Good Morning, folks! Happy Monday! Get ready for a monster week--lots going on.
For now, here is today's Wake-Up Call. Take a look, forward to a friend, and tell us if you would like to receive the daily edition every morning to your inbox. Simply send an email to info@LandColtTrading.com with the word 'subscribe' in the subject line. We'll add you to this FREE distribution list.
Wall Street's Version Of The Oscars
By: Kenneth Polcari, Expert Contributor
Translation - This morning - Italian banks are getting clobbered. Italian business confidence well below expectations, and news that the ban on short selling is coming to an end and that the G-20 has told Germany that they must put up more money to fight this crisis IF it wants help from the rest of the world.
The G-20 wants to see a clear commitment before they race to give come up with some $2 tril by late April. This morning we find out that Hans-Peter Friedrich (German Interior Minister) is leading a charge to make Greece "a deal that can't refuse" essentially "kick Greece out" of the Euro zone...who then would be next???
And this morning - we have OIL SHOCK (why are you surprised?) - Oil moves higher and there are two thoughts here: 1. Is speculation that we will run into a bit of trouble in the mid-east causing shortages and or military action. This would cause oil to spike – NOT a good end result. Or, 2. As others will have it – Oil is moving higher because the global economy has turned the corner.
The road is bright, thus DEMAND for oil is (will) increase and this is positive because it signals the end of this “Great Recession”. Sorry but I am in camp #1, and in fact the news sources this morning are all abuzz that higher oil is being caused by the geo-political issues vs. a recovery - and that any further increase in oil will certainly cause the global recovery to come to a halt.
Rising oil (thus gas) will only hurt a fragile recovery here and abroad. As we know, at some price higher oil & gas prices become a “threat” to any recovery vs. an affirmation that we are on the road paved in Gold.
Are we knocking on that door again?
As the mkt continued to move higher - S&P closed at 1365 – the best level since 2008. Investors wait patiently (or maybe not so much) for the expected pullback. EXPECTED – that is the key word here.
Webster’s defines EXPECT as “likely to happen, anticipate an occurrence.” But will the mkt do what is “expected”? Most of the time – it eventually does do what is expected – but not after causing a bit of pain (for the shorts) and a bit of reward (for the believers).
Currently – the mkt is being primed by the easy money provided by Uncle Benny along with the “improving” US macro data. The mkt action of last year – the volatility – has been replaced by complacency, yet you can feel that something is “brewing” just under the surface.
Is DOW 13k or S&P 1365 that final frontier? Will a move up and through this psychological barrier cause investors to “jump on board”? Does it really “feel” healthy or is it the medicine being administered? Here are a couple of points to ponder:
Small cap stocks have struggled for the entire month of February – attempting to break above resistance 6 times…unsuccessfully…the Dow Transports also not confirming this rally as it moves lower (hello higher oil prices – will hit margins on transportation stocks).
But not to worry – prices will go higher on the products that these transports deliver causing an increase in inflation that the gov't is convinced is NOT happening. The VIX is also screaming – WATCH OUT! It is testing its lower Bollinger Band (16.35) and has had a significant drop during the past two weeks, all while the Dow and S&P attempt to move higher.
Can you say D-I-V-E-R-G-E-N-C-E?
If we should all of a sudden see a “reversal” and watch the small caps and the transports do an about face – then you can bet that Uncle Benny and Jets are at it again, blowing smoke up (well – you get it right?).
IF successful then these resistance levels become support levels, which adds fuel to the fire and we can expect further upside. IF on the other hand – prices fail then current resistance will prevail and prices will move lower.
ON the docket this week is guess what? A new LIQUIDITY infusion, sponsored by the ECB (European Central Bank – Or Uncle Benny’s counterpart). For clarity, the ECB will make available another 1 Tril Euro’s for the European banks to borrow at 1% to turn around and invest in Sovereign debt – that pays ~6% or so, resulting in a 5% gain.
But who is really paying for this scam? The sense is that Europe has been building its firewall to protect the system from panic and failure so that when Greece goes belly up the system will absorb it, not causing pain and suffering on the rest of the Euro zone.
The fact is that they have had 3+ yrs to build the wall; we should hope that they have included re-enforcements.
In Europe mkts are all significantly lower - headlines scream about higher oil prices "weighing on equity mkts". Today, German Parliament holding a “special session” on Greek bailout and although approval is expected no one is really happy about it.
The G20 meeting also threw some cold water on the enthusiasm so mkts once again focusing on the reality: FTSE - 0.8%, DAX - 1.2%, CAC 40 - -1.13% , FTSE MIB (Italy) -1.54% and Eurostoxx -1.03%.
US Futures pointing lower and are currently -6.6 trading at 1356 - sitting right on the uptrend line. If we break this uptrend then 1340 should offer some support; if not then 1365 remains resistance.
This week we have a fair amount of Economic data that the mkts will be paying close attn to – to gain some clarity and direction. Today we get pending home sales with exp of 1%; Tues – Durable Goods – est of -1% vs. 3% last month.
Case Shiller housing index – exp of 0.9% DROP, and Key Republican Primaries take place in Michigan and Arizona. Wednesday – 4Q GDP 2nd revision – exp is unchanged at 2.8%. Thursday will bring the usual suspects, init jobless claims, cont claims, along with Construction spending and February ISM Index – more to follow.
Take good care –
Roast Sirloin with Mashed Potatoes & Peas- so last week I had mixed commentary on the Raisin Bran Muffins - a friend of mine asked me for a nice roast sirloin dish...so here you go. I hope you enjoy...easy to make and makes a great presentation if done correctly.
Get yourself a nice sirloin roast - 5 / 6 lbs...season with salt and let rest for 20 mins on the counter. While this is resting, slice fresh mushrooms, chop 2 lg carrots, 2 celery ribs, 1 large onion, select a nice bottle of red wine ( I use a pinot noir), a can of low sodium beef broth and a can of tomato paste.
After resting - season beef with pepper and sear it in a frying pan with Olive Oil making sure to brown on all sides even allowing a crust to form. When complete - place in a V rack in a roasting pan and place in a preheated 275 degree oven uncovered. Allow to cook for 2 1/2 to 3 hrs or when ready according to the meat thermometer.
After putting the roast in the oven - return to the frying pan - as the chopped veggies to the oil and sauté until tender - 8 / 10 mins. Add tomato paste and mix, add 1/2 bottle of the red wine and stir - bring to boil and let the alcohol burn off a bit...3 mins.
Add the beef broth and simmer - stirring occasionally. do not let it dry out...if necessary - you can always add a bit more broth. After about 10 mins....taste to make sure you like it. If so - puree 1/2 this mixture and return to the sauté pan. turn off heat.
When beef is ready - take out of over and let it rest for 10 mins - covered in foil. Reheat the sauce...thinly slice the roast and arrange on plate - top with sauce.
For the more traditional types - mashed potatoes & peas are always a winner in addition to a large green salad. Finish off with a glass of the red wine you used for cooking.