Central Banks Play Games, AI Predicts Trump and The Dover Sole Meuniere is $75!

It's Friday, October 28th - get ready for 3Q GDP (Gross Domestic Product) - coming to a theater near you at 8:30 am....now estimates are all over the place - the range while wide has been moving up lately as the gov't prepares to convince us that talk of a recession is just that....talk.   Estimates for GDP range from 2% - 3% - with most expecting a read of 2.5% this is in complete contrast to what the 1st and 2nd qtrs looked like - 0.8% & 1.2% respectively.  So I ask - what has really changed from the 1st and 2nd qtrs to cause such a spike in GDP?
 
Oil has been below $50/barrel and job growth has continued to be below estimates, inflation on stuff we don't need has remained sub 2%, But try and buy a 1lb of hamburger or a rib eye without feeling like you were just robbed!  And going out to eat.....I had a piece of Dover sole the other night for dinner at a NYC restaurant - it was 'a special'....nothing fancy, meunière style (lemon and white wine) - and I had to order sides 'al la carte' - when the bill I looked at it and saw that he had charge $75 for the Dover Sole.  Now look - I am NOT cheap - but $75 for a piece of fish?  I said to the waiter - is this a mistake and he said -
 
 "Oh no sir - that's why it's a special - they don't want you to see the price"
 
 - and to that I said - is this restaurant run by the gov't?  I mean have you seen what the cost of healthcare is going to be next year?  Insurance companies tell us that that rates will skyrocket by an AVERAGE of 25% - and this morning I heard on the radio that Obama administration is trying to do 'damage control' by saying that  
 
 'we need to destroy the myth of rising healthcare costs'  in fact he said:  "We need to clean the bugs off the window so that people can see..." 

Is it me?   Just another example of being 'out of touch'.....
 
Now trading yesterday was decidedly bearish - stocks came under pressure - the S&P closed down 6 pts at 2133 (and this morning - futures are trying to hold on here and are up 2 pts) .....the Russell 2000 got clocked as investors move from mid cap/small cap names into the safety and security of large cap US names - think the Dow Industrials!  This could suggest that investors are considering a weaker GDP report, because if they thought the report would surprise on the UPSIDE - then they would be piling into those very names or it could just mean that investors/traders are preparing for a rate hike and are now re-pricing assets.
 
Take a look at the charts - very interesting and goes right to my prior argument - investors are moving out of what the perceive to be the riskier areas of the mkt and moving into what is supposed to be the safety play. (Think the McClellan Oscillator - see my prior dailies).   The Dow and S&P have not moved much in the past 3 weeks - both down about 2.3% off their highs......The Dow has been trading in a very tight 370 pt range of 17,988/18,370 while the S&P has been caught in a 40 pt range from 2125/2165 since early September.....The  Russell has taken more of a hit -  breaking its intermediate support yesterday at 1210 - ending the day down at 1189 or down 5.1% since September.  Bond yields are spiking in the US & Germany and beginning to move up in other parts of the world as investors and traders are beginning to get the picture being painted by many of the central banks concerning rates and further accommodation. 
 
The bookies in Vegas are busy.....the chance of a December rate hike now stand at 73% - that is up 3%age points this week and action in the bond mkt would support this bet as bonds continue to sell off sending bond yields higher.  On Wednesday - the UK reported that their growth rate 'expanded more than expected' and this has all but killed further speculation of more accommodation by the BoE  (Bank of England),  Uncle Mario (Draghi) and the ECB (European Central Bank) continue to play 'Hide and Seek'  while the BoJ (Bank of Japan) is playing 'Duck, Duck, Goose' as they suddenly do an about face - suggesting that NEGATIVE rates in Japan may have run their course - preparing  investors there that the next move in rates may be UP and not DOWN.  It appears that central banks have had just about enough...they are choking on all this accommodation and now realize that they are up to their eyeballs in s---.  (fill in the blank)
 
The dollar continues to march ahead and oil is once again struggling with $50/barrel.  A better than expected GDP report today will only keep the fire on rising rates burning - as it suggests that the coming 2017 recession is NOT coming.  No matter what -  Where is the growth coming from?  LOOK for the amount of gov't spending in today's release of GDP.  Remember - it is an election season - there is a lot of the table that will define the US for years to come - If the gov't can 'shade' this qtrs report - with more smoke and mirrors - and make it appear to be stronger in front of one of the most contentious elections of our lifetime - they can try to persuade the voting public that staying on this CRASH COURSE is the better option!  Remember we are now saddled with the $20 tril debt that current Washington DC insiders have created an the current course is sure to only further inflate this number.....I'm just sayin.....
 
After the bell last night - we heard from Alphabet - they killed it  reporting $9.06/sh vs the exp of $8.61 - stock is trading up 10 points....Amazon on the other hand missed earnings at 0.52/sh vs exp of 0.78/sh - as they prepare to spend big for the holiday shopping season  - the stock got hit hard at 4:03 pm trading down $50 bucks....piercing its 50 dma but holding its 100 dma at $768/sh......but hold on.....top  line revenues grew by 29% at $32.71 bil besting the estimates of $32.69 bil.... and web revenues grew by 55%....so what am I missing here??  Like Apple - they are the elephant in the room......are they going away?  Have you ever used Amazon - enough said......
 
This morning US futures are up 3 pts -which will put the index right back at 2135 - besides the GDP report - we will get hit once again with a slew of earnings....Chevron, ExxonMobil, MasterCard, Hershey's, Xerox, Cabot Oil & Gas, Royal Caribbean, AbbVie, Ambev and AutoNation...Now while this is all well and good - investors will continue to speculate on what the FED will say next Wednesday - 6 days ahead of the election as the focus will move from earnings to monetary policy and in 12 days - the world will know what we as a nation have decided......Expect the rhetoric and drama to hit all time highs as shots fly creating more anger and divisiveness across the country....
 
CNBC runs with a story this morning that now has an AI (Artificial Intelligence) system calling the election.....and the interesting thing here is that this same system CORRECTLY predicted the last 3 elections......What is interesting is that yesterday they had a human poll that predicted a Clinton win.....and the plot thickens....
 
"Trump Will Win the Election and is More Popular than Obama in 2008, AI System Finds"   (Oh boy.....here it goes!)
 
European mkts are mixed to lower on balance.  Weaker earnings, uncertainty over FED policy and the US elections continue to weigh on investor's minds....Bank earnings are in focus...UBS reports a 60% decline in y/y profits - citing macroeconomic and geopolitical issues as the culprit....CEO Sergio Ermotti continues to pledge more cost cuts as he tries to right the ship.....The stock which is down 30% ytd....is rallying a bit on this news.....And in France - BNP Paribas reports 'better than expected' earnings and investors are hitting it...but they took that stock up 18% in the last month ahead of earnings...so it makes some sense that the trader types will take money off the table.  FTSE flat, CAC 40 +0.30%, DAX, -0.18%, EUROSTOXX - 0.28%, SPAIN - 0.33% and ITALY - 0.64%.
 
Take good care - Have a great weekend

KP

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Dover Sole Francese

 Considering that we discussed the Dover Sole - I thought I would give you the French Version.....but expect to feel like you got robbed at the fish store....

 

For this you need:  1 lb Dover sole, flour, eggs, parmegiana cheese, pepper, olive oil, butter, fresh lemon juice, marsala wine, garlic and some cornstarch.

Preheat oven to 300 degrees.

In a bowl - mix 3 eggs and a handful of parmegiana cheese and some pepper - beat well - set aside.

In a large sauté pan - heat up the butter and oil....

Now - dredge the sole in flour and then dip in the egg mixture

Place in the hot sauté pan - do not crowd.....

Cook the sole until nicely golden browned (maybe 2 mins max?) - now flip over and repeat - remove from pan - and place on an over proof dish and put in the over to keep warm until you finish all the pieces of sole.

 
Now - in the same sauté pan - add in some chopped garlic, fresh lemon juice (squeezed) and maybe 1/2 c of the marsala wine and 1 tbsp of corn starch (to thicken).  Stir until you have a nice thick sauce. 

Serve the sole on a bed of herb flavored rice pilaf and pour the 'sauce' over the fish.  Serve immediately.

 
Buon Appetito.