Things you need to know
- What was all the panic about? Covid – That would be a mistake
- Policy decisions and macro data and company/industry news should be your drivers
- Global markets all higher today, but I think Santa is still in lockdown mode
- Treasury yields up, Oil up, Dollar up and the Vix is down.
- Try the Potato and Eggs – makes you feel all warm and cozy.
Good morning…. Time to wake up and make the donuts! Markets are up today, after the beating they took on Monday…. the angst and nervousness that was all over the place – supposedly due to omicron/delta/covid has been replaced by calm, cool and collected…. Asian mkts all up nicely, with Japan showing the greatest gains of +2%, Hong Kong +1%. China + 0.7%, ASX +0.8%, South Korea +1% and Taiwan +0.4%. European markets are taking it back as well…FTSE + 0.8%, France + 0.4%, Germany +0.7%, Eurostoxx 50 + 0.8%, Spain +1% and the Mother Country – Italy + 0.7%.
US futures are also ahead nicely…. Dow futures +245 pts or 0.7%, S&P’s up 34 or 0.7%, Nasdaq +139 pts or 0.8% and the Russell + 21 pt or 1%.
Now all of this happening after some investors/traders and algo’s all hit the SELL button after the weekend news that Omicron was ‘raging’ across the world, some described it as ‘spreading like wildfire’ causing all kinds of renewed concerns over lockdowns, rising case counts and overrun hospitals….toss in all of the stuff surrounding central bank ‘future’ action – think tightening and rising rates along with the failed Biden and progressive left agenda thanks to Joey Manchin and Kirsten Sinema and all you had was a Monday morning recipe for disaster……or at least that is what some investors thought – a disaster, while others saw it as an opportunity….in fact I was a buyer yesterday not a seller – because in my note I told you that Apple is still Apple, IBM is still IBM, NVDA is still NVDA etc.… – nothing has changed for me to change my opinion about why I own them….Was I going to sell my stock because others were in panic mode? Do you know me?
By the end of the day – yesterday – stocks were bruised and beaten up – but had recovered a bit from earlier in the day as many looked at the prices and thought to themselves – ‘What am I doing? Why am I selling this?’ If it’s because of covid – that would be a mistake, if it’s because you really believe that we are headed lower then ok – sell away….or maybe its just prudent risk management – and IF that is the case, I would suggest that you pull back and don’t sell into an already weakened mkt due to temporary panic…because – as usual, it will most likely be the wrong decision….but that is what makes a market….both buyers and sellers….at 4 pm yesterday the Dow ended down 430 pts or 1.2%, the S&P’s down 50 pts or 1.2%, Nasdaq – 188 pts or 1.2%, the Russell down 35 pts or 1.5% and the Transports down 245 pts or 1.5%.
And like I pointed out – global markets -which were all beaten up are all higher today….so if you sold your Apple on the low yesterday…at 10;25 am at $167.72 – because you thought the bottom was falling out – you’ll be paying at least $171 today to buy it back….There is something inherently wrong with that trade….as a long term investor that is exactly what you should not be doing….it’s about building a portfolio to weather the storm, not to collapse in the storm….Apple is part of your foundation, it’s not the porch that you attached to your home that could easily get ripped off in a storm. It is those names that you should be considering tossing out in the storm…. NOT your AAPL, MSFT, IBM, JPM, F etc.
Now if you in the 20 – 40 set – you should be going ALL IN on days like yesterday…..if your in the 40 – 60 (and healthy) you should be all in and if you’re in the 60 – 90 set…then you should be all in, but all in, in an appropriate portfolio that reflects where you are in the life cycle…..remember, investing is dynamic, it is exciting, but it should not be treated like you’re in Vegas if what you are trying to do is build long term wealth and longer term generational wealth. And if you are a day trader – then go for it…. whip it around, have fun, don’t trip….
This morning – global markets are higher…. all the covid concerns from yesterday are nothing but a memory today…. while policy stuff is still an issue and will be an issue for months to come and THAT is what you need to be focused on when making investment decisions…. not what is now an ENDEMIC….no longer a Pandemic (in my opinion). And while I do believe that we can expect more turbulence in the months ahead due to FED policy, inflation, interest rates, macro eco data, earnings and earnings guidance (which starts in less than 3 weeks) and the ongoing drama over BBB in DC – I am not suggesting that the bottom is falling out at all…..UNLESS the FED becomes so hawkish that he starts raising rates in larger increments – say 50 bps moves vs. the expected 25 bps moves….and raised them more than the expected 3 times in 2022….then THAT would be a reason to re-think your portfolio….or at least a reason to take off the ‘porch’ and focus on the foundation!
10 yr. treasuries are yielding 1.43% this morning….and that is up from the 1.38% yesterday…. Oil – which got slammed over the covid headlines yesterday – falling 2.1% is UP 1.7% this morning – trading at $69.81/barrel. The VIX which spiked higher by 27% early yesterday ended the day up 20% is now down 6% in the pre-mkt as the tone settles down. The dollar index holding steady at 96.49….and likely to go higher in the new year as interest rates rise…. rising interest rates will benefit the dollar – look for 98 to be the next level of resistance.
There is no eco data this morning to drive the action….tomorrow we will get Mortgage Apps, and final 3rd quarter GDP – exp of 2.1% along with Existing Home sales of +3% m/m, …later in the week – we will get the weekly stats, but NONE of this will really affect trading this week….as so many are now away from their desks and have closed up shop for the year. But before they left, they placed buy orders well below and sell orders well above just in case it gets ridiculous…That is called ‘taking advantage’ of the algo’s.
The S&P closed at 4568 – after trading as low as 4531……almost kissing trendline support at 4525. This morning the S&P looks to open at 4600 ish…. if futures hold. Remember – it is a holiday shortened week – anything can happen if you let the algo’s take control…. So do not make long term investment decisions based on these next two weeks…. unless of course they hammer good names – then ‘back up the truck’!
Remember you can text the word INVEST to 21000 on your cell phone to get my digital business card. Feel free to download it and send me off an email or text. Happy to engage and talk markets, planning, thoughts, concerns, and ideas.
You can follow me on Twitter and TikTok @kennypolcari and on IG @kennyp1961.
You can also find my daily videos on my YouTube channel – Kennypolcarimedia – My URL address here: https://www.youtube.com/user/kennypolcarimedia
Take Good Care
Chief Market Strategist, Consultant
kpolcari@slatestone.com
Potato &Eggs
After the move yesterday – many investors just want to find some comfort….and what better way than Potatoes & Eggs? This also makes a great Christmas morning breakfast dish….
For this you need: Eggs, potatoes, garlic, onion, s&p, butter, olive oil, fresh grated Parmegiana Cheese and if you prefer a pinch of Italian seasoning.
Preheat the broiler (oven) to high.
Peel a couple of russet potatoes and then slice – now toss into a pot of boiling water – bring the pot back to a boil and blanch for 3 – 5 mins…. Remove – strain and set aside.
In a large bowl – crack 6 to 8 eggs – Beat well – add a splash of whole milk (or 1/2 & 1/2), season with s&p (and if you like a pinch of the Italian seasoning). Add a handful of grated cheese. Mix well – set aside.
In a large oven safe frying pan – melt a dab of butter, add a squirt of olive oil and heat. Now add in chopped garlic and sauté. Next add some sliced onions and sauté – until soft and golden…. add back the potatoes and brown on both sides – sautéing for maybe 10 mins or so.
Next – pour the egg mixture into the pan and allow to set. Twirl the pan to allow the egg to spread and cook. Once the edges begin to pull away – place the pan into the oven under the broiler…. Watch as it quickly cooks the top of the “frittata”. Remove and slide onto a large serving platter – cut like a pizza.
Have toasted slices of Italian bread on the table for your guests to make a sandwich. Serve with Ice Cold whole milk.
Buon Appetito.
