Things You Need to Know
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Thank you and God Bless America.
– Try the Bucatini
And it’s game on! Prediction markets are now betting that the shutdown will end by November 15th – the odds spiking to ~92% – that’s up from ~25% last week….
And stocks surged! The VIX collapses – falling 7.7%. Tech valuations once again a distant memory as the algo’s, traders and some investors took that sector up better than 2%! As usual – when Wall St accentuates the positives and eliminates the negatives traders (and algo’s) piled into the ‘riskier’ end of the markets – going full RISK ON.
Look at what happened to Bitcoin – they took 20% out of it over 30 days – from early October to early November – shaking the branches – causing the weak hands to bail and then they took it back up by 9% in just 7 days…
Same thing with equities:
S&P 500 down 4% in six days → up 3% in two.
Nasdaq down 6% in three days → up 4% in two.
Mag 7 down 6.3% → up 5.6% in just five days.
And so – you ask – where are we? Funny enough – we are right where we started…. Look at your statement – from 2 weeks ago to yesterday – You are in the same place – Personally – my account – after all of this drama – is off by 0.0005%. So, what’s with the angst?
Now, if you reacted and traded your ‘emotions’ and hit the sell button when it felt uncomfortable and then hit the buy button when it settled down – YOU are NOT in the same place and you are most likely in a worse position – because you are trying to time the market – you are trying to be a trader, when in fact you are a long term investor. This is why – having an advisor, having a plan, buying great stocks with great businesses that generate real profits and offer robust guidance always wins. Which doesn’t mean you can’t ‘play around the edges’ it just means – leave the core alone!
At the end of the day – the Dow added 380 pts or 0.8%, the S&P up 103 or 1.5%, the Nasdaq up 522 or 2.3%, the Russell gained 22 pts or 0.95%, the Transports lost 51 pts or 0.3%, the Equal Weight S&P added 40 pts or 0.5% while the Mag 7 gained 930 pts or 2.8%!
In any event – stocks ran because the Senate moved to end the longest-ever gov’t shutdown – removing (at least temporarily) significant economic headwinds. Remember – an end to this drama means that we will once again be getting all the economic data and that will bring more clarity about the state of the union and then what the FED might or might not do. Now – it is clear – unless we get something unexpected – that the FED is going to cut rates once again in December – this after JJ told us that ‘nothing was cast in stone’ and that no one should ‘assume’ anything.
Clearly the algo’s are not paying attention – they are discounting anything that JJ says – so the risk is, if JJ keeps his word and does nothing in December, then watch as the algo’s go into ‘stroke mode’. But again, the prediction markets are pricing in a 67% chance of a cut and that means that there is a 30% chance of no cut and a 0% chance of a rate increase. Now, while I am in the camp that they should do nothing – Remember – I do not have a vote!
Of the 11 S&P sectors – only 3 ended the day lower…. Consumer Staples lost 0.4% (and that makes sense – who wants boring staple stocks when it’s RISK ON?), Real Estate and Utilities were insignificantly lower down 0.07% and 0.03% respectively.
On the upside – Yes, it was TECH that led the way – up 2.6%, Consumer Discretionary + 1.3%, Communications +1%, Energy +0.9%, Basic Materials +0.9%, Healthcare +0.8%, Industrials + 0.6% while Financials ended up 0.4%.
Down the list we saw strength in Retail + 0.4%, the Growth Trade (SPYG) + 2.3%, Metals & Miners + 1.8%, Cyber + 1.8%, Semi’s +2.6%, Aerospace & Defense + 1%, Next Gen Internet (ARKW) + 2.8%, the SPXL (triple levered long) + 4.55%.
Clearly the contra trades did not have a good day. The SH – 1.5%, PSQ – 2.2%, DOG – 0.8%, the VIXY -5.2% while the SPXS (triple levered short) lost 4.6%.
Bonds ended flat – the TLT did nothing while the TLH lost 0.1%. Yields did nothing – the 10 yr is yielding 4.11% and the 30 yr is yielding 4.7%. 30 yr mortgages are still hovering around 6.2%.
Oil pushed higher – taking $60 back to end the day at $60.14 and this morning it is up another 20 cts at $60.34. Nothing new here -we remain in the $55/$62 trading range.
Gold SURGED higher…..gaining $114 or 2.8% ending the day at $4,115. Guess why? Because the market is anticipating MORE rate cuts following the Senate action yesterday. Period. Gold remains in the $3900 (trendline)/ $4400 trading range.
The idea for the surge is that when the gov’t goes back to work and we get all the data – it will show a ‘worsening economy’ rather than a strong one and that will give the FED (JJ) the green light to CUT…. Now, again, I am not in that worsening economy camp – and here’s why?
We have had a very strong earnings season, 83% of companies are beating on the top and bottom lines and forward guidance has been ‘robust’. AI is changing the world and therefore we must change the way we think about the world. Inflation is waning…. – appearing to be settling in at 3% – a level that the FED has made clear it is not fighting…because if it were – they would not be cutting rates. In fact – you can argue that the FED is willing to accept higher inflation in the months ahead – because if they keep cutting that is exactly what will happen. But hey, I’m a boomer – what do I know?
Either way – In your portfolio – you need to hedge/manage risk, look for stocks that can withstand consumer stress, stay diversified, own high quality names, always keep ‘some’ cash available and keep tabs on whether problems stay contained or become more systemic.
US futures are slightly lower – again you can’t be surprised. Dow futures down 2, S&P’s down 12, Nasdaq down 90 and the Russell is down 3. NVDA under pressure after news hits the tape that Softbank has sold ALL of its shares in the name…. Raising some $5.8 billion and that is causing some investors to get concerned. What does Masayoshi Son know?
Ok – listen – The sale aligns with SoftBank’s strategic pivot toward bigger AI bets (notably with OpenAI) rather than simply holding large positions in the chipmaker. SoftBank cited that the sale was “nothing to do with Nvidia itself” but about freeing up capital for large new investments.
By selling at or near a valuation peak (for them), they locked in gains and redeployed the cash into what THEY perceive as higher-growth opportunities in the AI infrastructure ecosystem.
What it isn’t is an indictment of NVDA’s business. The company remains a core player in AI.
It is a portfolio re-allocation, not a sign that the game is over for NVDA. They’re simply doubling down on the AI platform play (and infrastructure) rather than staying in one big chip bet. For you – it reminds us that even huge players will monetize winners and redeploy. (Uncle Warren does it all the time and they scream and yell when he does it too). Stick to the fundamentals: great businesses, strong management, robust cash flows. Unless you have an outsized position in one name that can cause you harm – there is nothing to worry about. Talk to your advisor!
European markets are higher as the earnings season rolls on. No eco data today to speak of and they are watching the US gov’t negotiations with a keen eye.
The S&P closed at 6,832 – up 103 pts. We are now back in the 6800 century, but we remain in the 6670/6900 trading range. While the excitement is ‘exciting’ it does not suggest it’s all a bed of roses from here. Do not be surprised to see us test lower once this euphoria ends. Watch for the eco data, listen to what JJ says about why they are cutting and then make a decision about what that means or not to your portfolio. And all that means is – remain disciplined, talk to your advisor if you are concerned, do not chase – stick to the plan.
Call me at 561-931-0190 – to give you a no obligation review of your portfolio. It’s all about risk management – let me help you assess the risk of the portfolio vs. the risk you are willing to take.
Countdown
17 days until Official Black Friday but only 9 days (11/20) until the Pre-Black Friday sales begin.
44 days until Christmas
50 days until the ball drops in Times Square
Take good care,
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.
Bucatini in a Roasted Cherry Tomato/Ricotta Sauce.
This is simple and so delish, and you can make an all-in-one Pyrex dish.
For this you need: 2 containers of cherry tomatoes (mix up the colors), shallots, Vidalia onion, plenty of garlic, fresh ricotta, fresh grated parmegiana, and of course the bucatini.
Begin by preheating your oven to 375 degrees.
Slice the tomatoes in half, peel and slice the shallots and onion, slice the garlic – now add all of that into a large Pyrex baking dish. Season with s&p and a splash of olive oil. Place in the oven uncovered – roast for 40 mins or so. Keep turning the tomatoes every 10 mins or so. Remove when done.
Now – bring a pot of salted water to a rolling boil and add in the pasta.
When the pasta is cooked – 8 mins or so, add directly to the Pyrex dish and mix. Now put 2 tablespoons of ricotta directly into the dish. Allow the hot pasta and hot tomatoes to melt the ricotta and coat the pasta and tomatoes. Toss in a handful of fresh parmegiana and serve in warm bowls.
Buon Appetito!