Joey makes good on his promise to release oil, and then?

• Joey makes good on his promise to release oil from the SPR.

• Oil prices rise? Think OPEC+.

• Nasdaq continues to re-price, Yields rise and the Dollar advances.

• Try the Italian Wedding Soup (if you don’t want the Rav’s).

Stocks once again ended the day mixed…. the Dow gaining 195 pts, the S&P up 8, the Russell down 4 while the Transports add another 135 pts.  Economic data yesterday revealed that Manufacturing PMI came in as expected while Services PMI was weaker than expected. 

Nasdaq names (high tech) continue to come under pressure as investors digest what is now expected to be a change in monetary policy…. Now – the FED will tell you no, it isn’t – yet the market is appearing to tell us something different.  The Nasdaq index is off 3% in the past couple of days…. not a reason to sound the alarm at all, (it is still up 23% ytd) but it is a reason to pay attention to what is happening around you and what is happening to specific stocks in the index.  While the index is off 3% - stocks like AMZN are down 6%, TSLA down 11%, and Cathie Woods’s ARKK ETF now down 17%, COIN down 15.5%, SHOP has lost 13%.... all this happening within the past week or so…. Do you see the pattern here? 

Yesterday, I pointed out that on Monday – there were 700 stocks (both NYSE & Nasdaq) making new LOWS vs. 330 stocks making new HIGHS – suggesting that maybe a repricing was under way…. Were investors reacting to what they think will be a change in policy?  I would say yes, they are…. I mean look – it is not a secret…. tapering has begun and there is even talk of increasing the pace of the taper to allow the FED to consider raising interest rates to combat surging inflation…. inflation that the administration would like you to believe is still transitory. 

Ok……In any event – the schedule currently suggests that tapering is to be completed by June 2022 – leaving the FED to decide what’s next for rates…But the whisper is that in the new year – the narrative will change….Jay – now that he has been re-appointed – will suddenly talk about how the economy is beginning to boil over – sending prices even higher – and that will demand that they react…or at least it should……this is a developing story – so sit tight – because you’ll hear more about this in the months ahead.

Then yesterday – Joey made good on his promise to do something about the price of oil – letting consumers know that he is on top of it!  The US along with India, Japan, the UK, China and South Korea have all banded together to release oil from their respective SPR’s (Strategic Petroleum Reserves) to try and bring down the price of gas at the pump – as we move into the holiday season….ok – great….the US is releasing 50 mill barrels over a period of weeks….great….we burn 18 mil barrels a day….so tell me – what exactly will 50 mil barrels do over the long term?  In fact – Energy Secretary Jenny Granholm (former governor of Michigan) when asked by a reporter - had no idea what the US consumes daily – never mind what this release would mean for US consumers. Goldman Sachs even said it was a ‘drop in the ocean’ – that this release may be worth less than $2/barrel for about a day or two……and then…. Well – you figure it out.   What did his economic (energy) team think was going to happen?  

Well, I bet they didn’t consider the OPEC + response – because if they did maybe they would have thought twice…You see – while the price of oil has come in by 10% prior to the announcement – trading as low as $75.50 barrel – yesterday it rallied post the announcement…..and today is up another 0.5% trading at $79/barrel –  and is now above the trendline resistance at $78.11….setting it up for a run to the October highs of $83/barrel.    Why?????   Well, I told you this yesterday as well….the OPEC + response is – ‘OK boys….no worries…we can cut production to offset the new supply that has come onto the market in order to maintain prices and price control’ – and in fact they are meeting next week and this is exactly what the market is expecting to hear (because it has been fairly well telegraphed).   So, do not expect prices at the pump to fall very much at all….  I’m kind of thinking that maybe Joey should consider a change in energy policy – what do you think? Recall – the US was the ‘swing’ producer under the prior administration – we were the nation driving the price of global oil – we were a net exporter of oil – imagine that………Just sayin’.

Yields on the 10 yr. rose to end the day at 1.677%, the Dollar rallied strongly and is now trading at 96.70 – up 3.8% since the end of October…. – after breaking out of what was real resistance at 94.50…. Remember that as it was doing that, I said that if it should break out then watch for it to run into resistance at 98. The idea that US tapering is on track and then rates are set to rise soon after – is a positive for the US dollar….and that is what the action is telling you. 

There is a slew of economic data today…. But none of which is expected to be a directional driver at all EXCEPT for maybe the FOMC mins from the November meeting. Investors will be perusing the report to see if they can glean anything new that maybe Jay isn’t saying out loud.

US futures are down this morning…. Dow off 150, the S&P’s down 17, the Nasdaq off 60 and the Russell down 20.  Nordstrom’s, GAP and BBY all getting creamed…. down 23%, 16% and 16% respectively…. after reporting misses in their earnings reports…. think supply chain…. yet – they tell us that this will be the strongest shopping season in years, so that is a bit illogical…. or maybe people are just not shopping at those stores…I guess it must be an online thing.

In Europe – markets across the region are also down…. between 0.3% and 0.5%.... this as more countries consider new restrictions/lockdowns to curb rising new covid cases…. IHS Markit composite PMI coming in at 55.8 – beating the 53.2 estimate.

Bitcoin is trading at $56,700, Ethereum is at $4,300 and two new ones that have attracted my attention – Chainlink (LINK) is trading at $27.14 while Avalanche (AVAX) is trading at $127.70.  

The S&P closed at 4690 after trading in a 20-pt. range….4678/4699. We remain in the 4630/4730 trading range.

Italian Wedding Soup (If you don't want the Rav's)

This is a great soup to make for any occasion but works very well with Thanksgiving. This soup is full of veggies and tiny veal meatballs and is a family favorite.

For this you will need:

For the meatballs:
1 lb. ground veal, chopped fresh parsley leaves, freshly grated Pecorino Romano, freshly grated Parmesan, 1 extra-large egg, lightly beaten, s&p.

For the soup:

Olive oil, minced onion, diced carrots cut into 1/4-inch pieces, diced celery (2 stalks), cut into 1/4-inch pieces, chicken stock (canned is ok – but homemade is better), 1/2 cup dry white wine, 1 cup of tubetini (small pasta) fresh baby spinach, washed, and trimmed. 

Preheat the oven to 350 degrees.

For the meatballs, place the ground veal, parsley, Pecorino, Parmesan, egg, s&p in a bowl and combine. With a teaspoon, drop 1 to 1 1/4-inch meatballs onto a sheet pan lined with parchment paper. (You should have about 40 meatballs. They don't have to be perfectly round.)

In the meantime, for the soup, heat the olive oil over medium-low heat in a large heavy-bottomed soup pot. Add the onion, carrots, and celery and sauté until softened, 5 to 6 minutes, stirring occasionally.

Add the chicken stock and wine and bring to a boil then turn to simmer for 30 mins.  Add the pasta to the simmering broth and cook for 6 to 8 minutes, until the pasta is aldente. The pasta will grow and suck up the soup….so make sure you have enough broth or use less pasta.

Next - add the meatballs to the soup and simmer for 1 minute. Taste for s&p. Stir in the fresh spinach and cook for 1 minute, until the spinach is just wilted. Ladle into soup bowls and sprinkle each serving with extra grated Parmesan.  A nice piece of garlic bread on the bottom of the bowl is always a favorite.