Kenny Polcari
KennyPolcari.com
Stocks closed mixed to lower on Friday – on what was the slowest trading day of the year…but did you really expect anything different? With the US mkts only open for 3 ½ hrs and no real catalyst to push it higher - it would have been hard for it to do anything other than what it did.
All the hype over Black Friday, Small Business Saturday, and Cyber Monday continue to cause a bit of concern as investors/traders began to wonder aloud – what it all means. Will the news on Saturday morning suggest that Black Friday was a dud? Have all the ‘pre-Black Friday sales’ taken the luster off? Are retailers sending the signal that they are nervous and if they are, then how will that translate to traders/investors on Monday morning?
Well – in a bit of ‘forewarning’ consumer discretionary and retailers led the way lower on Friday. WMT, AMZN, TIF, GPS, JCP, M, BBY etc…..all putting in weak performances ahead of the big shopping weekend as traders placed their bets….
On Saturday morning – the papers announced the news – No, not the fights to get into the stores, or the lines of people who camped out just to be first in line, but rather :
‘Black Friday – Not so Black’, ‘Black Friday Sales Slip from Year Prior’, ‘Black Friday Store Sales Fall as Americans Buy More Online’ and ‘Black Friday Was a Bust!’
SunTrust Robinson Humphrey summed it up by saying: “We believe that Thanksgiving shopping was a bust”…. but is that really what happened? Is it just that the shopping moved from physical to virtual? Consumers no longer feeling the need to get up and go out.....but rather sit home in their 'skivvies', open up their computers and shop online...spending some $4.4 bil online over the weekend......
in fact this morning's WSJ lays it out clearly:
"Online Shopping Surges on Black Friday Weekend - online shopping, especially via mobile phones, surges, showing how buying habits have changed"
What a contrast to years past? I mean who remembers the look of terrorized sales clerks as throngs of crazed, almost hysterical, shoppers pushed their way into the stores at midnight? So what’s the consensus? Seems to me that it was a lot of wasted time and talk about Black Friday..... and since all of these ‘sales’ were happening 'online' as well as in the store in the week's prior to Black Friday and will surely happen in the weeks following Black Friday – why then should anyone rush out and shop on Black Friday? What is the advantage? Apparently Zero!
The question then becomes - What happens to the margins? Yes - we are told that sales rose 14% y/y but at what cost? Will retailers crush margins in order to entice the consumer to part with their dollars? And then what does that really mean for the investment thesis? Is that Bullish?
What is important to remember though – is that the shopping season is not made up of any one day…..it is the culmination of shopping that takes place from early October – right thru Christmas and then it is the shopping that takes place on Christmas day thru year end when retailers slash the prices of anything that remains to get it ‘off the shelf’. So before anyone goes and makes an investment decision based on Black Friday – remember – Black Friday was a day created by the industry to create hype and excitement – in the end – the results will be what they are…..I am just not sure it will be what the retailers want them to be - but we shall see.......
OK – back to the mkts…on Friday we saw China get slammed (again) – down some 5+% as concern over the slide in industrial profits once again takes center stage causing some analysts to ring the alarm about a deteriorating Chinese economy. Add in the newly announced probe into some of China’s largest brokerages and you had the perfect backdrop for investors to hit the SELL button.
This morning we saw a repeat of that story.... Asian mkts continued to come under pressure overnight as this story builds.... At one point China was off another 3.5% in early trading only to recoup those losses and end the day marginally higher. The volatility in the Chinese mkts illustrates the difficulty that Chinese officials face as they try to transform their economy and allow the mkts to price in real risk as the gov't attempts to withdraw support. Japan -0.69%, Hong Kong -0.33%, China +0.26% and ASX -0.69%.
In Europe this morning we are seeing those mkts flat to slightly higher as investors there discount the negative moves out of Asia and begin the week anticipating more stimulus to be announced by the ECB on Thursday.
The Eurostoxx index - an index of 50 blue chip stocks that represent the 'super sector' leaders from 12 Eurozone countries - is up 2% this month and it is up 17% off the September lows as optimism builds over the strength of the Eurozone economy as well as the potential for more Kool Aid offered up by the ECB.
ECB Pres Draghi is expected to announce even more stimulus by pushing the cost of parking money at the ECB even higher ( rates to go further into NEGATIVE territory) as he tries to force the banks to lend vs. hoard...... FTSE -0.04%, CAC 40 +0.67%, DAX +0.97%, Eurostoxx +0.76%, Spain +0.98% and Italy +0.62%.
Now US futures have been all over the place....down nearly 9 pts in early pre-mkt trading and have now swung back to positive territory - currently up 3 pts at 2093 - as traders/investors return from the long holiday weekend. Get ready for 'macro data overload'.......as US investors/traders get hit with a slew of data.... In addition we will hear from Fed Chair Yellen as she addresses the Economic Club of Washington on Wednesday and the Congressional Joint Economic Committee on Thursday - Expect traders to listen intently to what she has to say.... What does that mean for rates? By now – everyone should realize that it is NOT about the December 16/17th meeting any longer – it is now about what happens next year....……Will she indicate that further rate hikes are in store in quick succession in the new year? Is she setting up to be more aggressive in the months ahead?
Watch for the 'FED Bus Tour' featuring a range of FED officials as they pontificate over the state of the economy and monetary policy.....Tomorrow we will get Chicago's Evans, and Fed Gov Brainard . Wednesday gives us Atlanta's Lockhart and San Fran's Williams. Thursday brings us Cleveland's Loretta Mester and Fed Vice Chair Fischer....and not to be outdone - Friday will play host to Philly's Harker, St. Louis's Bullard and Minneapolis's Kocherlatkota....
Now this week brings a ton of macro data: Today brings us Chicago PMI - exp of 54, Dallas Fed Survey of -10 and Pending Home Sales of 1%. Tomorrow we get Manf PMI of 52.6, Construction Spending of +0.6%, ISM Manf of 50.5....Wednesday - ADP Employment of +190k....
But the KICKER is on Friday when we get the final NFP report before the next FED meeting – expectations are for +200k jobs to be created – which would be down significantly from last month – but strong enough for her to say: “And we’re OFF!” (We would have to see a number sub 100k for there to be any concern that she will go into another holding pattern - not happening....)
Stay tuned - it is sure to be a week of volatility and excitement.
You will need: The steaks, 10 cloves of Garlic, Pork fatback, dried rosemary, coarse salt (kosher salt works nicely) and pepper. Remove steaks from fridge - rinse under cold water and pat dry with a paper towel. Leave on a platter for about 20 mins so that they get to room temp. In a food processor blend the pork fatback, garlic, rosemary to a paste like consistency. Next - wash your hands and massage this mixture into the steaks - taking time to make sure that you have worked the meat and the mixture well. Now season with S&P. Set aside.
Light the grill and turn the heat to high and allow the grill time heat up - it has to be nice and hot. Place the steaks on the grill and cook for about 5 min/side - depending on thickness - This will result in a med rare steak...so if you add a couple more mins on each side you will get a more cooked center. Remember though - when you remove the steaks from the grill - you will cover and let them rest for 4 mins allowing them time to continue cooking and allowing for the juice to flow. Once ready serve immediately on warmed plates. Accompanied by both a starch and a vegetable. Smashed potatoes and peas - along with a mixed green salad with red wine vinaigrette dressing.
Buon Appetito.
All the hype over Black Friday, Small Business Saturday, and Cyber Monday continue to cause a bit of concern as investors/traders began to wonder aloud – what it all means. Will the news on Saturday morning suggest that Black Friday was a dud? Have all the ‘pre-Black Friday sales’ taken the luster off? Are retailers sending the signal that they are nervous and if they are, then how will that translate to traders/investors on Monday morning?
Well – in a bit of ‘forewarning’ consumer discretionary and retailers led the way lower on Friday. WMT, AMZN, TIF, GPS, JCP, M, BBY etc…..all putting in weak performances ahead of the big shopping weekend as traders placed their bets….
On Saturday morning – the papers announced the news – No, not the fights to get into the stores, or the lines of people who camped out just to be first in line, but rather :
‘Black Friday – Not so Black’, ‘Black Friday Sales Slip from Year Prior’, ‘Black Friday Store Sales Fall as Americans Buy More Online’ and ‘Black Friday Was a Bust!’
SunTrust Robinson Humphrey summed it up by saying: “We believe that Thanksgiving shopping was a bust”…. but is that really what happened? Is it just that the shopping moved from physical to virtual? Consumers no longer feeling the need to get up and go out.....but rather sit home in their 'skivvies', open up their computers and shop online...spending some $4.4 bil online over the weekend......
in fact this morning's WSJ lays it out clearly:
"Online Shopping Surges on Black Friday Weekend - online shopping, especially via mobile phones, surges, showing how buying habits have changed"
What a contrast to years past? I mean who remembers the look of terrorized sales clerks as throngs of crazed, almost hysterical, shoppers pushed their way into the stores at midnight? So what’s the consensus? Seems to me that it was a lot of wasted time and talk about Black Friday..... and since all of these ‘sales’ were happening 'online' as well as in the store in the week's prior to Black Friday and will surely happen in the weeks following Black Friday – why then should anyone rush out and shop on Black Friday? What is the advantage? Apparently Zero!
The question then becomes - What happens to the margins? Yes - we are told that sales rose 14% y/y but at what cost? Will retailers crush margins in order to entice the consumer to part with their dollars? And then what does that really mean for the investment thesis? Is that Bullish?
What is important to remember though – is that the shopping season is not made up of any one day…..it is the culmination of shopping that takes place from early October – right thru Christmas and then it is the shopping that takes place on Christmas day thru year end when retailers slash the prices of anything that remains to get it ‘off the shelf’. So before anyone goes and makes an investment decision based on Black Friday – remember – Black Friday was a day created by the industry to create hype and excitement – in the end – the results will be what they are…..I am just not sure it will be what the retailers want them to be - but we shall see.......
OK – back to the mkts…on Friday we saw China get slammed (again) – down some 5+% as concern over the slide in industrial profits once again takes center stage causing some analysts to ring the alarm about a deteriorating Chinese economy. Add in the newly announced probe into some of China’s largest brokerages and you had the perfect backdrop for investors to hit the SELL button.
This morning we saw a repeat of that story.... Asian mkts continued to come under pressure overnight as this story builds.... At one point China was off another 3.5% in early trading only to recoup those losses and end the day marginally higher. The volatility in the Chinese mkts illustrates the difficulty that Chinese officials face as they try to transform their economy and allow the mkts to price in real risk as the gov't attempts to withdraw support. Japan -0.69%, Hong Kong -0.33%, China +0.26% and ASX -0.69%.
In Europe this morning we are seeing those mkts flat to slightly higher as investors there discount the negative moves out of Asia and begin the week anticipating more stimulus to be announced by the ECB on Thursday.
The Eurostoxx index - an index of 50 blue chip stocks that represent the 'super sector' leaders from 12 Eurozone countries - is up 2% this month and it is up 17% off the September lows as optimism builds over the strength of the Eurozone economy as well as the potential for more Kool Aid offered up by the ECB.
ECB Pres Draghi is expected to announce even more stimulus by pushing the cost of parking money at the ECB even higher ( rates to go further into NEGATIVE territory) as he tries to force the banks to lend vs. hoard...... FTSE -0.04%, CAC 40 +0.67%, DAX +0.97%, Eurostoxx +0.76%, Spain +0.98% and Italy +0.62%.
Now US futures have been all over the place....down nearly 9 pts in early pre-mkt trading and have now swung back to positive territory - currently up 3 pts at 2093 - as traders/investors return from the long holiday weekend. Get ready for 'macro data overload'.......as US investors/traders get hit with a slew of data.... In addition we will hear from Fed Chair Yellen as she addresses the Economic Club of Washington on Wednesday and the Congressional Joint Economic Committee on Thursday - Expect traders to listen intently to what she has to say.... What does that mean for rates? By now – everyone should realize that it is NOT about the December 16/17th meeting any longer – it is now about what happens next year....……Will she indicate that further rate hikes are in store in quick succession in the new year? Is she setting up to be more aggressive in the months ahead?
Watch for the 'FED Bus Tour' featuring a range of FED officials as they pontificate over the state of the economy and monetary policy.....Tomorrow we will get Chicago's Evans, and Fed Gov Brainard . Wednesday gives us Atlanta's Lockhart and San Fran's Williams. Thursday brings us Cleveland's Loretta Mester and Fed Vice Chair Fischer....and not to be outdone - Friday will play host to Philly's Harker, St. Louis's Bullard and Minneapolis's Kocherlatkota....
Now this week brings a ton of macro data: Today brings us Chicago PMI - exp of 54, Dallas Fed Survey of -10 and Pending Home Sales of 1%. Tomorrow we get Manf PMI of 52.6, Construction Spending of +0.6%, ISM Manf of 50.5....Wednesday - ADP Employment of +190k....
But the KICKER is on Friday when we get the final NFP report before the next FED meeting – expectations are for +200k jobs to be created – which would be down significantly from last month – but strong enough for her to say: “And we’re OFF!” (We would have to see a number sub 100k for there to be any concern that she will go into another holding pattern - not happening....)
Stay tuned - it is sure to be a week of volatility and excitement.
Steak Florentine
Start with a nice cut T-Bone or Rib Eye - always on the bone as the bone provides so much more flavor and makes a nicer presentation for your dinner guests.You will need: The steaks, 10 cloves of Garlic, Pork fatback, dried rosemary, coarse salt (kosher salt works nicely) and pepper. Remove steaks from fridge - rinse under cold water and pat dry with a paper towel. Leave on a platter for about 20 mins so that they get to room temp. In a food processor blend the pork fatback, garlic, rosemary to a paste like consistency. Next - wash your hands and massage this mixture into the steaks - taking time to make sure that you have worked the meat and the mixture well. Now season with S&P. Set aside.
Light the grill and turn the heat to high and allow the grill time heat up - it has to be nice and hot. Place the steaks on the grill and cook for about 5 min/side - depending on thickness - This will result in a med rare steak...so if you add a couple more mins on each side you will get a more cooked center. Remember though - when you remove the steaks from the grill - you will cover and let them rest for 4 mins allowing them time to continue cooking and allowing for the juice to flow. Once ready serve immediately on warmed plates. Accompanied by both a starch and a vegetable. Smashed potatoes and peas - along with a mixed green salad with red wine vinaigrette dressing.
Buon Appetito.
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