The Decibal Level Surges, Trumps Remains Defiant - Bannon & Cohn Go At It

Stocks did NOT spin their wheels yesterday at all - the noise started early - and the mkt came under attack! Trump continued the divisive rhetoric – politicians on both sides of the aisle lining up against him – Another WH council fails to come together – Trumps - Infrastructure Advisory Council has been scrapped as business leaders abandon Donny leaving him little choice but to disband it. Gary Cohn said to be frustrated with Steve Bannon as Bannon advocates for a trade war with China - never mind that fact that he is outraged over Trump’s stance on the events in Charlottesville - rumors of him quitting were all over the tape yesterday – WH Chief of Staff – General John Kelly battles to try to keep Trump ‘in line’,  The FED issues another warning of a stock mkt bubble, Key technical supports are under siege, seasonality factors bearing down on us while mounting macro data weakness piles up and a terror attack in Barcelona puts ISIS back on the front page.......  WMT’s sales rise but margins fell as they spend money to compete against Amazon and CSCO reports falling revenues -

The VIX surges by 32% as the ‘fear’ builds sending investors/traders running for the door……The Dow plummets triple digits – ending the day down 274 pts (-1.2%), the S&P gave back 34 pts (-1.5%), the Nasdaq fell 123 (-1.9%) and the all important Russell 2000 broke thru long term support at 1370 -  ending the day down 24 pts (-1.7%) at 1358.

Remember the conversation we had on August 10th -

“The Russell (small cap/mid cap index)  took it on the chin and was down by 1% and this is important.....Why? 

Because the  Russell 2000  is the US small company index and it tends to move early, either way,   leading the broader market (S&P 500).   It is an early indicator of mkt psyche……so has the Russell been screaming - "Hey!  Look at me!!"  all along or are we just choosing to ignore the warning?  Some analysts will refer to them as the 'canary in a coal mine'  - or an early indicator of potential danger ahead.”

Yesterday’s selling leaves the Russell with zero gains for 2017.  Zero.   Now the next area of support would be in the 1335/1340 range.....or the March 2017 lows.... A test and failure there will trigger more sell stop orders,  and don’t be surprised to see a void in bids anywhere in line - buyers looking to add to positions will not stand in front of a speeding train and are happy to bid lower in the face of any swift move down.

We are about to enter the ‘seasonally weak’ time period and with all of the drama taking place in DC, the weakening macro data points and the obvious difficulty that Trump is going to have accomplishing ‘anything’ - it is not hard to see how investors will re-think their position.  Risk models will be tweaked to reflect this new dynamic and prices will surely adjust. 

All 11 major sectors of the S&P were under pressure - Tech getting hit the hardest - first because it has been the best performer - so if you need a place to raise some cash - that is as good as any and second because any hint of a trade war with China will surely hit this sector hard……

Overnight - Asian and European mkts all moved lower in a game of 'catch up'....There weren't any notable news events (think geo-political) or macro data points to be concerned about.  We only have one eco data point here today and that is consumer sentiment - Not a mkt mover at all.  We will have Dallas's Fed Bobby Kaplan speaking at 10:15 am - but again - do not expect him to say anything that will matter to investors.    The focus will remain on all of the drama in DC.....more turmoil in the GOP will only increase the chances of Trump being isolated - which will further reduce any possibility of any movement on taxes etc. 

US futures are down 2 pts  as the sun rises.....I suspect that the mkt will get weaker as we get closer to 4 pm.  It's the weekend - all the noise is frustrating and no one knows what Trump is capable of saying or doing in the next 72 hrs....

 

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Sicilian Swordfish 

A great dish from this Island nation - well not really their own nation - but if you ask an Italian - Sicilians are Sicilians....Capisce?   

Raisins, green olives, capers, pignoli nuts (pine nuts), tomatoes, garlic, onion, s&p, olive oil and the swordfish.  This dish is easy to make - it will tease your senses - and tickle your pallet - only takes about 15 or 20 min's to prepare and 20 min's to cook....enough time to set the table, pour the wine, light the candles, put on the music and dim the lights.....
 
**Preheat oven to 400 degrees (f) and for my dear friend Stu in London that would be  200 degrees (c). 
  
Season the swordfish with s&p. 
 
Next soak the raisins in warm water for about 1/2 hr... drain and set aside. 
Heat the olive oil in a sauté pan on med high heat....sauté the diced onion and crushed garlic until soft. Do Not Burn.  Maybe like 5 / 8 min's....add raisins, diced tomatoes, chopped olives (no pits!), and capers - like 1 tblspn.  (If you like capers feel free to add a bit more - but not too much as the taste will overpower the dish).  Reduce heat to simmer and cover...stirring occasionally....for about 15 min's or so...
 
Place the swordfish in a baking dish and cover the fish with the raisin/olive/caper/tomato mixture - bake for 15 min's or until the steaks are firm.....
 
Present the fish on a warmed plate with steamed green beans and a large mixed green salad with red onions, cucumbers, grape tomatoes, maybe some fresh mozzarella....dress with s&p, oregano, a splash of fresh lemon juice,  balsamic vinegar and olive oil.  

  
Buon Appetito.