Good Morning, folks!
Futures are flat--again. Don't expect very much action in the markets, but you never know. Stay tuned.
For now, here is today's Wake-Up Call. Be sure to sign-up for your own free subscription by sending an email to info@LandColtTrading with the word 'subscribe' in the subject line and we'll make sure you receive Tuesday's edition directly to your inbox.
Thank you and enjoy...
Higher Oil, Higher Stocks!! It's All Good
By: Kenneth Polcari, Expert Contributor
So here is a taste of some of the most recent headlines that have caused the mkt to move higher - or as the logic goes - "Climb the Wall of Worry".
HP profit DOWN 44% - Lower sales margins, Gap profit DOWN 40%, Toll Brothers misses estimates as new deliveries DECLINE, Dell profit OFF 18% as expenses go higher, Oil continues to move higher testing $110/barrel - get ready for higher gas prices!
European banks take huge hits on sovereign debt - highlighting the continuing financial crisis enveloping Europe, Euro zone headed for RECESSION as ECB President Mario Draghi warns that there is "no escape from the tough austerity measures", Iran threatens the oil mkts, and the list goes on.
(Now to be fair - we are seeing improving macro data points in the US - but when talking about the Wall of Worry - the focus is on all of the potential pitfalls...)
So what is this Wall of Worry? It is this phenomenon when the financial mkts have the ability to ignore a growing list of NEGATIVE developments - it is the resilience really of investors and the mkts to overcome the current environment and focus on the future.
The wall may be a single economic, political or geopolitical or it may be a combination of all of them. Ultimately - what it says is that investors believe that the issues are reconcilable and resolvable.
So what did the mkt do??? After being in the red early on - the mkt managed to work its way out and end the day in positive territory - closing near the highs and once again preparing to challenge Dow 13k. Feels like the action is centered around the collapsing dollar and rising commodity prices - all fueled by the "liquidity pump" that shows NO signs of being turned off.
The Fed and other global central banks just keep pumping it in, forcing the risk trade to be alive and well. The pressure on the dollar - is a direct result of this "excess liquidity" and a weaker dollar is good if you are a seller of say - commodities or equities.
But if you are buyer of these same goods - then you are not so happy as it takes more dollars to fill your gas tank, or feed your family.
The mkt is +8% ytd, if you look at the S&P it shows a steady uptrend - beautiful really - it is well framed with not perceived cracks or weakness. But we know that this cannot go on without pause; can they really keep the pump going thru the summer and into the election?
The frustrating reality is that there has not been a meaningful pullback since mid-December, despite plenty of reasons for some consolidation as (if) the mkt moves higher- the will of the people will continued to be tested - Do I jump in now? Is this the top? Did I miss the trade? The funny thing is that as the mkt tests your will - investors will begin to throw in the towel and become buyers and then buying begets buying and logic goes out the window. It’s the herd mentality.
Look at what is happening in the leveraged bull and leveraged bear index fund space - money is coming out of both funds, so it makes some sense that if investors feel the mkt is overbought then they begin to take profits out of the bullish funds and move cash to the side.
But the drop in bearish leveraged funds might suggest that investors are NOT willing to bet against a
decline - yet. So - investors remain confused as they await the next shoe to drop. Again - if you are investing for the long term, you have to stay the course and ignore the daily noise. If you are day trading, then the noise is your reality...stay awake.
Overnight Asian mkts moved a bit higher on improving global economic data, and just for an update - year to date - mkts have performed nicely: Japan +14%, Hang Seng +15% and ASX 6%, China +10%.
In Europe this morning - shares are moving higher after 3 days of losses, once again - concerns over Greece are subsiding and mkts are focusing on some positive corp earnings, yet mkts remained subdued in terms of volumes.
Greece is supposed to make a formal debt swap offer today and Germany's Schauble re-iterates that there is NO guarantee of success and we can expect that they will be back at the table with "hat in hand". Year to date performance shows FTSE + 6.7%, CAC 40 +9%, DAX +16% and the Eurostoxx +8.9%.
US futures are higher +4 trading at 1367 - once again challenging the highs of the year. Dow Futures are also up - pointing to an opening above Dow 13k, remember - the herd mentality - buying will beget buying. Shorts will give up, asset managers will be chasing performance, sellers are clearly in control of the equity mkt - while buyers continue to control the housing mkt.
The Fed's James Bullard on CNBC - screaming that "the data is better: the economy looks brighter - housing has hit the bottom...blah blah blah". If the S&P breaks the years highs 1367, then next stop is 1400 taking us to levels last seen in May 2008 when the index broke down thru 1400 on its way to 684 in March '09.
The mkt awaits the eco news of the day - New Home Sales - exp of 315k and Univ of Mich Cons Confidence - exp of 73.0.
Take good care -
KP
Sole Meunière- easy to make and can be varied according to your own tastes:
You will need: Dover sole (or lemon sole) flour, s&p, butter/oil, lemon, parsley and capers (optional).
Rinse and pat dry the filets - Combine flour, salt and pepper - dredge the filets and set aside.
In a skillet over medium-low heat, melt the butter and add a splash of Olive oil to prevent the butter from burning. As soon as the butter stops foaming place the filets in the pan - being sure not to overcrowd the pan (maybe 3 fillets at a time). Cook for 2 - 3 mins then turn and cook for an additional 2 - 3 mins depending on thickness of the filet. Only turn once during cooking.
Place the filet on a warmed platter and melt a bit more butter in the skillet - turn off the heat so that you do not burn the butter....squeeze the fresh lemon into the butter - add capers if you want and stir together.
When completed - pour this sauce over the filets - sprinkle with fresh parsley and serve immediately. Serve this dish with French cut green beans - that are first blanched in salted water, then shocked in a cold bath then quickly sautéed in a bit of butter and s&p. Easy, quick and good for you. Enjoy with a light refreshing glass of white wine.
Buon Appetito
European banks take huge hits on sovereign debt - highlighting the continuing financial crisis enveloping Europe, Euro zone headed for RECESSION as ECB President Mario Draghi warns that there is "no escape from the tough austerity measures", Iran threatens the oil mkts, and the list goes on.
(Now to be fair - we are seeing improving macro data points in the US - but when talking about the Wall of Worry - the focus is on all of the potential pitfalls...)
So what is this Wall of Worry? It is this phenomenon when the financial mkts have the ability to ignore a growing list of NEGATIVE developments - it is the resilience really of investors and the mkts to overcome the current environment and focus on the future.
The wall may be a single economic, political or geopolitical or it may be a combination of all of them. Ultimately - what it says is that investors believe that the issues are reconcilable and resolvable.
So what did the mkt do??? After being in the red early on - the mkt managed to work its way out and end the day in positive territory - closing near the highs and once again preparing to challenge Dow 13k. Feels like the action is centered around the collapsing dollar and rising commodity prices - all fueled by the "liquidity pump" that shows NO signs of being turned off.
The Fed and other global central banks just keep pumping it in, forcing the risk trade to be alive and well. The pressure on the dollar - is a direct result of this "excess liquidity" and a weaker dollar is good if you are a seller of say - commodities or equities.
But if you are buyer of these same goods - then you are not so happy as it takes more dollars to fill your gas tank, or feed your family.
The mkt is +8% ytd, if you look at the S&P it shows a steady uptrend - beautiful really - it is well framed with not perceived cracks or weakness. But we know that this cannot go on without pause; can they really keep the pump going thru the summer and into the election?
The frustrating reality is that there has not been a meaningful pullback since mid-December, despite plenty of reasons for some consolidation as (if) the mkt moves higher- the will of the people will continued to be tested - Do I jump in now? Is this the top? Did I miss the trade? The funny thing is that as the mkt tests your will - investors will begin to throw in the towel and become buyers and then buying begets buying and logic goes out the window. It’s the herd mentality.
Look at what is happening in the leveraged bull and leveraged bear index fund space - money is coming out of both funds, so it makes some sense that if investors feel the mkt is overbought then they begin to take profits out of the bullish funds and move cash to the side.
But the drop in bearish leveraged funds might suggest that investors are NOT willing to bet against a
Overnight Asian mkts moved a bit higher on improving global economic data, and just for an update - year to date - mkts have performed nicely: Japan +14%, Hang Seng +15% and ASX 6%, China +10%.
In Europe this morning - shares are moving higher after 3 days of losses, once again - concerns over Greece are subsiding and mkts are focusing on some positive corp earnings, yet mkts remained subdued in terms of volumes.
Greece is supposed to make a formal debt swap offer today and Germany's Schauble re-iterates that there is NO guarantee of success and we can expect that they will be back at the table with "hat in hand". Year to date performance shows FTSE + 6.7%, CAC 40 +9%, DAX +16% and the Eurostoxx +8.9%.
US futures are higher +4 trading at 1367 - once again challenging the highs of the year. Dow Futures are also up - pointing to an opening above Dow 13k, remember - the herd mentality - buying will beget buying. Shorts will give up, asset managers will be chasing performance, sellers are clearly in control of the equity mkt - while buyers continue to control the housing mkt.
The Fed's James Bullard on CNBC - screaming that "the data is better: the economy looks brighter - housing has hit the bottom...blah blah blah". If the S&P breaks the years highs 1367, then next stop is 1400 taking us to levels last seen in May 2008 when the index broke down thru 1400 on its way to 684 in March '09.
The mkt awaits the eco news of the day - New Home Sales - exp of 315k and Univ of Mich Cons Confidence - exp of 73.0.
Take good care -
KP
Sole Meunière- easy to make and can be varied according to your own tastes:
You will need: Dover sole (or lemon sole) flour, s&p, butter/oil, lemon, parsley and capers (optional).
Rinse and pat dry the filets - Combine flour, salt and pepper - dredge the filets and set aside.
In a skillet over medium-low heat, melt the butter and add a splash of Olive oil to prevent the butter from burning. As soon as the butter stops foaming place the filets in the pan - being sure not to overcrowd the pan (maybe 3 fillets at a time). Cook for 2 - 3 mins then turn and cook for an additional 2 - 3 mins depending on thickness of the filet. Only turn once during cooking.
Place the filet on a warmed platter and melt a bit more butter in the skillet - turn off the heat so that you do not burn the butter....squeeze the fresh lemon into the butter - add capers if you want and stir together.
When completed - pour this sauce over the filets - sprinkle with fresh parsley and serve immediately. Serve this dish with French cut green beans - that are first blanched in salted water, then shocked in a cold bath then quickly sautéed in a bit of butter and s&p. Easy, quick and good for you. Enjoy with a light refreshing glass of white wine.
Buon Appetito
