Things you need to know.
– Stocks take a break as we await inflation data and the start of earnings.
– Oil and gold remain in tight trading ranges.
– The VIX suggests more complacency – which should make you suspicious.
– Hootie’s raise the temperature in the Red Sea, Merchant ships under attack.
– 5 days till the Iowa Caucuses and this is just the beginning.
– Try the Pan Seared Chicken Thighs in Orzo Cream
I was on The Big Money Show yesterday – here is the clip in case you missed it.
https://www.foxbusiness.com/video/6344566325112
Stocks struggled – just a bit on Tuesday, the Dow lost 157 pts, the S&P gave up 7 pts, the Equal Weighted S&P -31 pts, the Nasdaq gained 14 pts, The Russell lost 21pts and the Transports lost 134 pts. This morning futures remain sleepy – all trading around the unchanged line…. Bonds? Well, the 10 yr. yield remained north of 4% but this morning bond prices are up a bit causing the yield to fall to 3.98%. Oil rose after the pressure it’s been under ending, they day up $1.46 or 2% to close the day at $72.25 – although this morning – it too is giving just a bit of that back…. down 35 cts at $71.88. And the VIX reaches $13 – ending the day at $12.70 – suggesting ongoing complacency – which is curious/suspicious.
Look, there is a growing mismatch between what the market expects the FED to do vs. what the FED expects to do given the resilient economic fundamentals that are not screaming for rate cuts. But a pullback in the latest narrative would most likely ‘trigger a selloff’ across the board in stocks – and remember – the latest narrative is (was) for 5 – 7 cuts…. although they are trying really hard to debunk that without ‘triggering that selloff’. They are trying really hard to push back on a March start saying that one cut could begin in May – after that – it becomes really political because we would only be 5 months out from the Presidential election and the FED is not supposed to change any policy during that time block. So, sit tight….
And on the geo-political front – The Hootie’s are launching the biggest attack on merchant ships in the RED Sea causing more chaos and disruption – causing 5 US and UK warships to respond – shooting down 18 drones, 2 anti-ship missiles and 1 anti-ship ballistic missile late Tuesday – leaving all of us to ask – is de-escalation even possible now or will this conflict turn into something ‘bigger’?
French President Macron – 46 yrs. old – appoints a new prime minister – Gabriel Attal – a 34 yr. old – sending a clear signal that times are changing – there is a clear change in generational leadership – as Macron tries to ‘jumpstart his gov’ts flagging popularity’.
China’s latest move – sending a spy balloon over Taiwan just 4 days ahead of their elections – is raising all kinds of flags and concerns…reminding us that Xi Xi intends on taking Taiwan back – yet Jo Jo has been silent…. (Which is why I like the Aerospace and Defense sector – which is down 6% ytd – and names like RTX, LMT, GD, NOC etc….)
Donny – 77 yrs. old – continues fighting – claiming ‘Presidential Immunity’ leaving the federal appeals court skeptical (think reject his claim) over his role in plotting to overturn the 2020 election while Jo Jo – 81 yrs. old – continues pushing ‘Bidennomics’ sending a clear signal that NOTHING is changing here in the US.
Fox News continues to showcase the GOP candidates – in a town hall event – ahead of the Iowa Caucasus’s – last night it was Ronnie’s turn – and by all accounts he did make some headway….Monday evening it was Nikki – who also performed well and tonight they are featuring Donny….The stage is heating up….and while Donny is still in the lead – it ain’t over til the fat lady sings….The GOP primary schedule is Iowa (1/15) to NH (1/23), Nevada (2/8), South Carolina (2/24), Idaho (3/2), DC (3/3), North Dakota (3/4) and the Super Tuesday on March 5th…where 16 more states join the fun…and by then – it should be settled….So stay tuned…… the 4 remaining candidates are coming to blows….
And then at 4:17 pm – this headline hits the news wires – “SEC Grants Approval for Bitcoin ETF” – sending Bitcoin surging…towards $48k only to have that headline debunked as a fake…with Gensler and the SEC admitting that ‘someone hacked their X account and posted that erroneous headline’ (convenient?) and that sent Bitcoin plunging to $45k – before it recovered settling in at $45,600 ish. But was it? The street is in the camp that it is ‘highly likely’ – since the SEC, ETF issuers and exchanges have all been working hard to hash out the ‘technical details’…. I mean the decision is due today…and with the likes of Blackrock, Fidelity, Wisdom Tree, Invesco and ARK Investment Management ALL pushing for it to happen, it’s hard to see that it won’t……..Today’s decision will focus on Cathie Wood’s ARK Investment Managements application but it is expected that multiple approvals will be announced so that no one has first mover advantage.
Just to be clear – it was not a failure by X – This was an SEC failure…. Someone supposedly had access to the SEC account and posted it…. the SEC account did not have 2 factor authentication to prevent such posts, so the breach was fairly simple… This isn’t rocket science by any stretch…. This is just sloppy – although I’m still not sure I believe that it wasn’t part of the plan. Seems too convenient to me….
And the BA CEO Davey Calhoun – fighting back tears – announced that BA will take full responsibility for what happened over the weekend on that Alaska Air flight…well, that’s good, did he expect that Airbus was going to take responsibility? I mean – Come on!!! BA is now down 10% since this happened – leaving it down 14% on the year…. leaving me to ask – given all of the problems (sloppiness) that BA has experienced over the past 5 yrs….. Why put money into it? Are there other places to look? I mean they are not even paying you to own the stock…. Cash dividend was discontinued in February 2020! I’m out…. (I mean I was never in, but now I’m really out!)
And word has it that Alaska Air is offering $1500 checks to the passengers to make them ‘feel better’ about not being sucked out of the plane…Yeah…let’s see how that works out…. You can see the lawyers lining up….
This morning US futures are churning…. Dow futures are down 25 pts, S&P’s up 5, the Nasdaq is up 50 and the Russell is flat. The only macro data point today is Mortgage apps – and that is not expected to be a market mover by any stretch. The real test is tomorrow’s CPI and Friday’s PPI and then the start of earnings season…currently they are expected to grow by 1.3% – this is down from 8% in September. 9 of the 11 sectors are expected to report lower earnings – the big banks – the first out of the gate starting Friday – So let’s see how this begins…. Watch what these guys do with their loan loss reserves….
Oil is trading at $72.30 – in addition to the chaos in the Middle East – yesterday we learned that crude stocks fell more than expected. Today we will hear from the EIA to learn more about the supply/demand equation. Recall, I don’t think this is a declining demand story at all, I just think it is an increasing supply story….and there is a difference…..declining demand means that we are cutting back on oil use….and we are not….oil demand is expected to grow in 2024 and beyond…We remain in the $68/$75 range.
Gold – continues to trade in a tight range…and this morning it is up $7 at $2040/oz…. after testing once again trendline support at $2028/oz. We have now tested support 4 times over the past week….A failure to hold the trendline at $2028 will see it trade to $2015/oz….where it most likely will not find enough support either….taking it to $1990 ish….…I think it holds and we remain in the $2028/$2100 range.
European markets are all a bit lower today…. nothing new on the eco front – they await news on US inflation figures tomorrow and Friday. Markets across the region are all down by about 0.3%.
The S&P closed at 4756 – down 7 pts. All of the excitement driven by the TECH sector on Monday being credited to it being in a short-term oversold condition. I still expect the markets to churn a bit lower…. during the 1st qtr….. but do not expect them to reach correction type moves…. (greater than 10%) but I would like to see them shake the branches a bit to test investor loyalties. As a long-term investor – I love buying good stocks at a discount…. Capisce? Unless something that no one expects hits us – then normal backing and filling is ok.
On a side note – we finally learned that Secretary of Defense Austin is suffering from prostate cancer – we wish him well, but have to ask – why the secret? Plenty of men suffer from prostate cancer – It’s just part of being a man. I just want to know who was in charge when he was off the grid? Apparently no one.
Take good care.
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Pan Seared Thighs in Orzo Cream.
This is a one pan (oven safe) meal that is sure to become a family favorite.
For this you need 6 thighs, skin on, Onions, garlic, chicken broth, heavy cream (you can use light if you have to), s&p, thyme, spinach, orzo, butter and olive oil.
Preheat your oven to 350 degrees.
Season the thighs with s&p. set aside.
In an oven proof skillet – melt ½ stick of butter with a splash of oil. Add in the sliced onion and good until nice and caramelized…. season with s&p and thyme. Remove and set aside when done. Now in the same pan – add the thighs, browning them on both sides until nice and golden. Remove and set aside.
Next – add in ¼ stick of butter – along with a cup of orzo – brown in the skillet until its all coated, Now adds in the chicken stock – enough to cover the orzo. Add in ½ c of the cream, the onions and two handfuls of fresh spinach – mix well. Taste and adjust seasoning.
Reintroduce the chicken into the skillet and then cover with tin foil. Place in the oven and let it cook for 15 mins…test to be sure that the orzo is cooked. If not – let it cook for 5 more minutes. Remove and serve directly from the skillet – allowing your family to take a thigh with the orzo/spinach/onion mix. Yum.
Buon Appetito
