'Looser for Longer!'

So what happened? All this talk of the improving outlook for jobs.....Unemployment at near all time lows.....(currently at 5.1%) , FED getting ready to launch, normalization to begin....etc. And then at 8:30 am on Friday we got this 'less than stellar' jobs report....Expectations were for better than 200k jobs (with some whisper number pushing 300K jobs) and then we got the news.....Not only did the September jobs report disappoint at only 142k jobs - but the July and August reports got revised LOWER sending futures into a tailspin early on.

The news sent up the warning flags that the weakness in the global economy was finally hitting home - kicking the possibility of any rate increase in October (odds drop to 8%) out the door, and even suggesting that any rate increase at all in 2015 has been all but eliminated.

The warning flags sent the mkt into another tailspin - early on....but then the focus turned to chatter that not only is a rate hike off the table, but now the possibility of 'new' stimulus was becoming a reality. The chatter of a new stimulus program sent buyers searching for bargains - because IF the FED gets back into the business of monetary stimulation - then expect the mkt to move higher.

In the end - this report does confirm the continuing struggle our economy faces. Rob Carnell - Chief Int'l Economist at ING said it this way:

“No rate hike this month then it seems, But it raises doubts too about the probability of a December hike, unless the Fed changes the basis upon which it decided policy rates.”

So? Are we heading for another recession or are we in another recession? Well, we can't really say we are in a recession because we have not had two back to back qtrs of negative growth - but remember - this administration has gone to great lengths to change the formula about how we calculate GDP.... But there are other tools for testing whether a recession is at hand –

Enter stage left: Factory Orders. In September, (for the 10th month in a row), US Factory orders fell again y/yr. 10 months in a row - Factory Orders have declined y/y......marking the longest period of decline outside of a recession – so could we actually be in recession? Start noticing the empty storefronts again in your local community....(I was surprised that this weekend when I counted 15 empty stores in Mt. Kisco, NY....a fairly affluent community in Westchester County....Just poof! Here yesterday, gone today.)

Now overnight - Mkts are all moving higher....as the possibility of more stimulus is at the center of the conversation.....Mkts in Asia were the first to celebrate after the weekend.....but remember - Chinese mkts remain closed for a national holiday and won't open until Wednesday....so those participants have not been able to vote yet about what this report means for them. ..But in the end - if the China slowdown is beginning to infect the US economy then look for the PBoC along with the central gov't to begin another round of new monetary policy. Japan +1.58%, Hong Kong +1.62% and ASX +1.9%.

In Europe those mkts appear to be on fire....FTSE + 2.1%, CAC 40 + 3.19%, DAX +2.25%, EUROSTOXX + 2.88%, SPAIN +3.12% and ITALY + 2.3%. - Economic stats in the Euro zone were a bit disappointing.....EMU retail sales, EMU composite PMI, and German composite PMI all missed analysts estimates....
And so the mkts are loving this fact as European policy makers continue to worry about global growth, high unemployment in the region and the weakening pace of expansion...all this raises the risk of Euro area growth continuing to fade into the 4th qtr -which then will cause the chatter at the ECB to be about opening up the spigots once again.....

Now earnings season is about to kick off..... What will we see this time? Estimates have been slashed - Estimates for GDP are hovering around 1% - down from last qtrs 3.9% run rate....Earnings are expected to decline by 4% - but in the end - Will that happen? Probably not...Like I said - estimates have been cut/slashed really - so expect to see the usual 75% of reports BEAT the number..... Tomorrow we get PEP - est call for $1.26/sh and YUM brands....est call for $1.06/sh Both of these stocks have broken below all of their moving averages - as so many have - so listen for the guidance...what will they say about the US, China and the next 6 months? AA reports on Thursday after the bell and then next week we get the banks...JPM, GS, C, WFC, BAC etc....

The next move will be dictated by what these reports reveal....Will the China syndrome be the straw that breaks the camel's back?

US Futures are UP another 14 pts in early trade as the party continues. Fed Governor Rosengren - over the weekend - stated that the soft jobs report would likely result in a delay of a rate hike, which is being used by global mkts as a reasons to rally....but at what point will the 'bad” economic data coupled with a dovish FED not be “good” for stocks anymore?

Eco data today - Markit US Services PMI - exp of 55.6 and Non Manf PMI of 57.5 - If they come in at these levels then they signal continued expansion and that is good......... Thursday brings us the FED mins from the Sept meeting....this should really be a non event since we have already slaughtered that report after the NO action vote last month.

If futures stay strong going into the bell - then expect the mkt to test the 1990 range again. And if it gets really bullish then expect traders to test the down trending 50 dma at 2002....before we hit substantial resistance. Remember - action of late has been about 'selling the rallies' vs.' buying the dips' as investor confidence has been shaken and until we get a better handle of earnings - I would not expect this mentality to change.

Veal Shank Osso Bucco

Veal Shank “Osso Bucco” I made this on Saturday afternoon.....What a great dish! - Thick, meaty, delicious....if done right - it falls right off the bone and melts in your mouth........Osso bucco: is a specialty in Milan. It is made with carrots, celery, onions, garlic, S&P, lemon zest, red wine, beef broth and tomato paste.. You prepare it in the afternoon and then let is slow roast in the oven for hours......try it…it is wonderful.

First rinse the shanks and pat dry....dredge in seasoned flour – (here you can use GF – gluten free - flour) and then brown in a frying pan with heated olive oil.....making sure that you keep the heat on high to sear the outside while trapping all of the juices inside....After you have browned the meat - place in a roasting pan - making sure not to crowd them too much.....At this point - chop (not dice) chop, the carrots, celery and onions....crush 4 / 5 garlic cloves and spread the garlic and veggies over the meat. Add lemon zest on top - not to much - but enough so that you know it’s there.

Back to the frying pan - deglaze with red wine, add beef broth and a can of tomato paste (not puree) paste. Stir - bringing to a boil - then reduce heat and let thicken a bit - all of 4 mins or so.........if need be - add a bit more beef broth - then add this mixture to the roasting pan - making sure that you bathe the shanks in wine/beef broth. Cover tightly and place in a 325 degree oven for at least 4 hrs.....when ready....take a look, smell the wonderful aroma, notice how it fills the kitchen and permeates the house.....

When done - remove 1/2 of the veggies and puree. Place some of the pureed veggies in the center on a warmed plate and then place a veal shank on top of that. Next - take some of the remaining veggies and circle the shank. You should serve this with a nice onion risotto or even creamy mashed potatoes....

Have your guests take a seat, light the candles, turn on some nice dinner music to fill the room. Try this with a Brunello di Montalcino - it's like velvet and always works nicely


Buon Appetito.