• Stocks tank then rally back hard – as investors hunt for bargains.

  • IBM beats across the board Stock up 5% in the pre-market (core holding).

  • Crypto’s continue to thrash around and that is far from over.

  • The FED holds the KEY Take back control of the conversation.

  • Global leaders threaten Vlad with diplomatic sanctions.

  • Markets on high alert.

  • Try the Escarole and Bean Soup.

And the Sh*t hit the fan…. stocks went into a free fall on Monday morning…. futures pointing lower in the pre-market led to a collapse once the opening bell rang…. the Dow falling 415 pts by the time the bell stopped ringing…. the S&P, Nasdaq, Russell, and Transports not far behind. European markets which were down nearly 2% got weaker……Wiping out most of 2021 in a matter of hours as the S&P traded as low as 4,222 just 371 pts above the closing level on January 20, 2021, when Joey & Jill moved into 1600 Pennsylvania Avenue.

Weekend comments from both GS and MS suggesting that the FED’s situation is direr than they let on….and that it ain’t over by any stretch…..GS saying that even their suggestion of 4 rate hikes might be wrong while MS is saying ‘stay away from tech’…..all while Jeremy Siegal you know him a Professor from the Wharton School telling the audience that we can expect anywhere from 7 8 rate hikes in 2022 all setting the tone. Then toss in the Russia/Ukraine issue, the Iran (Houthi)/UAE issue and the brewing China/Taiwan issue and you have the recipe for a short-term disaster…because remember while all the geopolitical stuff will cause short term chaos it doesn’t price stocks in the long run. But that doesn’t mean you have to get run over in the process.

And then news that Joey was scheduling a zoom call with European leaders to discuss the building tensions between Russia and Ukraine and the world…. sent stocks even lower…Recall how he said that he expected Russia to make a move last week during his 2-hr. press conference almost giving Vlad the A-OK…. while leaving the leadership in Kiev wondering what on earth he was doing.

The Dow notching an 1100 pt. loss, the S&P over 170 pts, the Nasdaq down 670 pts while the Russell gave back 57 pts and the Transports lost more than 300 pts….as it seemed the flush was coming……then stocks stabilized a bit, rallied into the early afternoon only to weaken again as the clocked ticked towards 3 pm only to rally and go positive by the 4 pm bell. By the time it was over the Dow added 100 pts, the S&P up 12, the Nasdaq up 87 pts, the Russell up 45 and the Transports up 190 pts.

It was an amazing day for sure….and while buyers stepped out of the way in the early part of the day allowing sellers to toss it out the window, they waited patiently for them to tire….and then they went in for the kill…..scooping up names like NVDA that was down 10% by noon this on top of 36% it was already down let me reiterate this is NVDA….are you kidding? (Now to be fair there is some stock-specific news out about NVDA the ARM deal is off because of regulatory pushback so that is not helping the ‘buy’ story now, but I do not think it is a death knell for NVDA at all and in fact the stock is trading right back where it was on Sept 20th the day the deal was announced). Or AAPL which was already down 13% coming into the day sold off another 4% before the buyers stepped in, MSFT was off 16% then sold off another 5% yesterday…..XRT (retail) off 22% fell another 3 %, as the morning turned to afternoon, and one of my favorites IBM which was down 9% - fell another 3% before buyers started scooping it up ahead of last night earnings which beat the estimates. The stock is up $5 pts or another 4% this morning.……and you could come up with a slew of others that are great names that have come under pressure because of a change in policy, building anxiety, geopolitical chaos, yet whose stories have not changed…..so buyers started scooping them up…..backed up the truck taking the Dow from -1100 pts to +100 pts a stunning 1200 pt. swing from low to high….as some of the best names in the country went even further on sale.

As this was happening the 10 yr. treasury yield fell to 1.70% as money poured into the bond market in what was a ‘safety play’…that was until, buyers started to pile in…and then there was a change of heart, money came out and yields rose to 1.77% to end the day.

Oil which is expected to surge to $150/barrel if Vlad takes the place over (according to some JPM analysis) saw the energy sector trade as high as $86.60/barrel before it backed off into the bell as well closing the day down $1.83 at $83.31. This because the markets are not yet convinced that Russia will force himself on the Ukrainians…. the thought is that he will be ‘invited in’ to settle unrest in the country unrest that will clearly be made up….as he installs a puppet gov’t. And if he is invited in vs. just going in then maybe oil will not spike…. but let’s just see what happens. In the end Russia is looking to take back Ukraine.

And the VIX well that spiked too…. rising as high as 38.84 before settling $1 at 29.90. The VIX up 135% since January 4th, as the Nasdaq is kissing BEAR market territory, the Russell is in a BEAR market, and the S&P, Dow and Transports are all in correction territory.

But like I said yesterday with Charles Payne on ‘Your Money’ - don’t go celebrating just yet…. after such a volatile move like you can expect more to come. You don’t see the markets break down like that and then say, OK, it’s all better now….You, do as I said 3 months ago…you strap yourself in….and get ready for more turbulence ahead…and that is exactly what we are seeing this morning…US futures are pointing lower (again)…Dow futures down 105 pts, the S&P’s off 35 pts, Nasdaq off by 165 pts and the Russell is down by 15 pts.

Look nothing has changed the main plots continue to be the FED and monetary policy, a ‘pandemic’ and we are trying to price in a Russian invasion of Ukraine an invasion that Vlad thinks will restore his place in world history. The sub-plots are China/Taiwan, Iran and the Saudi’s which are simmering on the back burner- but that’s a different story.

Today starts the 2-day FED meeting, do not expect to hear anything official until tomorrow at 2 pm. There is lots of speculation about what ‘might’ happen and lots of speculation about what ‘should’ happen from all corners of the markets. The big banks have helped to jawbone the markets lower ahead of ANY FED move " and until we hear what Jay has to say expect the jawboning to continue.

You see Jay must TAKE back control of the conversation if he wants any of this to stop…. He needs to lay out the plan whatever it is, but he also needs to stop the idea that we are getting any more than 4 rate hikes in 2022…talk of 6 8 hikes are ludicrous – (in my opinion not helpful at all). He needs to clarify the issue about the balance sheet and the pace at which the ‘long end of the curve’ will rise. Because they have risen significantly in the past 3 weeks. 30 yr. money is now available at 3.7% when only a month ago it was hovering around 3% and one year ago it was 2.5%....and depending on what we hear will determine where the long end will go. And that should help to slow the housing market and it will help to reprice risk assets… (as we are witnessing).

Overnight the US put 8500 troops on alert and the Kremlin has said that only ‘exacerbates the tensions. This while Vlad has amassed thousands of troops, tanks, and equipment on the eastern border saying it means nothing he has no intention of invading…. Yeah how’s that working for you? The Biden zoom call yesterday afternoon is being defined as a ‘great meeting’ while Germany is still set against ‘arming Ukraine’…. More meetings over the next couple of days as NATO tries to negotiate a diplomatic solution.

European markets are all up…. this after they closed lower across the board by more than 3%. Investors there bracing themselves for policy updates and political updates. Earnings season is in full force so like here, there are lots of stock-specific headlines, but they are not driving the action….now…. At 6 am all the markets across the region are up less than 1%.... but it feels like they might go negative as morning turns to afternoon. Just a gut.

Crypto’s continue to thrash around as well, after the beating they have taken over the past month…. Bitcoin is trading at $36k and Ethereum at $2,400 higher than they were yesterday, but still lower than overnight trading. Expect the volatility in this asset class to remain high even if the volatility in stocks calms down….

The S&P closed at 4410 after testing a low of 4222 - which took us back to April/May 2021……a level that I had suggested would offer support and did…. I would expect that we will test that again…. after such a violent move and as investors attempt to figure it out. Just to be clear there has been a lot of technical internal damage done to the markets, so it will thrash around until it gets clarity. The FED holds the key right now, what they say will matter, but it will be what investors HEAR that is more important. Do they believe what Jay has to say? Do they agree with the FED think? And then are valuations properly reflected in that thought? Either way I said it before, and I will say it again…Buckle Up and Strap In…. stick to the plan, add new monies to VALUE and be patient with the sexy high growth names…because they will continue to get hammered until the FED offers more clarity and takes control of the narrative once again….

Either way I said it before, and I will say it again…Buckle Up and Strap In…. stick to the plan, add new monies to VALUE and be patient with the sexy high growth names…because they will continue to get hammered until the FED offers more clarity and takes control of the narrative once again….

Escarola & bean soup

Simple yet comforting…. All you need for this is your basic chicken soup, white beans, and fresh escarole and as always plenty of fresh grated cheese.

Take your chicken soup. Remove the chicken but keep the veggies carrots, celery, and onions. Bring to a boil then turn to simmer. Add a can of white beans cannelloni beans always work well and then add in the chopped escarole. Stir to allow the ‘escarola’ to wilt. Serve in warmed bowls and have plenty of fresh grated cheese on your table.

General Disclosures

Information and commentary provided by ButcherJoseph Asset Management, LLC (“BJAM”), are opinions and should not be construed as facts. The market commentary is for informational purposes only and should not be deemed as a solicitation to invest or increase investments in BJAM products or the products of BJAM affiliates. The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. There can be no guarantee that any of the described objectives can be achieved. BJAM does not undertake to advise you of any change in its opinions or the information contained in this report. Past performance is not a guarantee of future results. Information provided from third parties was obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness.

Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable. The price of any investment may rise or fall due to changes in the broad markets or changes in a company’s financial condition and may do so unpredictably. BJAM does not make any representation that any strategy will or is likely to achieve returns similar to those shown in any performance results that may be illustrated in this presentation. There is no assurance that a portfolio will achieve its investment objective.

Definitions and Indices

The S&P 500 Index is a stock market index based on the market capitalization of 500 leading companies publicly traded in the U.S. stock market, as determined by Standard & Poor’s.

UNLESS OTHERWISE NOTED, INDEX RETURNS REFLECT THE REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAINS, IF ANY, BUT DO NOT REFLECT FEES, BROKERAGE COMMISSIONS OR OTHER EXPENSES OF INVESTING. INVESTORS CAN NOT MAKE DIRECT INVESTMENTS INTO ANY INDEX.

BJAM is an investment advisor registered in North Carolina and Arizona. Such registration does not imply a certain level of skill or training. BJAM’s advisory fee and risks are fully detailed in Part 2 of its Form ADV, available upon request.

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