Things you need to know.
– Did JJ just ‘tease’ us or did he send a ‘signal’?
– Alberto says – maybe we should slow down….
– Trump nominates Atkins – and Bitcoin Charges thru $100k.
– Dow pierces 45k, S&P kisses trendline resistance at 6080.
– OPEC+ is in a tangled web – what to do?
– Try the Bay Scallops – Feast of the 7 Fishes #2
JJ Powell ignites one fire when he tells us that –
“The economy is strong and it’s stronger than we thought it was going to be in September, when the Fed began reducing borrowing costs from a two-decade high. The labor market is better, and the downside risks appear to be less in the labor market.” And this can ‘afford’ the FED to be a bit more cautious as they try to find the neutral level – a level that neither stimulates nor restricts the economy.
In yesterday’s note I said –
“Everyone sitting on the edge of their seats as we await remarks by JJ hoping for clues on what’s next and hoping that he will actually take a stance and indicate that he supports a NO CUT decision. Which btw – I do not think would cause markets to implode…. I actually think that long term investors would prefer that the FED do nothing ahead of the passing of the torch on January 20th.”
And to add to that narrative was St. Louis Fed President Alberto – who said that ‘it may be time for policymakers to slow the pace of interest-rate cuts amid higher than desired inflation and declining concerns over the labor market’.
Hmmmmmm…. ‘Higher than desired inflation and declining concerns over the labor market’ – just let that marinate for a minute or two…. And then –
Trump ignites another fire when he nominated Paul Atkins – a crypto advocate (think cheerleader) – as the new SEC chair (after we kiss Gary goodbye) – sending Bitcoin charging thru $100k – this morning trading at $102,825. Extraordinary!
And of course – let’s not discount the continued ongoing excitement around the Mag 7 stocks – led by NVDA + 3.5% yesterday – taking the whole group up 65% ytd….NVDA + 193%, MSFT +16%, AMZN + 43%, GOOG + 24%, TSLA +44%, AAPL +26% & META + 73% – clearly we can see who is carrying the load….
In addition – we heard from MRVL + 23% and CRM + 11% after they reported exciting results driven by the ongoing boom in AI…. Are you seeing the common theme here?
And this caused investors to jump in…. or did it…. read on….
The Dow surged by 310 pts or 0.7% to pierce 45,000 – ending the day at 45,014, the S&P added 37 pts or 0.6% taking it within 14 pts of another century mark (6100), the Nasdaq jumped by 255 pts or 1.3% the Russell tacked on 10 pts or 0.4% while the Transports gave up 22 pts after giving up 355 pts on Tuesday – sounds good, right? Well, the Equal Weighted S&P ended the day flat – which tells us that the broader S&P was in fact WEAK – vs. what the indexes are telling us.
Remember the Equal Weight – means that every stock carries the same weight rather than the regular index that allows larger cap stocks to take control….which only means – pay attention to what is being said…if the Equal Weight is diverging that means investors are becoming just a bit more cautious – and that makes sense after the 5.5% surge higher since the election – with ZERO pullback….…. Which doesn’t mean you panic, it just means don’t get drawn into the excitement as if you are missing out….If you are invested – you are participating (as long as you are also invested in a plan)…so sit tight – you are NOT missing out.
And to add to the excitement – France (the country) was thrown into chaos yesterday after that vote of ‘No Confidence’ led to the collapse of that gov’t. The geo-political unrest though doing little in terms of causing widespread angst – which goes to my point that while geo-political issues can cause short term chaos it hardly ever causes long term damage. This morning the CAC 40 (French Index) is up 0.3% but it is the only market center in the Eurozone that is negative on the year – 2.4% ytd.
All this excitement caused investors to go shopping for bonds (which have been under pressure and are negative on the year) – taking the TLT up 1% and the TLH up 0.8%…. the 2-yr yield dropping by 5 bps to end the day at 4.12% while the 10-yr backed off by 6 bps – ending the day at 4.18%.
Oil prices continued thrashing around – trading as high as $70.51 (kissing the intermediate term trendline that became resistance) only to then back off and trade as low as $68.49 before closing at $68.54 – failing to hold the short term trendline at $68.70 (which should have been support). The confusion a direct result of the OPEC+ meeting taking place today in Vienna…where they face tough choices on how to stabilize the oil markets amid the conflicting headwinds. Do they extend the production cuts or not? Look, US and non-opec production is surging – so they have to be careful how that approach this in order to NOT lose control and influence over policy and prices – but that might just be too little too late. My sense is that we are going to see lower oil prices in the months ahead as they tackle 3 key themes:
Overproduction and internal discord among OPEC + members
US & non-OPEC production that is flooding the markets – and
Global demand weakness – (which I do not believe at all – again, it’s a simple SUPPLY/demand issue….) Supply is overwhelming demand – which doesn’t mean demand is weak…it just means there is massive supply – so why again, would prices rise?
In any event – hold onto your ‘dishdasha’ (that’s the traditional robe – the long ankle length robe – that Saudi men wear).
Gold continues to figure it out – as it awaits the Friday NFP report and next week’s CPI and PPI reports – just days ahead of the FOMC meeting.…. remaining well within the latest tight trading range of $2650/$2680. The triangle chart pattern is coming to a point that gold either surges up and thru $2680 -which would see gold trade to $2740 or it fails and breaches support at $2660…. taking it to $2600 ish….
Eco data today is all about the Challenger Job Cuts…. This report offers insights into workforce reductions across various industries and regions, serving as an economic indicator of employment trends and business sentiments. Key functions of the Challenger Job Cuts Report include:
Tracking Layoff Announcements, analyzing those results by region and identifying the reasons for those job losses. (think cost cutting, market conditions, technology advancements). It also monitors future ‘hiring intentions. In the end – economists, policymakers, and business leaders use this report to gauge the health of the labor market and to make informed decisions related to employment policies and economic strategies.
But the real focus is the NFP report…. let’s not kid ourselves….
And US futures are resting……Dow futures are down 6, S&P’s – 3, Nasdaq -25, while the Russell is -2. Street analysts all trying to figure out what JJ said…. Was he being hawkish or dovish? And as you can imagine – there is a wide range of interpretations…I am in the camp that the FED holds tight (at least that is what they should do) but there are those (Evercore) that are saying
“We view this as slightly hawkish, BUT stopping well short of challenging the market’s growing confidence that a December cut is the base case…”
this morning – FED fund futures still show a 70% chance of a rate cut… I think that’s nuts! To me, a December rate cut means it IS the inmates that are running the asylum!
European markets are mostly higher – the UK is the only one under a tiny bit of pressure down 0.05%. Spain is up 1.2%, Italy +0.8%, Eurozone + 0.5%, Germany + 0.4% and France + 0.25%. As noted, the current French gov’t has collapsed – but the Notre Dame is once again Paris’s crown jewel – set to officially re-open on December 8th – following extensive renovation after the April 2019 blaze that shocked the world. The collapse of the Macron gov’t should not cause you to change your European investment exposure…. Don’t overthink this….
The S&P closed at 6086 up 36 pts. What did I tell you last week? If you drew a trendline – it suggested upper resistance to be 6080 and I fully expected the ‘momo’ guys to push it there just because….and guess what? They did. What happens next? Anyone’s call, you know me – I am NOT chasing, nor am I selling either. New money is sitting in my gov’t mm fund earning 4.25% while I wait…. In the end – patience is a virtue.
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Take good care.
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Bay Scallops in Black Truffle Cream Sauce
Feast of the 7 Fishes – 2
For this you need: Bay scallops (the little ones), olive oil, butter, heavy cream, white wine, shallots, garlic, black truffle, white truffle oil, s&p, Brussels sprout leaves and fresh grated Parmegiana and Medium Shells (optional)
Ok – you can make this dish in 15 mins…. Put a pot of salt water to boil.
In a large sauté pan – begin with a ½ stick of butter and a splash of olive oil – turn up the heat to med. Now add in the sliced shallots and chopped garlic…sauté in the pan for 5 – 8 mins…. now – turn up the heat and add in the rinsed (dry) bay scallops – you want to hear them quickly. Do not overload the pan, you will draw out the heat and the scallops won’t sear. You have to do these steps.
If you are serving pasta – Add the pasta to the boiling water – stir.
Next – once the scallops are seared – turn the heat down to med and deglaze the pan with some white wine – allow it to steam off a bit – now add the heavy cream and shaved black truffle. Stir well. Now add in the white truffle oil – this is key – you DO NOT need much – it is very potent…add – mix, taste. If you need a bit more than do so…but go easy – do not overpower.
Now take the leaves of the Brussels sprouts (cut the bottom and the leaves fall off) and add to the pan – this will give a nice contrast in color. Season with s&p.
Taste the pasta – should be almost aldente…. strain – reserving a mugful of water. Add the pasta shells directly to the sauté pan – pour about ½ of the pasta water in the pan and mix well…. Taste and adjust if necessary. Next add a handful of the cheese and mix. You will notice that the shells capture the scallop and some of the cream sauce…. perfect.
Serve immediately. Enjoy your favorite white wine.
Buon Appetito
