Market breadth is broadening out, and replacement parts?

• Stocks continue to churn lower from various FED comments and in preparation of today’s PCE data.

• Bond prices rise, Oil sits tight, and Gold remains stuck.

• Are the FED heads now sending conflicting messages?

• PCE out at 8:30 – will it surprise on the upside or downside?

• Try the One Skillet Thighs.

Stocks decline ahead of a KEY inflation report due out at 8:30 today….

The Dow lost 24 pts, the S&P down 9, the Nasdaq lost 88 pts, the Russell gave up 16 pts, the Transports lost 90 pts while the Equal Weight S&P added 1…..so it wasn’t really anything to write home about….some describing it as boring  - all while the market awaits today’s PCE data – which is expected to show an increase in inflation. 

And the FED heads are apparently ‘challenging’ each other in the global public square….Boston’s Suzy Collin suggesting that rates will move lower ‘later this year’ (undefined), NY’s Johnny Williams saying that the FED ‘still has a ways to go’ but also suggested that the FED will ‘likely’ cut rates later this year (again undefined) and Atlanta’s Raffi Bostic said he is comfortable taking a more ‘patient approach’ – suggesting NO time line to begin the rate cut process.  ……All this while Treasury Secretary Janet Yellen told us two weeks ago that she does NOT expect to see prices go down but that isn’t important because wages have gone up – so it’s a wash…..prices are higher, but your take home pay is higher and so – Why is anyone complaining? 

Recall that on Monday Kansas City Fed President Jeffrey Schmid – told us that that he is not in any rush to cut rates – urging patience as the fight continues while on Tuesday – Fed Governor Mishy Bowman re-iterated that call….’it is too soon  to begin to cut rates’ – neither one of them tagging a time line to when they think it might be appropriate – so there you….more confusion and uncertainty and that tends to send markets lower…..

The saving grace here is that the markets did not collapse on this uncertainty – in fact – as I have pointed out – there has been more of a reallocation of assets, a broadening of the market breadth – with money coming out of ‘tech’ and moving into names like AXP, HD, WFC, GE, UNP, CRM, SHW, ICE, SPG, COIN, CMI – that are all trading at 52 week highs.  And I do not see one of the magnificent 7  ‘tech’ names on the list – but what I do see is a range of industries represented and how advanced ‘tech’ is assisting these companies do better…and THAT should be the story going forward…..AI and advances in tech will create a more robust economy…and in fact – yesterday there was an analyst on Mornings With Maria that suggested that AI and 3d printers will be able to ‘print replacement parts’ for all of us – allowing us to live to be 150!  Hmnm, now that’s interesting – I’m curious if we are going to get to design the ‘size’ of those replacement parts?  (Now come on…. I’m talking about a Big Heart!)

Not sure about you, but I do not want to live to be 150…. I mean – when will we get to retire?  130?  And what about the social security fund?  I mean it is out of money NOW!  I’m happy to check out after 85 ish…. Do they think we’ll just keep having kids? –  They will have to do a lot more than just print ‘replacement parts! 

Bitcoin pierced $62,000, Ethereum pierces $3,200 Bonds gain in price sending yields slightly lower, Oil holds steady at $78.50, all while gold remains stuck between support at $2035 and resistance at $2052. 

On the economic front – Mortgage apps declined again – 5.6% as mortgage rates remained above 7%, 4th Qtr. GDP revised to 3.2% down from 3.3% and retail inventories were up 0.5% m/m slightly higher than the expectation.  But the key data point that we are all waiting for (which I think might just be a big non-event is today’s PCE deflator – the FED’s favored inflation gauge…and it IS expected to show an increase in inflation…and we know that….so the real question is – is it going to increase MORE than the already elevated estimate – because if it does then that will put the final nail in the coffin on rate cuts anytime this year.  And what happens if it really surprises us and declines?  The algo’s will go apoplectic!    Oh, boy…now they would have some explaining to do. …. Why?  Because every other inflation data point – points to rising prices (again). So, if they are using the same data, it has to point to a similar result – maybe not exactly the same, but similar.  In any event – it’s only hours away…

And like I have been saying, this data point will frame the next set of commentaries that we’ll get today….Chicago’s Austan Goolsbee is set to kick it off….and we know how he feels – he still thinks we are on the ‘golden path’ to killing inflation and leans toward cutting rates sooner vs. later…but then we’ll get Raffi (again) and we know that he is more cautious while Cleveland’s Loretta Mester is the wild card?  Which side of the fence will she be on?  Hold or cut? (She tends to be more conservative and that suggests that she is the hold/patient camp – so let’s see if she changes her tune).

Dow futures down 125 pts, S&P’s down 15, The Nasdaq lower by 45 all while the Russell bucks the trend and is up 3 pts…Which isn’t unusual – the Russell is  underperforming on the year….up only 0.6% vs. the 6.2% gains in the S&P and Nasdaq, the 3.3% gain in the Dow and the 2.5% gain in the equal weight.

European stocks are mixed…. Germany is up 0.5%, Italy +0.4%, UK + 0.2%, France unchanged and Spain continues to move lower down 0.1%.

The S&P closed at 5069 – down 9 pts…..If the PCE and the FED commentary gets the market all antsy – then I would not be surprised to see us test the 4975 ish level…and if it’s even higher than expected – then we could test the 4920 range….Trendline support is 4870…or 4% from here…

My sense is that today – the last day of the month – will be more affected by month end rebalancing rather than the PCE – UNLESS of course it is not what the market expects. 

News that Oprah is leaving the board of WW is sending that stock down 22% - trading at $2.90 in the pre-mkt…. This after she reveals that it is the GLP drugs that are helping her maintain her girlish figure…. Is she about to join the board of LLY or Novo Nordisk? 

C3.ai – (AI) a name I have spoken about before - surges 16% in the pre-mkt after the company told us that customers are responding 'positively’ to the new AI based apps.  Revenue +18% at $78.4 million vs. the expected $76.1 million. Sales are forecasted to be $82 - $86 million for the current period.  (analysts are smack in the middle at $84 million).  It is currently quoted up $5 at $34.25/$34.50.

I continue to think it still feels a bit toppy and tiring.  I am looking for some more churn and expect the broader market to back off a bit going into the end of quarter. 

One skillet chicken thighs

This is simple to make – You need:  boneless, skinless chicken thighs, orzo, lemons, Dijon mustard, s&p, garlic, shallots, paprika, Italian seasoning, chicken broth, chopped kale, butter, olive oil and feta cheese.

Season the chicken with the spices (s&p, paprika, chopped garlic, Italian seasoning) and a tablespoon of Dijon.  Mix to coat well.  

In a large sauté pan- melt ½ stick of butter and olive oil…. Sear the chicken on both sides and then remove.  In the same pan – add more butter and the chopped shallots.  Sauté for 2 mins…. Then add 3 or 4 lemon slices and let them brown. Now remove the slices and set aside – do not throw them out. 

Add the orzo – maybe 1 cup.  Toss it to brown just a bit.

 Now add the chicken broth to pan – enough to cover the orzo.  Add the chopped kale (you can use spinach) and return the chicken with the lemons.  Turn heat to med low and let it cook.  Keep your eyes on it, if the orzo sucks up all the broth – add a bit more…do not let it dry out.

While this is happening. Get the food processor – add a block of feta cheese with olive oil Whip it up to create a creamy feta. 

Now when done – serve the chicken and orzo and kale and top with the creamy feta sauce.  Yum.   You don’t need anything else with this dish.