TWO REMINDERS: Be sure to sign-up for your own FREE subscription to Wake-Up Call by sending an email to info@LandColtTrading.com with the word 'SUBSCRIBE' in the subject line and we'll add you to tomorrow's distribution list.
Second, be sure to follow us on Twitter at http://www.Twitter.com/LandColtTrading.
Santa Claus Saves the World
By: Kenneth Polcari, Expert Contributor
BA BA BOOM! AND THE DOORS GOT BLOWN OFF THE BUS
"The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,"
Talk about a headline - A smooth supply of credit? The need to prevent a credit freeze in Europe? Hello? Was the rumor of a French bank going belly up the catalyst? Was the S&P bank downgrades the catalyst? It begs the question: Just how bad was the situation if the cavalry of central banks were called in? Was a collapse of the Euro zone just days away as had been rumored? Just who is playing “I’ve got a secret?”
In a surprise move to stave off any potential bank or credit freeze – these 6 central banks – The FED, ECB, Bank of England (BoE), Bank of Japan (BoJ), Bank of Canada, and the Swiss National Bank - With the US – acting as the front man drew a line in the sand and agreed to provide liquidity “support” to the global financial system – and just like that – a rally was born.
European mkts exploded, and US futures shot higher; shorts got caught with their “pants down”, and long only asset managers enjoyed the ride. Total composite volume was some 5.9 bil shares – well ahead of recent figures.
Yes ladies and gentlemen – the world banking system is now backstopped in US dollars through 2013. The rally so strong that it is sure to be one of the top 5 performances of the decade! The Dow +4.2%, the S&P + 4.3% and the Russell 2000 posting a 5.9% move - Spectacular!
This week will surely go down in the history books as one of the greatest advances since March 2009 – when the massive Fed (manipulated) Bull mkt was born; and to think what a difference a week makes – no?
Last week – we had the WORST performing Thanksgiving week in some 70+ years – sentiment was poor, concern was high that the contagion was spinning out of control - and this week – well – You can’t make this up. (Hint - nothing has changed in Europe)
Remember though - the European debt crisis cannot be solved by this move alone, this action is meant to "buy" time for the Europeans to find a solution; and in a kind of prolific statement - Rep Spencer Bachus (R/Alabama) - chairman of the House Financial Services Committee had this to say:
"The region's financial crisis arises from economic cultural and sovereignty issues and profligate government spending. If the US is to continue to support Europe then Europeans must be willing to make the same kind of painful choices to reflect today's economic reality."
HELLO????? Is he kidding??? How about put your money where your mouth is?? How about show some leadership right here at home??? But that's another story for another day.
This action will provide short term liquidity to anyone who needs it, it seems though that the US (FED) will do all of the lending sending dollars to the participating 5 central banks who will then lend it out anyone who comes knocking.
These loans will be regarded as “risk free” because we are lending the money to the ECB and other central banks – at rates well below any rate that our own banks can borrow from the FED. So friends – we are the lender of last resort and we are lending at very, very favorable rates to our foreign friends.
I am guessing that things were getting a bit rocky in Euro land – huh? And where exactly are we getting all of this money? Simple - We are “creating it”.
Remember what happened the last time we “created” money? Stock rose, Dollar gets killed, commodities rise, other currencies rise – energy costs rise (oil surges), food costs rise (commodity surge) and it’s off to the races!
Overnight - Asian mkts rallied strongly as they played catch up this morning - though Euro mkts are lower and US futures are lower as the reality of the situation takes hold. Futures are down 2.50 trading at 1243, nothing dramatic yet...but as expected.
So what does it mean for trading? Well - We blew through two resistance levels – 1205 & 1225 in seconds, and ended the day at 1246 or just shy of the upper descending (resistance) trendline at (1250), drawn from the highs of Oct to the close yesterday.
This will provide immediate resistance if we continue to get better US macro data and this rally begins to have legs then we will see this level challenged, and look for 1265 to be the next target.
Clearly with this intervention the picture has changed dramatically. All bets are off as the rules changed, investors need to re-assess the landscape. Expect 1225 to be clear short term support. The mkts will need time to digest the explosive move of the past 3 days. In the end – Remember: “You can’t fight the Fed”.
Take Good Care
Filet Mignon with a Balsamic Vinegar Sauce - Easy, rich in flavor and presentation.....
Today we are going to Emilia-Romagna - this is the region that is dominated by the Po River - mainly responsible for the microclimate and the rich soil. The regional capital is Bologna. To the South - the Apennine Mountains separate this region from the neighboring regions of Tuscany, Marche and Liguria. When you think of this region - think of Prosciutto di Parma, Parmegiano-Reggiano and Balsamic Vinegar. Today's recipe takes advantage of the Balsamic Vinegar from Modena.
You will need: Filet Mignon, flour, beef stock, Balsamic Vinegar, s&p, Olive oil. Now you can make this two ways....if you are making on the stove - then use the flour to dredge as described...If you are grilling then eliminate the flour.
Rinse the filet and pat dry - pound with a meat pounder to flatten it out a bit........then dredge in seasoned flour (s&p)...shake excess set aside.
In a large sauté pan - heat up olive oil until is sizzles...now place meat in oil and cook.....brush occasionally with some balsamic. .continue cooking......
In a separate sauce pan add. about 1/4 cup of balsamic, 1/2 cup of beef broth and a tblsp on flour...mix well bring to a boil and then turn heat down to simmer. Do not let it get real thick - add a bit more beef broth is if needed. When the filet is done - present on a plate - cover them with the balsamic sauce and serve immediately. You can serve this with mashed potatoes and steamed asparagus (or whatever green veggie you prefer). Enjoy with a robust red wine.
**if you are grilling - then just season the meat with s&p, While grilling brush with balsamic and continue cooking. Prepare the sauce and when done grilling present on plate topped with the balsamic sauce - as described above.