More Bad News for the Economy

Kenny Polcari KennyPolcari.com

Poor economic news causes stocks to rally.....it is more of the ricochet moves that we have been discussing...notice again we traded down to support at 2120 and BOOM like clockwork - we rallied...now - it is not coincidence that yesterday's eco data was not a barn burner.....across the board the numbers disappointed....

Weaker retail sales - 0.3% led the parade of economic stats.....and as the morning dragged on - the reports continued to disappoint and that my friends is all the evidence that traders needed.....let's just say it again.....the FED is frozen, paralyzed really on interest rates - with the chatter now that even December while on the table, for appearances sake, is really off the table. Again, bad news is good news for the mkts....Discretionary spending activity weak, which has to downgrade the overly optimistic GDP forecasts of better than 3% for the 3rd qtr. YoY- retail sales are slipping into recessionary territory. Wages are slipping as we have discussed so many times before....Obamacare and soaring drug prices will be the driver of consumer spending dynamics of GDP this quarter, but it is killing retail sales and killing many businesses.

So the idea that rates are holding steady and the dollar was psychotic....first rallying and then plunging to end the day lower....Oil - bounced after the drubbing it took on Wednesday....and this morning is once again trading lower at $43.93 as it continues to tease with its 200 DMA at $44.19 - which is representing resistance.

Industrial Production - oh yeah...that fell as well...declining 0.4% MoM in August, its biggest drop since March. Add in the fact that the 1.1% drop YoY in US Industrial Production is the longest non-recessionary slump in over 100 years. But - Fischer, Rosengren, Dudley, Lockhart, Williams, George all think we are ready to launch.......It MUST be me......They so missed the boat...

Today is a quadruple witching - which is the simultaneous expiration of 4 sets of options.....Stock Index futures, Stock Index Options, Single stock options and single stock futures...it happens 4 times a year (qtr end) and is usually associated with much bigger volumes and volatility.....Look for extremely large volumes on both the openings and closings and while it looks 'big and scary' the fact is that in the final mins leading up to both bells - the stocks all pair off right where they are supposed to. You see - it is not a secret - traders expect it, and the mkt is well positioned to manage it.

So with only 4 trading days before the next FOMC meeting, traders/investors are likely to play the odds of no rate hikes vs. a 25 bps hike at least in the equity market. The bond mkt on the other hand is not sure and is taking no chances......so as we have seen - bonds have come under pressure and yields have risen.....and this won't calm down until we hear from Janet on Wednesday afternoon at 2 pm.

This morning US futures are once again under pressure....currently down 9 pts.....Now the S&P closed last night at 2147 - smack in the middle of the 2120/2165 range you and I have been discussing.....so again - I do not expect it to break out or break down ahead of the FED - but the daily volatility that we have been experiencing will continue until we get clarity.

Eco data today includes CPI (Consumer Price Index) exp of +0.1%, ex food and energy of +0.2%. Now this will be interesting....yesterday's data was weak....will CPI suddenly run contrary? If the number this morning is stronger than expected - that is considered INFLATIONARY and this will give the talking heads reason to suggest that a September hike is still alive and well...... Come on! Really?

Take Good Care
KP

Filet Mignon Drizzled w White Trufflle Oil on a Bed of Greens.

This is simple to make and presents beautifully.

For this you need: Arugula, some Boston Bib Lettuce, and some fresh baby spinach, Olive oil, Fresh squeezed lemon juice, sliced red onion, s&p, dried oregano, 4 filet mignon’s, shaved parmegiana cheese and some white truffle oil.

Spark up the grill – get it nice and hot.

Begin by rubbing the filets with just a touch of olive oil and then season with s&p – set aside.

Now prepare you greens – rinse and pat dry with paper towel. Put the greens in a bowl and add the sliced red onion - Set aside.
Grill the filets to perfection. Remove from the grill and cover with foil to maintain warmth.

Dress your salad – with s&p, oregano, olive oil and the fresh lemon juice. Toss well and divide the salad among the 4 dinner plates – making a nice bed of greens in the middle of the plate. Now place the filet mignon right in the center of the greens on each plate. Next drizzle the filets with just a bit of the truffle oil – do not overdo it – and top with the shaved parmigiana –

Serve immediately. Pair this with your favorite red wine – or keep it simple and have a nice chianti

Buon Appetito.

Author

Kenny Polcari

KennyPolcari.com

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