Will Congress Hand Trump a Defeat?

So it is VOTE day (most likely after the mkts have closed - so the results won't really be felt until tomorrow).....what will Congress do?  Will they come out and support the President or will they hand him his first defeat?  Certainly none of the Democrats will support a repeal and replace of Obamacare - but what will the Republicans do? 
While the talk has been of a failed vote - Trump and his team entertained conservatives at the White House last night (as they apparently played typical DC politics)  and this morning - the headlines are trending more positive....hinting that 'a deal is in place'....which is why US futures are trending higher in pre-mkt trading...

"Chances of Passing Obamacare Replacement Improve After Talk of Changes, as House Awaits CBO Score" 

"Trump Fights for Health-Care Bill, Makes Headway with Conservatives"

- and what are those changes?  Apparently the elimination of 'essential health benefits' - or benefits that have been blamed for the skyrocketing cost of Obamacare......and if they are successful and the bill passes - then the bill will move to the Senate where is it sure to fail......so before anyone gets all worked up - take a breath....this chapter is still in its infancy....This is far from over.....

And by now - we know that this vote is not so much about healthcare reform at all...today's vote is about the Trump agenda and the strength of his young presidency....If Congress hands him defeat today - then what does that say about Tax Reform?  Fiscal Programs and Spending? Budget Reform? And then what does that mean for the mkts? (think: Re-Valuation...)

Look - the mkts have rallied strongly on the 'idea' that Trump was going to be able to push through all of these reforms and while many of us remained cautious (and skeptical) so many rushed into the mkts to be the first on to jump on this train.....taking the mkts up some 15% since the election (March highs of 2400) but now the angst is beginning to settle in....As we moved into March - the GOP presented a bill (one that is far from perfect) and the mkts began to recognize that this was NOT going to so easy and the churn began.....in the last 2 weeks the mkt has given back about 2 1/2% as the reality of reform takes hold leaving so many analysts/strategists to call for the beginning of the end of this rally.......

The dollar -which had also spiked +7.25% on the excitement of the Trump agenda has now given up most of those gains as the reality of 'gridlock' and 'nothing done's' begins to find its place on the US economic stage.....The surge on the back of his election ahs now given way to decline as traders/investors begin to question Trump's ability to deliver on his campaign promises.....Look - the move was predicated on the fact that the dollar would surge as 'explosive domestic growth' hit the tape... and that is exactly what the mkt is now questioning....

Now the benefit of a weaker dollar is NOT lost on the big multi-nationals....because a stronger dollar negatively impacts their overseas earnings...while a weaker dollar positively impacts those same earnings....so it is a tangled web we weave.....what do we really want?  A strong dollar which signals US economic strength or a weak dollar that signals US Economic weakness?

But you say - what about rising rates?  Shouldn't that help the dollar rally?  Yes - but if the domestic economy does not do what investors EXPECTED then those same investors will begin to question what the FED will do....remember - while Janet did say we should expect 2 or 3 more hikes this year - She did NOT carve it in stone - at all....and today we will also get the chance to listen to her melodious voice as she takes center stage at 8:00 am this morning when she addresses the Federal Reserve System Community Development Research Conference......And do not be surprised if she sounds a bit more 'hawkish' - given how everyone seemed to think that she was 'dovish' last week....
If she re-iterates that we can expect 2 or 3 more hikes this year - she is being HAWKISH...there is no debate about it (rising rates are hawkish - Period)....but if she appears to be sitting on the fence at all - then the mkts will assume that she is DOVISH... so if the bill passes and Yellen comes off as dovish - then look for the mkts to rally....If the bill fails and Yellen appears hawkish then look for the mkts to sell off....anything else will just cause confusion!

 So yesterday stocks traded in a very tight range as investors digested the sell-off on Tuesday and considered the implications of today's vote.....Apprehensive is one word that comes to mind.......as investors now handicap the chances of the success....

From a long-term perspective it does feel a bit antsy......and while we are not yet in correction territory its beginning to feel like we are headed that way......up til now investors have been willing to give the benefit of the doubt to Trump but if the plan fails, then watch out.....because we are technically set up for volatility ahead...

The McClennan Oscillator and Summation Index for the Nasdaq is gasping for air.... - (this technical tool is a mkt breadth indicator - and it evaluates the action between advancing and declining stocks to gain insight into investor psyche and mkt action)....It is fighting at the zero line......and is currently trending below the zero line - (not good) as it means that more stocks are in decline...and that only a few (the big boys) are carrying the load.....and at some point even the big boys get tired.... 

On Tuesday - the Nasdaq gave up 110+ pts...bringing it  near enough  to its 50 dma at 5742 - and yesterday it found support there and bounced back - gaining back 27 pts of the prior days losses.....a lot of that move can be credited to bargain hunting as many now believe that Tuesday's 'sale' was more of 'one day sale' vs a 'week long or month long sale'.....keep in mind that TAX day is only 3 weeks away - and Uncle Sam does not want a meltdown prior to April 15th - so we can be sure that the big banks will come to rescue.....(with a little prodding from their friends at the FED)  ....go back and look at the prior years - there IS a pattern of the mkt holding in until the 16th and then BOOM!   
European mkts are all higher...after yesterday's terrorist attack outside of Parliament......UK retail sales were up significantly - +1.3% vs. the exp of +0.3%....German consumer sentiment slightly missed expectations but neither of these reports appears to be a real mkt mover......investors there are also paying close attention to the Trump agenda and the Yellen speech this morning.  FTSE +0.02%, CAC 40 +0.18%, DAX +0.38%, EUROSTOXX +0.24%, SPAIN +0.52% and ITALY +0.64%. 

Oil is trying hard to find stability and is currently up 0.27 cts at $48.31/barrel.....after yesterday's EIA inventory report that showed a build in supply - oil got hit again.....and today that mkt is free of any news - so it will try to re-group....as it is at a key level....failure to hold right here could see oil test the November lows of $46/barrel. 
 
US futures are Up 5 pts - eco data today includes Jobless Claims of 240k, Cont Claims of 2.04 mil, New Home Sales of 564k or +1.6% m/m.....(Recall yesterdays Existing Home Sales showed real weakness...a drop of 3.7% m/m) and the Kansas City Fed Survey of 14...
 
Any rally today should find resistance at the 2355/2360 range and support should be at 2327 level (50 dma)...at least for now....
 

Take Good Care
KP

Pan Roasted/Oven Roasted Veal Chops 

 This dish is not difficult at all - but it does take some time to write the process....do not be put off....the end result is delicious.  Professional cooks use this technique all the time.....and for good reason....it's great.    If you are unfamiliar - this is really a two step process - first you pan sear the meat then you transfer to a very high temp oven to complete the process.  The searing allows for the meat to cook faster (thus reducing time spent preparing) and it creates a beautiful caramelized crust on whatever it is your are pan roasting......read on.....
 
You will need:  thick cut veal chops on the bone, butter, shallot, leeks, beef stock, s&p, olive oil, fresh thyme.....
 
***Preheat oven to 450 degrees.  This is important so that the oven is ready to receive the chops once you have pan roasted them. 
 
Remove the chops from fridge and let come up to room temp.   Rinse and then pat dry with a paper towel. Season with s&p - set aside. 
 
Prepare the leeks - by washing/rinsing very thoroughly....Leeks grow in sandy soil - fyi - and as a result - the soil gets trapped in the stalk.....so - trim off the bottom - separate the stalks and rinse well..   Now chop the stalks.  Peel and chop the shallot.  
 
Next in a heavy bottom pan - heat the about 1/4 stick of butter on simmer/med low heat....**very important*** you do not want to burn the butter -  add the leeks and the shallot....cook on this low heat for about 15 mins....this is called sweating. You do not want  any color - you just want them to be soft and translucent.   ( * The process of "sweating" is used when you put some diced vegetables into a pan with a little oil and begin to cook them on a low heat. This causes the moisture to rise to the surface making the vegetables look like they are sweating.  You may think that this is the same as sautéing...it is not.  Sweating is done on a low heat while sautéing is done on a med/med high heat.  Sweating is usually the first of a few steps while sautéing is usually the final step in the process.)  Capisce?
 
Now - add about 3/4 cup or so of beef stock and turn up the heat to medium.  Simmer for about 5 mins....then cover, turn off heat and set aside.  The mixture should not very liquidy - it should be moist and thick....
 
In an oven proof pan sauté pan - heat the oil on med hi until you see it glisten....add seasoned veal chop and brown on all sides....Once browned and caramelized - put the oven proof pan in the oven and continue cooking for about 8 / 10 mins...depending on how you like your chop. 
 
Next add about 1 tsp of  fresh thyme to the shallot and leeks - season with s&p and heat.  For the presentation - spoon out some of the mixture in the center of a warmed plate and place the veal chop directly on top.  You can complement this dish with you favorite green vegetable - asparagus, or broccollini and a large mixed salad. 

 
Buon Appetito.