Things you need to know.

–         Momentum failed to breach 5000, but it did give it the ‘ole college try’.

–         Anything TECH driving the action…. are you surprised?

–         30 yr. – $25 billion bond auction today…. How will it be received? 

–         Cyber security is underrated – Hospitals in Chicago under constant attack from hackers…Expect names like CRWD, PANW, FTNT etc.….to continue to outperform.

–         Try the Lemon Chicken.

The Momo (momentum) guys are alive and well……..Algo’s running over each other pushing this ongoing historic rally in stocks ever higher…… taking the S&P right up to the 5th century mark….ticking at 4999.89 at 3:03 pm…..unable to pierce 5,000 – before  settling in at 4995.06 – up 41 pts or 0.8%…..The Dow added 156 pts or 0.4%, the Nasdaq gaining 148 pts or 1%, the Transports added 67 pts or 0.4%, the Equal Weight S&P up 25 pts or 0.4% – only the Russell (Small and Midcaps) bucked the trend – losing 4 pts or 0.2%.  Essentially – traders, algo’s and investors shrugging off any concerns about ‘stretched valuations’, seasonal weakness and more hawkish commentary from a range of FED heads.  The idea that the economy is firing on all cylinders will continue to fuel corporate profits – which is good, which again forces the question – Why exactly are some people screaming for the FED to cut rates?

As you can imagine – the gains once again driven by TECH and specifically the Magnificent 7….6 of the 7 registering substantial gains – MSFT + 2%, AMZN +0.8%, META +3.2%, NVDA +2.7%, GOOG +0.9%, TSLA +1.3% – leaving AAPL flat on the day….…SMCI one of the newest names to make ‘mind blowing gains’ also added 0.3% to their market capitalization.  All this excitement causing anything in the tech space to rally…. the XLK rose by 1.7%, SOXX (Semi’s) +1.5%, CIBR – Cybersecurity +1.8%, BOTZ – Robotics and AI + 0.8%, Disruptive Tech – ARKK + 1%, Expanded Technology – IGM +1.6% – and you ask – what is expanded technology?  Good question – It is defined as Tech, Consumer Discretionary (in the tech space) and Communications all in one place…and includes names like AAPL, META, NVDA, AVGO, CRM, ADBE, AMD, NFLX, ORCL, INTC IBM, QCOM, MU…. Capisce?

9 of the 11 S&P sectors registered gains…. only Consumer Staples – XLP and Real Estate – XLRE lost ground – giving up less than 0.1% – so essentially, I would call them flat.

Further down the ladder – we found strength in Home Builders – XHB + 1.7%, Metals & Miners – XME + 0.5%, Oil and Gas Exploration – XOP + 1%, Coal Names + 0.8%. Airlines – JETS + 0.15%, The SPXL – Direxion S&P 3 x’s levered BULL ETF + 2.5% and the list goes on….

We found weakness in Oil Services – OIH – 0.15%, Integrated Oils – think XOM & CVX – both a bit lower, Aerospace and Defense – XAR -0.1%, (which is really surprising to me- considering the global environment – but represents a longer term opportunity), And we saw weakness in the VIX – the fear index – down 1.7% – leaving it at historic lows…- suggesting high levels of complacency….which is in itself a contra indicator….

Bonds barely budged and that historic $42 billion auction of 10 yr. bonds that had so many on the edge of their seats – Yeah – no worries…it went off without a hitch….demand was strong…and the auction settled at 4.09%  – lower than anticipated – which means buyers paid UP– and that is a sign of confidence that the FED will pivot and cut rates later this year…..and why is that?  Because there were plenty of investors that bought 10 yr. bonds – locking in rates at 4.09% – suggesting that future auctions will produce lower yields and that is because the FED will cut rates….  If investors were not so confident – they would not have paid up for those bonds, they would have bid lower – forcing yields higher…but that is not what happened – so the interpretation is bond yields have peaked and the next move is down not up…. The only question that remains is – When? Because – while I am not completely convinced hikes are really off the table, I do agree that the next move is ‘most likely’ down – I just don’t agree that it is happening anytime soon….  But that’s what makes a market – both buyers and sellers.

The strength in yesterday’s auction also means that investors want ‘ultrasafe treasuries’ and that can be attributed to the recent concerns over the regional banking system – think NYCB and the exposure that they have to the NYC commercial real estate market and what that may mean for others in the space in other big cities across the nation and then what that might mean for stocks. This morning – the 2 yr. is yielding 4.4% and the 10 yr. is yielding 4.10%.

Again, there was no eco data to drive the action, but there were plenty of earnings reports that drove some stocks up or down significantly – think CMG + 7.2% SNAP -35%, FUBO – 23%, DIS +7% (AFTER THE BELL!), F +6% & FOXA – 6.8%, PYPL is down 10% in the pre-mkt…. all the moves clearly driven by what these companies reported and what investors thought of those reports.

US futures are lower…Dow -40, S&P’s -8, Nasdaq -30 and the Russell -7.

Today brings the $25 billion -30 yr. auction….and that will be the test of the week…. the 3 and 10 yr. note auctions were successful – but they are shorter duration…. – but the longer maturity (30 years) bond auction could prove to be a bit more difficult….

Just to so you understand…..Bonds are ‘long term securities and typically mature in 20+ years….while Notes are short or medium term securities and mature in 2, 3, 5, 7 & 10 years and T-Bills have a maturity of 1 yr. or less (it’s like having cash) and that is currently yielding 4.8% but allows you to get in or out without penalty….the 12 month CD is yielding 5.25% but locks you in for the 12 months. ……..So when you hear someone say they are buying the short end of the market they would be buying the notes…if they are buying the long end of the market – they are buying the bonds and if they are buying bills –  they are essentially just parking it in cash.  This morning – the 30 yr. bond is yielding 4.33% – if demand is strong then we will see that yield decline because investors will pay up, and if it is weak – the 30 yields will spike because investors will bid lower.

Earnings this morning include – ICE, TPX, THC, BTU (a fan favorite –watch this one), HSY, HOG, BAX, COP, DUK PM & RL.

Oil is trading at $74.60 – up 70 cts…. and is once again kissing resistance at $75…. Global crude inventories have seen a steady drawn down – think US, Europe, Singapore, China and Japan…. Inventories in container ships has declined by 55 million barrels, disruption in the RED Sea only adding to the argument.   And btw – the global economic data is ‘improving’ and that would suggest that demand will remain strong…. Hello? Oil analyst – Natasha Kaneva of JPM fame predicts that oil is set to rise by $10 before the end of April….and if that is true – then WTI will be trading within the ‘acceptable threshold’ for the Saudi’s…. They prefer it to have a 90 handle, but 85 is better than 65 – capisce? 

In addition – the ceasefire talks between Israel and Hamas has been rejected by Israel and that is keeping tensions high…. along with the EIA report that saw a stronger than expected draw DOWN in gasoline stockpiles here in the US…. Analysts were looking for a 140k barrel build – got a 3.15 million barrel draw down – and that suggests demand is alive and well.  If we pierce $75 – then we hit the $77 trendline resistance quickly.

Gold continues to trade in the $2040/$2055 ‘tight’ range…. this morning it is down $8 at $2,044 and will remain stable until we get more clarity on today’s 30 yr. bond auction……A strong auction will give gold a boost, while a weak auction will put a bit more pressure on it.  We remain in a wider range of $2030/$2100 and I see no reason for it to break out of that range unless we get hit with something out of left field.

European markets are a bit higher……Markets across the region up about 0.3%.  Investors there digesting a slew of earnings reports as well…..Shares of Maersk – the Danish shipping giant – are down 17% after halting their share repurchase program – pointing to the high uncertainty – caused by the Hootie’s in the RED Sea……But markets there are also held captive because of the uncertainty over what the ECB is about to do next….and while traders there are also screaming about rate cuts – Christine Lagarde has been offering cautious guidance – as she tries to change the narrative to ‘slow down boys – what’s the rush?’.  

And if you have not been paying attention – Another Chicago hospital is under cyberattack…. shutting down Chicago’s Childrens Hospital network for more than a week…. attacks on the nation’s health infrastructure have become all too common – with the hackers demanding millions in payment (think bitcoins) or risk the release of patient information…. – Cybersecurity has not (apparently) been a priority in the healthcare sector….…. Expect to hear more about how the players – CRWD, PANW, FTNT (and potentially new players) can fill this void. CIBR is up 37% in 12 months and is up 6% ytd and likely going higher…. CRWD +177% in 12 months and 24% ytd, PANW is up 120% in 12 months and 24% ytd….

The S&P closed at 4995.06 – up 41 pts…… S&P 5000 is calling…. who or what algo will be responsible for that ‘historic tick’?  And yes, I still think it’s toppy, but you can’t fight the momentum – which means do not throw in the towel and go all in…. but it does mean – be strategic in your picks…. Look at what is underperforming, ask why and then make a decision….do not just join the herd….

My gut says that once we breach 5000, there will be a short celebration – everyone will pat themselves on the back and tell you what a great investor they are…and then BOOM…. the bottom falls out (just a little – like 5 -8%) ….and stocks retreat…. something I want to see happen….and you should too! 

Talk to your advisor, if you are concerned or better yet – talk to me!

Take good care.

kpolcari@slatestone.com

Sources:  Bloomberg, CNBC, Reuters, Wall Street Journal

Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment.  The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.

The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions, which may not necessarily align with our firm’s standpoint.

While considerable effort has been invested to ensure the accuracy and dependability of the information presented, we must clarify that we cannot guarantee the accuracy of third-party information. Our usual sources for third-party data include channels such as Bloomberg.

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.

Lemon Chicken

This is a great dish if you are planning a party….it is easy to prepare and goes along way.  You can make it ahead of time and just heat it up in the oven when ready.  Served with another entree in a buffet style along with a large mixed green salad, Rice Pilaf and some sautéed broccolini – it makes a great presentation.

Ingredients

Boneless/skinless chicken breast/thighs

Lemons, Butter, Olive Oil, Beef Broth, Flour, s&p

Start with boneless/skinless breasts, and thighs.  rinse, drain and pat dry….

Slice the lemons into 1/8 in slices – set aside.

Season the flour with s&p.

Cut the chicken breasts/thighs into bite size pieces – dredge in seasoned flour and set aside. 

Next – in a large sauté pan – melt the butter and a bit of olive oil to prevent the butter from burning – make sure it is hot before adding chicken. 

Add enough to fill the pan – but do not overcrowd.  Keep the heat on med high/high.  brown the chicken all over….it will take on a golden hue…. should be about 5 mins or so……

Next add enough beef broth to bathe the chicken pieces – lay lemon slices on top of chicken and cover.  Turn heat to med and allow the lemon and broth to permeate the chicken.  About 3 / 5 mins more.  Keep your eye on it and turn the chicken so that it does not burn.  The broth will begin to thicken so make sure to not overcook.  

Transfer to a baking dish and repeat process for the balance of the chicken.  You can cover and keep warm in the oven until complete.

You can serve this as a main dish or like I said – you can use it on a buffet table for a Sunday Brunch.

Buon Appetito.