Things you need to know
- It’s a tangled web we weave
- Stocks churned as it digested the recent move higher
- Nancy flies to Asia – will she stop in Taiwan and if so, what will be Xi Xi’s response?
- Joey takes out an Al Qaeda operative – hoping to change the narrative
- Treasury’s remain inverted, Oil a bit lower on demand concerns and Gold a bit higher on inflation and geo-political concerns.
- Try the Grilled Jack Thighs
Stocks bobbed and weaved all day yesterday…. trading around the flat line ending the day slightly lower as investors, traders and algo’s continue trying to figure it out as the new month began. Eco data suggesting that the state of manufacturing in the US remains in expansionary territory while construction spending declined more than expected. ISM prices paid declined and that suggests that the pressure is waning…. but stocks couldn’t get out of their way.
On the international geo-political front – the conversation continues over what exactly Nancy Pelosi and her delegation is doing…. What is she expecting to accomplish by visiting Taiwan? And what does the ‘schism’ between the WH, and the House Speaker say about the state of the union within the administration and the democratic party? I mean, it might make more sense if we had a split in the administration…. the GOP controlling one branch while the DNC controlled the other branch – but the DNC controls both branches, so how do you explain it? Is Nancy operating in a vacuum? Does the WH really not have anything to say? Seems a bit odd to me, but I don’t live at 1600 Pennsylvania Avenue.
,China making it clear that they are not happy with her plans, threatening all kinds of responses, the WH saying that nothing has changed between the two countries and that the US views Taiwan as part of greater China and respects the ‘one China policy’…. Really? So defending Taiwan in the event of a military takeover – why? And so, the question now is will the tinderbox go up in flames or not? China has now put this in the spotlight, they have threatened retaliation and if Pelosi doesn’t go forward (now) it appears that she (and the US by default) have caved to a communist regime – so again – What exactly is she trying to accomplish?
At the end of the day – the Dow gave back 46 pts, the S&P down 11 pts, the Nasdaq lost 21 pts, the Russell fell 2 and the Transports rose by 25 pts.
Treasury yields reman inverted, so nothing new to report there and oil continues to retreat…..this morning oil is down 50 cts/barrel at $93.40….the recent weakness in oil being credited to a variety of weak manufacturing PMI’s seen around the world – China being the latest country to report weakness (the US is not in that camp – yesterday’s reports remain in expansionary territory). In addition – there is concern that supplies will remain tight, and that OPEC will decide to not up production in September – when they meet tomorrow – all while fears of a recession continue. Oil remains in the $88/$100 trading range. Further weakness will test the trendline support at $88 – if that does not hold – the commodity would potentially hit a void – leaving it vulnerable to test the $80 range. But let’s not get excited just yet….
And gold – continues to inch higher – this morning it is up $2.60/oz to $1790 – up 6% since mid-July when talk of a recession took on more meaning and the global geo-political situation heats up. Remember – Gold is considered both an inflation hedge, a recession hedge and a store of value when political tensions heat up. …..and while the FED and the administration kept telling us not to worry all spring – Gold declined in value – falling 17% as it wanted to believe that the FED could navigate a soft landing…..….but the recent moves higher are now telling a different story….Gold bugs are not buying the narrative and so they are buying gold to protect and insulate themselves from what could be more a ‘harder’ landing while investors are buying gold ahead of rising geo-political tensions.
And then the announcement out of left field hits the tape at 7 pm last night……..the US succeeded in taking out an Al Qaeda operative in downtown Kabul (via a drone strike) – the WH now hoping that this news takes the pressure off of Pelosi, takes the pressure off of the inflation/recession story and takes the pressure off of the latest Democratic Schumer/Manchin Spending Spree. Arizona Senator Kirsten Sinema remaining ‘hush’ on the $700 billion spending bill that has more than $325 billion worth of new taxes buried deep within. Expect to hear about this all week – as Schumer has to get this passed by Friday – (think summer vacation for Capitol Hill that takes them out of DC until after Labor Day now). Just a side not – ‘the Al Qaeda announcement’ did not redirect the narrative.
Earnings reports continued and yesterday 15 of the 20 reports beat the estimates (75%) – so that was a slight improvement over the recent history…. Today expect at least 20 more and today’s names include CAT, DD, TAP, JBLU, UBER, KKR, MRO, GEO, MAR and the list goes on….
Eco data is all about the 11 million jobs that remain unfilled and have remained unfilled for months now….
Global markets are all lower……partly the US/China drama, partly because of he Russia/Ukraine war, partly because of the upcoming OPEC meeting, partly because of concerns over how Europe is going to keep warm this winter, partly because of the latest covid lockdowns in China, partly because of the global slowdown, partly because of the coming recession, partly because of Neely Kashkari’s latest FED comments, partly because of a tiring consumer, blah, blah, blah….. – markets are now all focusing on all the negatives and while it does not feel really anxious – another negative headline could be enough to cause markets to become a bit more skittish. But in the end – it is what it is and while some of these issues will cause short term chaos, they won’t in the long-term price stocks…. which doesn’t mean it won’t get volatile, it will, so get ready.
Dow futures down 156 pts, the S&P’s down 30, the Nasdaq down 105 and the Russell down 11. Stocks in Asia also lower as the tension builds…. China lost 2%, Hong Kong down 2.4%, Taiwan down 1.6%, Japan down 1.5% and South Korea down 0.5%. Australia was the only region that notched a slight gain of 0.1%. European markets are also off to a weaker start – the UK – 0.1%, CAC 40 DOWN 0.6%, DAX – 0.8%, EUROSTOXX -0.9%, SPAIN FLAT, and ITALY DOWN 0.8%.
The S&P closed at 4118 – after trading at a low of 4096 and a high of 4144…..Recall, I thought that if we did not close at or above 4125 then stocks would trade lower…..3925 would be the downside target, but if Nancy lands in Taiwan at 10:20 am EST today that could all change…..or maybe not – Maybe Xi Xi, will decide to punish Taiwan after Nancy leaves, leaving the US to respond then. Oh boy, it’s all a tangled web we weave. Remember – Xi Xi needs to be seen as tough here. He is up for re-appointment in November – so this is NOT the time for him to appear weak at all……and all Nancy (and her delegation) did was ignite a fire – for what?
In any event – keep your eyes focused on the end game…. Stick to the plan.
Take Good Care
Chief Market Strategist
kpolcari@slatestone.com
Grilled Jack Thighs
You will need: Chicken Thighs (I prefer on the bone), but you can use boneless. brushed lightly with peanut oil and seasoned with s&p.
Season the chicken with s&p – set aside.
For the Sauce – mix: 1/2 c of soy sauce, 4 tablespoons vinegar, 1/2 c of Jack (Daniels), 1/2 c of brown sugar, 3 scallions, grated ginger – like a tblspn, 4 garlic cloves – smashed and chopped. Chop the scallions and mix all the sauce ingredients together and set aside. Taste – make any small adjustments.
If you do this on the grill, then – heat the grill to high…. add chicken – careful not to burn – cook about 4 mins on each side – or until lightly browned – not burned…. remove and place in a metal roasting pan.
Turn heat down to low. Add the sauce to the pan and return to the grill (leaving the chicken in the pan on the grill – capisce?) – stirring to coat the chicken pieces well. Continue to cook until the sauce is reduced to all but a glaze on the chicken. Remove and serve.
Enjoy.
