Geopolitical tensions in Ukraine and Gaza took center stage on Friday – a couple of key earnings misses did not help in allaying any concerns. Retail giant Amazon fell almost 10% on the day after reporting a wider than expected 2nd Q loss, Visa down 3.5% reported better results but offered up some cautious commentary about the months ahead.
The negative news – overshadowing the better than expected Durable Goods Report - forced traders to the sidelines ahead of the weekend, buyers became much more cautious and price sensitive leaving sellers with no one to play with. Keep in mind - negative
results/warnings from both Amazon & Visa do not signal a reversal in the broader trend - what it is does remind you of is that the 'rising tide may NOT lift all boats'......
With the mkt in negative territory all day – GS then issued a 3 month warning – Downgrading stocks to neutral as they see a chance of a temporary selloff – while on the other hand remain bullish (reiterating their ‘strong conviction’ profile over the next 12 months). The mkt yawned….
"We are concerned that a sell-off in government bonds will lead to a temporary sell-off in equities in line with what we saw last summer, though the magnitude is likely to be smaller as the need for bond yields to correct is lower than it was back then,"
Last summer’s correction was 6% - ( May highs to the June lows) only to have the mkt resume its rally to end the summer +1% from the original call. So if the selloff is likely in line with last summer but the magnitude is likely to be smaller – what are we really talking about? 3% - which takes us to 1925 ish. For some that equals opportunity – so let the music play….Now if they called for something a bit more significant - then you would have seen the mkt react accordingly - but that is not what they did.
The mkt has found plenty of support in the 1960/1970 range....and then again in the 1945 range - which is also the 50 DMA. A real break here would likely test the 1925 range taking us back to May levels. A repeat of last summer's 6% move would take the S&P back to its 200 DMA at 1855....not completely unreasonable - but unlikely based on what we know. ( It's what we don't know that can shake things up).
This week is chock full of data – both macro and micro. On the macro front – today we will get US Markit Services PMI - exp of 59.8 and Pending Home Sales- exp of 0.5% m/m (-5.2% y/y) – this will be widely watched after the disappointing read on New Home Sales last week. Couple this with tomorrow’s Case Shiller Home Price index and we will get a clearer picture on the state of the housing mkt.
On Wed – we get the ADP report - exp of 230k jobs created, the 2Q GDP report - consensus estimates hover around 3% - any weakness here could raise the warning flag – especially after the very weak showing in the 1Q.
The mother of all reports this week will be Wednesday's FOMC policy mins…. Watch for a reiteration of the continued taper (not new news). This report is being watched very closely for hints of interest rate policy change......... given the fact that we have a stronger job picture, decreasing rates of unemployment and hints of some wage and inflationary pressures building.... expect traders/investors to be fixated on every word as they look for the holy grail in terms of the mkts next move.
Friday will bring us the Non Farm Payroll report....here consensus views are also +230k jobs - below last month but still a healthy rate of growth - but again - will we see more part time or more full time?
Two events this morning will drive the action - First - Dollar Tree has agreed to buy Family Dollar for $74.50 share - sending FDO shares soaring in the pre-mkt up $14 dollars to trade at $74.....Does the mkt believe that this is the right price? We will soon find out. Dollar Tree (DLTR also moving higher by 7% in pre-mkt trading. Currently changing hands at $58/sh vs. Friday's close of $54.22/share.
Second - Hospira is in talks to buy the medical nutrition unit of French company DANONE for some $5 bil - this will allow Hospira to become the next in line to move their headquarters abroad to take advantage of the latest craze in 'tax inversion therapy' - therapy that allows US companies to 'domicile' in a foreign country in order to evade paying US taxes.....This has clearly become a hot topic as this tactic has lit a fire in the M&A industry while also lighting a fire under Obama's backside....as he calls upon Congress to stop the madness and put Tax Reform on the table.... With only 100 days until the mid-term elections - do not expect any movement as the Republicans turn up the pressure.....
US futures are little changed in early pre-mkt trading currently down only 1 pt at 1970 - that is up from earlier weakness as the mkt adopts a 'wait and see' attitude. I would expect the mkt to find support in the 1965 range while continuing to hit resistance in the 1975/80 range.
Geo-politics never far from investors minds will continue to play a supporting role in mkt action. Hopes for a quick end to the latest conflict in the Gaza Strip failed on Sunday as Israel and Hamas resumed heavy fighting that has so far left more than 1000 Palestinians dead in spite of UN and international calls for a ceasefire.
Overnight In Asia –markets are trading at multi month highs as investors celebrate... China breaking out to the upside as the move up and thru its 200 DMA was confirmed in Monday trading as it now tests the February highs of 2177. . Japan + 0.46%, Hong Kong +0.88%, China +2.41% and ASX -0.11%
In Europe – mkts are mixed.....not taking their lead from Asia - as they remain focused on earnings and politics. Italian business confidence missing estimates - but not having any real impact on Italian equities. In addition the EU is still wrestling with further sanctions on Russia. The agreement reached last Friday produced a warning from Vladimir that he would 'hamper cooperation on global security issues'. FTSE +0.15%, CAC 40 +0.43%, DAX -0.12%, EUROSTOXX +0.17%, SPAIN +0.11% and Italy +0.26%.
Vidalia Onions, sliced Portobello, Chanterelles, Button and Oyster mushrooms, Olive oil, garlic, shallot, fresh shredded Pecorino Romano Cheese and s&p. You can whip this up in about 45 mins or so….and it is better the next day – so make extra!
Bring a pot of salted water to a rolling boil.
Combine 2 diced shallots, and 3 chopped Vidalia onions 3 sliced garlic cloves with some olive oil in a large sauté pan. (One that will be able to hold the pasta when ready.)
Stir to coat well - season with s&p and turn heat to simmer – cover and cook for about 35 mins…stirring occasionally. You want the onions to be that nutty brown color – almost caramelized.
About 20 mins into it - add the mushrooms and another shot of olive oil - raise the heat and cook - do not burn. Taste and adjust the seasoning. Return to simmer.
10 mins later add the pasta to the water and cook for about 8 mins or until aldente….
When the pasta is done – strain – always reserving a mugful of the pasta water to use. Add the pasta to the sauté pan with the onions and mushrooms – stir to coat well. Add back some of the pasta water to moisten. Add a handful of shredded Pecorino Romano – and toss.
Serve immediately in warmed bowls and have extra cheese on the table for your guests.
Buon Appetito.
The negative news – overshadowing the better than expected Durable Goods Report - forced traders to the sidelines ahead of the weekend, buyers became much more cautious and price sensitive leaving sellers with no one to play with. Keep in mind - negative
results/warnings from both Amazon & Visa do not signal a reversal in the broader trend - what it is does remind you of is that the 'rising tide may NOT lift all boats'......
With the mkt in negative territory all day – GS then issued a 3 month warning – Downgrading stocks to neutral as they see a chance of a temporary selloff – while on the other hand remain bullish (reiterating their ‘strong conviction’ profile over the next 12 months). The mkt yawned….
"We are concerned that a sell-off in government bonds will lead to a temporary sell-off in equities in line with what we saw last summer, though the magnitude is likely to be smaller as the need for bond yields to correct is lower than it was back then,"
Last summer’s correction was 6% - ( May highs to the June lows) only to have the mkt resume its rally to end the summer +1% from the original call. So if the selloff is likely in line with last summer but the magnitude is likely to be smaller – what are we really talking about? 3% - which takes us to 1925 ish. For some that equals opportunity – so let the music play….Now if they called for something a bit more significant - then you would have seen the mkt react accordingly - but that is not what they did.
The mkt has found plenty of support in the 1960/1970 range....and then again in the 1945 range - which is also the 50 DMA. A real break here would likely test the 1925 range taking us back to May levels. A repeat of last summer's 6% move would take the S&P back to its 200 DMA at 1855....not completely unreasonable - but unlikely based on what we know. ( It's what we don't know that can shake things up).
This week is chock full of data – both macro and micro. On the macro front – today we will get US Markit Services PMI - exp of 59.8 and Pending Home Sales- exp of 0.5% m/m (-5.2% y/y) – this will be widely watched after the disappointing read on New Home Sales last week. Couple this with tomorrow’s Case Shiller Home Price index and we will get a clearer picture on the state of the housing mkt.
On Wed – we get the ADP report - exp of 230k jobs created, the 2Q GDP report - consensus estimates hover around 3% - any weakness here could raise the warning flag – especially after the very weak showing in the 1Q.
The mother of all reports this week will be Wednesday's FOMC policy mins…. Watch for a reiteration of the continued taper (not new news). This report is being watched very closely for hints of interest rate policy change......... given the fact that we have a stronger job picture, decreasing rates of unemployment and hints of some wage and inflationary pressures building.... expect traders/investors to be fixated on every word as they look for the holy grail in terms of the mkts next move.
Friday will bring us the Non Farm Payroll report....here consensus views are also +230k jobs - below last month but still a healthy rate of growth - but again - will we see more part time or more full time?
Two events this morning will drive the action - First - Dollar Tree has agreed to buy Family Dollar for $74.50 share - sending FDO shares soaring in the pre-mkt up $14 dollars to trade at $74.....Does the mkt believe that this is the right price? We will soon find out. Dollar Tree (DLTR also moving higher by 7% in pre-mkt trading. Currently changing hands at $58/sh vs. Friday's close of $54.22/share.
Second - Hospira is in talks to buy the medical nutrition unit of French company DANONE for some $5 bil - this will allow Hospira to become the next in line to move their headquarters abroad to take advantage of the latest craze in 'tax inversion therapy' - therapy that allows US companies to 'domicile' in a foreign country in order to evade paying US taxes.....This has clearly become a hot topic as this tactic has lit a fire in the M&A industry while also lighting a fire under Obama's backside....as he calls upon Congress to stop the madness and put Tax Reform on the table.... With only 100 days until the mid-term elections - do not expect any movement as the Republicans turn up the pressure.....
US futures are little changed in early pre-mkt trading currently down only 1 pt at 1970 - that is up from earlier weakness as the mkt adopts a 'wait and see' attitude. I would expect the mkt to find support in the 1965 range while continuing to hit resistance in the 1975/80 range.
Geo-politics never far from investors minds will continue to play a supporting role in mkt action. Hopes for a quick end to the latest conflict in the Gaza Strip failed on Sunday as Israel and Hamas resumed heavy fighting that has so far left more than 1000 Palestinians dead in spite of UN and international calls for a ceasefire.
Overnight In Asia –markets are trading at multi month highs as investors celebrate... China breaking out to the upside as the move up and thru its 200 DMA was confirmed in Monday trading as it now tests the February highs of 2177. . Japan + 0.46%, Hong Kong +0.88%, China +2.41% and ASX -0.11%
In Europe – mkts are mixed.....not taking their lead from Asia - as they remain focused on earnings and politics. Italian business confidence missing estimates - but not having any real impact on Italian equities. In addition the EU is still wrestling with further sanctions on Russia. The agreement reached last Friday produced a warning from Vladimir that he would 'hamper cooperation on global security issues'. FTSE +0.15%, CAC 40 +0.43%, DAX -0.12%, EUROSTOXX +0.17%, SPAIN +0.11% and Italy +0.26%.
Farfalle w/Vidalia Onions & Mixed Mushrooms
This is a great recipe and one that you can tinker with if your prefer. The basic ingredients include:Vidalia Onions, sliced Portobello, Chanterelles, Button and Oyster mushrooms, Olive oil, garlic, shallot, fresh shredded Pecorino Romano Cheese and s&p. You can whip this up in about 45 mins or so….and it is better the next day – so make extra!
Bring a pot of salted water to a rolling boil.
Combine 2 diced shallots, and 3 chopped Vidalia onions 3 sliced garlic cloves with some olive oil in a large sauté pan. (One that will be able to hold the pasta when ready.)
Stir to coat well - season with s&p and turn heat to simmer – cover and cook for about 35 mins…stirring occasionally. You want the onions to be that nutty brown color – almost caramelized.
About 20 mins into it - add the mushrooms and another shot of olive oil - raise the heat and cook - do not burn. Taste and adjust the seasoning. Return to simmer.
10 mins later add the pasta to the water and cook for about 8 mins or until aldente….
When the pasta is done – strain – always reserving a mugful of the pasta water to use. Add the pasta to the sauté pan with the onions and mushrooms – stir to coat well. Add back some of the pasta water to moisten. Add a handful of shredded Pecorino Romano – and toss.
Serve immediately in warmed bowls and have extra cheese on the table for your guests.
Buon Appetito.
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