Things you need to know.
– It’s Friday – just 6 hours until the weekend.
– Stocks continue to push higher on the idea that 50 bps is still a possibility.
– Bonds up, yields down, Oil up and Gold makes a new high.
– Futures are up, but it is Friday the 13th!
– Try the Chicken, Sausage and Sweet Vinegar Peppers.
If you want to learn more about Slatestone Wealth and how we can assist you in creating a plan to reach your goals – Click on this link to take you to our contact page – Put KP in the message box and I will give you a call.
https://slatestone.com/contact-us/
The rally continues…. can you say $1.3 trillion? – Because that is what happened this week…. The S&P has gained $1.3 trillion in value…. So much for that sell off! (Although today is Friday the 13th for those that suffer from Triskaidekaphobia)
Every major S&P group advanced…Communications gained 1.9% and was by far the winner, Consumer Discretionary gained 1.21% and then behind that we saw 1% moves in Energy & Basic Materials and then the other sectors fell in line….Tech +0.8%, Industrials +0.75%, Consumer Staples 0.6%, Healthcare + 0.35%, while Utilities and Financials carried up the rear – adding 0.2%.
At the end of the day – the Dow gained 235 pts or 0.6%, the S&P up 40 or 0.75%, the Nasdaq up 175 pts or 1%, the Russell added 26 pts or 1.25%, the Transports gained 90 pts or 0.6% and the Equal Weighted S&P added 40 pts or 0.6%.
The PPI – inflation at the Producer Level – surprised us just a bit m/m – coming in 0.1% greater than the estimate while the y/y numbers came in spot on, in addition unemployment claims ticked a tiny bit higher (more about that below) ……. So now what? Well, for me it does not change the narrative at all, but for the algo’s and traders it apparently does…..….and so, the market rallied on the idea that maybe next week we will get a 50 bps cut…..(they just won’t let go of that….). Now, don’t get me wrong – I love when stocks go up…. makes me feel all warm and cozy…. but as I told you – I do not believe 50 is in the cards and therefore ‘I do not believe the volatility is over’….
Which doesn’t mean that you should be selling your portfolio, it just means remain cautious with what and when you’re adding….…New money will sit in cash until you put it to work…. –because I think we still have another leg down….and guess what? If we don’t that will become clear…. And then we can revisit and reevaluate – remember, you are invested, so you are participating in any rally that takes place. Now, if you are just starting out that’s different – you have to jump in to start the process…. Again, give me a call to discuss…
Here is the link to my appearance with Charles Payne yesterday – where we discussed this very issue.
https://video.foxbusiness.com/v/6361890378112
Bonds fell sending yields up…. the TLT down 0.5% while the TLH gave up 0.4%…. the 2 yr. bond is now yielding 3.658% while the 10 yr. is yielding 3.683%. Today is the 7th day of being un-inverted – and still no recession….
Oil gained 2.8% leaving it at $69.18 and this morning – it is up again…. trading at $69.45. It is the ongoing Hurricane Francine story…that has shut down 40% of the production along the gulf coast… (this is temporary….) so once it passes – it will be all about how China demand is slowing and how the US economy is slowing and how non-OPEC producers are flooding the market with oil – blah, blah, blah…because those were the arguments last week……So, you can’t tell me that all of that has changed in one week…. In any event. – oil should hit resistance at about $73.50 (and that’s not the trendline), it’s the August lows – the trendline is way up at $75…. So, stay tuned.
Gold surged by $44 or 1.8% to end the day at $2580 (a new closing high) and this morning it is making another new intraday high…up $17 at $2597 – let’s see where it closes…. – …. This after the ECB cut rates again by 25 bps (and indicated more to come) and after the PPI report supports lower rates in the US. Recall – lower rates cause the dollar to decline and that causes gold to rise. (inverse relationship – dollar down, gold up, dollar up, gold down)
And yesterday the Dollar lost 0.45% – on top of the 4.75% that is has lost off the July high. Gold on the other hand is up 10% during that same time frame. Capisce? It’s that inverse relationship again…
This morning – US futures are higher as the opening bell gets ready to ring…. Dow futures are + 50, the S&P’s up 10, the Nasdaq +19 while the Russell is up 14. All this as investors, traders and algo’s all bet on the size of next week’s rate cut….Now, let me be clear….it’s going to be 25 bps, BUT remember what I said at the top of the page….while the PPI ticked slightly higher, Initial jobless claims ticked up (think unemployment claims) and that is causing some traders to push the idea that a weakening labor market DEMANDS a bigger cut….Ok, cowboy – slow down…Initial jobless claims were 230k vs. the expected 226k…..That a difference of 4k claims – not 40k claims….And as stocks tick higher, bonds tick higher as well and that is sending yields lower once again….This morning the 2 yr. yield is down 6 bps at 3.57% while the 10 yr. is at 3.64%.
The S&P closed at 5595 up 41 pts… Next week brings us Retail Sales, Industrial Production and Capacity Utilization along with Housing Starts, Building Permits and Existing Home Sales. But the BIG event is Wednesday’s FOMC rate decision….so sit tight…. Remember – it’s not the 25-bps cut that everyone wants to hear, it’s what he says about the November meeting and beyond…. Will he leave the door open to a bigger cut or will he close it….He’d be foolish to close it, so I expect the same old commentary…..it’s all about the data….right now the data calls for slow and steady….but that could change!
In the final analysis – long term investors need to remain focused and balanced. Building a strong, well diversified portfolio takes time and commitment….
Tune into to Varney & Co at 9 am this morning…. I will be co-hosting the 9 am hour with Lauren Simonetti – Ashley Webster is anchoring as Stuart is taking the day off.
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.
Chicken, Sausage and Sweet Vinegar Peppers
You will need: Thighs (bone in/skin on), s&p, olive oil, sweet Italian sausage, Vinegar peppers, butter, garlic, white wine, chicken broth, marinated artichoke hearts and flour. Total time 1 hr… start to finish….
Preheat oven to 375 degrees – Preheat grill for cooking the sausages.
Season chicken pieces with s&p – heat up oil in frying pan – when hot – reduce heat to med/hi – now add chicken and brown on all sides – maybe 10 mins total. Now remove and place in a baking dish and put in the oven and continue to cook for about 30 mins….
Next – cook the sausage on the grill – careful not to burn…. maybe like 10 mins total…. remove from grill and let rest for 3 or 4 mins then cut into bite size pieces.
In the meantime – add the chopped garlic to frying pan (that still has the juices and oil from chicken) along with sliced vinegar peppers – sauté. Now add the sausage, a bit of butter and some white wine and reduce (5 mins) – next add chicken broth and the artichoke hearts…. sauté for another 5 – 8 mins…
Re-introduce the chicken to the frying pan and allow to simmer for 2 or 3 more mins.
Now serve on a large, warmed platter family style. Accompany with a large mixed salad and a green vegetable – maybe some sautéed broccolini.
Buon Appetito.
