The FED, ObamaCare & The ECB - Which one Moves the Needle?

With little in the way of directional drivers - let's take a glance at the headlines...

US Stocks End Lower - as investors await Friday's NFP report (See below)

China Lowers Growth Target to about 7% - The National People's Congress kicked off overnight and set it GDP target at 7% - down from the levels of the past two decades in what the country is now calling the 'new normal'.

The NY FED - Once the Most Feared Regulator on Wall St - Gets Stripped of Some of its Power - Fed Governor Daniel Tarullo - will now be responsible for oversight and the 'control Center' will be located in - where else - but Washington. Much of this a result of the GFC (Great Financial Crisis) and an observation that

'a lot in the US regulatory system had not worked particularly well before the crisis and it was equally obvious that there was going to need to be a rethink and a reorganization"

Today the FED will release 'Part 1 of the Annual Stress Tests' on the biggest banks. At 4:30 pm (EST) we will get the results for GS, BAC, C, JPM, MS and WFC - The results will show off the risk management procedures, capital ratios, revenue and loss estimates under very extreme conditions - those conditions defined as:

GDP plunging to -6%, (Been there)
A 60% loss in stock mkt valuation, (Seen that)
Exploding oil prices (Lived that)
And exploding European bond yields (Patiently waiting)

Part 2 comes next Wednesday (March 11) at 4:30 pm (EST) when the FED will release the 'Comprehensive Capital Analysis and Review' - this will deal with analysis of dividends, stock buybacks and possible acquisitions in light of what the stress test reveal.

AbbVie to Buy Pharmacyclis for $21 billion...US pharmaceuticals group AbbVie signed this deal last night..giving them a huge presence in the blood cancer mkt. The deal is a mix of both cash and stock at a price of $261.25...... ABBV trading down 2 pts at $58.80 in early trade - while PCYC is trading up $18 at $248 on the news....

And Obamacare in the news once again......"Justices Spar Over Health Care Law Case"

Once again - the Supreme court will hear arguments over a lawsuit that could possibly 'gut the ACA' for millions of Americans The case revolves around the legality of the healthcare subsidies and the loophole that was apparently written into law that our elected officials failed to correct.....I guess Nancy Pelosi is eating her words now - when she said back in June 2012 that -

"But we have to pass the health care bill so that you can find out what's in it..."

because clearly she did NOT know.....and then she went onto to defend her comment by saying that :

"You’ve heard about the controversies within the bill, the process about the bill, one or the other. But I don’t know if you have heard that it is legislation for the future, not just about health care for America, but about a healthier America, where preventive care is not something that you have to pay a deductible for or out of pocket. Prevention, prevention, prevention—it’s about diet, not diabetes. It’s going to be very, very exciting."

And 'VERY VERY EXCITING is one way to put it......Where is she now? Has anyone see her - oh yeah she was spotted crying during the Netanyahu speech on Tuesday......It is time for her to go......
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Ok.... Stocks fell for a second day following the weaker-than-expected ADP private payroll number suggesting developing WEAKNESS in the job market. Stocks were under pressure from the opening and while they remained stuck in the red at the end of the day we did manage to come off of the early lows. The early weakness credited to profit taking, as traders continue to cash in ahead of what many are assuming will be a weaker report tomorrow.

As noted above - The healthcare sector was in the spotlight as the Supreme Court began hearing the Obamacare, “King vs. Burwell” case - which argues that an illegal and ongoing attempt to expand Obamacare is occurring outside the legislative process.

And yesterday we learned the percentage of money U.S. consumers spend on health care ROSE for the third straight year IN 2014 to another record high. Some 20.6% of total consumer spending in 2014 was devoted to health care, including prescription and over-the-counter drugs. That is up from 20.4% in 2013. So you want to know where the gas windfall is going? Talk to Obama (and Nancy)...about the exploding cost of healthcare in this country. It is choking discretionary income and is putting pressure on the overall economy.

Healthcare is consuming a bigger percentage of our incomes, and is strangling other long-term consumer spending opportunities......read - housing, groceries, dining out, buoying cars (as noted in the weak auto sales numbers) retail sales (clothing and footwear) and college spending. The rising costs of 'socialized healthcare' is becoming more of a problem for people and the Supreme Court will have to weigh the consequences of their decision against those who may be negatively impacted should the court strike down Obamacare. - And the plot thickens......

Are we seeing the beginning of a reversal in play?
Looking at many of the indexes - we can see that we are at the top of their trading ranges - pushing the envelope into overbought territory. Investors/traders are being forced to consider the reward/risk equation and if this ratio is worthy of higher stock prices (right now) in light of continued mixed to weaker data and predicted weaker GDP ahead. The tone says not now.....selling although not at panic levels at all has been fairly consistent over the past week....or you can say that the buyers have been more complacent and not nearly as 'gang busters' as they have been.... This is nothing to be alarmed about - it just says that investors/traders are taking a more cautious approach ahead of some key data points.

US futures are +2 at the moment as the mkt continues to try and stabilize around the 2100 level on the S&P. Yesterday we saw the mkt move to test support at the 2085 level....(as noted in yesterday's Morning Thoughts).... It does not feel like the bottom is gonna fall out..... in fact as long as all these central banks remain in the driver's seat - do not expect any kind of real correction.....they won't let it happen....Period, The End.

I think the mkt will remain in the 2085/2115 range - with little to no reason to really move outside that band just yet. Eco data today will be delayed due to the weather (US gov't in DC closes down because of a little snow) Init jobless Claims of 295k and Cont Claims of 2.4 mil.... You can't make this up....who would believe it?

In Europe the BoE (Bank of England) has left rates unchanged (expected) and the mkt awaits news from the ECB which should detail their future plans. Currently Euro mkts are higher as investors do not expect to be surprised at all.........FTSE +0.4%, CAC 40 + 0.83%, DAX +0.68%, EUROSTOXX +0.73%,SPAIN +0.54% AND ITALY +0.88%.....

Risotto Al' Amarone

This recipe comes to me from a friend in Lucera – in the Puglia region of Italy. This is the region that represents the heel of the boot – halfway up the calf. It is on the Eastern coast of Italy on the Adriatic Sea. Lucera – is an ancient city – one that is full of wonder and historical significance.

Today I serve up this incredible Risotto dish which is a perfect “primi piatto”.

For this you will need: Vialone Nano Rice – similar to Carnaroli but produces a more creamy delicious risotto, Fresh Monte Veronese cheese – this cheese is made from cow’s milk and is produced in Northern part of Verona. It is thought to be one of the great cheeses of the Lessini mountains. Finely chopped onion, butter, beef bone marrow, extra virgin olive oil, beef stock and a 1/2 bottle of Amarone della Valpolicella.

Begin by heating up the Amarone. - do not boil - just slowly heat it.

Bring the beef stock to a boil and then turn to simmer.
In a separate saucepan, heat the butter, bone marrow and a bit of olive oil, sauté the onion. When the onion gets golden brown, add rice, stir and toast over the heat for several minutes. Season with s&p. Slowly add the Amarone – stirring all the time as you add allowing it to absorb in the rice.

To complete - add the hot beef stock one ladle at a time. As it is absorbed add another ladle always stirring with a wooden spoon. Taste and adjust seasoning. Cook until the rice has absorbed all of the broth and the grain retains it texture – do not cook so much that you make it mushy. Turn off the heat; add a dollop of butter and the grated Monte Veronese cheese.

Serve immediately in warmed bowls. It doesn’t get any better than this!


Buon Appetito.