Things you need to know –
– The bears tried to crush ‘em, but the bulls are not having it
– Earnings, Earnings, Earnings….
– GDP, Consumer Consumption, Retail Inventories and New Home Sales all on the docket
– Oil is up, Inventories are down.
– Try the Pork Roast Stuffed w/ Provolone and Tuscan Herbs
So the bulls are not dead yet…..they were just waiting in the wings….ready to pounce on those bears that were using the Microsoft earnings report as an excuse to ‘sell the market’…..Recall that on Tuesday night – Microsoft reported what some thought were mixed (but better) results ……and in the moments after the report – traders took the stock UP in the post market session – but overnight to Wednesday morning – they all had a change of heart……they decided that the report was not all that they thought it was and so they sold it….and that cast a pall over the mood of the markets yesterday morning….US futures were weaker – and Microsoft was the culprit……and since it was the ‘first of the titans’ to report – they decided to use it as a guide for what was to come…..Suddenly investors/traders weren’t so confident ……….extrapolating its results across the board – making projections on all aspects of what the tech industry was about to report (think AAPL, GOOG, TSLA, IBM, AMZN)…..the stock which surged higher by 4% on the Tuesday post session was quoted down 2% or $5 in the premarket yesterday….causing me to say:
“If they get really carried away – I suppose we could see it trade down to $220 ish (November low) over the next couple of days….but I don’t think so….I am a buyer of MSFT on weakness.”
Well, they did succeed in taking it down to $230 by 9:55 am – which was a $12 decline or 5% of its value….and then boom….the bulls jumped out of the bushes and ambushed the bears….slaughtering them along the way….taking the stock to positive territory at 2:17 pm to a high of $243.30 – a $13 pt swing from low to high……before backing off a bit (readying to fight another day) ending the day at $240.61. This morning it is quoted up $1.50 at $241.40/$241.50. In fact – I was on with Liz Claman at 3 pm yesterday – and we discussed this very fact – click below to see it.
https://video.foxbusiness.com/v/6319248441112#sp=show-clips
And so it goes….so while stocks ended the day mixed – it was essentially a win…considering the beating they took right out of the gate. By 4 pm – the
Dow ended the day with a 9 pt gain, the S&P lost less than 1 pt, the Nasdaq ended the day lower by 21 pts or 0.2% after being down more than 260 pts or 2.4%….the Russell gained 5 pts and the Transports lost 160 pts.
It was another busy day of earnings….no macro data to speak of – Mortgage Apps which showed a 7% gain w/w….but that was not the driver. It was the 40 earnings reports we got that drove the action…and with 12 of them reporting losses – the leaves the trend at just below a 70% run rate for companies reporting a beat. We heard from T (b*), USB (m*), ADP (b), SF (m), GD (b), NDAQ (m), HES (b), ABT (b), KMB (b), BA (m), NEE (b), NSC (m), TSLA (b), IBM (b) WOLF (b) and the list goes on…
(*b – Beat, m – Miss)
And what this really showed was mixed results for the US economy – as these companies represent a range of industries – leaving the tug of war between the bulls and the bears – alive and well.
And then the bell rang, and the post market awaited reports from TSLA, IBM, WOLF, and a handful of others…but let’s not kid ourselves – the focus was squarely on TSLA and Big Blue (IBM for those too young to understand the reference). What were we about to hear and how would the algo’s react? Well, TSLA reported RECORD quarterly profits and revealed that the recent price cuts have fueled a surge in demand for a Tesla car – the algo’s went nuts in the moments post the report taking that stock up $10 or 7% to end the session at $154.75…..leaving TSLA up 52% ytd…..HELLO???? This morning it is quoted at $154.50/$155.
And then we got Big Blue – They beat as well….reporting $3.60/sh vs.$3.58/sh y/y…. Revenues of $16.69 billion was better than the estimates of $16.15 billion but ever so slightly below the $16.7 billion last year….Are you kidding me? They reported flat sales y/y as the strong dollar hurt their bottom line….(but this is ridiculous – the strong dollar is hurting every multinational company….so get off that soap box – that was a strong dollar does to companies that need to convert foreign currencies into dollars – it is NOT a surprise at all to the seasoned investor) They are also joining the industry in announcing a 1.4% RIF (reduction in force – think LAYOFFS) and that amounts to about 280,000 jobs…. The algo’s initially sent the stock up $5 to $145 and then had a change of heart taking it down to $137 – leaving it down 2% in the post trading session…. This morning the stock is quoted at $138/$139.. and like MSFT – I am a buyer of IBM on any weakness.
Today – US futures are UP….Dow futures +12, the S&P’s +9, the Nasdaq is ahead by 62 and the Russell is up 2. Eco data includes Chicago Fed Survey, Kansas City Fed Survey, Personal Consumption and the first whack at 4th qtr. GDP…..it is expected to show that the economy expanded at a 2.6% clip – down from the 3rd qtr. rate of 3.2%. We will also get Wholesale and Retail Inventories, Durable Goods and Capital Goods Ordered and Capital Goods Shipped. Watch for New Home Sales – which are expected to be down 4.7%….but with mortgage apps up last week and the week before -maybe the housing data will begin to show some slight improvement….Not positive, but maybe not so negative….Remember – I told you yesterday that home builders are offering all kinds of ‘extras’ and ‘sweeteners’ to get buyers off of the sidelines….and with mortgage rates expected to go higher in the coming months – as the spring selling season kicks off and the FED continues to raise rates – it will be interesting to see if they are successful.
We are gonna get 30 more earnings reports today and they include LUV, JBLU, ROKU, NOC, MA, SHW, DOW, INTC, & V. – again a range of reports representing airlines, aerospace and defense, credit cards, streaming services, chemicals and semiconductors.
European markets are all higher…up by more than 0.75% across the board. Retailers leading the way higher…..improving sentiment across the zone is raising the idea that maybe the Eurozone can ‘avoid’ a recession….something I am not sure I agree with….but – let’s run with that for today at least. Just fyi – European markets are outpacing US markets so far this year….…with Italy and the Euro Stoxx Indexes up more than 10% ytd while Germany, Spain, France and the UK – are not far behind.
OIL – It’s UP! Go figure…who would have thought? The EIA (Energy Information Admin) reported that crude inventories only rose by 533k barrels – well below the expected forecast of 1 million barrels. The rise in oil is also being helped by the weaker dollar. This morning oil is trading just north of $80/barrel….leaving us in the $80/$85 range for now.
And gold continues to move up….something I have been big on…..this morning it is trading at $1952/oz….and is now up by more than 17% off the November lows and up more than 7% this year. And that is taking the miners with it….NEM +16% ytd, GOLD (Barrick) +14% ytd, FCX +22% ytd…. A sector I have liked and have been discussing on this platform since the year began.
Treasury prices are churning in line….as investors opt for stability and optionality during this continued volatile time. The curve remains inverted…. suggesting that the recession IS coming….I’m still waiting for the NBER to call it.
The S&P closed the day at 4016 – essentially unchanged….Yesterday – we pierced 4000 and then we pierced 3980…to trade down to 3949 – just a hair above the short term trendline at 3939……Futures this morning suggest more churn…..as we await the FED meeting next Wednesday and the ECB on Thursday. The ECB is important because it speaks to what Christine Lagarde sees for the Eurozone, the same way we expect JJ to see for the US. She (like JJ) has pledged to keep raising rates and then holding them at higher levels for longer…let’s see if that narrative has changed for either banker…..I don’t think it does, but I’m not a member of either central bank board!
Remember, you are a long term investor – build it and stick to the plan….trying to pick tops and bottoms is NOT what you do….it’s about building that strong foundation….dollar costs averaging into it and reinvesting all the divy’s (unless of course you need the divy’s as income…if not -put them back to work). Don’t’ be afraid to buy your names on weakness (as long as the weakness is not a fundamental shift in the sector or the name). A perfect example are the semi’s…last year they crushed them – for what? Are we suddenly NOT using semi’s in EVERYTRHING we touch every day? They (SOXX ETF) lost 40% in 2022 and have gained more than 15% ytd (and going higher), NVDA lost 54% in 2022 and has gained 32% so far this year…. and if you had been dollar cost averaging in then you would have a nice position and a nice cost basis….so when they come after them again (like they are doing) – you enjoy the ride….So, stick to the plan….
Call me to discuss. Kacecapitaladvisors.com
Take good care.
Chief Market Strategist
kpolcari@slatestone.com
Grilled Pork Roast Stuffed w/Provolone &Tuscan Herbs
This is a great dish – easy to prepare and absolutely delicious and is cooked just right on the grill….you need to begin by making a jar of these fresh herbs – dry them and then use them on so many things….additionally – it is a great gift to give to someone. Just buy a nice glass jar (Ball jar) – fill it with the dried herbs, tie a ribbon around the top and attach a handwritten note:
To: Our friends. Enjoy the simplicity of these fine herbs. Life is better with a great homemade dinner.
The Tuscan herb mix consists of Sage, Rosemary, Garlic and sea salt. You can add other herbs as you wish – maybe bay leaf, or that fresh basil that you have growing in your garden. There is no magic, the creation is completely up to you – but here is a good guide…use 6 parts sage, 2 parts rosemary and 12 cloves of garlic. About 1 tblsp of Salt and some pepper…do not kill it with too much pepper. Your guests can always add pepper.
Remove the herbs from their branches and pile on the cutting board with sliced garlic and the salt. Now begin chopping and mixing the herbs…the best knife to use is what we call a “mezzaluna” or half-moon. It is one of those rounded knives (a half moon) with hand knobs on both ends that you rock back and forth – that chops so nicely. It is a must have in the kitchen.
Chop until the herbs are fine – now transfer to a cookie sheet and allow to dry for a day or two. Now put them in a jar and seal.
Ok – next – the pork roast… have the butcher slice it open – (tell him you want to stuff and roll it). Open it up and massage a bit of olive oil – s&p. Now you can line the pork roast with provolone cheese and then the herbs. Carefully roll it and tie it with kitchen string. Now season it on the outside with s&p and set aside until ready to cook it.
Heat the grill to high and get it really hot… using your BBQ brush – clean the grate….place the pork on the grill and turn the heat to med. Cover and allow to cook – turning it to grill all around.
While this is grilling – you can prepare some apple sauce or if your prefer try a Fig spread. In a saucepan – Add in ½ lb. of figs, some chopped rosemary, 1/2 cup of orange juice, 1 tspn of honey, 1/4 cup of water and s&p. Bring to a boil then simmer for about 20 mins. Mix should be nice and thick. Now let it cool – strain – reserving the liquid – then place in the food processor and blend well until smooth – add back a some of the liquid to keep it smooth and spreadable. Cover and put in the fridge.
When the pork is cooked – remove from the grill, cover with foil and let rest before slicing. After 10 mins – slice and serve with the fig spread and the apple sauce. Allow your guests to choose. Serve the pork with roasted Brussel sprouts or sautéed broccolini, a large salad and your favorite red wine. Remember – it’s all in the presentation….
