The Lady was not for turning, but markets might

" Welcome to the United Kingdom. want our relationship to get off to a good start, and to make sure there is no misunderstanding between us - I hate Communism."

- Prime Minister Margaret Thatcher to Russian President Mikhail Gorbachev

The world bids farewell to the "Iron Lady" - a woman that will go down in history as one of the 20th Century's most influential leaders.

Stocks erased early losses to push higher in late trading, as investors focused on the start of corporate-earnings season and the renewed chatter of possible policy signals from the Federal Reserve (not happening) as there are several speeches today and tomorrow from different Fed Presidents.

As expected Alcoa (AA) kicked off the earnings season after the bell and reported earnings of $121m which is down 50% from last year , but incredibly they managed to "pull that rabbit out of the hat" and beat the "lowered" estimates! (Go figure...). However, the stock traded down in post market trading as revenues, projected to come in at $5.88 billion were just $5.83 billion, signaling that the top line just keeps struggling. Quarter over quarter we witness actual earnings beating lowered expected earnings, and again the bar has been lowered so the challenge to beat is honestly a non event.

Despite weakening global economic reports and daily downgrades of earnings forecasts, the market continues to push higher. Recent economic reports are forcing some to be more cautious. To date we have seen 100+ S&P companies reduce estimates, which in fact have gone negative on earnings pre-announcements, but as many analysts tell us, the earnings have already happened. The market knows this. The devil is in the details and those detail are what the CEO's are saying about the future.

And the future, for the Fed at least, may become a bit more confusing over the coming days. James Bullard, St Louis Fed President will be on CNBC Squawk Box at 8, Richmond President Jeffrey Lacker speaks at 9:30 on "Too Big To Fail Banks" and Atlanta Fed President Dennis Lockhart will make the welcoming remarks at the Atlanta conference at 1 pm. Expect everyone to pay attention to the conversation. Are they giving markets a clue to future action ahead of the release of the FOMC minutes tomorrow? Will conflicting opinions cause investors to ring the cash register?

Did you see the commentary from Blackrock yesterday? Blackrock, for those of you who are unaware, is one of the industry's biggest money managers and they have stood up to say "Stop the madness..." QE4 is a "large and dull hammer" that has DISTORTED MARKETS and risks stoking inflation. Rick Reider, who manages some $760 bln in fixed income investments for Blackrock joined the chorus of singers beginning to really speak out about the growing risks of trouble ahead for the bond markets saying that:

"Fed policy has had a distorting effect on capital allocation decisions of all kinds at virtually every level of the economy"

He calls for the Fed to cut the program in half noting that as interest rate begin to normalize

"losses that occur to fixed income portfolios will be more and more acute."

Understand that even though he speaks to the fixed income markets, the equity space could be in for more volatility if the Fed exits prematurely. We have seen every single time someone indicates a pullback by the Fed, the equity markets begin to tremble, signaling the disconnect between what the economy is saying against what the stock market is saying. Yes, low rates have forced the "Risk Trade" artificially forcing stocks higher.

In yesterday´s action, a pushing of the market to 1563 makes the likelihood of a 1525 test more remote at the moment, no matter what the economy looks like. We remain range bound, right? We have been in this range of 1550 / 1565 since early March and until we see a real break or breach 1538 (trend line off Nov lows) the market will continue to churn. We are watching global markets turn weaker, yet here at home we are only seeing sector rotation while the overall market holds the line. On the upside, 1580 is key resistance (trend line off Sept highs) and 1538 is key support..

Today we have a couple of economic reports, NFIB Small Business expectations of 89.8 and wholesale inventories of 0.5%. Do not forget the Fed speeches as the market awaits the earnings season to move into full swing. Tomorrow we have Bed Bath and Beyond - (very consumer sensitive) and Friday's big Banks - JPM and WFC.....

Currently futures are churning around the flat line. AA is under pressure as investors react to last night's report. Geo-political risks remain elevated as North Korea continues to threaten peace in the region, yet the markets are discounting some big event. The US does remain the " safe play" for global investors as they continue to look for safety in the equity space hoping that the Fed keeps serving up the Kool Aid.

Overnight in Asia, stocks moved higher. Chinese inflation easing more than expected helping to boost some commodity producers. Japanese stocks once again move higher as investors there begin to turn their attention to coming earnings yet in the end could not hold onto those gains. Japan flat, China + 0.64%, Hong Kong + 0.7% and Australia +1.4%.

In Europe, markets also moving into positive territory as enthusiasm increases about coming earnings. Weak economic data came out of France and Germany. France saw both budget and trade numbers widening while in Germany, import/export numbers fell, both raising concerns about future growth which seem to have little impact on investor psyche. In the UK, Industrial output came in better than expectations. Eurozone finance ministers to visit both Portugal and Greece as they continue to raise concerns over reform and austerity measures. FTSE + 0.37%, CAC 40 +0.55%, DAX - flat, EUROSTOXX +0.4%, SPAIN +0.8% and ITALY +1.4%.

Take Good Care

Tortiglioni Siciliana

This is one of those dishes that you only got a your grandmother’s house (if she was Sicilian) – it is comfort food - Simple to make - serve it with your favorite Chianti…

For this you need Garlic, olive oil, Eggplant, Cherry Tomatoes in their juice, s&p, Vidalia onions, and Ricotta Salata. (Ricotta Salata is an unusual cheese. Made from Sheep’s milk – the curds and whey are pressed together and dried before aging – giving this cheese a dense texture with a salty, milky flavor – almost like feta - but drier – It is not a creamy Ricotta cheese at all).
Bring a large pot of salted water to a boil.

In a large frying pan – heat up some olive oil – add in a couple of sliced cloves of garlic and sauté…now add in two med/lg diced Vidalia onions – continue to sauté until soft and translucent – 10 mins….Next add in 4 m- 12 oz cans – of cherry tomatoes in juice. Turn heat to med low and let it simmer - next – with the back of a slotted spoon (or with a fork) crush some of the cherry tomatoes so that you get a chunky sauce while keeping some of the tomatoes whole. Season with s&p.

Make a garlic paste – so - in the food processor add 6/8 garlic cloves and some oil – blend well. Add enough oil – you don’t want a dry paste – you need to toss the cubed eggplant in it – so it can’t be dry.
Dice the eggplant – leaving the skin on…cut it in half and then cut each half into 1” strips and then cut across to make cubes…..add to a large bowl and toss with the garlic paste – let sit for 10 mins.

Now in a separate sauté pan – add a bit more oil and heat up. Now add the eggplant and sauté on med hi heat. Season with s&p. Keep tossing the eggplant until it is cooked. Should take maybe 15 mins or so. Make sure to keep stirring – do not burn. When complete – add to the larger fry pan with the tomatoes. If you need to add a bit water – do so now. Taste for seasoning and adjust if necessary.

Now the pasta – for this I use Tortiglioni (tor – ti – li – oni) - this is in the family of Penne Pasta. It is slightly larger and slightly twisted – but it screams for a hearty sauce with chunks of meat or veggies etc. In this case we are using “chunks” of sautéed eggplant with Cherry tomatoes. Cook until al dente – maybe 8/10 mins max. Strain the pasta always reserving a mugful of the water – return to the pot – add back ½ the mug of water – stir to re-moisten. Now add directly to the tomatoes and eggplant and allow it to blend for 5 mins or so – keeping the heat on simmer. Serve in warmed bowls with shaved ricotta salata on top.

Buon Appetito.

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