Defense Stocks Celebrate

Stocks rocket higher yesterday as they once again kiss all-time highs on the S&P……Defense stocks stealing the thunder as investors piled into these names as Trump inks a deal with the Saudi’s…. Just so you know – the US will sell $110 bil worth of arms to the Saudi’s with the option to sell as high as $350 bil over the next decade…. this deal should keep the Iranian’s in check and strengthen our relationship with the Sunni alliances. It also ensures that oil will continue to be priced in US dollars – 

Joining the party were the Tech, Industrials, Energy, Healthcare, Consumer Staples, Consumer Discretionary, even Utilities were all higher…. Signs of broader economic strength were the stories of the day – suggesting that investors/traders are now pushing President Trump and his antics aside….so many now expect the mkt to grind higher no matter what happens in DC. 

The concern here though is that the mkt is STILL betting on economic and fiscal reform in 2017 and that now appears more and more unlikely ….It is now June (for all intents and purposes) and if anyone really thinks that the administration is going to get any reform signed, sealed and delivered in the next 6 months – well they should see a shrink….Congress is ‘out to lunch’, the administration is under a cloud of suspicion over a range of geo-political issues and the administration’s proposals continue to boggle the mind. 

Last night – Mike Mulvaney – released the “Taxpayer First” budget outline and it calls for massive cuts to ‘safety net programs’ – in fact hundreds of billions of dollars in cuts to Medicaid, food stamps and disability benefits to name just a few…. which always makes me wonder – Why are we cutting programs – funded by US taxpayers - to help Americans when maybe we should be cutting programs that send US taxpayer money to foreign countries? If we must make a cut to balance the budget – why are we cutting programs at home? Can you imagine the amount of waste that happens when we send money to foreign countries and how much of that money ends up in the pockets of corrupt officials vs. being used for its intended purposes…but hey – that’s a whole ‘nother discussion…. I mean I wish we could help everyone – BUT if we can’t and we have to make a decision – then shouldn’t America first be the mantra call? Shouldn’t we be using our own money to help fellow Americans? But I digress…. Back to Wall St…

Now OPEC is now the all the rage once again….as the focus turns to Thursday’smeeting – where everyone now expects OPEC to announce a continuation of the current production cuts…and this has sent oil and energy stocks higher…. but – remember – 2008, 2000/2001, 1998 – when OPEC also cut production – what happened? Think marked slowdowns (recessions) hit the US…BUT as we keep hearing…. this is a different time…. OPEC has their back up against a wall – Why? Because the US is now a net EXPORTER of oil and if they continue to cut production – they risk losing mkt share to the US – they (OPEC) would have to ramp up production and drive the price of oil down into the $30’s to kill the US effort – so the question is – Will they do that? 
Now look – Energy stocks are still under pressure – the XLE is down about 12% since the highs of January….and is trading at $67.93 - below both its 50 and 2090 dma’s ($68.78 & $70.42 respectively). SO - If the economy is so health then why are the energy names still struggling? Remember – this group had by far the best earnings of all the S&P sectors – yet they still can’t get out of their own way….

Like I said yesterday afternoon on ‘The Closing Bell’ – while we are once again at the highs – you can feel the exhaustion in the mkt…. you can sense the overhanging resistance. While so many ‘expected’ the mkt to bounce back after the one day beating it took last week – we are not out of the woods just yet….do not be surprised to see the mkt churn and turn lower as we move into the June FOMC meeting where we fully expect Janet to announce a 3^rd rate hike in 6 months and the 2^nd hike for 2017. 

This morning – US futures are up small as the mkts appears ready to test 2400 on the S&P once again…. Where I think, it will fail. We remain in the 2380/2400 trading range for now. Trump is still making headlines abroad – while his detractors continue to build a case against him here in the US. 
The Memorial Day weekend is upon us – so expect the volumes to continue to fade as we move thru the week.
 

Pan Seared PoundedVeal Chop

This is a great recipe that is easy to make and will give your guests the sense that you really went out of your way…. Great presentation and delicious to eat. 

6 - med sliced veal chops, pounded to 1/2 in thickness, Extra Virgin Olive Oil, s&p, 5 tblspns of bacon fat, Provolone cheese - med sliced, prosciutto, thinly sliced, 3 cups diced shallots, 1 1/2 c beef stock, fresh thyme leaves, and butter. 

Preheat the oven to 200 degrees - Grease a baking sheet with butter

Season each chop with S&P and place on the baking sheet. Bake for 10 mins. 

While that is cooking - Heat up 2 large sauté pans on med high - these pans must be big enough to fit 3 of the chops - add a splash of olive oil and some of the bacon fat to each pan.... Now add 3 chops to each pan and cook for 3 to 4 minutes per side. Remove and place the chops in a roasting pan. Top with Provolone and then the prosciutto slices - Prosciutto must be on top, not under the cheese. 
 
Turn the oven to broil and place the chops in the oven on the middle rack - Broil until the prosciutto becomes crisp, (no more than 5 - 6 mins) Remove and tent with tin foil to keep them warm. 

In each of the sauté pans - add the shallots and cook for 2 to 3 minutes. Deglaze each with some beef stock. Add some thyme and allow to reduce, 3 to 4 minutes. Combine the liquid into 1 pan, add a 1/4 stick of butter and let it melt. Stir to mix well. Taste and adjust - season if necessary. 
Serve the chops on a heated plate drizzled with the sauce – have some sautéed spinach on the side along with a lg mixed salad.

Buon Appetito.