You Think I'm Fat!

Ok - so you know the story - The father says one thing and the daughter heard something different - so for example -

I say to my daughter - "Honey, do you want to try this 5 day cleanse with me?"  and she says "You think I'm fat!"  And I say "That is NOT what I said at all" and she says "Well THAT is what I heard"...
 
And so it goes.....the never ending drama created by communication.....and that is what happened yesterday after Uncle Mario (Draghi) came to the podium...you see - it was all about the ECB (European Central Bank) yesterday morning....What would he say?  How would he say it?  Will it be dovish or hawkish?  Will he create a 'taper tantrum'? 

In fact - Draghi pulled it off beautifully and in the end acknowledged that the lack of gov'ts to 'play their part' necessitated  that the Governing Council EXPAND the current 80 bil Euros/month stimulus program by adding more than half a TRILLION Euros to the program and EXTEND it until 'at least' the end of 2017.   He also made adjustments to the program's rules - to avoid running out of 'stuff to buy'...... So what do you think?  Taper or not?  Dovish or Hawkish?   He said:
 
“The presence of the ECB on markets will be there for a long time.  Quantitative easing is “in a sense open-ended, it’s state-contingent,”
 
Sounds to me like he is in it for the long haul......he cited continued weak underlying price pressures (think lack of inflation),  he acknowledged great political uncertainty across the continent (think the Anti-Establishment Vote that we have seen 3 times in the last 5 months); he cited 'inadequate gov't reforms' that are causing a degree of anger not seen in decades which is the driving force behind the changing political landscape......He repeated that while he has begged individual countries and the EU to create real fiscal structural reforms for the sake of the Union - he is fully aware that these same gov'ts have come to rely on the central bank for monetary stimulus as each gov't has 'failed the people'. He also reiterated the ECB’s line that the economic outlook ' remains subject to downside risks'.  Does this sound familiar to anyone?  Did we not see that story unfold in the UK?  In the US? and in Italy?
 
Now let's just take a look at the new deal....
 
Currently he is spending 80 bil Euros/month until March 2017.   Everyone agrees on that. No issue. 
 
Next he announced that he would then extend the program another 9 months at 60 bil Euros/month...so it appears as if he is tapering - no?  This sent the mkts into a bit of panic mode (nothing big, more caution) until they 'listened to his press conference....and realized that the 'original plan 'was that come April he would taper to 60 bil Euros/month for 6 more months only.....So let's do the math:
 
6 months at 60 bil = 360 bil Euros worth of 'additional' stimulus   OR
9 months at 60 bil = 540 bil Euros worth of 'additional' stimulus
 
So is he tapering or is he expanding?  I say expanding...but what do I know......
 
So here is the issue - everyone heard something different and the early mkt reaction suggested confusion because all they heard was a reduction in bond buying to 60 billion Euros a month starting in April from 80 billion Euros currently -- interpreting the ECB as being hawkish.  This sent the Euro down 1.4% in the moments after,  while German 10-year bunds and 2 yr notes rallied before they realized that maybe it wasn't a taper at all causing the Euro to rally and the Bunds and notes to ease...and so it is - just another day in the office.....
 
Now remember - Political concerns are no excuse for lack of leadership that can change the course of history...Germany, France and the Netherlands all have elections next year - and if the UK, the US and Italy are any indication - the establishment better be paying attention because the constituents are angry!
 
In the end European stocks rallied as the reality of continued stimulus lives on.....in the US - mkts also marched higher - even after that explosive move on Wednesday.  Investors and asset managers can't buy stocks fast enough apparently - a marked change from earlier in the year.  Yellen readying to raise rates next week and investors are cheering her on.....Trump announcing economic plans that are exciting after 8 yrs of higher taxes and larger handouts......
 
Momentum is high - and the euphoria is infectious and while the promise of new economic policies are encouraging - they are at the moment just ideas - Taxes and trade policies are BIG issues - there is lots of talk about what they WILL be....but until they ARE - nothing has really changed other than the EXPECTATION of change ahead.........So is the mkt a bit ahead of itself at 27 times earnings?  Sure....but with only 2 1/2 weeks to go until year end and the final portfolio marks - many asset managers need to play catch up and make sure that they can show how well positioned they are going into 2017......
 
US futures were a bit higher and now are flat as the mkts digest the latest ECB announcement.....Eco data today includes:  Wholesale Inventories of -0.4% and Wholesale Trade Sales of +0.7%.  2250 is going to be the number to watch...if the mkt pierces that (yesterday's high) then expect the algo's to once again shift into overdrive as the chase heats up again......
 
Oil is up small this morning after being down small yesterday - so essentially it is in the same place it has been since the OPEC announcement.   WTI is trading at $51.21 while Brent Crude is at $54.06.  Talk of the Non-OPEC producers ramping up production continues to put a lid on higher prices for now.....
 
Gold is under pressure - currently down $6 to $1166/oz..  It does seem to be trying to build a bit of a base here - but my guess is that it goes lower before it goes higher.....still thinking it needs to test $1120/$1140 range first.   
 

Stuffed Calamari 

 This is outstanding…you have to like Calamari’s because this one is a bit of work….but the result – to die for.

For this you need:  Calamari bodies for stuffing – so you want the big ones… (You don’t need or use the tentacles so just specify “bodies for stuffing”), homemade Italian style breadcrumbs (recipe below), wine, olive oil, toothpicks, homemade marina sauce (same as the lobster sauce w/out the lobster.) s&p.

So here is the deal – you order the calamari’s from the fish store – “cleaned”.  This means that they trim the tentacles, and take out the membrane from the inside…..but here is reality…..you still to make sure that they are clean – so when you get home – you need to wash them and confirm that the membrane was in fact taken out.  If not – you have to turn the calamari inside out – and then rinse well and then turn it back again – this is the trick…you have to be very careful as you do not want to rip the body otherwise you cannot stuff him.  Capisce?

Now take a bowl of breadcrumbs - add enough olive oil to make them moist but not “wet”, now add a splash of your favorite white wine – not a chardonnay.  Mix well.  Can you make a ball with the breadcrumbs?  Do they hold in place?  Perfect.

 Now – carefully stuff the calamari using a teaspoon and your index finger….careful not to overstuff as they will explode in the sauce when you cook them.  You need stuff them just enough so that you can pin them closed with a toothpick…  Repeat until you have stuffed all of the calamari’s …(I usually cook about 6 lbs of them on Christmas Eve so it takes a couple of hours to clean, stuff and cook).

Once you have stuffed them – drop them into the marinara sauce that you have prepared and turn the heat to simmer – DO NOT BOIL the calamari’s !
They will begin to plump up and turn white then take on the color of the sauce.  They will cook in all of about 30 mins (max).  Turn heat off and let rest.

 Again – you should make this the day before and let it sit overnight. The next day – take it out of fridge and let warm up to room temp and then heat up on simmer.  When you are ready to eat them – serve them in a large bowl with plenty of tomato sauce.  You can also make this and serve it over linguine if you prefer.  The other option - if you make both the lobster and calamari sauce - then mix a couple of ladles of each and serve that over the linguine.....


 
Buon Appetito.