Deluge of Data

Good morning and welcome back to the daily grind......So on Friday while in Providence, RI - Yellen told us that 'rates are on track to rise this year....but will likely proceed cautiously because the job mkt hasn't fully healed, inflation is low and growth has disappointed us again...' But what was or real interest is her admission that although the unemployment rate is at 5.5% even SHE remains skeptical because

'it probably does not fully capture the extent of slack in the economy"....Do you think????

Now although she fully expects rates to rise to 3.75% - at some point - she does not see that before 2018 (well after the next presidential election cycle).......so that's at least 30+ more months of discussion.....about when they will launch, at what pace will they try to normalize and what that says about the continuing recovery, jobs, inflation, wage growth and longer term health for a sustained US recovery.

After her speech - the mkt continued to chop - moving lower as traders tried to handicap what her speech really meant. The bottom line is that the mkt continues to struggle near the top - void of any real reason to push up and thru but equally void of any reason to break down.....

Also on Friday - the gov't told us that CPI rose in line with expectations - yet core prices (Ex food and energy) rose more than expected..... Adding to the confusion is a y/y comparison......where the broad reading is down 0.2% yet the core reading (ex food and energy) is up 1.8% allowing for a range of analysts to 'spin' the news......Paul Ashworth - Chief U.S. Economist at Capital Economic said,

"Overall, with the employment cost index suggesting that wage growth is accelerating and the CPI indicating that underlying price inflation is rising, the Fed can't wait forever before beginning to raise interest rates from near-zero. September is still the most likely lift-off date, but July is not out of the question, particularly not if we get another couple of robust rises in core consumer prices in May and June."

[For the record - I say December at the earliest].

While the Fed welcomes any opportunity to discuss the timing of rising interest rates - the Obama administration is quietly keeping the pressure on the FED to take no action .....because higher rates raises the cost of government borrowing – and with the Presidential election cycle gearing up.......the stakes are high.

The dollar - which has been gaining ground again over the past couple of weeks (+4%) attempted to break out on Friday - hitting its head on resistance and failing - but this morning we are seeing that the dollar index has now pierced resistance (50 DMA) at 96.63 - trading as high as 97.01 in early morning action. This should put a damper on oil - causing that commodity to churn in line and potentially test the recent lows of $58.25 ish.....Gold as well continues to move lower as the dollar moves higher and that commodity is testing support at $1196. Failure to hold the line there could see gold go to the $1175 range before stabilizing.

Now on the technical side - While prices last week ended near new records, volumes remind me of late summer - and they do not appear to be committed enough to continue to ignite much more of a rally at the moment. Recall the bearish triangle pattern I noted last week........[Draw support from the lows of January and resistance from the highs of February] You can see the resistance in the S&P and DOW as prices have done nothing but go sideways for the past two weeks and now appear to be exhausted......

(This is not the case with the Nasdaq or the Russell - and the Transports are in a clear downtrend - so this sets us up for another interesting conversation).

Note how prices have struggled here at the resistance line of this triangle pattern and note how close the support line is coming to that resistance line.

So - we must ask - will we break up and thru or will we test support? Now that is why they call this formation a 'bearish triangle' because a majority of the time the support line fails to hold and a 'mini correction' is born. I'm just sayin..... Watch closely as this formation plays out......this tapered pattern of prices for the major indexes may indeed foretell a summer correction is ahead......

This morning US futures are down 4 pts....this is after being down 7+ pts in early pre-dawn trading.....we are due for a long list of data today after the long weekend. Durable goods exp of -0.5% (negative 0.5%), Ex Transports of +0.3%, Cap goods 'orders' Non Defense ex Air of +0.3%, Cap Good 'shipped' of +0.3%, FHFA Home price index of +0.7%, Markit US Services PMI of 56.5 and 'Revisions to New Home Sales' will now show a 5% increase (funny...I guess someone forgot to total the spreadsheet) and Richmond Fed Index of 0.0, while Dallas Fed should show a decrease of 11.5.....Nothing in these numbers suggests a broad robust
recovery.....so look for the mkt to continue to flounder as it tries to reconcile mkt action with Fed intentions. I think we remain stuck in the 2120/2130 range.

***Fed Vice Chair Stanly Fischer is due to speak at 12:30 - so expect returning traders to sit tight while the HFT guys pay "Clinton rates' for the speech.... Oh why - they don't?

In Europe - mkts there are mixed now after some early weakness.....Elections in Spain over the weekend brought some 'anti austerity' parties to the podium......causing traders to suggest that if Greece is successful in winning a new agreement - then that opens the door for Spain (and possibly Portugal and Italy) to turn up the temperature on a Greek style showdown with international creditors. FTSE -0.19%, CAC 40 +0.32% DAX -0.46%, EUROSTOXX FLAT, SPAIN -0.07% and ITALY +0.81%.

Steak Pizzaiola

You will need a couple of things: A nice rib eye, or T-bone - (about 3/4" thick), Olive oil, Oregano, garlic, onions, red and green bell peppers, can of crushed tomatoes (not puree), some red wine, salt and pepper....**crushed red pepper flakes (optional).

In a sauce pan - heat olive oil and add crushed/sliced garlic and move it around for a couple of mins until it is nice and golden....add a sliced white onion and julienned bell peppers - turn heat to medium and cover. When the onions and peppers are soft (about 5 mins) add the crushed tomatoes, oregano and *red pepper flakes. Turn heat up and bring to a quick boil then reduce heat to medium. Add red wine (about 1/2 cup) salt and pepper and let simmer and thicken up....about 10 / 12 mins.

Next - rub steaks with olive oil, salt and pepper - do not drown the steak in oil - just enough to massage the steaks and prepare them for the grill. Sear the steaks on the grill and cook for about 4 mins per side - now remove and add the steaks to the Peppers/Onions and Tomato sauce. Cover and turn heat to simmer and cook for another 5 mins .

This should give you a nice medium steak (depending on thickness) - If you prefer you can let simmer longer for more well done.

When done - remove steaks from the pan - slice into thick strips and arrange on plate. This should be enough to feed 4 adults. Next - stir the sauce in the skillet pan to deglaze - making sure to scrap the pan for any bits left behind. Spoon sauce over the steak and serve immediately. Present this meal with a large mixed salad of Arugula, Boston Bib & Romaine topped with tomatoes, red onions, cucumbers - dressed in a red wine vinaigrette. For wine - You can keep it simple and go with a Chianti.


Buon Appetito.