Gains and Losses

Stocks fluctuated between losses and gains on Thursday, on a day that saw Asian and European markets come under pressure as well after China announced a revision to the way they diagnose the virus. causing the number of confirmed cases soaring. It sounds worse than it is. Apparently, after the WHO (World Health Org) said that “the surge in coronavirus diagnoses didn’t necessarily indicate a spike in infections.” Which leads me to ask, how come? If these people weren’t counted before and assumed to be healthy. When they are found to be sick, that results in more infections than previously thought. So I disagree. The surge in new cases does represent a spike in infections. But, I guess my logic doesn’t make sense (at least right now). The additional cases don’t mean anything or that is what they want us to believe. And then as investors/traders and algos got used to that and appeared unfazed. The NY FED announces that they are shrinking the recent repo operations. Operations that were conducted to calm the markets ever since that “spike” in September.  And that shrinking starts tonight. So let’s see how the repo market and treasury markets respond.

Yesterday’s economic data came in inline. There’s nothing really to be concerned about in terms of weakness. In fact, Year/Year CPI was a bit stronger than the expectation, which suggests that inflation is simmering. While that one data point alone will not cause any change in plans, it is important to understand the role it plays in the analysis. By the end of the day, we saw the Dow swing 200 pts from high to low to end the day lower by 128 pts. The S&P swung from -18 to +7 to end the day lower by 5.5 pts, The Nasdaq swung 98 pts from hi to low ending the day down 14 pts, while the Russell added 5 pts.

News hits the tape that a judge has granted a temporary block against MSFT after Jeffrey (Bezos) throws a hissy fit because he wasn’t awarded the 10 year, $10 billion government contract known as JEDI (Joint Enterprise Defense Infrastructure), accusing the President of interfering and throwing the modernization of our military into disarray. I wouldn’t mind, but AMZN does a massive amount of business already with the U.S. government and the idea that they want it ALL should concern every one of us. Do we want to be completely dependent on this ONE provider for all of the government’s needs? This is far from over. But I think we have to consider the implications of the role that AMZN already plays in government work. Just sayin’.

After the bell, as the sun set on the east coast, it began to rise over the South China Sea. And guess what? China is reporting even MORE new cases since Wednesday night. So what does that mean?  Apparently nothing. “Move on, nothing to see here?” After all of the negative headlines yesterday, stocks rose overnight in Asia as investors/traders and algos once again pushed it to the back burner.  Talk of a “V-shaped” recovery in the economies most affected is now the chatter. Meaning, we will see a steep fall in economic activity in China. But then will see just as swift rise once this virus is contained. So nothing to worry about. All the drama created by the virus and the negative headlines, all the infections and deaths, all of the lost economic activity etc. suddenly means nothing. The sense is that this too shall pass and the Chinese economy and the global economy will ok. I guess the question then is, just how deep will the V be? Economic data for February is not available yet. When it does become available in March, we will begin to see just how deep it might be. In the meantime, Beijing did move on the promise to cut the tariffs imposed on US imports by half. That is a positive.

By the end of the day Japan lost 0.59%, Hong Kong +0.31%, China +0.70% , while the ASX gained 0.37%.

European markets are up as analysts and strategists consider the impact that this pandemic is going to have on the global economy. The sense is that whatever the impact is, it will be confined to the first quarter, period. So, it is being discounted beyond that as investors look through the bad news and focus on the broader fundamentals. Yes, airlines, cruise ships, gaming stocks, have already gotten hit and may get hit more depending on the headlines. Economic data in the EZ did slow in the fourth quarter as expected and in Germany eco data there showed its economy stagnated during the same time. So that isn’t good, but it was expected so we can dismiss it.

FTSE +0.25%, CAC 40 -0.05%, DAX +0.30%, EUROSTOXX +0.12%, SPAIN +0.45% and ITALY +0/07%. 

US futures are UP. Dow futures are +30, S&Ps are up 5, Nasdaq is up 27 and the Russell is up 3 pts. Economic data today includes Advance Retail Sales – exp of +0.3%, Ind Production of -0.2% and Capacity Util of 76.8. No one is expecting any surprises, so don’t expect them to be a market mover today. Without any real new negative headlines concerning the virus, it feels like the path of least resistance is up.

The S&P closed at 3373, and feels like it wants to challenge 3390. On the downside, it feels like support at 3350.

Oil which rallied nicely yesterday is up again this morning, as it seems to have found support at the $50 level that we discussed. Today’s action brings us to $52 as it appears that it wants to move towards the mid-50s. All that talk of how the virus is going to destroy demand has to be reconsidered now that stocks are telling a different story. And the recent production cuts by OPEC/Russia are helping to support oil in here.

Take good care.

Kp


Rigatoni alla Vodka

Rigatoni alla Vodka

I love this dish… easy to make and is usually a fan favorite. Works great as a starter dish for a nice dinner party.

For this you need: 1 lb of Rigatoni, 2 garlic cloves – chopped, butter, olive oil, diced prosciutto, heavy cream (room temp), your favorite vodka (Tito’s works well), shredded fresh parmigiana cheese, s&p and 1 can of crushed tomatoes.

Begin by bringing a pot of salted water to a rolling boil

In a deep pan – melt half a stick of butter and add a splash of olive oil, add the chopped garlic and the diced prosciutto. Saute for 3 or 4 mins. Now add the can of crushed tomatoes (not puree), about 1 quarter cup of vodka, s&p. Bring to a boil and then turn to simmer and cook for 8 – 10 mins. Turn off the heat.

Add pasta to the pot and cook for about 8 mins or until aldente.

Now stir in about three quarter cup of heavy cream. Drain the pasta – keeping a mugful of the water.  Add pasta to the sauce – toss in the shredded parmigiana and mix well. Serve in warmed bowls.

Buon Appetito.

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Kenny Polcari

Kenny is the editor of Morning Thoughts and has been with Seven Figure Publishing since 2019.

Kenny is a CNBC exclusive contributor appearing on shows like The Halftime Report, Power Lunch, and Closing Bell. His market commentary has reached audiences across the nation on media outlets such as Bloomberg, Fox, ABC, and more.

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