Here Comes the Song & Dance

So - Stocks started the day strong.........felt like they wanted to make a comeback....make a statement.....fight thru the malaise and dreariness - and for the most part - they held on for most of the day - ......but that was not to happen.....as the day wore on - stocks gave it all up - the choppy trading choppy seen as traders showed caution going into today's NFP report . The tech-heavy Nasdaq dropped to its lowest closing level in almost two months and the dollar staged a modest comeback. The S&P struggled to hold onto the 2050 level and in fact managed to do just that by the closing bell.....

Overnight - Asian mkts lost ground......as investors in Asia were not taking any risks either ahead of what could be volatile US trading. Japan back from a 3 day holiday sold off small - but is now down some 9% in the last week. China down 2.8% and Hong Kong down 1.6% after the rumor mill reported that Chinese regulators may delay mainland listings of US -listed Chinese companies...... and in Australia up 0.25% - the Reserve Bank CUT their inflation outlook - igniting calls for more rate cuts. (think more Kool Aid).

In Europe this morning - mkts there are under pressure as investors/traders are erring on the side of caution ahead of our report....remember - a stronger report will then re-ignites the FED discussion about higher rates...... FTSE - 0.84% CAC 40 - 1%, DAX - 0.52%, EUROSTOXX -0.97%, SPAIN -0.52% and ITALY -1.23%

Over the past 2 days - the mkts have been hit with the song and dance from a number of the FED mouthpieces - Williams, Bullard, Lockhart etc... - trying to tell the world that YES - June is on the table and rates are due to rise.....because the US economy is so strong and robust that they MUST get out in front and slow it down.......Now that's all well and good - if in fact it were true...( FED Funds do not support this analysis and in fact only place a 10% chance that rates will or should rise in June.)

Now I do not believe any of it......and I don't believe that any of the Fed presidents want to raise interest rates BUT they are backing themselves into the corner. (think December 2015) and they need to take pressure off of the Japanese yen and the Euro. The smart money is betting the Fed will take the pressure off the yen and the Euro by just talking about the possibility of higher rates (jawboning).....and given these hawkish comments of late - we have seen the dollar rally every day this week causing stocks and oil to weaken.

In my view - the only way the FED can raise rates at this point is to change the rules of the game if they want to somehow justify whatever move they make.... Keep in mind - we are talking about 25 bps at most - which would take us to the 0.50/0.75 range.......significantly BELOW long term avg rates and still very accommodative.....- so the mkt should not throw a temper tantrum - over 25 bps.....but that's another issue.
So next question: Does anyone really care about the NFP report any longer? I mean the long term asset manager - the man/woman that is making decisions 2, 3, 5 yrs out - is this one report really going to change is policy, mindset or trading acumen? No.... It is the short term trader, liquidity provider that cares...and so the wheels will turn...but I do not in the end think that today number will do anything to change the direction of the conversation or mkts....

So today at 8:30 we will get the data.....expectations are for a +200k jobs number......and after the data this week 0- it is hard to see how there could be any surprise at all...Now what is interesting is that our friends at GS are expecting a jobs report of +240k...well above consensus......this as they just make another LAYOFF announcement in today's WSJ

"Goldman Sachs Cuts More Jobs in its Securities Business".......this marks another wave of cost cuts........as they eliminate the high cost humans in favor of cheaper technology.

US futures are now down 6 pts - and if this holds thru the opening...then look for the S&P to break the 2050 level decisively......and as we have been discussing - the mkt has fought the good fight...it has tried to hold onto this key level....but my sense is that after 4 attempts - the bears will raise their ugly heads and send the bulls running for cover......look for the mkts to test the longer term 200 dma at 2013 or so. Now I don't expect it today - but once we break 2050 decisively then the mkts will have to find and test the next level..... It will be interesting to see how they explain the data today.....
 

Chicken Thighs w/Pancetta and Balsamic Vinegar

It's a game of chicken.....so try this chicken recipe tonight.

For this you need: Olive Oil, Diced Pancetta (Or Bacon), 8 Medium Sized Skinless Chicken Thighs, Onion, Diced, Garlic Cloves, Peeled & Minced, Dry Red Wine, 1 Can Diced Tomatoes, Tomato Paste, Water, Chopped Rosemary, Chopped Thyme, S & P, Red Hot Pepper Flakes (Optional), Balsamic Vinegar, Chopped Fresh Parsley

In a large heavy skillet, heat the oil over medium heat and cook the pancetta until cooked through and lightly browned, about 5 minutes. Remove the pancetta to a plate, set aside, and brown the thighs well on all sides, about 10 minutes. Remove the chicken to the plate and cook the onions until translucent and soft, stirring often, about 5 minutes.

Add the garlic and sauté for 3 mins or so, Add the wine, (about ½ cup) increase heat to medium high heat, and cook just until the wine is reduced by half.

Now add the tomatoes, tomato paste, water, rosemary, thyme, salt, pepper, and red pepper flakes if you are using.
Bring to a boil, then reduce to a simmer and return the chicken and pancetta to the pot. Cover the pan, and simmer for 20 mins, or until the sauce has thickened, adding additional water as needed if the sauce thickens too much. Taste the sauce, and adjust s&p as needed. Now stir in about 1 tblsp of balsamic vinegar – mix well and place the chicken on a platter.

Top with the sauce, then sprinkle with the chopped fresh parsley.



Buon Appetito.