Things you need to know.
– Sammy is going to jail for a long time.
– BoE joins the ECB and The FED – holding rates steady again.
– Mkts now expect the FED to halt rate hikes – bonds surge, stocks surge.
– Try the Apple Cinnamon Pork Chops
SBF (Sam Bankman-Fried) is found GUILTY on all counts…. faces 100+ years in prison – it only took the jury 5 hours to come to that conclusion. I’m just saying – there was NO other possible verdict, so let’s not make this out to be a ‘shock’…. I mean he might be shocked, but that’s because he is not living in reality…. Time to move on….
SBUX, CLX, PLTR and others join the party and report much better results, Eco data in line – US Labor Productivity rose the most in 3 years and that is seen as ‘helping to alleviate’ the inflationary pressure of wage growth – all as we await today’s NFP report. Initial and Continuing Jobless Claims rose for the 6th week and that suggests that the job market is weakening…. that those out of work are having trouble finding new work and in an odd twist of logic – that is what the FED wants to see.
The BoE – like the FED – held rates steady – they now join the FED and the ECB in holding the line.
The algo’s now expect the FED to remain in pause mode for the balance of the year – allowing the prior 11 hikes to really start to ‘kick in’, while many economists and analysts are now calling it ‘time to quit raising rates’ and that sent bond prices higher and yields lower. The 30 yr. bond way outperforming – its yield down 13 bps to 4.8%…. recall that it ticked at 5.17% on October 23rd – leaving its yield down 7% in the last week. The TLT (20 yr. bond etf) rose by 2.3% and the TLH (10 – 20 yr. bond etf) ended 1.7% higher. Both of these bond ETF’s have gained significant ground in the last 5 trading days.
Gold whipped around – trading as low as $1987 and as high as $2000 as the ongoing conflicts around the world continue to cause some investors to play it safe. Oil rose $2 or 2.5% to end the day at $82.50.
The VIX – fear index – continued its plunge lower (that’s bullish)…It is now down more than 30% off the mid-October high – plunging through 2 trendlines to end the day sitting directly on the 3rd line at $15.76 – if we breach this trendline then we could see the VIX fall to the 13 – 14 range and that will only further fuel the fire……. and all of this excitement caused the smart logic (stock) algo’s to go from the aggressive seller we have seen over the last couple of weeks to an even more aggressive buyer sending stocks higher – continuing the rally (from a way oversold position) ignited on Monday. The Dow gained 565 pts or 1.7%, the S&P up 80 pts or 1.9%, the Nasdaq up 230 pts or 1.8%, the Russell ahead by 45 pts or 2.7%, and the Transports added 265 pts or 1.9%.
Recall what we discussed – when the markets get anxious – it is the buyers who are in control of the action – because the sellers NEED them and when the tone changes – and the markets become settled – then it is the sellers who control the action because the buyers NEED them….and stocks get whipped around – only confirming the strategy we talk about daily…..Create a plan, invest in the plan and stick to the plan get comfortable with being uncomfortable.
The contra trades all got whacked – no surprise there while nearly everything else rose and rose significantly……Real Estate – XLRE up 3.1%, Energy – XLE + 3%, Consumer Discretionary – XLY + 2.6%, Financials – XLF +2.4%, Industrials – XLI +2%, Basic Materials – XLB + 1.9%, Utilities – XLU +1.8%, Healthcare – XLV +1.6%, Communications – XLC and Consumer Staples – XLP both up 1.3%.
Disruptive Tech – ARKK up 8%, (think falling rates), Semi’s – SOXX up 2.3%, Aerospace and Defense – ITA + 2%, Metals and Miners – XME + 2%, Coal Stocks up 4%, Oil & Gas Exploration – XOP up 2.6%, AI +13% and the list goes on and on….
And then after the bell – the one that everyone waited for – APPL and while they beat on all the metrics – the guidance was muted…Timmy warning of a ‘sluggish holiday season’ and China weakness…all as street analysts say that the new iPhone is not ‘wowing’ everyone (blah, blah, blah!) But they still managed to post revenue of $89.5 billion in the qtr. (that’s $358 billion/yr.)– yes down from $90.1 billion last year but ahead of the estimate of $89.3 billion. EPS of $1.46/sh vs. the estimate of $1.39/sh. And traders did what in the after-hours session? Took it down 2.5% – but they had taken it up 2.2% during the day…so what did they really do? Nothing. In any event – expect some media channels to discuss this all day – I on the other hand won’t pay any attention to the discussion but will add to my position – after I see how it acts once the market opens…. Anywhere around the trendline at $171 ish is ok with me. Again, it’s Apple, it’s a very mature company, and while it is a fan favorite – it is NOT a sexy’ hi growth company any longer, but rather a solid, steady store of value. You buy Apple – on any pullback – and put it away…until something tells you otherwise and last night’s report did NOT tell me otherwise.
At 8:30 – we are going to get the latest NFP report and the expectations are well televised….190k new jobs….but regardless of what the top line figure is – let’s not get all worked up….recall last month – it was double the estimate – but what they didn’t tell you is that 150k of those jobs were part time (second) jobs for so many people….and what does that tell you? People are struggling. If though, the number does come in with a 3 handle on it – then that whole ‘FED is DONE’ conversation – gets tossed out the window…..….Unemployment is expected to remain at 3.8% but the whisper number is more like 4% and if we get a 4% number then look for analysts to start talking about the ‘Sahm Rule’ – which identifies signals that point to a coming recession. Anything less than 4% won’t trigger that rule thus won’t trigger the recession conversation….so sit tight and watch. Average Hourly earnings are expected to by up by 0.3% m/m and 4% y/y. Weaker numbers will support the idea that the labor market is softening (positive)…while stronger numbers will do the opposite (negative).
Continue to watch earnings – which so far have been ‘better than expected’ on the top line, but have been cautious on guidance (APPL only the latest example) and that is exposing the weakness as companies fail to deliver – but it then supports the idea that the FED has not lost control of the macro environment. I am in the camp – that when Janet brings $1.6 trillion of treasuries to the market over the next 5 months…. bond prices will once again move lower -sending yields higher…. And that has the ability to disrupt markets again. Remember – China, Japan and the FED are all now NET SELLERS of US treasuries – Capisce? (Hint: They have been the biggest buyers – but that is changing….) So when the biggest buyers walk away – you can’t assume prices just go higher – do you?
We are now only 8 weeks away from Christmas……and only 4 weeks away from Hanukkah…. Which leaves me to ask – what kind of holiday shopping season are we in for? Analysts are already predicting a ‘banner year’ – which again makes no sense to me, but let’s see….
This morning US futures are taking a breather…. Dow futures + 6, S&P’s down 7, the Nasdaq down 52 and the Russell is up 5 pts. The focus today – will be all about the NFP report and the Apple report, the supposed weakness in China and whether or not consumers are going to surprise us this holiday season. We are sure to keep talking about whether the Santa Claus rally has begun in earnest or not….
European markets are flat. As noted – the BoE did nothing and held rates steady for the second consecutive meeting – but Governor Andy Bailey – mimicked JJ and Christine Lagarde – telling us that rates will be held in restrictive territory for longer and that the risks do remain to the upside and that it is way too soon to discuss rate CUTS….(sounds very familiar, no?)
The S&P closed at 4317 – up 80 pts and just 2 pts below the high of the day…….We are now decisively north of the long term trendline at 4240 – so this becomes support – in the event that the market retreats……4350 is the next trendline level of resistance with 4400 being the final frontier…..If we pierce up and thru 4400 – in the next couple of weeks – then it will be ‘game on’ to see if the BULLS can take us back to the year’s high of 4600 or if the BEARS fight to prevent it…..Remember – every time we pierce a technical trendline to the upside – it ignites the algo’s (just as it did when we violated those same trendlines to the downside)…..so, get ready for more excitement.
Which is why I keep saying – make a plan and stick to it….do not try to pick tops and bottoms, own the biggest names in the sectors you like and ‘invest’ – don’t trade your investment account. Sign up for divy reinvestment as a way to build your portfolio and use the chaos to tweak when necessary. Call me to discuss.
It is Friday and the weekend is here – and there is always the chance that the situation in Israel heats up even more than it is. Keep that in mind – but remember – geo-political issues do not price stocks in the long run.
Take good care.
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Apple/Cinnamon Pork Chops –
Here is an interesting and easy recipe that will change the way you think about Pork Chops….easy to make, pleasing to the eye, and delicious…. It takes no more than 25 mins to prepare and serve and is a very popular pork recipe.
You will need: 4 chops – on or off the bone (your choice – I prefer on the bone), butter, brown sugar, cinnamon, nutmeg, s&p, apples and crushed pecans (maybe like 3 tblspn) ….
Preheat your oven to 300 degrees.
Season chops with s&p. In a sauté pan – heat some butter and add chops and brown on each side for about 4 mins – depending on thickness…. While cooking – prepare the dressing.
In a bowl – add 3 tbls of brown sugar, dash of nutmeg, about 1 tsp of cinnamon. – set aside.
Peel and slice the apples into thin slices – set aside.
When the chops are done – remove and place in a pyrex baking dish in the oven. Cover with tin foil.
Now in the saute pan – add ½ stick of butter and then the apples, pecans, and brown sugar mix to the pan – cook until tender. This creates a delicious “apple sauce” – Do not overcook the apples as they will turn to mush…. When done – present the chop on a warmed plate and dress with the apple/brown sugar mixture…. I would accompany with a baked sweet potato sliced open with a dab of butter and a large mixed green salad. Enjoy with a nice Chianti….
Buon Appetito
