He's Alive, He's Alive!

Earnings season got underway – with AA kicking it off after the bell causing traders and investors to scream - "He's alive, He's Alive!" - AA reported strong numbers- the stock rallied 1.15% in the afterhours session trading up to $15.02. That was the good news…..

The “not so good news” (notice the positive) was that the US stock mkt did not have a good day yesterday as traders expressed their concerns over current valuations, growing tensions in the Mid-East -[as missiles rain down over Israel - shot from the Gaza strip - which is sure to bring some renewed action from Israel bringing that region of the world one step closer to war] , disappointing news out of Europe and Asia - giving traders a reason (and opportunity) to 'adjust' their portfolios.....

Selling hit the 'momo names' hard with the Russell down 1.2%, Nasdaq Biotech's down 2.2%, internet/social media stocks got hammered - TWTR -7% and FB taking it on the chin -4%.....the broader mkt (DOW) Ended the day down 117 pts at 16,906 while the S&P lost 14 pts leaving it at 1963.

Financials took it on the chin on the back of the WSJ article yesterday as they brace investors for disappointment in the coming weeks...but beware - if the selling takes place now - and prices readjust - then when they announce - you may get that "it's already priced in' attitude and BAMMMM...it's off to the races.....

As Sandy Lincoln of BMO Global Asset Management tells us:

"Valuations are getting more extreme, and some people are likely thinking it's time to cut back"

But my question is - have valuations JUST gotten extreme? I mean they weren't extreme last week as traders took the mkt new highs...... No matter - as much as the mkt was under some pressure - it was NOT panic selling by any stretch...in fact - contrary to what Yousef Abbassi from Jones Trading says that

"Just ahead of earnings season, many investors were reluctant to commit more money to the market"

I would say - that is not true....investors are NOT reluctant to commit they are reluctant to commit at those prices....you see - as stocks trade lower - there are plenty of investors that are WILLING to commit....and so - the world turns....
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The pressure was on – right from the start….as the mkts in Asia and Europe were under pressure on Tuesday – with some of those mkts down over 2% - the ‘not so good tone’ permeated investors/traders in the US. The disappointing macro reports out of Europe in the past couple of days is raising the red flag.....you see the concern is that a slowdown of sorts is hitting the two largest economies of Europe and if Germany begins to stumble, the rest of the Eurozone will get hit even harder.....causing analysts/investors/traders to reconsider the current state of affairs.

Did someone say Currency War????

As earnings season kicks off here and around the world - The strength of the Euro is causing so many CEO’s in Europe to call on politicians to do something. Big European companies it seems may be having trouble competing on the global export stage with a strong Euro. In fact – Airbus CEO Fabrice Bregier – is urging European Central Bankers to “do more to reduce the value of the currency to aid exports”.

“Europe "has to gain credibility" on how it manages its currency. Such actions are especially needed as other governments, such as Japan's, seek to reduce the value of their currency to boost competitiveness. Europe politically has to do what it costs to make it happen. This is the condition of additional industrial development in the euro zone and so additional exports."

He went onto say that: “Europe can’t be the only economic zone of the world that doesn’t consider its currency as a weapon – a key asset to promote its economy”

Airbus has a lot to lose here….Because the company suffers from “currency mismatch” - a condition that exposes the company to systemic risk as they book most sales in dollars while its costs are largely in Euro’s. Rest assured though, They ‘hedge’ this risk by using complex financial instruments (which we hope someone understands - unlike the last crisis).

So will Uncle Mario (Draghi) come to the rescue? I mean how can he disagree that a stronger Euro is negatively impacting his recovery? I mean just look at what Uncle Benny and the Jets did in this country.....launched massive QE - killed the dollar and BOOM - we are hitting new highs on an almost daily basis...... And btw – Uncle Mario has said that he stands ready to do whatever it takes, so if that means that the ECB will launch a QE program – well….I guess he can join the party!

And all that glitters.......

Gold has rallied back to the $1320/oz and is holding nicely above the lows of 2013, and its 50, 100 & 200 DMA’s….It is hitting resistance right here at $1330 and if it pierces this decisively and then test of the March high of 1390 will be the target.....

US futures are flat this morning as we await the FED mins to be released at 2 pm....Yawn! Really? Are these mins gonna reveal anything that we don't know? Is Janet gonna tell us how strong the economy is now that we got such a great NFP report last week? Let's ask Bill Simon - CEO of WMT - who told Reuters that the current employment picture has 'failed' to make a difference at WMT.

"It's really hard to see in our business today … that it's gotten any better,” he said. “We’ve reached a point where it’s not getting any better but it’s not getting any worse – at least for the middle (class) and down."

So that 'surge in new jobs - is NOT creating any real buying power at WMT.....Maybe we should ask Tiffany's - Thoughts?

Asian mkts were down again last night.....after the US drubbing..... Regional data was no help. Chinese inflation more subdued than anticipated and Australian consumer confidence failing to rebound.....so the pressure is on.... Japan -0.08%, China -1.23%, Hong Kong -1.55% and ASX -1.06%.

In Europe - mkts are mixed - after the tough couple of days suffered there. FTSE -0.57%, CAC 40 -0.14%, DAX - 0.0%, Eurostoxx +0.14%, Spain +0.08% and Italy +0.3%

In a shout out to CPL Justin Kuhel, USMC - I encourage all of you to visit his website -

marchacrossamerica.org

and support his walk across America - currently near Memphis - as his way of paying tribute to his wounded and fallen comrades...his journey will raise awareness and funding for 2 World Class Veteran's Charities -

Headstrong Project & Help our Military Heroes.

Lemon Basil Swordfish

Lemon, Basil Marinated Swordfish - This is an easy and delicious summer dish....swordfish steaks are great on the grill and when you present it on a bed of arugula and tomatoes - it is just beautiful. For this you need:

Swordfish, olive oil, fresh lemon juice, chopped basil, chopped mint, chopped garlic (like 2 cloves), s&p.....

Mix together all of the ingredients (except the swordfish) and taste to make sure you got it right....now pour half of the mixture over the steaks and let marinate for 30 mins.....

Heat the grill - Now place the steaks on the grill and cook for about 3 mins and then flip (clearly if the steaks are thick - then grill a bit longer).

While the steaks are cooking - prepare the plates with a bed of arugula and sliced - beefsteak tomatoes. Season with s&p, and a squirt of fresh lemon juice. (You can add a splash of balsamic if you like). Now place the grilled swordfish steak on the arugula and serve with you favorite chilled white wine.


Buon Appetito.