Think the Energizer Bunny

Think - Energizer Bunny - "He just keeps going and going and going...."

.......and the mkts keep moving higher and higher remaining positive for the past 6 days as investors/traders take it all in.. M&A (merger & acquisition) activity lighting up the board - Pharmaceuticals and drugs enjoying the latest round of activity providing underlying support for the improving tone across global mkts.

This rally remains an enigma - strategists/analysts although all expecting a strong finish to year end - are also expecting a near-term pullback - some calling for a 5% - 8% adjustment (I am in that camp) while others are bracing for a much more dramatic move - some 15% - 30% lower.

Where did it go? I mean two weeks ago - they were throwing the momo names off the roof as traders/investors chose to 'raise some cash' - we witnessed as some of these names suffered 20% - 30% haircuts....while the Nasdaq flirted with a 10% correction - yet the broader mkt - DOW and S&P came nowhere close to that - leaving these same analysts scratching their heads. Well folks - we are about to see whether or not traders and investors have the fortitude to keep pushing.....as both the DOW and S&P are testing all time highs yet again......

With the mkt testing the highs - we do not see a surge of volume - meaning that large asset managers are keeping some powder dry while they tweak their portfolios and trim some outperforming positions while re-allocating to some underperformers - so any attempt at a pullback will be met with real institutional natural buy interest - providing broader support.

Adding to the feel good mood is the a continuation of a "fairly positive earnings season accompanied by slowly improving macro data". I have been saying here in my note as well as on CNBC that I expect 2014 will be a good year - maybe not as good as 2013 - but a good year still.....and we can expect more M&A activity as companies have accumulated such high levels of cash, and are now being forced to put it to work as they look for growth opportunities as the economy strengthens.......

The action yesterday only re-enforces this argument. Novartis/GlaxoSmithKline and Eli Lilly - all jumping in bed trading assets amongst each other to strengthen their individual mandates and optimize their portfolios, and future pipelines.

WSJ headlines with "Deal Flurry Shows Drug Makers' Swing Toward Specialization"

Then the rumor mill fires on all cylinders as bankers speculate that Pfizer has been in takeover talks with AstraZeneca - this just added fuel to the fire and BOOM....it's off to the races.... Remember - big healthcare companies are cash cows - they are a defensive play and so do not be surprised to hear more.....

So - The mkt is showing major resilience - but underneath something just does not feel right....kind of like the 'calm before the storm'.... Or am I just being too cautious? I love when you read the paper and some analysts tell us how 'surprisingly good' earnings season is....estimates are projected to decline by 1.4% vs. last year....estimate have been cut so 'beating' is almost a joke....and when those some analysts tell us that 64% of reports are better than expected it - should it raise a red flag?

Then Dennis Gartman - that famed money manager - told us two weeks ago to 'SELL EVERYTHING - GET OUT - RAISE CASH' as the mkt was preparing for a meltdown......(How'd that work out?) He turned tail so fast it is almost laughable as he now tells us that he has changed his mind and is now 'PLEASANTLY LONG' - doesn't that scream market top? And what is 'pleasantly long' anyway? Was he playing both sides of the fence - telling investors to get out while he was scooping it up? I mean you gotta ask the question..... I mean - I'm just sayin'.....

US futures this morning are down 2 pts....essentially flat - today will be another big earnings day....what will we see..PG just announced an earnings BEAT - reporting $1.04 vs. $1.01...In fact - the stock is trading LOWER in early pre-mkt trading...and the song plays on.....

Will 'better than expected' reports tempt traders to take us up and through 1900? Not so much.....I am thinking that we are hitting our heads right here....not enough 'oomph' to get us up and through yet.....The FED is due to announce next week and expectations are for another $10 bil to come off the table - while she reiterates that rates will stay low forever.....and as long as that is true - then any broad pullback will be short and shallow....

Action in both the DOW and S&P do suggest that an eventual move higher may not be far off - but the mkt needs to digest the latest swift move back to the highs. Individual names may get punched if they disappoint - but then - there lies your opportunity - especially if the pendulum swings too far - as we just witnessed with some of the growth names during the past couple of weeks. I believe the range for the S&P will remain 1850/1885 - any attempt at 1900 will be met with real resistance but unless we get some really unexpected data or geo-political news - there is really no reason to force them lower YET.

Overnight Asian stocks opened higher reflecting US action yesterday....but then pared gains after China reported a weak PMI - 48.3 - signaling contraction for a 4th month. Funny though - all the angst about how a slowdown in China will affect US corp earnings and the global recovery have NOT COME TRUE - in fact - companies so far have not expressed much concern of a slowing China and global mkts are not imploding. Japan +1.1%, Hong Kong - 0.97%, China -0.26% and ASX +0.7%.

In Europe today - mkts are under a bit of pressure. All mkt centers taking a break from the rally as investors there are showing a bit of concern over the latest China data and a slew of earnings reports. Tech and mining stocks under heavy pressure as investors raise some cash on the back of the weak China report. Again - it is NOT panic - just normal portfolio activity based on the latest data. This reports does suggest that 2Q GDP in China might come under more pressure....but do not read too much into it yet...the 2Q has only just begun..... FTSE -0.17%, CAC 40 -0.39%, DAX -0.3% EUROSTOXX -0.28%, SPAIN flat and Italy -0.52%

Veal Medallions W/Porcini, Shitake & Button Mushrooms in White Wine

You will need: Dried Porcini mushrooms and fresh Shitake and button mushrooms, 1/2 stick butter (at least) , dried sage leaves (finely chopped), 6 veal medallions, 3/4 cup white wine, chopped Italian parsley, s&p, 1/2 cup heavy cream.

Soak the dried porcini in 1 cup of warm water for about 1/2 hr. Once soaked - remove with a slotted spoon - next line a strainer with paper towel and strain the soaking water into a bowl and set aside. Do not throw away...you will need it in the next step.

Clean and Chop the shitake/button mushrooms and set aside.

Add the butter and the sage into a sauté pan and turn heat to med high..add a touch of olive oil to prevent the butter from burning. Next add the veal medallions do not crowd the pan. Brown well on one side - then flip and brown the other side...you should probably cook for about 4/6 mins total....they should be pink on the inside.....

Add the wine and let it boil - after 30 secs or so...remove the veal and place on a plate. continue to steam the wine - scraping the bottom of the pan until all the wine is evaporated. Now add back the mushroom water..and the porcini's to the pan....stirring - allowing all of the liquid to evaporate..... Now add the fresh mushrooms and the chopped parsley. Season with s&p - turn heat to low and cover pan....the fresh mushrooms will make their own juice - keep cooking - stirring every once and a while - remove cover until the juice evaporates. Now add back a splash of white wine and the heavy cream and stir until it becomes a little thicker - 3 or 4 mins. Now - season the veal with s&p and add back to the pan - leaving long enough just to reheat. Turn them once or twice to assure even heating.

Present on a warmed plate and serve this dish with steamed asparagus - seasoned with s&p and a dab of butter. Prepare a salad of arugula, boston bib and maybe some fresh spinach. Add red onions, cucumbers and sliced tomatoes. Season with s&p, oregano, a squirt of fresh lemon juice, red wine vinegar and Olive oil. I like a nice Merlot with this meal as it is a medium bodied red.


Buon Appetito.