AT&T & TWX Done, Scared Child Goes Home and FED Raises Rates

Dull – defined as lacking excitement, brightness or vividness…. boring.; The Dow ended the day down 1.58 pts, the S&P closed up 4 pts while the Nasdaq ended up 43 pts (as tech continues to surge) and the Russell tacked on 7 more pts taking those two indexes to new highs on sub-par overall volumes….
 
And it could not have gotten any duller than it was yesterday – in fact – I had to pull out the blood pressure machine to try and find a pulse anywhere – was there a heart even beating as asset managers/traders found little reason to make any moves at all……choosing rather to ‘sit this one out’ as global investors considered the implications of the US/NK summit – what did it all mean in the end as both sides lined up to either defend it or attack it…and so it was……
 
The only action or consequences were the defense companies – all lower LMT – 1.3%, GD – 1.6%, TDY -0.46%, RTN -2.8%, MSA-0.46% , and the Aerospace/Defense ETF – ITA down 1%....all because Donny told the world that the US would (temporarily) halt the WAR GAMES that we play with our allies in South Korea – as we’ show good faith to a ‘scared child’ -  The scared child in this case is Chubby – Kim Jung On…because no matter what you say – he is a scared child who is trapped like a rat…and he knows it……so the US has extended an olive branch (and most of the world is applauding this move)….the rest of this story is yet to be written – and who knows how it will end – imagine writing ‘your story’ 30 yrs ago….what would you have written?  How would your life have advanced vs how it advanced?  Did your account for the unknowns when you were writing that story 30 yrs ago?  
 
In the morning we got the CPI report and as expected – there was nothing new in that report that would have changed the mindset….m/m was +0.2% and y/y was 2.8% - Bingo…exactly what the talking heads suggested – so toss that one out – no reason to change course on that report…
 
And as the clock ticked towards 4 pm – hedge funds, mutual funds, traders and investors all waited for Judge Leon’s decision about the future of the $85 billion AT&T/TWX merger deal - Would it proceed or not?  Would the gov’t win their case against this merger or would capitalism take the day……..and in the end at 4:10 pm – the judge announced his decision….Score one for capitalism, Score one for Goliath…….as the judge ruled that this ‘vertical merger’ was not the same as a ‘horizontal merger’ blowing the gov’t case wide open – sending TWX up 4% in the after-hours trading and again this morning in the pre-mkt trading….AT&T is lower by 2% and the whole sector is now ablaze with opportunity….think Comcast/FOX and for sh*ts and giggles consider what happens to DIS, CABO, CHTR, ATUS, DISH…..How will investors now see these other members of the group? 
 
[Vertical merger is a merger between two companies that operate at separate stages of the production process for a specific finished product. 
 
 A Horizontal merger is a merger or business consolidation that occurs between firms that operate in the same space, as competition tends to be higher and the synergies and potential gains in market share are much greater for merging firms in such an industry. – Investopedia]
 
And today the bell tolls at 2 pm – because this is when Uncle Jay (Powell) FED Chair takes to the podium on the world’s stage announcing a 25-bps rate increase in US fed funds…. (could somebody shoot me please) ….and maybe once he is done – investors will get a better sense of whether there is 1 more or 2 more increases coming in 2018…. 1 more increase is what is expected so then expect no reaction…but if he becomes a bit more hawkish or changes the language of his prior statement - leaving the door open for 2 more increases – then watch how the talking heads line up…. who defends it or who attacks it…. seems to be a lot of that going on these days…. someone is always defending and someone is always attacking….and so the world turns and the mkts react (or not).   
 
Overnight there was little eco news to drive mkts…. Asian mkts ended the day a bit lower as the focus shifted from US/NK summit to central bank policy statements over the next 3 days…. FED, ECB and BoJ……Japan was the only mkt center to buck the negative trend – ending the day + 0.38%, Hong Kong – 1.22%, China – 0.98% and ASX – 0.51%.
 
In Europe – the mkts there are up but directionless really….as they too await the FED statement, the ECB and the BoJ statement. Now why the world is ‘waiting’ on the FED is a bit curious…. it’s not like they are playing ‘I’ve got a secret’……The only geo-political exciting event is that PM Terry (May) is fighting off a coup d’etat in Parliament as the rebels fight over amendments over how to exit the EU…. She is a fighter…. FTSE +0.49%, CAC 40 +29% DAX + 0.23%, EUROSTOXX +0.20%, SPAIN +0.02% and THE ITALIANS ARE SURGING BY 1%.  (Try the Sweet Sausage, Sautéed Garlic, Onions and Bell Pepper Pasta in today’s note)   
 
Eco data today includes Mortgage apps -1.5%, PPI (producer price index) exp of +0.3% m/m, Ex food and energy of +0.2% m/m, and PPI y/y of +2.8%.  Again, this is only important if we get a 3% print as this will once again cause angst in the mkts as well as at the Fed…. So, stay tuned. 
 
US Futures are up 4 pts at 2794….  Look – yesterday (again) we ran right up to and kissed 2800 and then backed off – and it looks like it wants to try to get off 1^st base (2800) and move to 2^nd base (2825) -  a little high school humor……. that makes sense, right?  Again, it needs to test, back off and retest before it pierces and makes a move to the all-time highs January highs of 2870. 
 
Oil is down by 0.38 cts at $66.  It remains in the $64.68/$67.62 range. 
 
Gold is down $1 at $1,298/oz…. after the historic summit.  The dollar index – DXY is flat at $93.81 as it consolidates right in the $93.50/94 range

Ziti Rigati W/Rainbow of Bell Peppers, Onions & Garlic 

So, I made this last night – you can see my twitter post @kennypolcari or on my Instagram @kennyp1961
 
For this you need:  1 lb of Ziti Rigati, 6 Sweet Italian Sausages, Vidalia onion, Red, Green, Yellow and Orange Bell Peppers, s&p, Olive oil and some Chicken Stock & Pecorino Romano Cheese.
 
Bring a pot of salted water to a rolling boil
 
Light the grill
 
In a large sauté pan – add the oil and chopped garlic – sauté for 4 mins or so…now add in the chopped onion, and sliced bell peppers – now you should use all 4 colors – so that the dish is vibrant and colorful – pleasing both to the eye and the pallet…. Season with s&p and sauté until nice and soft and the onions are translucent. 
 
While this is happening – place the sausages on the hot grill and brown up nicely…. making sure to turn them to get the grill marks all over.  When cooked enough (because they continue to cook when you slice them in the peppers and onions – remove and bring in the house.  Using a sharp knife – slice the sausages into bite size rounds and add to the sauté pan with the peppers and onions.  Season with s&p – stirring to marry the flavors.  Now add in just a bit of chicken stock to provide some more sauce.  It’s really the olive oil and the liquid produced by the veggies that create the sauce. 
 
Turn off the heat – toss in a handful or two of the cheese and mix well. 
 
Now add the ziti rigati to the pot and cook for 8 mins or so…taste to figure it out…. Once done – reserve a mugful of the water and strain the rest - put the pasta back in the pot and add ¼ c of the water to remoisten.  Now add in the sausages etc and mix well.  You can add a bit more cheese now – or let your guests add it on their own.   You can never have enough of the cheese!
 
Enjoy this with a light red.

Buon Appetito.