Countdown to OPEC

Global mkts continue to power to higher as investors/traders ride the stimulus wave..... Here in the US - Stocks put in a repeat performance spiking early and then broad selling over the session – S&P and Dow still managed to push to new highs. Volumes were light in this holiday shortened week as so many prepared for Thanksgiving and with a nor'easter expected along the east coast on Wednesday - expect even more people to change their plans to get out of dodge early.....

Now did you notice what happened yesterday? The small caps/mid caps shot higher as well... means that traders are gambling on the fact that the stimulus announced from China will likely keep stocks up through year end- and they may be right, despite the strongly overbought conditions. So is the rotation back into risk a sign that all is good in the world? Look - smaller cap stocks usually outperform larger cap stocks during any stimulus manipulated rally. In the end - what makes this any different than prior manipulated rallies? And guess what - the ECB did not yet really do anything....all they have done is make a promise...they have not actually pulled the trigger.....imagine what will happen if Draghi puts his money where his mouth is?

Expect traders to tire of promises.....at some point they will begin to lose patience and begin to take money off the table...after this 13% rally off the October lows of 1820.
Today we have a slew of US macro data - GDP at the top of the list - exp a small revision to 3.3%, Pers Consumption of 1.9%, Case Shiller Housing Price index and the Consumer Confidence survey of 96....All of these will speak to the health of the American consumer - but will mkts really respond considering they have the support global central banks?

Thursday will bring an OPEC decision....and while oil prices have recovered some - they are still under pressure - so what will OPEC do? They are in a catch 22. If they cut production then it will encourage US producers to ramp it up and if they hold the line then we could see prices continue to move a bit lower - painful for them - but more painful for the US and Russia (and Venezuela, Nigeria etc...)

Clearly they want to protect their position - but how? OPEC is suffering a bit - (while global consumers and other sectors are reaping the reward - think transports, airlines, shipping, manufacturers...) as a result of large new supplies coming to the mkt from non OPEC producers - not because there is a demand problem. US oil imports from OPEC are now at a 30-year low as we come online producing nearly 9 million barrels a day.......That being said - no one should underestimate the ability of OPEC to turn off the taps to force stability in prices and the Saudi's remain the linchpin. The Saudi's have made it very clear that they are comfortable with current production levels and a supply glut will continue to put pressure on the US producers as oil prices weaken. A cut in OPEC production would surely cause prices to trade a bit higher - as history shows - but just how high and for how long?

And consider what happens if OPEC fails to come to a unified agreement.......and members decided to go it alone - will prices rise or fall? My sense is that the mkt will become confused and prices would move lower first as it shakes out.

This morning - US futures are up slightly as we await today's macro data.....and while investors/traders will focus on anything that causes the mkts to move - do not expect fireworks (unless there is a big miss). I suspect that we will continue to challenge the Friday highs of 2071 ish...and then back off on low volumes. Current trading range seems to be 2040/2075 range.

Overnight in Asia - China rockets higher once again closing +1.37% up 20% ytd on the back of the recently announced stimulus plan. The rest of Asia mixed as investors/traders await US macro data and the OPEC decision on Thursday. Australia off a bit on the back of weakening copper and gold prices. Japan +0.29%, Hong Kong -0.21%, ASX -0.50%.

In Europe - all mkts are firmly in the green....Better German macro data - GDP +1.2% - and more talk of easing by the ECB when they meet on Thursday is causing continued excitement. In addition - Mark Carney - BoE Governor assuring the mkts that the bank would continue to stimulate their economy if it was necessary....emphasizing their 'considerable flexibility' in managing the situation. FTSE +0.08%, CAC 40 + 0.54%, DAX +0.9%, EUROSTOXX +0.79%, SPAIN +1.07% AND ITALY +1%.

Stuffed Cubanelle Peppers

Now I put this in my note from yesterday. Cubanelle peppers are the long Italian peppers used for stuffing. Pick up a dozen from the store and try this recipe.

You need: Cubanelle Peppers, Italian seasoned breadcrumbs, olive oil,

Put the breadcrumbs in a bowl and add some olive oil - enough to wet them but not enough to soak them.....mix well..

Now - using a teaspoon - carefully stuff the pepper - pushing the breadcrumbs deep into the pepper with your finger if you need to. Once stuffed - place in a baking dish - alternating 'head to toe'.

Preheat the oven to 375 degrees.

Now drizzle the peppers with a bit of olive oil - not to much - they will make their own oil.....
Now cover with foil and place in the oven - bake for about 40 mins. Now remove the foil and let them brown a bit....if there is too much oil - just take a spoon and remove some it.

Let them brown for about another 10 - 15 mins or so. Remove and let stand while they cool. Now - if you overstuffed them - then expect to see some of the stuffing come out of the pepper - no problem - It's all good. Serve alongside the other veggies at your Thanksgiving table.


Buon Appetito.