Markets celebrate strong earnings

Yesterday was all about earnings.......high profile names like CAT, DD and MCD stealing the spotlight.......as each of these companies blew the roof off the house......of the 30 Dow stocks in the index - 8 names shaved about 110 pts off the index - UNH, MRK, V, DIS, PFE, JNJ, UTX and MMM while the other 22 added over 200 pts to the index - leaving the Dow up 100 pts on the day.....it was all about earnings and future guidance and while there were only a couple of misses yesterday morning - investors rewarded the broader mkt - as they hit their BUY buttons on the computer while punishing the names that disappointed...for the Dow those two names were UTX -2.5% and MMM - 5.1% - and these alone shaved 90 of the 110 pts off of the index....
 
CAT is always an interesting report......because it speaks to real global growth - they design and manufacture construction, mining and forestry equipment.  They manufacture the engines and other products that power these machines in addition to natural gas engines, industrial gas turbines and diesel/electric locomotives...and then they finance and insure the whole shebang for you......Their geographic reach is global and includes operations in the US, Switzerland, Japan, China, Singapore, Brazil, Russia, Mexico, Australia, South Africa, UAE and Belgium.  They sell their products all over the world so this reports speaks to the overall health of the global economy so whether you're digging, mining, paving, loading or cutting down - CAT does it all. And investors handsomely rewarded them by taking that stock up 6% yesterday....leaving it UP 25% ytd.  The stock gapped UP 5+ pts on the opening - so expect to see investors/trader fill that gap in the weeks ahead.
 
MCD on the other hand is a franchise of fast food restaurants - that is also global in reach as they serve billions of people hamburgers and French fries.....and this qtr saw them revamp parts of the menu, offering $1 deals and building out their 'McDelivery' option via UberEATS in 13 more countries  which now makes the service available across the globe...that is in 47 countries on 6 continents.....it is fascinating really to watch how the world changes.......investors celebrated by taking that stock up $7 to end the day at $159..... MCD also gapped UP on the opening leaving that stock vulnerable in the days ahead to having to fill that gap. 
 
The mkts also got a kick in the pants after the Saudi's announced that they would further limit their production and exports in August....this sent oil up 3.3%  to end the day at $47.88.. Oil in now kissing intermediate resistance at $48.80 - this will be key to watch.......if successful then look for oil to rally quickly to long term resistance at $51.75.  Oil is up another 29 cts a barrel in early trading as the momentum continues.. this morning the API reported a –10.2M bbl supply draw late yesterday, more than 4X the stockpile decline analysts were expecting.
But as we have discussed - is there really any reason for oil to go much further?  Non Opec producing nations are happy to fill in the void that is created by OPEC cuts so longer term resistance at $51.75 will be tough to breach...But hey - I suppose anything is possible. 
 
Energy stocks rallied and the energy ETF (XLE) enjoyed the company of buyers.....It has now broken up and thru short term resistance at $65.68 and will try to test resistance at $67.44.
 
Now remember what I said yesterday....
 
"Tomorrow we will hear from the FED and as discussed - we are not expecting anything of significance to come of it.....other than potential clarification on future moves.....Remember that some of the best performing days for the mkts are when the FOMC meets...Why?  Because that is when the 'team' gets to work - supporting stock prices while the FED meets - sending a message of vitality and growth".  
 
So today at 2 pm - we will get the results.....and while there are zero expectations for a change in rates or the move on balance sheet shrinkage - investors will be listening to the language that they present....Have any of the words changed since the last meeting?  and if  so - Does that change the outcome?  My guess is no....we are on the path....she cannot reverse course now without creating angst and questions of credibility......so the push continues as investors focus on the 'better than expected' earnings around the horn.....
 
US Futs are pointing up in early trade +3 pts - as the mkt reacts to all of the 'better than expected' earnings reports AFTER THE BELL last night.....ESRX, TXN, T, AMGN, CMG all beat.... and all traded higher in after hours trading...this morning we are seeing AMGN quoted a bit lower - but nothing of value has really traded yet.....
 
This morning look for KO, GLW, HES, DHI (beat), HLT (beat), TMO (beat), F, STT, SIX and BA......after the bell we will hear from Marky Mark (Zuckerberg) on a FB Live Earnings Event.....exp of $1.31/sh is the number to beat....but remember - the stock is up 11% in one month...and is up 45% ytd.....so BE CAREFUL......a good number could still cause traders to take money OFF the table.....and the clock ticks.....
 
Now in DC - it was the usual drama....the Senate trying to take vote to 'discuss' the next move - and the drama came when John McCain entered the room......he got a standing ovation and took to the podium to reprimand and encourage this legislative body to 'do what's right' for the country and for the people - saying that even he 'wasn't voting for it in its current form'  as it is a 'shell of a bill right now'.....Obamacare is broken and BOTH SIDES KNOW IT........his speech was impassioned and personal.....and while the voted to 'discuss' (positive) -  hours later they failed when the proposal to replace major portions of Obamacare failed to attract enough votes to pass...so folks this is hardly over.....sit back and wait.....
 
Trump then takes to the podium denouncing Jeff Sessions once again - raising the ire of the conservative segment of his party that are now threatening revolt if Jeff gets thrown out.....but the mkt pays no attention.....and on we go....
 
Look for the S&P to test the highs at 2480 early on - If the earnings reports this morning are all positive.....but once we get there - the sellers will defend that position as they await the FED report.........
 
European mkts are higher.... after some upbeat economic data & continued earnings optimism.   FTSE +0.45%, CAC 40 +0.63%,  DAX + 0.28%, EUROSTOXX +0.42%, SPAIN +0.36% and ITALY +0.36%.

 

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Chicken & Sausage W/Sweet Vinegar Peppers

Chicken/Sausage/Sweet Vinegar Peppers - a bit of a take on the traditional Scarpariello dish - (you can use hot cherry peppers if you prefer - I cannot)

You will need: Thighs & legs, (bone in/skin on), s&p, olive oil, sweet Italian sausage, Vinegar peppers, garlic, white wine, chicken broth, marinated artichoke hearts, thin sliced potatoes, s&p and flour.   Total time 1 hr...start to finish....

Preheat oven to 375 degrees - Preheat grill for cooking the sausages

Season chicken pieces with s&p - heat up oil in frying pan - when hot - reduce heat to med/hi - now add chicken and brown on all sides - maybe 10 mins total.  While this is cooking - place the sliced potatoes in the baking dish - season with s&p - add a splash of oil.   Now remove the chicken from the frying pan and place in the baking dish and put in the oven and continue to cook for about 30 mins....

Next - cook the sausage on the grill - careful not to burn....maybe like 10 mins total....remove from grill and let rest for 3 or 4 mins then cut into bite size pieces.  In the meantime - add the chopped garlic to frying pan (that still has the juices and oil from chicken) along with sliced vinegar peppers - sauté. Now add the sausage and  some white wine and reduce (5 mins) - next add chicken broth and the artichoke hearts....sauté for another 5 - 8 mins...

In a separate bowl - whisk together some flour and milk (you can use water) and add to the frying pan - allowing it to cook and thicken a bit....do not let it get too thick - you can add a bit of broth if you need to.  Re-introduce the chicken/potatoes to the frying pan and allow to simmer for 2 or 3 more mins. 

Now serve on a large warmed platter family style.  Accompany with a large mixed salad dressed in a balsamic vinaigrette dressing.  Enjoy your favorite chilled White wine -

  
Buon Appetito.