VIX Prints at All Time Low

Stocks finished in the red on Friday......again not much action at all - GE was the only talking point really......as a company in transition - there are so many questions....and not a lot of answers yet.....on Friday morning they reported earnings of 0.28 cts/sh vs. the expectation of 0.25 cts/ sh.......so that was good, but the kicker was that  they tempered their 2017 expectations and now we will have to wait until sometime in November to hear what the new boss - John Flannery -  (Immelt is out as of this qtr) has to say....some investors were not happy - hitting the sell button on their computers....the stock fell nearly 3%  as those investors/traders took this as a negative allowing other investors to take advantage of this sale -

Now look - it  has not been a good year for GE - the stock is off 21% since the December highs........ever since Immelt's announcement the stock has suffered due to the lack of clarity on the future and another 4 months only means more uncertainty........Investors are wondering if their pivot away from financial services - which has been getting hammered for years now and into energy - which has also been getting hammered for years now -  along with a renewed interest in Jet Engines and Turbines will be good for investors.... A look at GE on the chart does not reveal a pretty picture at all.....it has broken all supports and is now well below - seemingly plunging into the nether world.........The last time GE traded at these prices was September 2015.....so the question is:  Will investors back off and give Flannery time to breathe or will they punish the stock as they count down the days until November?  

The other noticeable print was the VIX... it ended the day at an absolute closing low at 9.36.....which screams complacency.....suggesting that 'it's all good....'  - the sun is shining so don't bet against it.....  - the problem arises when the VIX drops too far – into territory where market plunges have been born.....as of Friday - it appears as if we are now in labor....A look at the 20 yr chart reveals a lot..... the last two major market corrections - 2000 & 2008 -  were preceded by a drop to near 'new low' in the  VIX for that time period. In 2000 the VIX hit a low of 16.54 - which was the low at that time and the mkt proceeded to go into the Dot Com BUST......which sent the S&P down 23%......in June 2008 - the VIX traded at 16.47 - a new low - which subsequently saw the S&P drop some 52%.... I mean I'm not screaming to get out of the water...I'm just sayin.....don't be blinded..... There has not been a decade in our lifetimes that we have not seen a recession and a corresponding market correction and while they tell us that we are not in a recession - the data is beginning to say otherwise.....

Saturday's WSJ only confirmed this fact. 

"Short Sellers Give Up as Stocks Run to New Records"  - a gauge of bets against stocks is at a 4 yr low even as warning signs persist. 

Bets against the S&P are now at the lowest level since May 2013........Short sellers have gotten taken to the cleaners as the mkt refuses to give up.....I mean look - the mkt is at odds with what the economic activity suggests......stocks are trading at near all time highs- as investors expect the implementation of business friendly reforms - all of which we have not and most likely will not this year.......Mkt action  suggests that there will never be another down day on Wall St...and that my friends is dangerous....The sense that there is no risk or that stocks will always go up is foolish....

Now look - neither of those bubbles in equity prices even comes close to the bubble we are in today... The indexes are trading at PE ratios that are not sustainable UNLESS we get real change in policy...... An all-time record low in the VIX is not a message that “all is well”........ It is a warning suggesting that when the tide goes out - we'll see who has no clothes on.......and that my friends may not be a pretty as you think......

US futures are down 5 pts in early trading... the IMF trimmed US economic growth expectations to 2.1% in 2017 (down from 2.3%), reflecting the lack of any fiscal progress in Washington.  .it's another big week of earnings as we enter the crush week - Tech remains the key for the mkts.....if tech continues to trade higher - then it will give support to the mkt...but if tech turns (again) then the mood will shift...........and this morning we will get Markit US Manf PMI - exp of 52.2 along with Markit US Services PMI of 54.  Remember - anything over 50 is considered expansionary - but if the trend is down then is it really expansionary?  Existing Home Sales are due out at 10 and the expectation is for a -0.9% print.....

Tomorrow starts the two day FOMC meeting....on Wednesday at 2 pm we will find out what the FED has in mind....or not.....I don't think we will learn anything new at all about what the FED is going to do.....she has been clear....Balance sheet shrinkage beginning in September with another rate increase likely in December.....Now while the S&P may find support at 2450 - real short term support is at 2425.......or down 1.7% from Friday'sclose.....With volumes churning at low levels - moves tend to be more exaggerated.....and we could see the mkt drop quickly if the data or the earnings guidance shows any more signs of weakening.....

European mkts are also under pressure.  Economic growth in the Euro Zone is off to a weak start for the 3rd qtr.....Composite PMI fell to 55.8 from 56.3 in June.....suggesting the GDP is only expanding at a 0.6% rate......Chris Williamson - Chief Business Economist at IHS Markit had this to say

"The Eurozone's recent growth spurt lost momentum for the second month, but still remained impressive"  Of course he would say that.....is he gonna say the sky is falling?  Not a chance...and then qualified the ECB stance - saying that

"It adds to the belief that the ECB policy makers are in no rush to taper."   - suggesting that ECB Pres Uncle Mario (Draghi) while trying to prepare the world for tightening - is just not ready ...

FTSE -0.9%, CAC 40 - 0.02%, DAX - 0.49%, EUROSTOXX - 0.21%, SPAIN - 0.30% and ITALY +0.18%. .

Pork Cutlets Dressed Pine Nuts Wrapped in Prosciutto 

Today's recipe came to me from a dear friend - Margaret P...who found this in "La Cucina"  (The Kitchen).  It is a great recipe and one that you should try .....
For this you need:

Pine nuts, Raisins - plumped in hot water and then drained, capers - rinsed and soaked in cold water, finely grated Grana Padano Cheese, Chopped flat leaf Parsley, butter, chopped garlic, pork cutlets (pounded thin), prosciutto, s&p.

Pre heat the oven to 475 degrees.

Chop the nuts, raisins, and capers and mix well.  Add in the grated cheese and parsley - set aside.   Season the cutlets with s&p. 

In a non stick pan - melt some butter and sauté the garlic over med heat....Now add the seasoned cutlets and cook for no more than 2 mins per side.  Now remove from heat.  Next dress each cutlet with the nut/cheese mixture - roll it up and wrap in a slice of Prosciutto di Parma (you can use a toothpick to hold it together).  Place in a baking dish and top with a touch of butter.  Bake in the oven for 5 mins and remove. 

Serve immediately with a tossed greens - simple - Arugula & spinach dressed with s&p, oregano, squirt of fresh lemon, touch of olive oil and red wine vinegar. 

 
Buon Appetito.