’t see that, do you?
Oil is now up and through $90/barrel and is kissing $91 as the sun rises over the Atlantic. Now, you heard that Jo Jo has offered Venezuela some sanctions relief in order to bring supply relief to the oil markets (of course he did, because we’ve heard nothing from the Saudi’s or OPEC+)…that move is expected to bring 200k – 300k/day onto the market, but that would pale in comparison to the loss of 700k barrels/day if we impose sanctions on Iran – and so oil goes higher.
The dollar index – DXY continues to hold tight at $106.27.
This morning stocks are lower…. The Dow is down 70, S&P’s down 11, the Nasdaq down 52, the Russell is off 6. It is Friday, the weekend is coming, there is no change in the Israel/Hamas war and Jo Jo told us last night why he has requested an emergency bill requesting $100 billion in aid to support BOTH Ukraine and Israel in their wars – while also providing money to help support the US border with Mexico – which is laughable….Do you see how they tied all of that money together….making it nearly impossible for it to fail? …promising us that the money is to be used to prevent both of these conflicts from becoming even bigger and will pay us ‘dividends’ for generations to come. At the same time – he also told us that he secured an agreement between Israel and Egypt to provide the first (of many) shipments of humanitarian aid for Palestinians in Gaza that will cost us another $100 million. This way – everyone gets something…. We haven’t left anyone out…. The ‘rumor’ is that there is even some money in that pot for Taiwan! Capisce?
Eco data this morning is nothing….so expect the focus to be on Jo Jo’s speech last night, JJ’s speech yesterday morning, the ongoing conflict in the Middle East and the ongoing conflict on Capitol Hill – where the GOP has managed to look like a bunch of clowns…..unable to come together as a conference and do the right thing. Could we see weakness again going into the weekend – absolutely….so sit tight.
Stocks in Europe are lower – It is the same issues affecting the mood in Europe – Geo-political, earnings and economic data. At 6 am – we see all the markets down by more than 1%.
The S&P plummeted thru 4300 yesterday closing at 4278 down 36 pts – we did test as low as 4269 and I suspect we will test it again today…..….I still think we will test the trendline at 4231 now…..if only to see if the buyers are willing to defend it. If it fails – then a swift move to the 4100/4125 range would not be out of the question.
And here is the update….We raised ~$3 million last night on behalf of our veterans that suffer from the hidden wounds of war – PTS….It was an another amazing event shedding light on an issue that kills 22 veterans a day….You can learn more at
Thank you to everyone that supported my (our) efforts in this quest to ‘bring’ these men and women home.
Take good care.
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Kenny Polcari is the Chief Market Strategist for SlateStone Wealth. Neither Kenny nor the partners of SlateStone Wealth are compensated in any manner by the issuers of any securities mentioned in the publication.
Vermont Maple Syrup/Bourbon Marinade
This is a simple marinade and is wonderful when grilling a nice bone in Rib-Eye.
For this you need: 1 cup of real Vermont maple syrup, ½ cup of Jack Daniels Bourbon, s&p and a shot of ground red pepper….
Mix well – and then use it to marinate your favorite cut of meat. (Overnight always works well). When you are ready to eat – light the grill – get it nice and hot – sear the steak – turn the heat to med high – let it sit for 4 mins and then flip it and repeat….(now depending on thickness will dictate the mins….if it’s nice and thick – let it sit for 5 mins, if it’s a bit thinner – then 3 mins works.
When done – serve with a large mixed salad and some steamed green beans. Simple. Enjoy this meal with a robust ‘Red’.
Buon Appetito
