Things you need to know.
– It is Jackson Hole day…. Do not expect a Jumbo announcement.
– Next week it’s all about NVDA.
– Kammy accepts her nomination.
– Labor Day is coming as so is market weakness.
– Try the Sea Bass.
Stocks pulled back ahead of JJ’s speech as investors brace for a ‘reality check’ in aisle 5. Governor Chrissy Waller kicks it off at 9:15 and then JJ enters stage left and takes his place at the podium in center stage at 10 am this morning, set to give what some are describing as his most important speech of his tenure as Fed Chair…. Investors that are expecting a ‘jumbo’ move are sure to be disappointed…….as FED officials signal that continued ‘slow, methodical’ approach…. But my readers will not be surprised – this is exactly what we have been discussing…. Like long term investing – Slow and Steady Wins the Race… We learned that as a child when ‘mom or dad’ read us that famous Aesop fable – ‘The Tortoise and the Hare’ (surely you don’t need me to recap – do you?)
The Dow lost 177 pts, the S&P gave up 50, the Nasdaq lost 300, the Russell down 20, the Transports gave back 105, while the Equal Weighted S&P lost 22 pts. The tech megacaps leading the way lower…
Remember – yesterday we discussed how traders and algos had taken stocks right back up to the ‘overbought’ trendline near the all-time highs – this after a two-week decline (July 15th – Aug 5th) that saw the S&P trade down 9.5% nearly testing long term trendline support at 5015. The low that day was 5116…. a level that many of us think will be tested again in the not-so-distant future….
Now while I think that the market will back off after JJ’s speech – because he will say what the market expects – no surprises…. but that may only be a short move…. (for now). Why?
Because next week (August 28th to be exact) brings us another KEY event….and you know what it is…. Can you say NVDA earnings? (Due out at 4:20 pm) Expectations are for CEO Jensen Huang to report 65 cts/share…. while revenue is expected to be $28.5 billion IN THE QTR – to be clear – that’s just 3 months – and if that is the case – it would be a 111% increase y/y. Now, I like many, expect them to just destroy it (I’m using that negative as a positive) ….and then continue to tell us how we are just at the very early stages of this AI revolution ….Nervous traders and algo’s took the stock down 35% between mid-June to early August and now those same traders have taken it back up 44% to end the day at $123.75. What the next move is, is anyone’s guess. All I know is I never wavered – NVDA is just one of those names that should be a part of everyone’s portfolio. But we can discuss that later….
Next week also brings us a host of eco data…..Durable goods, Richmond and Dallas FED surveys, 1st revision to 2nd qtr. GDP, Retail inventories, Pending Home Sales, Personal Income, Personal Spending – but the one that will keep everyone’s attention (at least everyone that is at their desk) will be the July PCE Price Index Report…This is the FED’s favored inflation gauge and it is expected to show an increase of 0.2% m/m and 2.6% y/y while the Core rate is up 0.2% m/m and 2.7% y/y. While they are ‘inline’ – they would be a 0.1% increase over last month’s read…. But remember – it is the end of August, volumes (especially next week) are expected to be lower thus the moves will be more exaggerated.
And then we have Labor Day, summer is over, and everyone is back to school and back to their desks….and that, my friends, is when I think we will see the market decline….to shake the branches a bit to see who falls out….
Long term investors should use any pullback as an opportunity to buy stocks that go on sale and that doesn’t mean buy them when they lose 3% or 4%….it means, let them come in – down 10% or 15% is nice entry point – to start your shopping spree.
Bond prices fell sending yields up….10 yr. yields are now 3.86% while the 2 yr. is 4%, while gov’t mm funds are still paying close to 5%.
Oil – is down 11% from the July high….we tested a low of $72.20 in early August – rallied back to $78.50 in mid-August and tested that $72 level again only 3 days ago… where it appears there is some support….This morning – oil is up 80 cts at $73.85 – this as an expected surplus is set to hit in the 4th qtr. IF OPEC+ goes ahead with their plan to increase output in October – which would send prices lower – something the Kingdom does not want to see. Remember – geo-political concerns in the mid-east and in Russia/Ukraine also continue to cause supply concerns but as of now – that has not resulted in any major disruptions nor any major price increases…… My sense is that oil is in the $72/$78 range for now.
Nothing new in Gold…it continues to trade in the broader $2500/$2600 range. Yesterday it traded as low as $2507 to end the day at $2520. This morning it is up $16 at $2536. All this as gold traders prepare for JJ’s speech.
US futures are surging higher ahead of Jackson Hole…. Dow futures +160, S&P +35, while the Nasdaq +170 pts and the Russell is +13. Traders and algo’s expecting something different…. they are expecting JJ to define the plan…. something he will not do…. but it is what it is…. Enjoy the ride, you are invested….it’s all good….just don’t get drawn into that FOMO trade…..You are not missing out at all….Keep you cash liquid, earning 5% in the gov’t mm fund….ready to pounce when the pullback occurs.
European markets are higher as well…. up about 0.7% across the board – ahead of all the speeches today. Investors there, like here, are expected to hear a lot about monetary policy and interest rates….and how that will impact both the ECB and the BoE.
The S&P closed at 5570 – down 50 pts… the focus today remains squarely on JJ. Next week it is all about NVDA…. So, sit back….and grab the popcorn.
Now last night – we saw Kammy accept her party’s nomination…. she gave a rousing speech, but what did she really say? She spoke as if Donny is the incumbent, and she is running against him…. I think she is running against JoJo – trying to distance herself from his administration…. although – not sure how successful that will be. She didn’t talk international policy, she didn’t talk China, Russia or Iran. She didn’t’ talk about her 25% tax on UNREALIZED gains – This is a key part of her plan, and you need to be sure you understand what it means. She didn’t talk about raising corporate tax rates, she didn’t talk about the border, but she did tell us that she will CUT taxes on the middle class. She is going to create an ‘opportunity’ economy for everyone….….Great…..I’m hoping that we find out more before we are expected to vote….and don’t forget early voting begins in 3 weeks…If you live in Pennsylvania – you can vote on September 16th, Minnesota or Virginia – you can cast a ballot as soon as September 20th….
Give me a call to discuss.
Take good care.
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Roasted Sea Bass in a Marsala Wine Sauce
Sea bass is a fish that you find in cold waters of the southern Atlantic/Pacific and other Southern Oceans (Indian). It feeds mostly on squid, shrimps, and other small fish and for itself is the delight of Whales, Elephant Seals and Octopus… It is a white flaky fish that is easy to prepare and can be combined with many ingredients to make the perfect presentation. Today’s meal is a roasted sea bass on a bed of Onions/Mushrooms
You will need: 1 lb. of sea bass, olive oil, butter, onion, Marsala Wine, Fresh wild mushrooms, Chicken stock, s&p, and chopped parsley for color.
Prepare by chopping the onion, slicing the mushrooms and chopping the parsley. Have all other ingredients out on the counter to ease the process of creating this dish…
Preheat the oven to 450 degrees – Do not put the fish in the oven until it has pre-heated to the proper temperature.
In a sauté pan – heat the olive oil and the chopped onion – cook until soft and translucent. Turn the heat to high to make the pan really hot – then remove the pan from heat and deglaze with 1/4 cup or so of Marsala Wine – you can use White wine if you prefer – but you will get a different flavor – just fyi. (I say remove the pan from the heat because if you use Marsala, the flame can easily ignite the wine and singe your face – reg white wine – no worries) When the wine has cooked off add the sliced mushrooms and about a tblsp of butter. Reduce heat to med and cook until tender.
Now add the chicken stock – maybe 1/2 cup or so… and s&p… let it cool down… just so it thickens a bit…
In another sauté pan heat up a bit more olive oil…season the sea bass with s&p and add to the pan skin side down for about 5 mins… you want the skin to be crispy… flip and cook for about 1 min – transfer to a baking dish and put in the pre-heated oven and roast for another 4 / 5 mins.
Warm the serving dishes and place a bed of the onion/mushroom mixture on the plate and then top with the pan roasted filet. Adorn with a bit of chopped parsley. You can serve this dish with herb/garlic wild rice and sautéed green beans. Complement with a chilled bottle of your favorite Verdicchio, light the candles, turn down the lights… and you are off to the races… like putty in your hands.
Buon Appetito.
