Seared Halibut in an Orange/Lemon Butter Sauce
Halibut is a great fish to cook with. It is a white fish, flaky and takes to any number of dressings. Today –we are going to sear it in a little butter/oil and then roast in the oven until tender. When serving – you drizzle some homemade Orange/Lemon Butter. Sound good?
Things you need to know.
– Yields rise to their highest levels since the fall of 2023.
– While that could be a challenge for stocks – yesterday’s action was fairly muted.
– CPI due out tomorrow, PPI on Thursday.
– The rate cut narrative is ‘a changing…’ – was just a matter of time.
– Were people really crying over the solar eclipse? What am I missing?
– Try the Halibut
Stocks struggled on Monday as investors, traders and algo’s considered the new reality….NO rate cuts! Bond prices continue to get hammered – sending yields up….as the market awaits two important inflation measures this week.
The Dow lost 12 pts, the S&P down 2, the Nasdaq gained 6 pts, the Russell added 10, the Transports up 15 and the Equal Weight S&P rose 17 pts.
Bonds continue to suggest pessimism – as the bond guys expected to see the economy roll over – and it is not. The TLT is down 7.5% ytd while the TLH is off 5.8% ytd. The yield on the 2 yr. rose 3 bps to end the day yielding 4.75% while the 10 yr. yield rose 2 bps to end the day yielding 4.42%…..this after the 10 yr. came within a whisker of 4.5% – a level that some suggest is the tipping point…meaning, if we kiss and pierce 4.5% then watch for the 10 yr. to approach the October highs of 5% and you remember what happened to stocks when the 10 yr. did that!
In the weeks leading up to the surge in yields – stocks got slapped – The S&P lost 9%, the Nasdaq gave up 13%, the Dow gave up 8%, the Russell gave up 18% – and that was just the indexes – individual names got hit even harder….the Magnificent 7 leading the way down, the way they led the way up….AAPL – 12%, AMZN – 19%, MSFT -14%, TSLA -30%, NVDA -20%, META -12%, SEMI’S – 18%, – you remember that don’t you? The value trade – SPYV got beaten up – falling nearly 11% while Utilities – XLU fell 20% (and they are not the sexy stocks by any stretch of the imagination). It caused all kinds of angst in the markets – and rightly so, 5% – 10 yr. yields are a definite headwind for stocks because locking in 5% guaranteed for ‘some’ of your money makes perfect sense and adds stability to your portfolio.
Look – by now you realize that investors are reconsidering the whole ‘multiple rate cut theory’ – as inflation remains an issue – something we have been discussing for weeks now. Last week – Minneapolis Fed President Neely Kashkari told us that ‘if inflation stalls, then there won’t be any rate cuts’ (guess what – inflation IS NOT stalling – capisce?)…..This followed what former FED Vice Chair Roger Ferguson told us one week ago and echoed comments by both Fed Governors Mishy Bowman and Adriana Kugler. Yesterday – Chicago Fed President Austan Goolsbee – who is NOT a voting member of the FOMC warned that holding rates higher for longer will lead to higher unemployment – No kidding! To which I would say – that has not happened yet, suggesting that maybe rates need to go even higher – 5.25% rates have not affected unemployment at all.
Now – What was 5 or 6 cuts has become 1 or 2 cuts and even that seems a bit odd to me. Economic macro data points continue to show a strong US economy and an ongoing strong labor market. Commodity prices are rising, (BCOM index is up 8.2% in the last 5 weeks), manufacturing and services PMI’s are in expansionary territory and wages continue to grow. Unemployment remains at near historic lows at 3.8% and the consumer continues to spend. So, where is the problem? Remind me again why the FED needs to cut rates?
What I find comical is that many analysts on the street have just shifted their opinion of when the first cut will happen, not IF a cut will happen. JPM economist Mikey Feroli now expects the FED to ease in July while there are still some that think it has to happen in June. You know me – May is the cutoff (and that is not happening)– once you get into June – you are within the 6 month window of the Presidential election – and it will be difficult for JJ to convince anyone that the economy is so bad that he needs to cut rates in front of what is sure to be a contentious election…..But, it is a different world – all of the old rules are no longer valid – apparently.
By now you know that the CPI is expected to show a 0.3% increase in prices m/m on both the topline and core rates. It is the y/y numbers that are expected to be a bit elevated at +3.4% and +3.7%. PPI numbers on Thursday are expected to be up 0.3% on the top line and +0.2% ex food and energy. But again, it is the y/y numbers that are expected to surprise to the upside. PPI top line y/y is expected to be up 2.2% (vs last month’s +1.6%) and Ex food and energy of +2.3% (vs. last month’s +2%). And all this says is – inflation remains sticky, this is not the time to consider cutting rates and stimulating the economy – which doesn’t mean that rates are never going down again, it just means, it ain’t happening right now.
Oil- which has shot higher over the past 10 weeks remains elevated – this morning WTI is up 40 cts at $86.84/barrel. Recall – Oil is benefiting from 4 themes, an improving global economy, growing demand, OPEC+ production cuts and lots of geo-political unrest. And then yesterday we learned that the Saudi’s NEED oil prices to be at least $85/barrel in order for them to ‘balance their payments’ – that’s up from $80/barrel last year, so do not expect the Saudi’s to change their production targets and produce more oil, if anything, they want to produce less to keep the stronger demand narrative alive and well. In fact, the Saudi’s hiked the price of oil by $2/barrel for Asian buyers – which suggests a ‘demand recovery’ story across the region as production cuts continue to create a tight market. Oil now appears to be in the $85/$90 trading range just as the northern hemisphere enters the summer driving season.
Gold keeps climbing…. up another $22 today – trading at $2,373/oz. It’s up 18% ytd…. who would have thought? Global unrest and central bank buying around the world – cited as reasons for its move. China added 166k oz in March alone, ($325 mil) Turkey, India, and other Eastern European countries all buying it as well. The action suggests 3 things. 1. Geo-political issues are not going away, 2. that a June/July interest rate cut IS coming and 3. Is that it is a play on fiat currencies. I agree with the first and third argument- I disagree with the second argument. So, when June/July comes and there are no cuts, then I would expect to see gold back off a bit – not dramatic – just a bit.
At 5 am – futures are suggesting a muted opening…. Dow futures are -46, the S&P’s -1, Nasdaq +14 and the Russell is -5. The action continues to feel muted as investors wait for tomorrow’s data and Friday’s start to earnings season. There is no economic data today.
Mohit Kumar – Chief economist and strategist at Jeffries in Europe thinks we are having the wrong conversation…. He is more worried about whether or not the FED will cut rates if the economy starts to falter – Really? Where has this guy been? I will say that the FED is looking for a reason to cut, they just can’t find it yet, it’s not will they cut, it’s ‘give me a reason to cut’ and right now – there is NO reason to cut.
European stocks are lower….…. ECB rate decision due out on Thursday.
The S&P closed at 5202 – down 2 pts. Yesterday JPM CEO Jamie Dimon once again warned – in his annual letter to shareholders – that he sees a sharp rise in interest rates (think 8%) – citing ongoing geo-political unrest and record high gov’t spending – forcing Janet to bring exorbitant amounts of treasuries to the market to pay for all of this. Remember – Janet is expected to bring a massive supply of treasuries to the public square – and while there will be plenty of buyers of our debt, the question remains – at what cost? More supply will put pressure on bond prices and that will send yields up, not down – again – something we have been talking about since last year. In the end – Jamie thinks that the market is too optimistic, suggesting that a pullback is coming.
Well, he is in good company, because I too think that yields are going up and not down and that the market needs to correct. You can define a correction however you want – I would like to see an 8% – 10% pullback – something that would surely shake the branches, but it would also help to flush out some of the extended enthusiasm. While I would like to see it, I am not sure that we will, so don’t get all worked up. I’m just saying, the longer the market marches higher, the quicker it will correct – WHEN it corrects.
Stick to your plan, talk to your advisor…..this is not the time to bail, but nor is it the time to chase stocks, but that does not mean you can’t put money to work in other sectors that are expected to outperform. In the end – know who you are, what your risk profile is and make sure your goals are aligned. Talk to your advisor or call me to discuss.
Take good care.
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Seared Halibut in an Orange/Lemon Butter Sauce
Halibut is a great fish to cook with. It is a white fish, flaky and takes to any number of dressings. Today –we are going to sear it in a little butter/oil and then roast in the oven until tender. When serving – you drizzle some homemade Orange/Lemon Butter. Sound good?
For this you need: 2 lbs. of Halibut, butter, olive oil, s&p.
For the sauce you need: Fresh squeezed lemon juice, fresh squeezed orange juice, shallot, white wine, butter.
Begin by adding the juice from the lemon and orange to a saucepan and reduce by half over med heat – set aside.
Preheat the oven to 400 degrees.
Season the halibut with s&p.
In a sauté pan – heat up a dollop of butter and a splash of olive oil – when sizzling – add the halibut and sear nicely until golden brown on both sides. Remove and set in a roasting pan and place in the oven for 15 mins (or so).
While this is cooking… find another saucepan… add in a half a stick of butter – when melted – add the sliced shallots and sauté. Now add about three quarters of a cup of white wine and cook until reduced by half. Turn the heat to simmer… add a tbsp. on butter and whisk – when incorporated, add another tbsp. of butter and repeat – continue for 2 more tbsps. Now slowly add in the citrus juice and mix well.
This looks great on a bed of spinach. Place the halibut on top and then spoon the sauce over the top. Serve with your favorite white wine.
Buon Appetito
