Kenny Polcari
KennyPolcari.com
**Breaking News – 4 am (est)….Turkey intelligence tells us they (Turkey) took out a Russian Fighter Jet that had crossed over into Turkish airspace....early reports suggest that they had warned the fighter jet - yet that warning must have fallen on deaf ears as they shot it out of the sky….US futures turned sharply lower on this news - going from +3 to -10.......European mkts are also now sharply lower FTSE -0.93%, CAC 40 - 1.52%, DAX -0.89%, EUROSTOXX - 1.1%, SPAIN-1.53% and ITALY -1.2%….. more to follow as the darkness turns to light**
Asian mkts closed mixed overnight and as noted European mkts are lower following an uninspiring day yesterday here in the states as well as in Asia. Concerns over terrorist threats and the latest news continues to dominate the conversation - Brussels is on lockdown for the 4th straight day as police hunt for a ‘prime suspect’ responsible for the Paris attacks, the US and ‘allied nations’ continue to punish ISIS and the US issues a ‘global travel warning’ ahead of the Thanksgiving holiday.
Yesterday stocks rose at the opening bell only to sell off as we moved into the close. It seemed that neither the bulls nor the bears were really in control as the mkt waffled. The major indexes finished the day just south of the unchanged line – The Dow lower by 31pts, the Nasdaq unchanged while the S&P 500 slipped 2 points. (The small cap Russell 2000 was the only bright spot adding 5 pts.)
Trading volumes were lighter as so many stuck to the sidelines on the heels of the volatility seen over the past few weeks and concern over some of the upcoming macro data due out today. Remember – this week is usually a good week for stocks – but I think there is this new concern out there on a number of fronts....
Will Black Friday/Cyber Monday live up to their reputation considering all of the weak macro data of late - and is Black Friday really a thing anyway? The sales have been going on for weeks now....so it's almost comical to see how all these retailers are positioning themselves and then what the media will have to say about the 'blowout' Black Friday numbers......(Yawn...). On the other hand - many are now worried over the possibility of more terrorist attacks around the world in the weeks ahead as so many celebrate the holidays over the next five weeks.
On the deal front - Yesterday brought the news that Pfizer (American based) and Allergan (Ireland based) had in fact reached a ‘deal’ to combine companies allowing Pfizer engage in a ‘reverse merger’ – taking full advantage of the inversion trade that we spoke about last week. This deal valued at $150 billion will not only create the world’s biggest drug maker – but it will also result in huge tax savings for the newly combined company that will now be domiciled in Dublin – where corp tax rates are a fraction of the 35% rate here in the states.
The ink was not even dry yet on the morning papers before the screaming started over whose fault this was and how could this happen? For Pfizer it is a brilliant deal right? They took full advantage of a broken US corp tax system – a system that has been broken for years but that no one in DC chooses to address.....– yes they may recognize it and may have been talking about it ad naseum but in the end they have done NOTHING and now they are all screaming about it.
GOP frontrunner – The Donald – called the deal ‘disgusting’ and took direct aim at the politicians saying that "our politicians should be ashamed of themselves for a tax system that encourages such moves…” this coincidentally from someone that has used the system to his advantage (via bankruptcy) a number of times makes you wonder - if he were in a position to do an inversion deal and cut his taxes via a sanctioned loop hole - what would he do??? But he is now running for President – so I guess his perspective changes.
The Democrats – not be out done - jumped on the bandwagon as well with Cousin Bernie (Sanders) – a former US Senator - calling it ‘disgusting’ while encouraging the current administration to block it. Hillary – the former US senator, Secretary of State and first lady – said that she would all of a sudden - ' propose specific business tax proposals while urging Congress to act immediately to make sure the biggest corporations pay their fair share so that the US taxpayer is not left holding the bag’ .
Interesting to note here is that both Sanders and Clinton were members of Congress – and neither one of them chose to make US corp tax policy or individual tax policy a top issue during their tenure…..but now that they are running for President – so I guess their perspective changes as well. Funny how that works – no?
So with all this political and economic uncertainty hanging around, coupled with the recent volatility - it is no wonder really that trading is lackluster and directionless. We usually see activity like this when a trend has run its course (in either direction) – when the mkt appears a bit exhausted – when neither side is in control.
This kind of action creates that technical pattern known as a ‘spinning top candlestick pattern’. Spinning tops are candlesticks patterns with small real bodies (representing a tight trading range) that represent the tug of war between the bulls and the bears while having rather long tails on both ends - suggesting that both sides had control at one point during the day - but in the end - backed down. This technical pattern indicates that neither the bulls nor the bears are in control. They are just 'spinning their wheels'. The tight trading range suggests that a possible reversal of trend is in the works....and that the possibility of such a reversal is enough to keep traders/investors on the sidelines until the trend stabilizes.
Despite this being a shortened week there will still be a slew of U.S. economic data out over the next few days. We will see reports on home sales and personal consumption - exp of +3.2%.... Today though, we look for a revised read on 3rd qtr GDP . The expectation if for the revision to show a rate of 2.1% vs. the initial read of +1.5%.....by now we all know that the initial inventory build component was on the low side in the first go around so a revised inventory build will be the reason for the increase in the revision.......
News of the latest attack on a Russian jet will change the course of the conversation and mkt action today. Unless the macro data today surprises the mkts – I do not expect to break up thru resistance or down thru support – yet this new international headline will be cause for renewed concern and caution forcing mkts lower as the day moves on - because it's all about the new uncertainty and the fact that it was a Russian fighter jet only causes more anxiety that threaten to escalate tensions even more. Look for support at S&P 2065.....
This soup is topped with fresh mozzarella, toasted pine nuts and sweet raisins…..Come on now….how good does this sound?
For this you need: fresh mozzarella cut into chunks, pine nuts, olive oil, chopped onion, Yukon gold potatoes, peeled and coarsely grated, water (or veggie stock), fresh escarole roughly chopped, s&p, golden raisins, soaked in hot water for 5 minutes then drained.
In a large pot - heat oil over medium-high heat. Add onion, reduce heat to med and cook, uncovered, stirring occasionally for about 10 mins…. Next add potatoes and cook, stirring occasionally, about 5 minutes more. Now add in the escarole and season with s&p.
Continue cooking, covered, stirring occasionally, until leaves are wilted and tender, about 10 minutes more; add 1 ½ cups water (or veggie stock) and bring to a simmer. Transfer contents of pan to a blender or food processor and purée until smooth; season with salt to taste.
When serving – add chunks of the fresh mozzarella, some toasted pine nuts and sweet raisins…..you can drizzle a bit more of the olive oil if you prefer…..
Buon Appetito.
Asian mkts closed mixed overnight and as noted European mkts are lower following an uninspiring day yesterday here in the states as well as in Asia. Concerns over terrorist threats and the latest news continues to dominate the conversation - Brussels is on lockdown for the 4th straight day as police hunt for a ‘prime suspect’ responsible for the Paris attacks, the US and ‘allied nations’ continue to punish ISIS and the US issues a ‘global travel warning’ ahead of the Thanksgiving holiday.
Yesterday stocks rose at the opening bell only to sell off as we moved into the close. It seemed that neither the bulls nor the bears were really in control as the mkt waffled. The major indexes finished the day just south of the unchanged line – The Dow lower by 31pts, the Nasdaq unchanged while the S&P 500 slipped 2 points. (The small cap Russell 2000 was the only bright spot adding 5 pts.)
Trading volumes were lighter as so many stuck to the sidelines on the heels of the volatility seen over the past few weeks and concern over some of the upcoming macro data due out today. Remember – this week is usually a good week for stocks – but I think there is this new concern out there on a number of fronts....
Will Black Friday/Cyber Monday live up to their reputation considering all of the weak macro data of late - and is Black Friday really a thing anyway? The sales have been going on for weeks now....so it's almost comical to see how all these retailers are positioning themselves and then what the media will have to say about the 'blowout' Black Friday numbers......(Yawn...). On the other hand - many are now worried over the possibility of more terrorist attacks around the world in the weeks ahead as so many celebrate the holidays over the next five weeks.
On the deal front - Yesterday brought the news that Pfizer (American based) and Allergan (Ireland based) had in fact reached a ‘deal’ to combine companies allowing Pfizer engage in a ‘reverse merger’ – taking full advantage of the inversion trade that we spoke about last week. This deal valued at $150 billion will not only create the world’s biggest drug maker – but it will also result in huge tax savings for the newly combined company that will now be domiciled in Dublin – where corp tax rates are a fraction of the 35% rate here in the states.
The ink was not even dry yet on the morning papers before the screaming started over whose fault this was and how could this happen? For Pfizer it is a brilliant deal right? They took full advantage of a broken US corp tax system – a system that has been broken for years but that no one in DC chooses to address.....– yes they may recognize it and may have been talking about it ad naseum but in the end they have done NOTHING and now they are all screaming about it.
GOP frontrunner – The Donald – called the deal ‘disgusting’ and took direct aim at the politicians saying that "our politicians should be ashamed of themselves for a tax system that encourages such moves…” this coincidentally from someone that has used the system to his advantage (via bankruptcy) a number of times makes you wonder - if he were in a position to do an inversion deal and cut his taxes via a sanctioned loop hole - what would he do??? But he is now running for President – so I guess his perspective changes.
The Democrats – not be out done - jumped on the bandwagon as well with Cousin Bernie (Sanders) – a former US Senator - calling it ‘disgusting’ while encouraging the current administration to block it. Hillary – the former US senator, Secretary of State and first lady – said that she would all of a sudden - ' propose specific business tax proposals while urging Congress to act immediately to make sure the biggest corporations pay their fair share so that the US taxpayer is not left holding the bag’ .
Interesting to note here is that both Sanders and Clinton were members of Congress – and neither one of them chose to make US corp tax policy or individual tax policy a top issue during their tenure…..but now that they are running for President – so I guess their perspective changes as well. Funny how that works – no?
So with all this political and economic uncertainty hanging around, coupled with the recent volatility - it is no wonder really that trading is lackluster and directionless. We usually see activity like this when a trend has run its course (in either direction) – when the mkt appears a bit exhausted – when neither side is in control.
This kind of action creates that technical pattern known as a ‘spinning top candlestick pattern’. Spinning tops are candlesticks patterns with small real bodies (representing a tight trading range) that represent the tug of war between the bulls and the bears while having rather long tails on both ends - suggesting that both sides had control at one point during the day - but in the end - backed down. This technical pattern indicates that neither the bulls nor the bears are in control. They are just 'spinning their wheels'. The tight trading range suggests that a possible reversal of trend is in the works....and that the possibility of such a reversal is enough to keep traders/investors on the sidelines until the trend stabilizes.
Despite this being a shortened week there will still be a slew of U.S. economic data out over the next few days. We will see reports on home sales and personal consumption - exp of +3.2%.... Today though, we look for a revised read on 3rd qtr GDP . The expectation if for the revision to show a rate of 2.1% vs. the initial read of +1.5%.....by now we all know that the initial inventory build component was on the low side in the first go around so a revised inventory build will be the reason for the increase in the revision.......
News of the latest attack on a Russian jet will change the course of the conversation and mkt action today. Unless the macro data today surprises the mkts – I do not expect to break up thru resistance or down thru support – yet this new international headline will be cause for renewed concern and caution forcing mkts lower as the day moves on - because it's all about the new uncertainty and the fact that it was a Russian fighter jet only causes more anxiety that threaten to escalate tensions even more. Look for support at S&P 2065.....
Pureed Potato/Escarole Soup
So here is another soup recipe in case you are still undecided about what to serve first for Thanksgiving dinner. This one is a pureed potato/escarole soup - thick and rich - it makes for a perfect starter dish.This soup is topped with fresh mozzarella, toasted pine nuts and sweet raisins…..Come on now….how good does this sound?
For this you need: fresh mozzarella cut into chunks, pine nuts, olive oil, chopped onion, Yukon gold potatoes, peeled and coarsely grated, water (or veggie stock), fresh escarole roughly chopped, s&p, golden raisins, soaked in hot water for 5 minutes then drained.
In a large pot - heat oil over medium-high heat. Add onion, reduce heat to med and cook, uncovered, stirring occasionally for about 10 mins…. Next add potatoes and cook, stirring occasionally, about 5 minutes more. Now add in the escarole and season with s&p.
Continue cooking, covered, stirring occasionally, until leaves are wilted and tender, about 10 minutes more; add 1 ½ cups water (or veggie stock) and bring to a simmer. Transfer contents of pan to a blender or food processor and purée until smooth; season with salt to taste.
When serving – add chunks of the fresh mozzarella, some toasted pine nuts and sweet raisins…..you can drizzle a bit more of the olive oil if you prefer…..
Buon Appetito.
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