Things you need to know.
– Retail Sales came in weaker – but hold on….
– Stocks end mixed, Bonds surged, yields declined.
– Oil up – OPEC ‘considers’ delaying again, Gold up.
– VIX is complacent again.
– Lots of housing data this week – expected to be weak.
– Try Chicago’s Chicken Vesuvio
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Friday was an interesting day…..stocks struggled, bonds ended the week higher sending yields lower all while the Retail Sales Report came in softer than expected – 0.9% – some calling it ‘an abrupt pullback’ after another record holiday shopping season – that saw a record $994 billion or 4% increase over 2023…..
…..….but it is important to note that the weakness in that report was seen in vehicles, furniture and sporting goods… Sectors that saw growth in December – Furniture up 5.6%, Auto’s +7%, so it makes sense that we should see weakness, I mean are you buying a car every month? Or new furniture? But that is what they chose to focus on….and remember – those are usually expensive items, and they have a greater impact on the report and so it makes headlines….
What the report failed to note was the rise in spending at restaurants and bars +1%, in ‘general merchandise’ +0.5% and gasoline stations +1% – which suggests that while the top line retail sales report was soft on items you don’t need everyday – consumers continue to spend money. The headlines – as you can imagine – emphasized the negative, while ignoring the positives. (that’s because the negative view supports their narrative of lower rates).
At the end of the day – the Dow lost 165 pts, the S&P was flat, the Nasdaq gained 80, the Russell lost 2 pts, the Transports gained 211 pts, the Equal Weighted S&P lost 9 pts, while the Mag 7 Index added 120 pts.
4 of the 11 S&P sectors rose – Tech + 0.4%, Financials + 0.2%, Communications + 0.6% while Energy added 0.4%. The other 7 Sectors lost some ground with healthcare down 1%, Consumer Staples – 1%, Basic Materials, Utilities and Real Estate down 0.4%, Industrials – 0.25% while Consumer Discretionary was flat.
Bonds gained – the TLT + 0.5% leaving it up 2% ytd, while the TLH + 0.6% leaving it up 1.9% ytd. The 10 yr yield that kissed 4.62% last week – ended the week at 4.50% down 12 bps…..3 & 6 month bills are yielding 4.20% on an annualized basis while your gov’t money mkt fund is paying you about 4.5%….Fidelity is at 4.9% while Vanguard is paying you 4.25%….. 30 yr mortgage rates continue to tick at 6.875% assuming you have a FICO score of 740+. A 710 FICO score gets you a 7.449% rate while an 800 score gets you 6.75%.
Oil – is up $1.30 or 1.75% – to trade at $72/barrel. News that OPEC+ is considering delaying supply increases beginning in April being cited for the move……if they do, it will be the 4th time they delay bringing supply to the markets….All this suggests is that there is confusion on how to proceed as some members want to increase supply while others are more concerned about price weakness…..Look – here’s the skinny – at $74/barrel many of the OPEC+ members can’t cover their gov’t spending – so it’s an issue….(for them). Lower prices are not going to help them….at all, so don’t expect them to just roll over…no matter what Donny wants. Here are some of the estimates by the IMF (Int’l Monetary Fund) – Saudi’s need $96/barrel to cover spending, Iraq $90, Kuwait $80, UAE only needs $57, Qatar is the winner at $43. So you can see who is on what side of the argument……
Oil remains in the $70.60/$72 trading range…. a failure to hold at the lower end could see oil trade down to $69 ish…while a push up could easily see $74.
Gold continues to shine…. trading in a tight range $2880/$2950…. This morning it is up $24 at $2930/oz. My gut says that while there are geo-political concerns and inflation concerns around tariffs and as a hedge against inflation as well as the ultimate ‘safe haven’ play – the surge in gold is more about global central bank demand (think emerging mkt economies)…..and replacing all the gold in Ft Knox – which apparently is about to be audited…and the push is on to replace the missing gold. But that’s another story….
The VIX – Fear index – has once again retreated into ‘complacency’ – trading below all 3 trendlines…something that just suggests that ‘everything is good’ – and you know how that goes! Which is once again – the exact reason you need to have a plan and then stick to it.
US futures are higher…. Dow up 50, the S&P’s up 20, the Nasdaq ahead by 83 while the Russell is up 5. Eco data today includes Empire Manufacturing, tomorrow brings us Housing Starts and Building Permits – both expected to be down. We will also get the latest FOMC mins…. where I do not expect to hear anything, we don’t already know…. the data is the data – the economy remains robust, and the labor market is not in decline and rates do not need to go lower. Period. Friday brings us the February PMI’s – manufacturing at 51.2 and Services at 53 – both in expansionary territory along with Existing Home Sales – which are also expected to be down. The housing numbers will be tied directly to mortgage rates, blah, blah, blah and we can expect to hear all kinds of people screaming about high rates…. – but maybe housing prices just need to ‘adjust’ (down) to what are historically normal rates.
European markets are flattish…. Germany down 0.15%, France flat while the UK, Spain and Italy are all in positive territory. News that the US and Russia are in Saudi Arabia discussing the end to the Ukraine war are keeping markets in check. Both the Ukrainians and the Europeans shut out of this meeting – which isn’t making them happy at all. But before we go and blow that up – let’s see what comes out of it…Clearly – the end game will include all participants – but you have to start somewhere…. And this is more than we have seen since this conflict began.
The S&P closed at 6114 – leaving it closer to the high than not….and while futures are higher this morning, I still think it feels a bit tired here….so I expect the churning to continue in the 6000/6150 trading range.
Saturday came and went – and while we did not get all of the remaining hostages out, we did get 3 more with more coming in the next couple of weeks as phase 2 of the cease fire deal begins. The idea that ‘all hell did NOT break loose’ over the weekend – is a positive for stocks and sentiment.
Reach out to discuss any questions or concerns you have. Give me a call. Click here https://slatestone.com/contact-us/ to contact me – Put KP in the message box and I will reach out to you.
Take good care.
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Chicken Vesuvio – (Thanks Brian for reminding me).
This is a classic Chicago style Italian American dish…….and you make it in just one pan.
Here is one version that uses artichoke hearts, there are other versions that use peas or even lima beans…. This is where you get to be creative.
For this you need: Olive oil, chicken Thighs, bone in and skin on, red potatoes, garlic, white wine, chicken broth, s&p, oregano, thyme, butter and frozen artichoke hearts.
Preheat your oven to 400 degrees.
Season the chicken with s&p.
Heat up some oil and butter in an oven proof pot. Brown the chicken on all sides – about 10 mins…. remove and set aside. Now add in the cut-up potatoes and cook for 10 mins….
Add the sliced garlic – cook for another 2 mins…. now add ¾ c of wine – let the alcohol burn off – then add ¾ c of broth, the oregano and thyme –
Add the back the chicken to the pot – cover and place in the oven for 20 mins…. When done – remove and set the chicken and potatoes on a platter. Now add the thawed artichoke hearts to the pot – cook over med high heat until the artichokes are tender. Stir in ¼ stick of butter – let it melt and then spoon the sauce with the artichokes over the chicken and potatoes. Delish.
Buon Appetito
