Money, Money, Money.....

" Money, Money Money - Always Sunny , In a rich man's world" Abba - 1976

And that is the way it is......OK – so we get it……stocks were pushed higher overnight as central bank intervention took center stage (again) as central bankers try to avoid a ‘global recession’ – causing stocks to rally ….mkts gapped up – China, Japan, Germany, France, Italy, and the US just to name a few - and then held onto the highs going into the quarter end. All US indices were sharply higher causing qtr performance to end the day positive territory. Going into today - the DOW is +0.86% , S&P +1.3%, Russell +4% and Nasdaq +4%

It has been an interesting time – macro data has been mixed at best while M&A continues to be healthy adding to the 'feel good' mood and yesterday was no different – another ‘Merger Monday’ - Healthcare being the beneficiary – as investors continue to see money being put to work in this space. 3 blockbuster deals - United Health (UNH) to buy Catamaran Corp, Horizon Pharmaceuticals is buying Hyperion Therapeutics and Teva is scooping up Auspex.

On the macro data front – the news has been mixed at best causing confusion and mixed explanations to detail the data..... Yesterday pending home sales hit it out of the park – in complete contrast to some of the more recent data – only adding to investor confusion while Personal Income (supposedly) rose by 0.4% but Personal Spending missed the estimate. Concerns over coming earnings and the strong dollar did not appear to be on anyone’s mind yesterday.

The most laughable piece of information was the complete week over week reversal coming out of the National Assoc of Realtors after yesterday’s pending home sales report:

Yesterday - NAR's chief economist Larry Yun had this to say about yesterday's report:

“Pending sales showed solid gains last month, driven by a steadily-improving labor market, mortgage rates hovering around 4 percent and the likelihood of more renters looking to hedge against increasing rents,”

This in complete contrast to what he had to say last week weaker new home sales:

“Severe below-freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country”

That same severe weather was present in both reports....how can one report be so positive while the other is so negative.....Oh right - when the report is bad we blame the weather and when it is supposedly good we highlight the improving economy, rising wages, low interest rates and stronger labor mkt!
And to think - people get paid for this!!!

Do not discount the power of window dressing at qtr end as portfolio managers trying to eliminate the negatives and accentuate the positives. We have seen money move out of the better performing sectors and move into some of the underperformers in anticipation of better days ahead..... Energy continues to tease investors – as the 40% plus move lower in oil has created some very interesting opportunities in the energy space. The debate rages on about where oil is headed and if $42/barrel is the low...... and if it is….then expect the space to heat up as longer term money gets put to work.

Now like I said - the action was driven by the central banks....and although I fully expect the mkts to try and close out the qtr in line – US futures this morning are under some pressure - currently down 10 pts as the mkt digests the ridiculous move yesterday. I suspect that the mkt will test the 50 dma at 2070 and try to hold the line. Caution is the word – as this is a holiday shortened week and as fast as the mkt surged higher – lack of participation and one negative story can take it all back in the blink of an eye.

Wednesday though – is a different story….It is April and the beginning of a new qtr – Earnings begin anew and the concerns over the strong dollar, weaker top line revenues, forward guidance, etc…will now take center stage. The new qtr will once again cause investors to re-visit the coming FED tightening schedule….and while we all expect any tightening to dampen some investor enthusiasm – we have been assured that any change in rates will be slow and steady and ‘inconsequential’ – which only means that trading may remain choppy and sloppy……

From a geo-political perspective – Greece continues to be the wild card…..now maybe less so than it was 3 yrs ago…but still a concern. PM Tsipiras addressed his Greek parliament on Monday – but gave no indication that there is any imminent deal….and the clock ticks ever closer to ‘failure’. Here is the ugly truth: Greece fails to demonstrate any commitment to reform – the European Union, the IMF and the ECB – all suspend the current support program – Greece defaults and begins to go down the drain – panic will set in – causing a run on the banks – Grexit becomes a reality. If this happens then the government could introduce capital controls.

(Capital controls are gov't e measures that restrict or bar the sending of capital outside or inside a country - causing panic....investors will then withdraw in a reaction known as capital flight)

This would be an immediate stop-gap solution and it does what it is intended to do - if a country is experiencing rapid outflows of money, it stops them. The difficulty will be re-integrating into the eurozone and lifting the controls at some point.

And the really UGLY truth is that even if they resolve this situation (slim at best), they will be back in the same position in less than 4 months. Greece's current support program is only good until June, - so sit down and strap in.....turbulence ahead......
I am out the rest of the week - on business in California. Have a great holiday - see you next week.

Risotto w/Cauliflower & Truffle Butter

This is another great risotto dish that is easy to make and easy to present. For this you need:

Diced Spanish onion, olive oil, butter, 2 Cups Arborio rice, 1/2 Cup dry white wine, Cauliflower Florets Cut Into bite size pieces, warm chicken broth, s & p, truffle oil or truffle butter and shaved Parmegiana cheese.

Heat the olive oil and butter in a heavy saucepan over medium heat.

Add the onions and cook until tender - maybe 10 mins...then add the risotto and stir until well coated with the oil mixture. Add the wine and continue to cook until it is almost completely absorbed.

Next - begin by adding one ladle of the hot chicken broth, stirring frequently until it has been almost completely absorbed before adding more. Continue to cook the risotto in this manner adding the broth one ladle at a time until the rice cooks.

While the risotto is cooking, heat some more olive oil in a frying pan and add the cauliflower. Cook over medium low heat adding a tablespoon or two of broth until the cauliflower is tender and just beginning to turn a golden brown. Remove from the heat.

After cooking the risotto for about 25 mins, should be tender to the bite, stir in the cauliflower and butter. Season with s &p to taste.

Once it is well mixed - serve the risotto into individual bowls, drizzling the top with the truffle oil or a spoonful of truffle butter. Garnish with shaved cheese and serve immediately.


Buon Appetito.