Things you need to know.
– Labor Day Weekend is here….
– Stocks brush off any of the NVDA negatives (not that there were any!)
– Oil rallies on unrest in Libya, Gold and Bonds Steady.
– Try the Mac & Cheese
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It is Friday August 30th – the final day of trading for the month and while it is not the end of the qtr. – you can expect some end of month window dressing – not much but some…. Nothing to get all worked up about…Now –
NVDA who? Because that’s what it felt like…the disaster (selling in the broader mkt) that some were waiting for never happened….and while I (like many) think the recent earnings report was just fine, there are those that are just not happy and looking for the negatives….hitting the sell button to make their point….By the end of the day – NVDA lost 6.4% and if you add in the 2.4% loss from Wednesday – you get close to that 10% move that the options market was suggesting…..funny how that works no? In any event – while NVDA did blow the doors off, there are some cost and production issues that they need to deal with – but in the end – the fact is that the demand for these chips is ‘off the charts. Period.
Yesterday Cheryl Casone asked me about investors who want to get involved in NVDA – those that are just starting out…How do they do it? Well, in this case – slow and steady will win the race…start by ‘dipping your toes in the water’ and then watch it – add more as it trades over the coming weeks, months…. – using DCA (Dollar Cost Averaging) is the way to go….…. remember – this is a marathon, not a sprint…
https://video.foxbusiness.com/v/6361215975112
For me – this is like Apple or IBM, JNJ, MSFT, JPM, AMZN etc…you buy it and hold it – Period! NVDA is and will continue to be a ‘game changer’.
At the end of the day – The Dow ADDED 245 pts or 0.6% (NVDA is not a Dow stock), the S&P ended the day flat, the Nasdaq lost 40 pts (NVDA is in both of those indexes), the Russell added 15 pts (no NVDA), the Transports up 2 pts ( no NVDA) and the Equal Weighted S&P up 27 pts…and here – while NVDA is in this index – it is the ‘equal weighted’ feature that took the sting out!
So – for those just starting out that want to get in – yesterday or today is a good time to get going…The stock is off ~8% from its most recent high and is down ~16% off the June high of $140…Like I said – ‘Dip your toes’….don’t go all in on the first day….allocate X while you build up the position to reflect the percentage of your portfolio that YOU want. Remember – that means – what is your risk profile? What is your age? How much time are we talking about because time makes a difference….
Eco data yesterday – revealed that GDP was revised upwards – suggesting an even stronger US economy…coming in at 3% up from 2.8%…. Personal Consumption also stronger at +2.9% vs. the expected 2.2%. Retail inventories rose by 0.8% vs. the expected 0.5% – which means there is more inventory that needs to go…which means get ready for the sales…because either retailers misjudged demand, or demand is slowing or preferences are changing…but in any case – if this stuff doesn’t get sold at regular prices it’s gonna get shipped off to TJX, or ROST or BURL to get marked down and off the shelves…The bigger number yesterday was Pending Home Sales…and they plunged m/m…falling 5.5% vs. the +0.2% expectation…. While pending sales y/y plummeted by 4.6% vs. the expected decline of 2%. (You can assume that that is a positive argument for cutting rates).
Eco data today includes Personal Income and Personal Spending but the BIG number today is the FED’s favored inflation gauge…the PCE report…..(Personal Consumption Expenditures) – measures the avg changes in the price of goods and services over time….It is a KEY indicator used by the FED to track inflation….and like I said yesterday – it is expected to by up by 0.1% over last months read…nothing to worry about – it will not change the narrative at all…unless it surprises significantly to the upside….(not happening).
Oil rose by 2% on Thursday – this after testing long term support at $75.88 – News of unrest in Libya being cited as one of the reasons for the gains… The country’s output was slashed by 500k barrels/day and all the export terminals on the eastern part of the country were closed – amid an internal fight for control of the country’s central bank……the fear is that the cut could swell to 1 mil barrels/day… This morning oil is trading at $76.10 – with support at $75.90 and resistance at $77.10.
Gold continues to do nothing – churning in line at $2557/oz….Gold has been in this very tight range for 3 weeks now as it kisses the high…..remember – lower rates will help support gold and new inflation expectations that will result from either party will also see a flight to safety into gold.
US futures are up…. Dow futures+ 62 (Dow making new highs), the S&P is up 21, the Nasdaq is up 122 pts (NVDA quoted up $2 at $119.50/$120) while the Russell is up 10.
European markets are also higher…. up about 0.5% across the board….as they too are making record highs…. all on the idea of lower rates and moderating inflation….
Again, it is the final day of August – summer is coming to an end, volumes will remain subdued…It’s a long weekend – Go and enjoy it….
The S&P closed at 5591. The 8:30 announcement is about it for the day…Once that is out – it’s bye, bye for anyone left. We will have to wait until next week – after Labor Day to get more of a sense of how investors are shaping up going into the next FED meeting and the Presidential election….
Expect to hear all kinds of commentary about last night’s CNN taped (and scripted/edited) intv with Kammy and Timmy. She says her values have not changed – that’s all you need to know.
In the end – it is important to always take a ‘balanced’ approach to long term investing…building a strong, well diversified portfolio takes time…. Give me a call to discuss.
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.
Not your Kid’s Mac & Cheese!
It’s the long holiday weekend – serve up some comfort food – something that makes you feel warm and fuzzy…. – and what is better than a plate of Mac and Cheese….
For this you need: 2 c of whole milk, water, 1 lb. of elbow macaroni, 8 oz of shredded American cheese, butter, 1 tsp of Dijon mustard, 7 oz of gruyere cheese – shredded, 2/3 c of breadcrumbs, olive oil, s&p and fresh grated Parmegiana cheese.
Turn the oven to broil – so that it’s ready for you.
Bring 3 ½ cups of salted water to a boil – Add the milk. Now add the macaroni and reduce heat to medium low and cook for about 6 mins…. or until aldente… (You do not want mushy pasta). The pasta should suck up the water and milk…. (If it doesn’t – then you used to much, but just strain it off)
When cooked – add the shredded American cheese and mustard – stir constantly until cheese melts – should be no more than 1 min or so…. Take it off the heat and now add in the shredded Gruyere mix just to distribute – and then put it in a buttered Pyrex dish.
In the meantime – add the breadcrumbs to a frying pan and a dollop of butter – cook over med heat until the butter melts – remove from the heat and add the fresh grated parmegiana cheese…….now spread the breadcrumbs over the mac and cheese and place under the broiler (middle rack) – just long enough to toast the breadcrumbs…. Remove and serve…. Yum.
Buon Appetito.
