Parade of FED Speakers

Stocks did that 'ricochet' thing again yesterday... after two days of pressure - where stocks broke short term support at 2168 - stocks bounced off the 2140 level and rallied 13 pts to end the day at 2159 -  following the first of three Presidential debates - where neither candidate scored anything big, but neither appeared to have blown up......as discussed yesterday - the sense is that Hillary was better prepared....Trump, on the other hand, is quick to dismiss that analysis as he continues to hammer home his message of 'change'. 

I think yesterday's move was more a 'relief rally'.....boosted by some better than expected eco data and a surprising comment by FED Vice Chair Stanley Fischer....
 
Remember Stanley? (His friends call him Stan) - he is an MIT graduate,  economist, author and Vice Chair of the FED.  Born in Northern Rhodesia he is both a citizen of Israel and the US, in fact, he served as governor of the Bank of Israel from 2005 - 2013 before coming to the FED.  Well - he was the one to predict 4 rate increases for 2016 back in January...telling us to prepare for normalization.....(so far that has not happened and with only 3 months left in 2016 that appears to be almost impossible) and now at a speech given at Howard University yesterday he said that The FED should avoid raising interest rates too much.
 
"I don't want to raise rates too much,  rates should rise but I don't know when that should happen."   (repeat:  I don't know when that should happen..)
 
In the same breath, he then said that the tight labor mkt is pushing up wages.....So I ask?  Where exactly is that happening?  At Wal-Mart?  At McDonald's?  Is he talking about the efforts to raise the minimum wage to $15/hr?
 
We've already seen what that is going to do, no?  When this conversation started back during primary season - McDonald's announced how they would embrace the efforts to raise min wage and then they began rolling out 'self-service kiosks' that allow customers to order/pay and receive their food without EVER having to interact with a human - claiming it is more efficient and reduces human error... Whatever.....
 
Now get ready for a repeat performance on Capitol Hill today.....Does the name John Stumpf mean anything to you?  He is the bonehead CEO at WFC that tried to justify 'bad behavior' at his bank - as minimum wage employees were encouraged to open fictitious and unauthorized accounts to meet 'sales goals'. 

The board of directors has decided to claw back some $41 mil of 'unvested equity awards' from him and another $19 mil unvested equity awards from his sidekick Carrie Tolstedt - the 'executive' who oversaw the banking unit that created these 2 mil fraudulent accounts....but don't cry for Argentina - because she will be retiring with a $125 mil pay package.....  Is it me?  I hope she pays her fair share of federal and state taxes....
 
Next up - the continuing saga called OIL......While stocks rallied, Oil fell 3% as traders now appear to be accepting the fact that any cap or cut in production is not happening......Saudi Energy Minister, Khalid al-Falih said yesterday that he does not expect to reach an agreement out of the Algiers meetings.....and BOOM...the bottom fell out.....

In the same breath, he did express hope that there is still enough time to  come to a control agreement for the November 30th OPEC meeting.(causing oil to rally a bit this morning...).   This is called jawboning (as he takes a lesson from every central bank out there)  doing his best impersonation of Uncle Mario (Draghi) or Janet Yellen to try and hold up prices despite the failure to reach any kind of agreement.  Look,  Iran has only recently re-entered the free world oil markets they are not going to agree to cut production now or in November or anytime over the next several years. Iran has to play “catch-up” and it will be years before they will play nice in the sandbox....Remember - Iran and Saudi Arabia are enemies and the Saudi's  will refuse to controls if Iran is not part of it.   

And today's WSJ runs with this headline:

"US Shale Firms Survive Oil Slump" - the shale industry has proved resilient despite low prices thanks to cost cuts, job cuts and efficiency improvements. 

It goes onto say that even IF OPEC manage to strike a deal to cut production - the US can easily step in to fill the void....so is oil really going to trade much above $50/barrel in the near future?  Most likely not and the chances are that oil trades lower first. If OPEC keeps hope alive and continues to tease about a November agreement then maybe it finds support right here at $44.64 (long-term support). 

The dollar is up small and Gold is flat......hovering just below support at $1329/oz.  Look for gold to remain in the $1315/$1337 range until something happens......

US futures are down 3 pts in early trading as the mkt continues to digest the next steps.....We remain in the 2140/2180 range.....
 
Eco data today includes Mortgage Applications -0.7%, Durable goods - exp of -1.5%, ex transports of -0.5%, Capital Goods Orders Non Defense Ex Air of -0.1%.  At 10:30 we get the weekly EIA Petroleum Status Report....think 'No Deal in Algiers'......
 
It appears that members of the FED are about to hit the media circuit today.... and what a cast of characters it is:  Kashkari at 8:45 am, Yellen at 10 am, Bullard at 10:15 am, Evans at 1:30, Mester at 4:35 pm and George at 7:15 pm.  I don't even know what to say about this....other than - Are you kidding?  What could they possibly say?   Either way - expect that all of these speeches will be closely watched as the algo's search for words- clues really - as to the path of interest rate policy going into year end and 2017......
 
European stocks are all up -  BoE Deputy Governor Minouche Shafik reveals that 'more easing will be needed'.......Sound familiar?  Deutsche Bank rebounds a bit after  CEO Cryan announces that he has agreed to sell its UK Insurance Unit.....FTSE +0.77%, CAC 40 +1.05%, DAX +1%, EUROSTOXX + 0.93%, SPAIN +0.78% and Italy +0.96%. 
 

Take Good Care
KP

Pasta Faggioli

This is an all time Italian Classic....it's just plain comfort food.... a vegetarian, healthy comfort dish - full of protein, fiber and low on calories....
 
In a saucepan - heat up some Olive oil. .  Add  a couple of cloves of crush garlic,  finely chopped  onion, celery stalks  and carrots and pancetta. - sauté until tender - about 15 min or so.  When soft add 1 can of cannelloni beans, one can of crushed plum tomatoes.  S&P, and 3 cans of water.  Bring to a boil.....then reduce heat to simmer and cook uncovered for 20 mins....you may have to add a bit more water to keep it a bit soupy. 
 
In separate pot - boil a pound of elbow macaroni in salted water.....when almost done - strain - reserving the pasta water - then add pasta to the tomato and bean mixture.  Now the pasta will suck up the soup...so if you need to add back some of the pasta water to keep it more soupy....  Add 2 handfuls of grated cheese - Parmegiana or Romano - adorn with chopped Italian parsley - stir and serve.  

 
Buon Appetito.