Algo's go Schizo - ECB Pumps More Money

OK - time to get OFF the FED bandwagon - There was NOTHING new in yesterday's statement....another $10 bil off the table and a commitment to leave rates low for a 'considerable time'. HELLO??? What is it that anyone is surprised about?

The dollar soars on this news - why? It's not like we got any good news about the US economy, Gold, Oil lost ground and stocks - well they were schizophrenic around the announcement as the algo's couldn't figure out what it all meant - so they bot 'em, then sold 'em only to buy 'em again as the press conference got underway. By the end of the day - prices did weaken again - but not enough to push us into negative territory.

It was the usual BS - Janet said that “the labor market has yet to fully recover. There are still too many people who want jobs but can’t find them.”

She then went onto say that low inflation and the annualized rate remains below the 2% objective, which is a different than what was said back in July with inflation being “somewhat closer” to its goal. This as we learned that the August CPI (Consumer Price Index) declined 0.2% - the weakness only adding to the confusion....because the weakness would argue for more stimulus while the tapering and the increase in the median estimate for the FED funds rate suggests that rates are moving higher.

The dollar soars because every other central bank is maintaining or even adding to looser monetary policy forcing their rates even lower - essentially it is a race to the bottom and with yesterday's affirmation that QE is ending and rates will rise AT SOME POINT the dollar is the beneficiary - moving higher vs. those currencies as traders get in front of the expected future move in US interest rates. The issue now is at what level will a stronger dollar begin to damage the US economy and our export market considering that we continue to struggle?

On the other hand - FED-EX reported yesterday that they will hire 50K more temporary workers this holiday season, while UPS estimates it will need some 90K additional temporary workers - sending the message that they are expecting the consumer to go gang busters - so if they are feeling better about themselves then I guess that means everything is coming up roses...and thus we should expect rates to rise to curb the enthusiasm.

Overnight - the ECB pumped $106 bil in a new loan program - TLTRO - Targeted Longer Term Financing Operations - a cheap way at providing money to banks to lend out. The idea is to have the banks flush with cheap money so that they will now find it easier to lend money to the non financial businesses to help boost the economy.....This on top of the program that Draghi announced last week. Many still question if this is enough....

European mkts are screaming higher....FTSE + 0.44%, CAC 40 + 0.63%, DAX +0.97%, EUROSTOXX +0.8%, SPAIN +0.70% and ITALY +0.34%.

But don't forget the Scottish Vote today...with the results coming by tomorrow. The bottom line sense is that the NAYs will win - albeit by a narrow margin - yet the UK will be compromising on many fronts to save the Union.

US futures are surging this morning +7 pts - as traders/investors digest the FED action as well as welcome this morning's ECB news. With so much going on the macro level - geopolitics are taking a back seat at the moment - but beware they have not gone away at all. Expect the mkts to once again challenge the all time highs at 2011- one more time as the mkt prepares to move a bit higher thru year end. With confirmation that rates are not going anywhere prior to May/June 2015 - traders will continue to celebrate. We remain in the 1972/2011 trading range for now. A decisive break up and thru will take the S&P to the 2025 level....but that is not happening today.

Fish & Chips

For this you will need: flour, 1 tablespoon baking powder, 1 teaspoon kosher salt, 1/4 teaspoon cayenne pepper, Old Bay Seasoning, 1 bottle cold brown beer, 1 1/2 lbs of your favorite white fish - tradition calls for codfish and cornstarch.

In a bowl, whisk together the flour, baking powder, salt, cayenne pepper, and Old Bay seasoning. Whisk in the beer until the batter is completely smooth and free of any lumps. Refrigerate for 15 minutes. (Note: The batter can be made up to 1 hour ahead of time).

In a deep frying pan - heat up some oil until it shimmers. Dredge the fish in the cornstarch. and then dip the fish into the batter and immerse into hot oil. When the batter is set, turn the pieces of fish over and cook until golden brown - this should only take you about 2 mins.

Drain the fish on paper towels and Serve with malt vinegar, roasted potatoes or french fries and cole slaw on the side


Buon Appetito.