Things you need to know:
- Trump plays Monty Hall saying “Let’s Make a Deal!”
- China – suspiciously “mum”
- The UK has spoken – BoJo wins decisively in a snap election!
- No one paying attention to the circus on Capitol Hill
- RISK ON all around the world
- Try the Prime Rib
US announces that we have reached a “trade deal!” For the third time (or is it the fifth or sixth time?) But it is what it is and the market loves it. (Or at least the algos love it) The funny thing is that the algos aren’t aware that this has been a repeating headline for months now. Every time it hits the algos go hog wild, as if this is the first time we’ve heard it!
It started with the Trump Tweet early yesterday morning, saying “both China and the US want a deal.” Which is interesting in itself because didn’t Donny tell us last week that he was NOT in a rush to make any deal at all. In fact, maybe he would wait until after the election to deal with it. So much for that. So the markets surged with the Dow rising some 315 points early on, only to back off, as the speculation built on what that really means. Then at about 2:50 pm, the news “hits the tape.”
“US Reaches Deal ‘In Principle’ with China; Awaits Trump Sign-off” The algos go hog wild once again. The deal calls for the Chinese to buy $50 billion worth of agriculture (AG) products in 2020, along with energy and other goods. In exchange, the US will reduce the current tariffs on many Chinese products as well as cancelling the tariffs set to go into effect on Sunday. If they fail to execute on this part of the deal, then they can expect the tariffs to be re-imposed in what is called the “snapback provision.”
(Just me asking here: Is this really a deal at all? They are buying food that they have to buy and we are rolling back some tariffs – WHERE IS THE BEEF? I mean is this what we have all been waiting for?)
By the time the closing bell rang, all of the indexes were solidly in the GREEN. The Dow adding 220 points or 0.8%, the S&Ps ahead by 26 points or 0.86%, the Nasdaq surging by 64 points or 0.73% and the Russell adding 12 points or 0.79%. And the SURGE continues overnight and this morning (see below).
Is there need for caution? Official state ministry has been “mum.” Word this morning suggests that the Chinese have a range of concerns (still). Will Donny change his mind in the days ahead? How will this be received at home in China and will China’s other trading partners get annoyed. Does this somehow violate the WTO (World Trade Organization) policies? (First time we’ve heard that!) CNBC’s Eunice Yoon reveals a host of concerns that the Chinese have. So just for your information, this apparently is NOT a done deal by any stretch. We may be close, but if you listen to her detail the concerns. they are real. So hold on, more to come!
Is it interesting that we have NOT heard a peep from Xi Xi or Liu He or any other Chinese trade minister about this agreement?
LANDSLIDE IN THE UK
And next up was stunning election results in the UK. Current PM BoJo wins that snap election “hands down” in what is being sold as a “rejection of the far left” and a vote for “conservatives.” This is a “historic victory” as he secures the biggest Conservative Party election since 1987, securing 364 parliamentary seats, a 78 seat majority in the House of Commons. The British have spoken (for the second time) apparently they want to leave the European Union. This vote solidifies the exit that we have been discussing since the original vote in the summer of 2016! BoJo, in his acceptance speech, says that BREXIT will be achieved by the deadline: January 31, 2020. “No ifs, No buts, No maybes.”
Food for thought: Does this say anything at all about voter mentality in the US? Will the US reject the platform of the far left (Lizzy and Bernie)? Will the Democrats consider coming to the center and reject some of the lunacy put forth so far? And if so, what does this say about future market performance?
So as you can expect, it has been RISK ON for 24 hours now. Markets around the world all surging.
Overnight in Asia – Japan +2.5%, Hong Kong +2.5%, China +1.98% and ASX +0.46%.
And in Europe, in addition to the trade deal, they are reacting to the UK Vote. Every market there is up more than 1% as all of this geo-political news settles in.
FTSE +1.66%, CAC 40 +1.27%, DAX +1.25%, EUROSTOXX +1.42%, SPAIN +1.53%, and ITALY +0.96%.
US futures are surging yet again. Dow futures are up 148 points, S&P +13, Nasdaq +50 and the Russell +9 points. The market wants a deal, skinny or not, and as of this morning it got one. Although if you listen to the media, this is not a done deal, no matter what Stevey Mnuchin says. So don’t get emotional just yet. Stay the course, harvest gains where you should, and re-allocate according to the plan. Do not let the headlines drive an emotional decision.
Oil is UP more than 1% as the trade and UK news gets digested. WTI is up 77 cents at $59.94, once again banging its head on the $60 number. This story will continue to unfold as the trade details become clearer. Is this deal the deal the one that lays the groundwork for Phase Two and Three?
Prime Rib - A Christmas Favorite
Now - on Christmas eve we eat the 7 fishes, and on Christmas day - we enjoy the classic prime rib.... Prime rib is easy to make - as long as you don't overcook it… so make sure you have a good meat thermometer....
I am featuring this today for Jeanne from Osterville, Ma. Osterville is a beautiful community along the Cape Cod shoreline… Jeanne is a friend and an avid Morning Thoughts reader… and she loves the Prime Rib Recipe. Merry Christmas Jeanne! I hope you enjoy.
For this you need:
1 - 10 lb Prime Rib, sliced garlic, S&P, and some thyme.
In a small bowl mix the garlic, olive oil, s&p and thyme.
Begin by putting the roast in the roasting pan - fatty side up. Now rub the roast - including the fatty side - with your mix. Be sure to massage it well so that it is all seasoned. Set it aside and let it come to room temp.
Preheat your oven to 500 degrees - when ready place the roast in the oven and “roast it” for about 15 - 20 mins… then reduce the temp to 325 - and cook for about another hour or hour and half… You will know when it is done when the internal temp reads 135 - this should produce a beautiful med rare roast.
Remove it - tent it with foil and let it rest for 15 mins before you carve it.
Serve this with sour cream mashed potatoes, sautéed peas and mushrooms and a large salad. Enjoy with a nice bottle of Brunello di Montalcino.....
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