Jamie Blows the Roof off the House and is the US about to Blow Kim Jong-Un out of the Water?

 Good morning America! - It is Thursday April 13, 2017 - and there are a couple of issues on the table.....First at home we get bank earnings (and those are important)....JPM - exp $1.51 - and as expected - Jamie BLOWS THE ROOF OFF THE HOUSE....earnings came in at $1.65/sh easily beating the $1.51 estimate......Earnings climb, Revenues  climb helped by lending and higher rates....... Recall - last week when we discussed this and I asked

"Does anyone really think that Jamie Dimon is going to disappoint"?  I mean really - was that even a possibility?  NOT!  The stock jumps $1 in pre-mkt trading immediately after the announcement.....taking it right to intermediate term resistance..... Next up -

 C - exp $1.24, PNC - exp $1.83 and  WFC - exp 0.96 cts....Do we expect any disappointments?  NO - at least not in the bottom line.....but as usual guidance will be key on a number of levels....what it says about current bank management, what it says about regulatory outlook, what it says about future job losses (or gains) and what it says about the economic outlook and future FED policy are only a few of the things that investors will be listening for....

US futures are lower again this morning currently down 7 pts (suggesting that when the mkt opens at 9:30 the S&P will be testing 2,338ish)......The S&P is down 2.5% off its all time March closing high of 2,400......Now this in itself is nothing to fret about - I mean 2.5% is not a disaster...but it does cause some to become a bit more concerned.  Look - as detailed in earlier notes this week and last week - the 50 DMA (day moving avg) on the S&P is 2,350 and the discussion was that if the S&P breached this support then we could expect lower prices in the weeks ahead.....for a week or so - sellers tested the will of the buyers at that key level.....and each time the buyers did not disappoint - they defended the position - while also re-thinking it (maybe it is time for the buyers to back off and test the will of the sellers) ...and the sellers did not give up....they kept pounding it.....they did not back off and for some good reasons.....

1.  Geo-political Risk have spiked - the missile attacks on Syria and the resulting debate between the Russians and the Trump Administration.  The face to face meeting between Sec of State Rexy and his Russian counterpart - Sergey....how would that go - considering US/Russian relations are under some pressure....  'Chubby' (otherwise known as Kim Jung On)  and the North Korean Inter-continental ballistic missile 'test launch' that is supposed to happen on Saturday and Trumps response to it by sending an 'armada' of warships into the waters off the Korean Peninsula.   China's response?  Would they support the US and try to reign in Chubby or would they step aside only to accuse the US of violating international law - as the Russians did over Syria? 

2.  Earning season  which kicks off today........Remember   we have been led to believe that corporate earnings for the S&P 500 index will increase for the 1st qtr  by 9% (down from an initial 11% rate), according to Fact Set  and by 6% according to some street analysts - while there are some out there that believe that the whisper number will be closer to  12% for the qtr -  which would be the first double digit growth we’ve seen in years....and considering that 4th qtr 2016 earnings came in at 3.5%  - a 12% growth rate y/y for S&P earnings is 'a stretch'.  But so much happened in the last 5  months...that investors piled in (bullish)  and are now highly leveraged. 

Remember - leverage works BOTH ways.....it's great on the way UP (if your long)  and it slices deep on the way DOWN and vice versa - it's great on the way DOWN (if you're short) and it slices deep on the way UP.   The test now will be - Who wins?   If the S&P 500 earnings come in under expectations, the mkt will find itself  a bit stretched...capisce?

3.  GDP?  Recall the trend.....  3rd Qtr 2016 +3.5%, 4th Qtr 2016+2.0% and estimates for 1st Qtr 2017 +0.6% (GDPNow forecast) - do you see a trend here?  And with failed reforms in Obamacare and Taxes - along with all the infighting in DC - it is no wonder.  

Let's just make this clear.....the failure of healthcare reform means that health insurance premiums in the 1st qtr are still soaring and that all the penalty taxes are still slamming the consumer.  Tax reform that we thought would happen late 2017 is now off the table until at least mid 2018,  Retail is a disaster...... 2000 store closings (that we know about) across the country do little to instill confidence. 

And just a historical  note...... Every (that's 100%)  of a new presidency that follows a  2 term presidency have experienced a recession in their 1st term....I'm just sayin........and seasonally - the mkt always weakens post TAX day.....which this year is Monday April 18th. 
 
4.  A gov't shut down looms?  Yes it does......Congress will have only a few days when they get back from vacation to pass a bill to fund the gov't  or there will be a gov't  shutdown starting on April 29^th. 

Now as you can imagine the Senate Democrats are looking to STOP a bill to fund the gov't unless they can stop the funding of Trump’s Mexican wall and get more funding for Planned Parenthood.  - reminding us of the fight during the Obama administration when the Republicans were accused of shutting down the gov't - Now it's PAYBACK time for the Democrats.......Will they force a shutdown?  Will they be accused of holding us hostage this time?    NY's  Senator Schumer  (Dem) rejects the idea that Democrats were being hypocritical for hinting at a gov't shutdown ( of course he does) and said it was up to Republicans to keep the government open and so expect to hear so much more about this latest monkey wrench in the days ahead.

OK - so overnight in Asia – mkts closed lower ahead....political tensions continue to run high and comments last night by Trump about dollar strength (he prefers it weaker)  are sending the Yen higher...  Chinese trade balance  beats all expectations as Exports came in at 16.4%  and Imports came in at 20.3% - Good for China......Japan -0.67%,  China +0.15%, Hong Kong -0.21% and ASX -0.74%.   

 In Europe – stocks are lower  as investors consider Trumps comments on the dollar and US interest rates (he prefers lower vs. higher).   Investors are also bracing for earnings and any potential action over the weekend off the Korean Peninsula.   FTSE -0.58%, CAC 40 0.55%, DAX -0.38%, EUROSTOXX -0.51%, SPAIN -0.57% and ITALY -0.85%.

 And with  US futures down 7 pts  look for the mkt to test lower as we move into a long weekend with all the turmoil that is on the horizon....Investors will raise cash to get ready for lower prices next week.   2,350 is now resistance and you can find support at 2,300. 

Gold - surges higher and is up $12 points at $1,289...it has broken up and thru all resistance - think safety trade......next stop should be $1,315 ish and if we blow thru that then $1,350 is within reach.....But this all depends on what happens this weekend....Will Chubby do something stupid or will the Chinese convince him that it is NOT in his best interest? 
 

Easter Roasted Leg of Lamb 

First you need to make the dressing for the lamb and for this you need

Olive oil, Fresh lemon juice, 6 cloves garlic, Fresh rosemary, kosher salt and black pepper.   Now make the marinade....Add the ingredients to a blender or food processor and process until smooth. The marinade should be thick in consistency so it doesn’t run off the meat while cooking and forms a bit of a crust.

Preheat the oven to 425 degrees.

Next peel and dress the potatoes with olive oil, s&p, fresh lemon juice, garlic powder and oregano.  Toss and mix well.  Put the potatoes on the bottom of the roasting pan.  Now place the lamb on top and put in the oven covered and roast for 25 mins.  Now turn the oven down to 350 degrees and continue to cook - uncovered.....(rule of thumb - 20 mins per pound is about right).

Make sure to baste the potatoes and the roast while cooking.  When done - remove, cover and let rest for 15 mins.  You can now broil the potatoes so that they become almost golden brown.

Slice the lamb - arranging nicely on the platter, circle the meat with the roasted potatoes.  Make sure to serve with a lg mixed salad and enjoy.

 
Buon Appetito.