Wrecking Ball

"You came in like a WRECKING BALL.....all I wanted was to break your...." (I think the word is walls - but you can fill it in - Myley Cyrus - 2014

And BOOM! It hits again - bad news is BAD news..........and I love when they say it was a 'risk off' day.....not completely true - at all. What was 'RISK OFF ' for some was 'RISK ON' for others....it's just that the guys putting risk on (buyers) - were much more 'price sensitive' shall we say..... They saw the wrecking ball and so decided to be a bit more cautious....or were the savvy? I'm going with savvy...because if you are in this game - then it's all about understanding the mindset, the herd like mentality....When it seems like everyone is running for the door - is when the tough get going....

Global mkts had been under pressure - In Europe - reality is coming home to roost as it looks like they may get hit with a triple dip recession.........More evidence that Germany is stalling..... The pressure ramped up when it was reported that German industrial production fell by 4% in August versus expectations of a 1.6% drop. August factory orders fell by 5.7% which is the biggest drop since 2009, German business confidence falling to the lowest in 18 months. The prospect of a German recession can no longer be ruled out.

And just for fun - throw in the latest IMF report and that only added fuel to the fire - as noted in yesterday's comments. I think it was the warning that

"frothy conditions due to sustained low interest rates"

was the key to cause some investors to re-think the process. The IMF reduced world growth forecasts in 2015 by 0.2% to a 3.8% expansion due to the uneven recovery citing weakness in the Eurozone, Brazil and Russia. Ok - but this was not NEW news and global growth of +3.8% is a whole lot better than -3.8%. The IMF has been sending up smoke signals over the past 6 or 8 months....they have been concerned, they have expressed that concern....so why now? Why did the mkt choose to listen more intently yesterday? I can think of a couple of reasons -
Germany is the new wildcard.....no one wanted to believe that the engine of growth in Europe could falter....but it looks like maybe it is...just maybe.... The economic sanctions with Russia have possibly backfired causing a marked economic slowdown in Germany given Russia has been an economic trading partner. Not sure I completely agree - but you can't argue with what happened.

Next up - Ebola! - really starting to make waves around the world - Airlines, taking a hit - I mean you never know who you are sitting next to on those cramped jam packed airplanes with lousy ventilation - especially if you are on a flight from Liberia....but CMRX (Chimerix Inc) could be the beneficiary of all hits concern as this biopharmaceutical company is rumored to be working on the vaccine to stop this crisis....This stock was up +5.6% yesterday and is up another 3% this morning....trading at 34.75.

3rd q Earnings......so now with all this European concern - this is just the kind of news that raises a lot of doubts about how much upside growth potential is left for companies and for the economy with QE ending this month and as the global economy circles the drain.

Moving to the other side of the world - Japan is also in deep trouble. Economic data from Japan shows their economy is getting worse too. The BoJ struck sounding the alarm bells on the world’s third largest economy, as policymakers “cited housing and industrial production as weak spots and said business sentiment had 'paused' as a result of the April tax increases that led to a sharp contraction in its second quarter numbers...again not NEW news - but when the stories turn negative - the computers kick into high gear.

Additionally - do not discount the pure technical breaks...causing the risk management software driving the computers to send sell orders to the mktplace. Note that the mkt test 1950 in the first few mins of trade yesterday and held there all morning - trading on either side 1948/1954 back and forth, back and forth...as the afternoon wore on - the buyers got tired and chose to move lower....the selling algos sensed this and selling begets more selling....the buyside computers sense the break and move lower again...and the cycle continues.....and so you have what you have.

What we need to see this morning is a flush - a swift move lower to test the 200 dma at 1905 ish....or at least the August lows of 1915 ish....shake them out.....'separate the boys from the men.'

US futures are + 2 pts this morning and even though European mkts are lower again...it does seem like we are trying to stabilize - the problem is that 1930 on the S&P is not a level of support....it is either the 200 dma at 1905 ish....or it was the 1950 level yesterday that we pierced....so I continue to say that the mkt has to test lower and find support before it can resume its climb. Trading range now is 1905/1950... and 1905 is still only a 5.3% move off the all time high...so it is not the end of the world at all......

Spaghetti Fritatta

This is a great dish for left over spaghetti or linguine or perciatelli - any long type of pasta - actually any leftover plain pasta will do....

You need:
The pasta, olive oil, butter, onions, spinach*, eggs, 1/2 and 1/2, Fresh grated Parmegiana Cheese, s&p. * you can use any green veggie - broccoli, asparagus, arugula etc....you make it your own.

Heat some butter and oil in a large oven proof skillet

Preheat the oven to broil.
Add chopped onions and cook until soft. Set aside.

In a bowl mix the beaten eggs, 1/2 and 1/2, s&p, spinach, cheese and sautéed onions. Mix well. Now add the pasta. Toss and mix.
Now pour this into the pan and cook until firm, rolling the pan to get the eggs to spread evenly. Using a spatula life the sides and let the wet eggs find their way.

After about 5 or 6 mins - when firm - place the pan in the oven under the broiler and let the top cook nicely. Keep your eyes on it - so that it does not burn. Remove and slide onto a large serving platter and slice like a pizza. Serve with Italian toast.


Buon Appetito.