So, stocks did an about face. Futures, which had been up in the early morning hours, suddenly turned lower as we moved into the opening bell. What looked like a nice start to the final month of the year, turned negative fairly quickly. It turned even more negative when Trump "tweeted" out that he was initiating a "new trade war" by restoring tariffs on steel and aluminum imports from Brazil and Argentina, because they are manipulating their currencies, causing renewed concerns over global trade as it appears that we are in a trade fight with almost everyone! China, Europe, and now Latin America. Who's next? Then at 9:45 and 10 am we got two reads on US Manufacturing data (and this interesting) a complete contradiction!

Markit IHS reported that US Manufacturing PMI came in at 52.6, higher than the expectation of 52.2. Bullish, no? Yes, but apparently the algos paid more attention to the ISM Manufacturing number, which was in complete contradiction to the IHS report. ISM showed that manufacturing contracted, worse than the expectation: 48.1 vs. the 49.2 expected. So the algos had to make a choice, they had to take their lead from one of the reports. Since they both report on the same sector, one of the them had to be right. And so they (the algos) chose the Negative. The weaker ISM report is easier to believe, no? Especially in light of the new trade tariffs being imposed on Brazil and Argentina while we expect additional tariffs to be imposed on China next week.

I mean, the fact is that we have been talking about weakening manufacturing "around the world" for nearly two years now. Yet the markets surged, making new high after new high. Then US ISM breached the magic 50 number in September (for the month of August), raising all kinds of alarms and sell signals. This was just around the time of the 15 second yield curve inversion that sent the markets into a tizzy causing numerous strategists to call for the end of the world. Ok a bit dramatic, but they tossed around the "R" word (recession) as if it was the end of the world. All the while though, Markit IHS never faltered, they never reported a contractionary number at all and the so the market "liked" that story better. Stocks rallied through September and began to falter in October when the October ISM report (for September) showed a second month of decline. Then there was all the concern over what the FED was going to do which caused an early October retreat. Then the FED went and cut rates for the third time and BOOM, it was off to the races. No one seemed to care that the ISM report for September and October suggested contraction – NO ONE.

The S&P rallied 10% off the Oct. 3 low. The Dow surged by 8.5%, the Nasdaq ran up 13%, and the Russell added 11%.

So isn't it funny that yesterday's ISM report showed a third month of contraction while the Markit report once again showed expansion and suddenly everyone is concerned? The only thing that was new yesterday was the announcement about trade with South America. And let's be serious, in light of everything going on, is this really going to bring the global economy to a standstill? Doubtful...

If the ongoing 23-month battle over trade with China has yet to cause the global economy to go off the edge (as so many told us it would), tariffs on aluminum and steel from South America is certainly not going to cause the blowup. The market and investors have seemingly been able to rationalize it away. If you think about it, the market made at least a dozen "new highs" in November alone. So the odds tell you there has to be a down day at some point. That day was yesterday and maybe again today...

By the end of the day the Dow gave up 268 points or 0.96%, the S&P lost 27 points or 0.86%, the Nasdaq lost 98 points or 1.12%, and the Russell fell by 16 points or 1.04%. If you were asleep all day and woke up at 4 pm, you would have thought the market crashed. Santa was replaced by the Grinch!

As expected, tech stocks took it on the chin. Remember what we said, they were the high flyers on the way up and so will be the leaders on the way down. The XLK gave up 1.43%, the XLI (Industrials) lost 1.6%, even retail got sold even after the explosive retail weekend that produced record sales numbers. XRT (retail ETF) lost 1.07%. Energy remains in focus, ahead of the OPEC and OPEC+ meetings this week and while initially rising in the morning, ended the day completely unchanged as we await the latest news of what's next for the oil markets.

And this morning, futures were up in the early hours. That was until Donny took center stage over in London, telling the international press corps that "maybe it is better to wait until the 2020 elections before we make a deal with China..." And boom, Dow futures moved from +70 to – 109 pts in about three mins. And so yes, trade headlines do make a ton of noise when they hit the tape but have yet to really price stocks in the long term, unless of course you think that the trade war is POSITIVE, considering the indexes are up better than 20% across the board.

This morning's headline does raise a couple of questions. What's the big deal? We are now 23 months into this war. What's another 11 months? I mean are we really getting a trade deal in the foreseeable future? And while I was convinced that we were going to get an 11th hour deal next week, after yesterday and this morning, I am no longer in that camp at all. The market IS pricing in at least two more rate cuts in 2020, so hey! "It's all good!" The weakness we are seeing in the markets is a present from Santa...

Overnight, Asian markets fell, Australia leading the way, falling better than 2% while Japan lost 0.64%, Hong Kong lost 0.20%, and China added 0.39%. Concerns over the bigger trade war now China, Europe and now South America causing angst around the world. The RBA (Reserve Bank of Australia) kept rates unchanged at 0.75%. No surprise. This was expected (after the three rate cuts in that country since June). Additionally, news that China is outfitting smart TVs with spy chips is causing concern for consumers. Their data is being collected, sent to a server in China to be dissected and then sold to advertisers as well as build a database of US consumers. This is on top of Amazon's Alexa and Google's "assistant." And the latest app craze, TIKTOK is in the news for more of the same, saving and sharing data in China when they EXPLICITLY said "they don't do that!" And while you don't think it's a big deal because TIKTOK users are mostly "kids," that is BS. Either you ARE stealing the data or you are not. And what then happens to the data. I'm not being an alarmist here, but maybe we should be...

European markets are off to a mixed start. Not so concerned about the newest headline on trade. Although, the headline is not lost on South America or China alone. A US trade representative (not identified) came out today and said that the US could impose 100% tariffs on some French products after Manny Macron (French President) decided to apply a digital tax on some big US tech companies, a move that is viewed as harmful to America! The action is being driven by the headlines versus the fundamental data, period.

FTSE -1.04%, CAC 40 – 0.20%, DAX + 0.39%, EUROSTOXX -0.64%, SPAIN +0.31%, AND ITALY +0.67%.

No economic data today.

US futures are down but have rallied back a bit since the early morning push lower. Currently Dow futures are down 80 points, S&Ps -8 points, Nasdaq – 31 points, and Russell -4 points. Expect nothing more today than trade, trade, and trade... with about everyone! His latest salvo about no interest in making a deal with China right now will certainly drive the conversation and the markets.

The S&P ran into resistance at the 3150 level and is now ready to test the 3095 level where it might find some temporary support. But if it gets uglier, then look for the trend line at 3030 for the next real level of stability.

Oil is trending a bit higher this morning as the world prepares for the OPEC meeting this week. The Saudis are pushing for a production cut while the Russians are not sure yet about what to do. We remain in the $55/$57 range for WTI.

Gold is up $5 on the back of the angst, as if found support at the $1460 level. If we don't get a deal and the angst rises, then expect gold to rally back to the $1500 level where both the 50 and 100 Day Moving Averages are converging.

So it is that time of year again – the holiday season is among us and for those of you who know me – an Italian Christmas Eve is always a big thing – it is the Feast of the 7 Fishes – known as "La Viglia."

The tradition of eating seafood on Christmas Eve dates way back... and is built on the tradition of abstinence - in this case, refraining from eating meat. Why seven? There are many thoughts on what the number seven relates to – could it be the number of Sacraments in the Roman Catholic Church or is it that seven is a number representing perfection... the traditional Biblical number for divinity is three, and for Earth is four, and the combination of these numbers equals seven. No matter why - it is a great tradition and one that I will share over the next seven days. I hope you enjoy.


#1 - Linguine and Lobster Sauce

Today's recipe represents the first dish.

You will need: 2 live lobsters, garlic, crushed tomatoes, onions, basil, s&p.

Start with the basic marinara - Sauté crushed garlic in olive oil on med heat - do not burn the garlic... now add 2 large slice Spanish onions (or Vidalia if you can get them) and sauté until soft - about 10 minutes or so...

At this point add 3 cans of kitchen ready crushed tomatoes - NOT PUREE - if you can't get kitchen ready crushed - then buy the plum tomatoes in juice and run them thru the blender or food processor - leaving a bit chunky... Bring to a boil - season with s&p, and fresh basil – stir. Once it boils - turn heat down to med low and prepare to add the lobsters.

First rule - Always use live lobsters. (Should be like 1 1/2 pounders each). Rinse under cold water - leaving the elastics on the claws so that you do not get clipped. Once you rinse him/her... remove the rubber bands and put in sauce claws/face first... now he/she may flap its tail - but that is only for a second or two... Add second lobster. Stir and make sure that the lobsters are submerged in the sauce and turn heat to simmer... allow to cook for about 30/45 minutes. Now if you are making this the day before - remove from heat, let cool and then refrigerate. The next day - take out of fridge and let come up to room temp and then slowly re-heat on simmer... You can just smell the goodness and feel the ocean waves hitting you in the face...

Bring a pot of salted water to a boil - add the linguine and cook for 8 / 10 minutes or until aldente. Strain - always saving a mugful of pasta water - and return to pot. Add back about 1/4 of the water and stir to re-moisten... do not soak... capisce? Now add 3 ladles of sauce and toss... Serve immediately - making sure that you have grated Pecorino Romano cheese on the table for your guests. If you like - you can remove the tail/claw meat - shred and add to sauce or you can just present it on a plate for your guests to enjoy...

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