Trump Pressures the FED? Ridiculous! 'It's the Economy Stupid!'

“Stop the World - I Want to Get Off!”  - a classic musical directed by Anthony Newley and produced by David Merrick -  Opened on July 20th, 1961 at the Queen’s theater in the West End of London......How apropos that today is also July 20 - only some 57 yrs later - yet the phrase rings true still today...... and the chorus yesterday couldn’t have been louder......
Good morning...and guess who is back?  Yes - folks - it’s me and I’m all wound up after my vacation....so - there was a fair amount of controversy, activity and noise while I was away -  I tried to ignore - since I couldn’t do anything about it anyway.... but yesterday’s noise ignited a firestorm of commentary and controversy...... What was the noise you ask?
Trumps comments on what he thinks of rising rates....so unless you were completely oblivious to the news - here is the cliff note version.... Yesterday on CNBC - Donny told Joe Kernan that he was not happy with rising rates, and that while he understood the independence of the FED - he is just not happy with where rates are going in this country.  Period the end.   He did not tell Uncle Jay (Powell) to stop raising rates nor did he tell him to lower rates - but he did say that he was ‘letting them do what they need to do’ - somehow implying that he could stop them - HE CAN’T......the FED is an independent body - specifically so for this reason!   Remember - the FED is charged by Congress to
“...maximize employment, stabilize prices, and moderate long-term interest rates.”
Let’s be clear - the President of the US does not control monetary policy, and while the President appoints members of the FED he does NOT control the members of the FED - who once appointed can’t be ‘fired’ - they serve fixed terms and are all confirmed by the Senate before taking office. 
Yet - the left is trying to have a field day with it - as they have with every other comment that comes out of the WH.....Look - let’s just say it for what it is - He (the Donald) is unconventional, he marches to his own beat, he could care less about what the critics are saying - in fact - my sense is it only ignites him......which then sets the whole thing in motion yet again - and the merry go round continues....
And while higher rates may cause angst - let’s be real - they are still historically low by ALL standards......and yes, the dollar is responding by moving higher - which does cause US exports to become more expensive around the world - which COULD mean that it negatively impacts the economy - are you following me? So, he is not wrong when he makes those comments – any economist would agree – higher rates make the dollar more attractive and so it is what it is…. It is a tangled web we weave - but Uncle Jay - who by the way has NOT met with Trump since his appointment back in January -  put it all in place yesterday by saying:
“We have a long tradition here of conducting policy independent of all political concerns. We do our work in a strictly non-political way, based on detailed analysis, which we put on the record.  The non-political approach is deep in our DNA.”
 
Look - remember that the FED slashed rates to near zero at the birth of the GFC (Great Financial Crisis) and then ballooned the balance sheet in concert with other central banks around the world - to save the global financial system from implosion...they then kept rates low for far longer than they should have and kept the stimulation going on far longer than they should have - because the analysis drove those decisions.....they were very transparent about it - in fact some might argue they were too transparent - but that’s another story....and so today - Uncle Jay would have to prove any change in policy by discussing the facts - and those facts are all of the data points that the economy creates on a monthly basis....Trump can’t ‘trump’ those facts...so get off of this argument - as Former President Bill Clinton once said
“It’s about the economy stupid!”
So yesterday – the mkts sold off –  the Dow lost 134 pts, the S&P gave up 11 pts, the Nasdaq lost 30 pts……but not because of Donny’s comments at all – those comments just gave the media something new to talk about.   Now look – the mkts were all over the place – as they tried to interpret what the Trump comments would mean for FED policy – Let’s say it again…they mean absolutely nothing…the mkt will and should trade on fundamentals
The mkt sold off because of the continued trade tensions and a host of lukewarm corp earnings and a renewed effort by the Senate to toughen foreign investment reviews – a measure meant to strengthen the committee on Foreign Investment, strengthen the export control system and cool down foreign investments from countries like China that could threaten national security. 
Financials (XLF) led the mkt lower falling some 1.6%  – after having a banner week on the back of their earnings announcements – the XLF had risen some 6.2% since July 3 as investors/traders piled into the sector in anticipation of ‘better than expected’ earnings……but names like American Express (AXP) and Travelers (TRV) – disappointed investors/traders yesterday and helped to ignite the selloff – led by the trader types…because the long term asset manager understands the longer term fundamentals that drew them in initially…..remember – there are opposing forces at work every day….and while the trader types were unloading – the investor types were hanging around patiently – buying stock at cheaper prices.
Tech – XLK – 0.32%, Healthcare – XLV lost 0.59%, followed suit, while Energy XLE and Industrials - XLI was flat and Utilities – XLU gained 1% as the highlight outperformer….and that makes perfect sense…. (think safety trade). 
During the week I was gone – the O’Neil rotation graph has changed considerably – Utilities shot up and are now going from Underperforming and Improving to Outperforming and Improving……Energy and Transports have gone from Outperforming and Improving to Underperforming and Weakening…. Consumer Cyclicals are on the fence between Improving and Weakening…. Retail is trying to make its way back to the Outperforming and Improving quadrant. 
US futures are pointing lower by 5 pts  - more Trump talk – except today it is about more trade tariffs on China – Trump now saying that he is prepared to put a tariff on EVERYTHING that comes from China (or anywhere else if necessary) while ignoring any turmoil it may cause….The S&P has now advanced towards 2810 in the past week….but appears to be struggling with this level…..if the rhetoric heats up – then look for the mkts to back off – with the S&P retesting the 2775 level to see if there is real support.  Futures imply an open below 2800 in the S&P and psychologically that could be a Friday game changer….holding that level on a closing basis is what we want to see.  A close below will set us up for weakness next week.  
 
There are no notable economic reports today or Fed speakers. GE reported and beat the number by 1 penny…..the stock is trading up by 20 cts...at $13.92.
Oil is up small but remain down on the week – as there now appears to be an oversupply of oil as production as some locations comes back online…the Saudi’s though are quick to dispute this fact and that is causing the latest rise in prices…. But in the background, you have the simmering issue about the ongoing trade war with the US and China and what that means for oil if our economies begin to slow….and so oil continues to hover around the 50 dma. 
 
 

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Grilled Apricot/Honey Dijon Chicken Thighs  

Easy marinade and works well with chicken on the grill.

For this you need:  6 thighs, (bone in), Apricot Jam, Honey Dijon mustard, s&p, onions and butter.
 
Sauté the butter and chopped onion in a pan on med hi - until translucent.  Now add 2 tblspn of the apricot jam, and stir.... after about 3 mins - remove from heat and add some honey dijon and s&p - taste to adjust.  Let cool for 10 mins.
 
In a large bowl - add the thighs and the marinade - let sit for 30 mins.

Heat the grill - place foil on the grate and then place the chicken on top of the foil.

Turn heat to medium and cook until nicely browned and the juices run clear.

Serve this dish with corn of the cob and a large mixed green salad.  Great for an evening BBQ.

  
Buon Appetito.