"You Can Do Magic"

What's all the fuss about? CPI rose at a 2.1% pace y/y.... isn't that what the FED wants? Well - not so much...

What they DON'T TELL YOU , but what YOU SEE (if you are breathing) is that price increases for food and energy are on a tear. Does anyone at the FED go food shopping? Do they put gas in their cars? (No, the gov't does that). CPI excluding food and energy increased 0.3% in May after rising by 0.2% in April. Core prices rose by 0.4%. Not so bad, huh?

The real kick in the pants is precisely food and energy, which affects every single person daily....not “core” prices, which include all of the other essentials such as cell phones, computers, TVs and furniture, appliances etc. ( Not sure about you - but when was the last time you cooked a piece of furniture?)

When you pull the report apart you will find food prices increased 0.7% in May and energy prices increased 0.9%. If you annualize these rates then look for food to increase by 8.4% and energy to rise by 10.8%.

Just to clarify - we are seeing the biggest increases in meat, fish and eggs. as noted in the report:

"the index for meats, poultry, fish, and eggs rose 1.4% in May after a 1.5% in April, with virtually all its major components increasing.”

At this rate that would mean that meats, poultry, fish and eggs would have an annual inflation rate of 16 – 18%. But, no worries - core inflation rate will be under 2%.

Yet the mkt teased all day yesterday - finally ending the day a bit higher as investor attention swung from the rapidly deteriorating situation in Iraq to the 2 day FED meeting in DC. While the Tensions in Iraq are certainly giving investors reason to be cautious, pushing oil prices higher, the Fed continues to command attention as it relates to overall investor sentiment. While inflation is getting ready to 'rear its ugly head', I do not expect a surprise from Janet and her band of merry men.....I believe that they will stick with the song sheet - as the band America says:

"You can do magic, (do,do dooo) you can have anything that you desire, Magic, and you know, You're the one who can put out the fire..."

Will she put out the fire today? Can she 'do magic'? Can she keep the hawks at bay? We are about to find out.....

Expectations are for an add'' $10 bil to come off the table, but what will she say about rates? Will she echo the sentiments of Christine Legarde? (IMF Fame) Will she err on the side of safety and confirm that rates are to remain low for 'infinity and beyond' to insure the stability of the financial mkts at a time of such geo-political instability?
What is happening in the Middle East will serve as a poignant subplot for the Fed. Markets have enjoyed the benefit of all of this kool aid since 2009...returning nearly 200%,... with little or no corrective catalysts - other than the threat of taking the punch bowl away as noted in 2011.

Tensions, uncertainty, and rising oil prices, however, are an age old nemesis of economic growth and financial markets. For those of us alive in the 1970's - do I need to remind you? Recall the Oil Embargo? Gas lines, Rationing by license plate number, And more recently - recall the price of oil (Brent at $150 a barrel, WTI at $135) prior to the onset of the Great Financial Crisis of 2008..... I'm just sayin.

Yesterday's housing report was not a barn burner by any stretch...Housing starts DECREASED by 6.5%, building permits down....this at a time when these stats should be increasing....and as you know - this sector of the economy is extremely sensitive to interest rates - thus one more reason to keep rates low.

US futures are +2 in early morning trade....mkt is treading water as it digests the eco data today....Mortgage Apps were reported -9.2% - kind of in line with the weak housing numbers yesterday. Other than that - traders are awaiting the FOMC press conference today at 2:15 pm. We remain in the 1915/1950 trading range - the surprise will be if we push up and through resistance after the FED report.

What can she possibly say that will cause traders/investors to challenge resistance? We already know rates will remain low, that is not new news....The macro data continues to be mixed - so that is not new news.....the geo-political situation is a bit edgy - but that is also not new news....so what could it be?

Roasted Sea Bass in A Marsala Wine Sauce

Sea bass is a fish that you find in cold waters of the southern Atlantic/Pacific and other Southern Oceans (Indian). It feeds mostly on squid, shrimps, and other small fish and for itself is the delight of Whales, Elephant Seals and Octopus... You can find this fish around the world called by different names - Chilean Sea Bass in the US, Mero in Chile and Japan, and Merluza Negra in Argentina and Uruguay. It is a white flaky fish that is easy to prepare and can be combined with many ingredients to make the perfect presentation. Today's meal is a roasted sea bass on a bed of Onions/Mushrooms

You will need: 1 lb of sea bass, olive oil, butter, onion, Marsala Wine, Fresh wild mushrooms, Chicken stock, s&p, and chopped parsley for color.

Prepare by chopping the onion, slicing the mushrooms and chopping the parsley. Have all other ingredients out on the counter to ease the process of creating this dish....

Preheat the oven to 450 degrees - Do not put the fish in the oven until it has pre-heated to the proper temperature.

In a sauté pan - heat the olive oil and the chopped onion - cook until soft and translucent. Turn the heat to high to make the pan really hot - then remove the pan from heat and Deglaze with 1/4 cup or so of Marsala Wine - you can use White wine if you prefer - but you will get a different flavor - just fyi. (I say remove the pan from the heat because - if you use Marsala - the flame can easily ignite the wine and singe your face. - reg white wine - no worries) When the wine has cooked off add the sliced mushrooms and about a tblsp of butter. Reduce heat to med and cook until tender.

Now add the chicken stock - maybe 1/2 cup or so....and s&p...let it cook down.....just so it thickens a bit.....

In another sauté pan heat up a bit more olive oil...season the sea bass with s&p and add to the pan skin side down for about 5 mins...you want the skin to be crispy......flip and cook for about 1 min - transfer to a baking dish and put in the pre-heated oven and roast for another 4 / 5 mins.

Warm the serving dishes and place a bed of the onion/mushroom mixture on the plate and then top with the pan roasted filet. Adorn with a bit of chopped parsley. You can serve this dish with herb/garlic wild rice and sautéed green beans. Complement with a chilled bottle of your favorite Verdicchio, light the candles, turn down the lights..... and you are off to the races.... like putty in your hands.


Buon Appetito.