Drama on Capitol Hill –
**TikTok CEO Shou Zi Chew tries to assure US lawmakers that China does not have any access to any of the data that they collect on Americans…..He disagrees with the description that ‘they are spying on Americans’ he says that he ‘no evidence that the CCP is using the data and that he does not supply them with any data….’. Now, that’s hysterical! Hello – Bytedance owns TikTok and the CCP owns Bytedance……so stop already….**
But the truth is – they all do it – they all collect the data, the keystrokes, locations, likes and dislikes….….Facebook, Apple, Google, Amazon and the list goes on…..but those companies are not owned by the CCP…(or at least that’s what we are told…..) It is a slippery slope…. But we brought this upon ourselves**
And what are we having for dinner? Try the Pan Seared Sea Bass
Big tech led the market higher………and I mean BIG tech…AAPL, MSFT +2%, PANW +1.6%, NVDA + 2.7%, AVGO + 1.3%, QCOM +1.8%, AMD + 2.7%, INTC +3.2%, SOXX + 2.5%, CRWD +1%, JNPR + 2.2%, CSCO +0.5% etc.….these names seen as offering shelter in the storm – many (not all) flush with cash have been outperforming this year – XLK +16%, SOXX + 25%, BOTZ + 19%, CIBR + 7%, Disruptive Tech – ARKK + 21% – but remember – these were also ALL names / Sectors that were clobbered last year….- so the rebound is not unexpected as investors look for bargains and opportunity…… This as investors remain a bit concerned about the ongoing stress in the banking sector that has rocked markets around the world. Mixed commentary coming from the FED chair JJ Powell – who assured us on Wednesday that the banking system is strong vs. an about face by Treasury Secretary Janet Yellen – who told us 2 weeks ago (post the SVB collapse) – not to worry about deposits – sending the message that ALL deposits were protected and then on Wednesday told us that she is NOT working on any plan to raise the FDIC limits on deposits – sending the message that her prior comments were incorrect – and that sent the regional banks into another tailspin…..as investors/traders and algo’s tried to decipher the latest narrative. The questions are – Are the deposits protected or not? Is the US banking system stable or not? Is there a storm brewing on the horizon that they see, but we don’t? And there are many more to ask…but we don’t have the time right now. Just a note – Janet Yellen does another about face overnight saying that the ‘Treasury would take additional actions if warranted to stabilize banks’. I think its time for Janet to pack it in….no? Go on vacation….get some sun – you look a bit pasty…!
In the end yesterday, we did see the broad indexes all rally strong during the day but fade as the sun was setting….As the bell finished ringing – we found the Dow + 75 pts, the S&P +12 pts, the Nasdaq +118 pts, while the Russell lost 7 pts and the Transports lost 22 pts.
Only 2 of the broad 11 sectors ended higher….TECH and Communications….- both up 1.6%…..the worst performers were Utilities – down 1% and Energy -1.4% while everything else was off less than 0.5%. Regional banks though were front and center and ended the day lower as investors toggled back and forth depending on the headline…two of the most popular regional banking ETF’s lower……KRE -2.8%, BKX -1.7% – all while FRC – the poster child now for regional banks lost 6.1%.
And it’s a flight to safety as investors grapple with a confusing narrative……..
Treasury prices rose sending yields lower – the 2 yr. is now yielding 3.6% – recall it was 5.25% only 2 weeks ago…. the 10 yr. is yielding 3.29% – down from 4% 2 weeks ago…., Gold surged by $47 or 2.4% – trading as high as $2,023 before settling down to end the day at $2,012. Recall that gold had surged to $2,025 in early Feb….then it sold off as the dollar index surged on the rising interest rate narrative – trading down to $1,814 – and then the banking crisis hit and investors tripped over each other to jump back in…..taking Gold to where it is today.
Oil – surged up and thru $70/barrel before settling at $69.50 – as the media continued to push the global economic slowdown narrative – putting pressure on oil prices. This even as increased Russian supplies – despite sanctions – continue to hit the market as Asian (regional) demand rises and the ongoing discussion surrounding the return of Chinese demand…..Now, either it is happening or it isn’t…..look – they have been telling us that demand from China will surge once they re-open….enough already- they have re-opened and demand from China is strong…Yesterday I told you that China is expected to represent 40% of the increase in global oil demand THIS year… so please – stop with the histrionics….. China is open stop with the back and forth already. Chinese demand is NOT going down and by the way – neither is demand in Europe, and North America. Period. The world is awash in oil, we just can’t pump and produce it fast enough to meet demand – and – the Saudi’s who are (now) the swing producer – and I say now because under the prior administration the US was the swing producer – can tweak production and cause prices to rise or fall…..and we should expect them to continue to manage the global supply/demand narrative. The next OPEC + meeting is on April 5th….so get ready. Remember – $80+ oil is their sweet spot.
This morning global markets are under pressure….European markets all lower by more than 2% across the board. US futures are also down as the week comes to a close…..Dow futures are down 300 pts, S&P’s down 30, the Nasdaq down 80, the Russell is down 18 pts as the sun moves across the pond. Concerns over the European banking sector are top of mind as Deutsche Bank comes under pressure – down 10% this morning as prices on their credit default swaps spiked higher…. Credit Default Swaps are a form of insurance for bondholders against a possible default……the price of those swaps jumped by 173 bps….suggesting that ‘someone is concerned that there is another fire simmering’ – raising concerns again about the European banking system. In addition US regulators are looking at UBS as concern grows that they helped Russian Oligarchs evade US sanctions…..so this plus the ongoing confusing narrative here at home is putting pressure on US banks…big, medium and small….JPM, BA, WFC, C all quoted lower….expect the same to be true for all the others…..
Eco data today includes Durable Goods – exp of +0.2%, Capital Goods Ordered and Capital Good Shipped and the S&P US Manufacturing PMI of 47 and Services PMI of 50.3 – leaving one in contractionary territory while the other one is barely in expansionary territory. We will also get the Kansas City Fed Survey…..but considering the tone of the futures – I am not sure that any of this matters.
The S&P closed at 3948 up 12 pts…..but it was a crazy day….the S&P traded as low as 3919 and as high as 4007….as the chaos continues… and investors attempt to find opportunity. The move in the S&P did take us below the 200 dma at 3935 setting us up to retest it again and possibly test the March low of 3800….…If nothing changes expect to slice right thru 3935 on the opening…..let’s not kid ourselves….the mood remains volatile and when that happens – the path of least resistance is lower….….Do not chase anything….patience is a virtue. Make your shopping list – pick your entry points and then wait….complement your portfolio with some contra trades if you think the bottom is going to fall out….
Take good care.
Chief Market Strategist
kpolcari@slatestone.com
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Pan Seared Sea Bass on a Bed of Sweet Potato Mash
For this you need: Two sea bass fillets, chorizo, olive oil, S&P, spinach, 2 sweet potatoes, milk (I always use half & half) , butter, mustard and red pepper flakes (optional)
Bring a pot of salted water to a boil. Peel and cube the sweet potatoes and put them to boil. Once they are done – fork tender – strain, add the milk (or cream) half stick of butter, s&p, and a teaspoon of mustard and then mash it all together. (Here is where you would add the red pepper flakes if you are using). Keep warm in the oven.
Bring fillets to room temperature and rub in a little olive oil and season with S&P. Set aside.
Heat the frying pan on a med high heat – add a dollop of butter and add diced chorizo, sauté for 2-3 minutes and then remove the chorizo but leave the oil. Now add the fillets – skin side down and sauté until the skin is crisp – 4-5 mins -, flip and sauté the fish – flesh side down for another min or so – add back the chorizo to re-heat.
While the fish is sautéing – in a separate frying pan – add a dollop of butter and wilt the spinach. Season with s&p as desired.
Present as follows: Spoon the mashed sweet potato onto the plate, top with some spinach and then place the filet on top of that – Spoon the chorizo around the plate and serve.
Pour yourself a nice glass of your favorite chilled white wine..enjoy!
