No Rate Hike In Nov (DUH!), Holiday Temps Demand More? Obamacare Implodes!

Good morning.....pick up the WSJ and what do you see?  First - NO RATE RISE IN NOVEMBER - (You are KIDDING!)  In fact - whoever thought that she would raise rates 1 week before the election - should have their heads examined......that was NEVER happening....so now the task is supposedly to convince the mkts that it is coming in December -

"FED's Task Next Week:  Signal December Rate Rise - Officials are expected to signal a rate rise before the end of the year, BUT they aren't in a rush"

Now that last part might just be the key to unlock the thinking......'they aren't in a rush...'  Hmmmmmm - are they suggesting that although they have set us all up for a December rise that maybe there really isn't a need?  I mean - forget credibility - that went out the window months ago....It appears to me that the FED's mandate has been to keep the Democrats in the WH - and she has done a fine job at that.....You see -  if Hillary is elected then Yellen can plot her next move without fear of retribution - I mean Trump has said he would throw her out if he was elected - and no one wants the first female FED Chair to go down in flames - do they? 

Let's look at it - Europe is in a deflationary environment - Draghi and Merkel need US stability,  Italy is ready to implode - on December 4th they are voting on a referendum to amend their constitution to 'reform' appointments and powers of the Parliament.......Will they be the next country to opt out of the EU?  France?  Spain?  Japan is circling the drain while China and the US appear to be in a bubble - talk of a rate rise raises the anxiety level across global asset managers - no matter how small - just because is a rise really necessary at this time? 
They have ALL left the door open to back off of a rise with statements like NY's Dudley - yesterday.....

"There isn't this tremendous urgency to act on monetary policy right now.....it's not like if we wait a meeting or don't wait a meeting that it has huge consequences for the trajectory of the economy........."  

He went onto say that the FED will raise rates this year "subject to the economy continuing to evolve in line with my expectation."    Did you catch that?  Subject to expectations......BOOM and the door is left wide open...

Now - some ask - But how can do that?  She has sent every member out to prepare the mkts for a December rise - how can she really just do a 180?  Well IF the Democrats win and as Hillary talks of 'healing the nation' after such a difficult race - Yellen could easily say that the new administration needs the FED's help to maintain stability during this transition of power....It may be a long shot - considering that the mkt is now placing a 70% bet on a rate rise - so Yellen would have her work cut out for her - but if the mkt starts to convulse after the election and before the December FED meeting  - she can talk about how the nation needs the security of a concerned FED.    I'm just sayin......It is not out of the question at all.....

Stocks traded higher yesterday on one of the busiest merger Monday's in a long time.....Now while it may have appeared to be a block buster AT&T /TWX deal - it really wasn't...you see - first of all - the move in TWX happened last week - before the announcement and before 'anyone was supposed to know about it'  - you see on Oct 19th - the stock traded in a tight range - $79.23/$79.88 - on the 20th is spiked for 'no apparent reason' - trading - $78.80 / $$86.75 and on the Friday - when the rumor hit the street that something was brewing - the stock traded - $83.31 / $94.44.  Up some 18% in two daysand the news wasn't even out yet.....Imagine that!  So yesterday was a bit of a letdown - considering that the clowns in Washington all expressed concern over what this merger could mean - and the stock traded DOWN on the day......   

 While this deal would give AT&T control of cable TV channels HBO and CNN, film studio Time Warner and other coveted assets - there is massive speculation that it ain't happening.  The problem is media is already highly concentrated into a handful of powerful companies, and this merger would only exacerbate that concentration - creating major roadblocks for the gov't  -  In the end - the industry needs more competition not less.....

As discussed yesterday - this is a big week for earnings.....by the Friday more than 300 of the S&P 500 companies will have reported - and we will have a better idea if this qtr will be a down qtr or will it be the turnaround qtr?  It is all about earnings and so far - we have seen some big beats and some positive guidance - but again a lot of that is just smoke and mirrors ahead of the election - analysts slashed estimates ahead of earnings giving enough room for companies to beat by wide margins - all to create a sense of real improvement.....Whatever!

Next up - the journal tells us that

"Retailers Rushed to Hire for Holidays, a Sign of Tight Labor Market" 

and to that I say - Baloney.   Companies are having to offer free lunches and higher wages at the very bottom of the food chain for these temporary workers - workers that will be OUT OF A JOB in January.......and THIS is supposed to be the barometer that we gauge the health of the labor mkt?  Temporary holiday workers?  Is it me?   People don't want temporary 3 month jobs - they want full time jobs - so all of this BS that companies have to 'pay up' is just that - BS! 

Now while the mkt ended higher on the day - breadth (advancing vs. declining issues) continues to suggest that stocks are weakening.....the Nasdaq is a prime example of broad weakening (less and less stocks advancing and the ones that are - are the big names)  and that suggests that the tech sector is under pressure while the index suggests otherwise......(more smoke and mirrors)

Think Apple - making new highs for the year as concern grows over what they will say. Expectations for AAPL are $1.65/sh.... So what will they report?  The whispers suggest that revenues will drop about 9%... FactSet tells us that Apple will be the biggest hit to earnings growth for the Tech Sector for 3Q....so today's news will be watched closely...maybe even closer than usual.....Since 1Q 2014, iPhone revenues have contributed to the bulk of Apple’s earnings (62%) but over the last year these revenues have been declining as the global recession has worsened, so today's report will be important for the entire tech sector.  The stock is up 26% for the year and 22% since the 2Q earnings report - so any disappointment will cause traders and investors to take some money off the table after such a dramatic move.....  especially if investors think that the FED is about to move.....I'm just sayin.....

Mkts around the world are mixed....nothing really moving significantly in either direction as earnings continue to dominate the conversation....US futures are flat as well as we prepare for the onslaught of earnings...Corning, Ryder Systems, USG, AKS, VLO, JBLU, DD, WHR, LLY, BHI and the list goes on... 
Yesterday saw the mkt open strong and then churn...as it tried hard to break above 2150....in the final mins of the day - they managed to do so.....but my sense is that the mkt is heavy....You will need a real catalyst to send this mkt much higher and for now - I don't see what that is......Oil is up small after backing off a bit yesterday after Iran said that they have no intention of cutting production.... Gold up $6 guess where? Right at long term support as it also struggles to hold on....

Look for the mkt to hit resistance right here in the 2155/2160 range...as the churn continues.....in other news - the Obama Administration confirms that health insurance rates are about to increase by 25% on avg.....isn't this grand - the program is about to implode just as he leaves the WH.....leaving millions of people fending for themselves after he and Nancy Pelosi shoved this down our throats...... Just something to think about.....
 

Take Good Care
KP

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Minestrone (Vellutata)

A vellutata is basically a cream sauce - a hearty delicious vegetable soup bathed in a cream sauce....easy to make and delicious to eat....

For this you need:

Olive oil, chopped shallots, dice peeled butternut squash, 1 med zucchini diced -, celery diced, carrots diced, potato, peeled and diced, s&p, cecci beans or cannelloni beans, chicken broth, all-purpose flour, butter, whole milk, and a baguette - cut into rounds that you have lightly buttered and toasted.....

In a large saucepan, heat oil over med high heat - Add shallots, squash, zucchini, celery, carrots, potato and s&p.   Cook, stirring occasionally, 3 minutes. Now add 2 cups broth, bring to a simmer and cook until vegetables are tender, about 10 minutes.  Now add in a can of the beans. 

Meanwhile, in a small saucepan,  add 1 cup of whole milk, whisk together flour and room temp butter. (maybe like 3 tbls flour to 1/2 stick of butter).  Then add 3 more cups of milk, 1 cup broth.  Place on med heat and stir......bring it to a simmer then remove.  

Add milk mixture to the vegetables, bring to a simmer and cook, stirring occasionally, until ingredients have blended....taste, adjust and Boom!  It is ready......Serve the soup in warm bowls and top with a toasted round.....you can have grated cheese on the side if you wish.....

 

 
Buon Appetito.