Rise of the Robots

"What a difference a day made, Twenty-four little hours,  Brought the sun and the flowers, Where there used to be rain.......Lord, what a difference a day makes, there's a rainbow before me, Skies above can't be stormy, Since that moment of bliss.......".    Dinah Washington

 

Yes, folks - What a difference it made....on Monday the mkt looked like it was about to come apart at the seams....ending the day with a feeble recovery - then yesterday - the gov't comes out and tells us that Consumer Confidence has 'never been stronger'...and BOOM! - there go the algo's again....initiating BUY orders and sending the mkt higher.....The Dow rallies 150 pts the S&P tacks on 16 and the Nasdaq adds 35 pts while the Russell surges by 10 pts....And it's all good again...all that concern and anxiety over the failed healthcare bill and what it meant for future policy is now 'out the window' - the computers don't care from one day to the next.....and I say this because if you saw this morning's WSJ - you are beginning to get the picture....

"Blackrock Bets on Robots to Improve its Stock Picking".

They have begun the process, all of the fancy consultants along with new management have decided that the humans just are NOT equipped to pick stocks.....so - Say hello to Watson.....(or Watson's cousin)...as Blackrock hands out pink slips to the humans and replaces desks with servers to cut costs, reduce overhead and streamline advice for the 'low cost crowd'.  Humans apparently are 'just not equipped to beat the market' with traditional stock picks.....so they are going even more passive (think ETF's) which is nothing more than a mutual fund that trades like a stock that allows investors to get access to a sector, a country, a theme, etc at drastically reduced rates - while giving up the human connection....

I guess the question is - are we willing to be led around by computers, are we willing to 'take our brains out of our heads' and do what we are told by a robot that is dressed up to look like a human and  sound like a human but is not human?   I mean - At what point does the madness end?  Is anyone else tired of this? 

But I suppose when you manage some $5.1 tril of investor assets you can do what you want - you can convince the crowd that this is in 'their best interest'.......

OK - look - for those of you that were not around in the fall of 1987 -when the mkt crashed - losing 22% of its value in 6 hrs - let me remind you......It was all computer generated - PERIOD THE END.....Why? Think - Portfolio Insurance - a computerized, automated risk management system that went haywire (A system designed by mathematicians, and physicists and computer nerds - it was NOT designed by anyone that was IN the business of trading stocks) 

Yes - the premise may have been noble BUT the execution was horrendous.....computerized generated SELL signals began in Asia on that fateful Monday morning....(remember 9 pm in NY is 9 am in Asia - so while we are tucked in our beds - they are fast at work)......remember this product called 'Portfolio Insurance' - and was NOTHING more than a computerized model, that gave the SELL signal to asset managers around the world - (beginning in Asia)  and as the mkts suffered - the computer generated more SELL signals and the pain worsened - by the time the sun set on Asia and rose on Europe the blood was running down the streets - the Europeans - no knowing what was about to hit them - braced hard.....the computers kept generating SELL orders and the humans were pushed aside - UNWILLING to challenge this new technology.....By the end of the day - Europe was a shadow of its former self....and now the tide was rising on the Eastern seaboard and the slaughter was about to begin...... How'd that work out for you?

I will never forget the day - the waves of SELL orders kept coming, (all computer generated) it was like the humans took their brains out of their heads and acted like a bunch of drones......I mean JNJ which closed at $96 on the Friday, closed at $45 on the Monday - losing 50% of its value in 6 hrs....and why exactly?  Because some computer program needed to raise cash - so it went to the most liquid stocks...(think - GE, KO, GM, T, MO, PG, K, etc).....I mean JNJ makes baby powder and baby oil......and it lost 50% of its value in 6 hrs?  Really?  YES - but we can discuss at another time....

Now - today they will tell us how we are protected and that 'kill switches' exist to prevent such mkt meltdowns....but I'm not really sure I believe that - products that exist today - did not exist in 1987 - leveraged ETF funds that exaggerate moves and other derivative products designed by all of the big investment banks to 'enhance performance' CUT BOTH WAYS...And that is what everyone forgets.....recall the GFC (Great Financial Crisis of 2007-2016)-  all of those fancy acronyms that NO ONE really understood - especially the brain surgeons that designed them..... because just like 1987 - no one expected it - there were no safeguards in place...but that's another story...

So - now the talk turns to Tax Reform and how the administration is going to concentrate on this aspect of Trumps campaign - apparently no one really  wanted him to take on Healthcare so investors have moved on...and now are embracing the next 'reform package' and now that the gov't has told us that consumer confidence is at a near all time high - the computers are suggesting that it is time to BUY and BOOM!  Here we go sports fans!

US futures are flat this morning as the world watches UK PM Theresa May sign and deliver the document that forever takes the UK (United Kingdom) out of the EU (European Union....it is a historic day for Europe and the world...and we have the next 2 yrs to see it thru.....and while it is official as of now.....do not expect fireworks just yet.....Negotiations are not due to start until late April....

UK stocks are flat and the rest of Europe is taking it all in stride..The pound Sterling the biggest mover - as it took a beating when the document was delivered to Brussels.....only to recover by early afternoon.  Remember - this is not out of left field - investors knew this was happening ever since their vote in August 2016.....This story is just being written - so do not look for any of the details just yet.....they will be forthcoming in the chapters ahead....FTSE - 0.18%, CAC 40 +0.08%, DAX +0.32%, EURSTOXX +0.09%, SPAIN -0.3% and ITALY -0.24%.

US futures are pointing to a mixed open - as it needs to re-assess the action yesterday..........Eco data today includes Mortgage Apps they fell 0.8%, and Pending Home Sales m/m are expected to rise by2.5%......

OIL is up 0.24 cts/barrel after yesterday's API (American Petroleum Institute) reported a 'slower build of inventories'.....funny - we still added 1.9 mil barrels of oil, but that was down from last week's 4.5 mil barrels - so the analysts are trying to paint that as bullish.....Now remember - oil has broken all supports and is well below (5.5%) it 200 dma which now represents resistance at $51.33.....so even a small pop will be cheered - but I am sure that oil will struggle to get up and thru that level - at least for a couple of attempts.

The VIX (Fear Index) after having shot higher on Monday - is now settled down and fallen back to 11.61 - which is more complacent....suggesting that Monday's action was an outlier.....

 

Grilled Shrimp on a bed of Lemon Infused Orzo 

An easy spring/summer dish

 For this you will need:  about 2 doz large, clean & deveined shrimp,  10/12 skewers, olive oil, oregano, fresh lemon juice, minced garlic, s&p, feta cheese and some Orzo ( Orzo is a rice shaped pasta – used in many types of pasta salads or soups or in this case as a bed for the shrimps) .

**if you are using wooden skewers – you must soak them in water for at least 20 mins.**

Now – pierce the shrimps onto the skewers – maybe 4 at most per.  Set aside in a deep pyrex dish. 

Next mix the olive oil, garlic, oregano, some lemon juice, s&p – shake well and then pour 1/2 over the shrimps.  Place in fridge and let marinate.
Heat the grill – using a grill brush –clean the grill rack. 

Bring a pot of salted water to a rolling boil and add the orzo…cook for about 8 mins or so…do not let it get mushy….keep it a bit aldente.  Strain and mix with the feta.  Now pour the remaining mix into the pasta with the feta and stir well to coat.  Place the orzo in a large family style platter and make a bed. 

Next – remove the shrimps from fridge and place on hot grill….be sure to not burn….should take no more than 5 to 7 mins max.  Now place the skewers on top of the orzo and feta.  Take a picture to remind yourself of this great and simple dish. 

 
Buon Appetito.