Now Who is Spoofing US?

Stocks came out of the gate with a bang.....moving higher in the early seconds after the bell rang only to weaken as the mins ticked by......at 10:20 - the mkt was not only negative but was testing support .......and like I said in yesterday's note - it found the buyers......that's all it needed. The fact that the mkt failed to 'break' WAS the positive and it was off to the races...... By 3:30 - the indexes were once again flirting with their highs....and Nasdaq? Well that index was not only flirting, it was teasing traders and investors - daring them to push it up and thru its March 2000 high of 5048.....But alas - that was not to be yesterday.....and it may have a bit of trouble today as well....at least until investors have a chance to react to the disappointing tech numbers reported after the bell last night.

Now - let's put this in perspective....FB - which everyone was waiting for - did not disappoint.... Sales rose by 42%....not bad, but the afterhours crowd was looking for 49%...so those bozo's were disappointed and took 2 1/2% out of the stock in the moments following the release....Now - revenue growth was impacted by the stronger dollar - and since FB generates more than 50% of its revenue overseas - then you can see the impact that the strong dollar had....BUT we KNEW THIS.....And since they don't 'produce' a product overseas - they did not get the benefit of weaker foreign currencies like so many of the multi-nationals are getting... In the end - earnings of 42 cts were ABOVE the 40 cts expectation and well above a year ago of 35 cts.... So - get over yourself....This was not a negative report....In early pre-mkt trading - the stock is holding right in line at $83.65 - which was yesterday's low...Now on Tuesday - the stock did gap up - just a bit - so technically - it might want to go back and 'fill that gap' at $83.15......and then after that...well - I suspect it could go on to challenge the March highs of $86/sh.

TXN and Qualcomm - well those are different issues - and in fact more concerning...as they missed on earnings and 'lowered forward guidance'.....So my sense is that these stocks will cause investors to focus on the negatives....causing the mkt to once again stall - for now.

Look - Earnings results so far from 110 companies reported in the S&P are on track to fall 4% from a year earlier.... The S&P is trading at 17.4 X's the previous 12 months' earnings, - this is 17% ABOVE the historical 10-yr average of 14.6 X's...... This is why the mkt has been tossing and turning of late.....We are trading above historical averages all while U.S. economic indicators continue to miss and disappoint causing long term investors to sit tight - thus the lack of real commitment and volumes......

One of the most interesting reads on this are the 'Economic Surprise Indexes' that exist across the street. Citigroup has one, BB has one and both are negative as of the 20th......In fact the BB Surprise Index is making fresh lows......The index measures whether the eco data is beating or missing forecasts, and the fact that it is sitting at its lowest level since the end of the GFC (Great Financial Crisis) - should be just a bit concerning....Next week we get 1Q GDP, which we know is not going to be 'robust' , the Atlanta Fed is projecting growth of ZERO and yet here we are testing new highs. Does anyone else suspect a disconnect? Is someone 'spoofing' us?

Next week (28/29) we will hear from the FED - you can expect to hear more about a weak global economy, strong dollar, weak earnings, zero GDP growth and lack of inflation - all as reasons for caution in the months ahead.....June is OFF the table - rates not going anywhere.....August is most likely off the table as well - but they will not close that door in April......they need to keep hope alive that rates will begin the move higher......with probably no real intent on doing anything as long as the US economy continues to waffle back and forth. NY Fed Pres. Dudley had this to say:

"While I am relatively optimistic about the growth outlook for 2015, I also must acknowledge that there are some significant downside risks...in particular the 15% appreciation of the exchange value of the dollar since mid 2014 is making US exports more expensive and imports more competitive"

(The strong dollar is expected to reduce GDP growth by about 0.6%).

Speaking of 'spoofing' - have you seen the latest on the story of the week?

Exchanges in both the US and Europe had this clown on 'trader watch' - identifying numerous suspicious trades over a period of months....very large orders entered and then cancelled over and over.....in '09 and '10 they even questioned his actions...telling him that on the very day of the crash that "orders are expected to be entered in good faith for the purpose of executing bona fide transactions".

How's that working for you? It wasn't until 2012 when the still unknown whistle blower identified all of these suspicious trades dated May 6th. The CFTC (Commodities Futures Trading Commission) saying that they do NOT have the technology to monitor cancelled trades in 'real time' hindering their ability to police the mkt...( you mean to tell me that technology can follow me around the world, knowing everything about me yet - we can't monitor trades in a completely electronic world?) ...Gary Gensler former head of the CFTC and former GS MD, and now Hillary's CFO for her Presidential campaign, issues a 104 page report explaining the cause of the flash crash and admits that they never even looked at spoofing, layering , manipulation or order cancellations....... You can't make this up...who would believe it?

US futures are down 5 pts at 2094......as we await some big earnings today...Companies reporting during the day include 3M, CAT, GM, PEP, PG, United Continental......After the bell we will hear from Amazon, Google, MSFT and Capital One. Eco data today is more housing data....new home sales of are expected to be down 4.5%....in contrast to yesterday surprise 6% rise in existing home sales....so more confusion......In addition we will get Init Jobless Claims of 287K, Cont Claims of 2.29 mil and the Kansas City Fed Manf report of -2.

Support for the S&P is now at 2085.....Look for the mkt to test is today's numbers show signs of disappointment.

In Europe - mkts are lower.....Eurozone business activity disappoints....Markits Flash PMI fell to 53.5 from 54......German PMI fell to 54.2 form 55.4.....(remember a read above 50 is expansionary - so it is not a complete disaster - but the trend is moving in the wrong direction) Spanish unemployment rose and UK retail sales fell......FTSE +0.08%, CAC 40 - 0.77%, DAX - 1.06%, EUROSTOXX -0.94%, SPAIN -0.72% and ITALY -0.73%.

In Asia - Chinese Flash PMI fell to 49.2 vs. the est of 49.6 (below 50 is contractionary) but markets are shrugging off the news as it raises expectations of MORE stimulus. Japan +0.27%, Hong Kong -0.38%, China +0.4% and ASX +0.12%

In case you missed it - Carly Fiorina is throwing her name in the ring as a Republican candidate for Pres.......on May 4th...and then she will be one of the keynote speakers at the May 5 TECHCRUNCH DISRUPT NY conference. She is also launching her book on that day as well as appearing across the range of cable programs..... Carly Fiorina - really? How would she deal with Putin, Iran, Syria, Hamas, ISIS, Yemen, and Iraq....to name just a few of the int'l challenges that confront the US president... She was the CEO at HP!

Classic Spaghetti and Meatballs

In times of stress we need some comfort food and when I think of comfort food - my 102 yr old grandmother comes to mind....now - just fyi - yes she is 102 - and she is a vibrant, healthy, fully employed. She manages the gift shop at a local nursing home where she is confused why the 80 yr olds are in wheelchairs.....she is 20 yrs their senior and still driving, walking, cooking, reading, entertaining, and engaging in relevant topics of the day....

Meat sauce - you need: 4 chicken thighs with the skin, 4 country style pork ribs, onions, garlic, olive oil s&p. 4 cans crushed tomatoes (NOT PUREE) Fresh basil.

Now - slice 3 large white onions, chop 4 gloves of garlic and sauté (med/hi) in a heavy bottom pot. After about 5 mins...add the chicken thighs and brown for about 15 mins....remove the thighs and set aside. (when it cools you can remove the skin if you prefer) Now add the ribs to the pot....brown these for about 15 mins... Remove and set aside. Now add - 4 cans of kitchen ready crushed tomatoes....if you cannot find then buy the plum tomatoes and run them thru the food processor - add 1 1/2 cans of water - stir - bring heat up to high until it boils then reduce to simmer....season with s&p, add the fresh chopped basil - like 6 / 8 leaves. Add back the meat - chicken, pork and meatballs. Add in the oil and bits from the fried meatballs. Let simmer for at least 45 mins - stirring occasionally....at this point it is all done. (But if you turn it off and let cool and refrigerate until the next day - it is always better.)

The Meatballs:

You CAN NOT USE LEAN GROUND BEEF.. Absolutely not....they will taste like cardboard.....you need GROUND CHUCK..... Do not buy the 90/10 (90% lean/10% fat) you are wasting good money and your time!!! You need at least 75/25.....(75% lean/25% fat)

Now that we got that right - (you can also add some ground pork or veal if you like) I always use 1 lb of ground chuck and 1 lb of ground pork.....2 eggs, pepper, handful or two of grated Pamegiana, (if you only have Romano then that's fine), 2 med cloves of crushed and minced garlic*, 2 slices of Italian bread soaked in whole milk and a splash of olive oil....no need to add salt - the cheese will provide it.

Remove any rings and wash your hands.....now form the meat balls....bigger than a golf ball, but smaller than a baseball....next - I fry my meatballs and then add to the sauce...you can also place on a baking sheet and bake in the oven for 15 mins or so on 350 degrees and then add to the sauce. If you are in a rush - then just add them to the sauce raw and they will cook in about 15 mins......but for me - I prefer to fry them first.

Now bring a pot of salted water to a rolling boil - add spaghetti and cook for 8/10 mins until aldente. Strain the pasta - reserving a mugful of pasta water . Return pasta to the pot - add back 1/4 cup of water to re moisten....now add 4 ladles of sauce and mix well.

Serve immediately in warmed bowls with plenty of fresh grated Parmigiana cheese. Serve all of the meat on a separate platter in the center of the table.


Buon Appetito.