Stocks Did an About-Face Yesterday

Overnight the tone has clearly changed. European markets which got beaten up yesterday are all up this morning as individual European countries begin to wake up. Energy which had a good day yesterday is up again this morning and that is also fueling some of the surge. Even news that the top German court found that the ECBs (European Central Bank) government bond purchase program “partially violates the law” has done little to cause markets to sell off. Investors/traders and algos all appear to be focused on any and all re-openings whether they are in Europe or in the US even as concerns about a second wave of infections remains a possibility.

In early trading – the FTSE is +1.13%, CAC 40 + 1.7%, DAX +1.26%, EUROSTOXX +1.07%, SPAIN 0.95% and ITALY +0.90%.

US futures are also higher – sending Dow futures up 150 pts, S&Ps +12, Nasdaq + 56 and the Russell up 12 pts. News that the Treasury is set to borrow $3 trillion this quarter to fund rescue efforts was corrected when Stevie Mnuchin told the press that the number was really $2.999 trillion and this now brings the US government debt to a whopping $25 trillion and the current deficit to $744 billion. Estimates for 3Q borrowing are running as high as $677 billion and counting. All of this money is a result of the multiple stimulus packages and efforts by Congress to resuscitate the economy.

Eco data today includes: Markit US Services PMI exp of 27 while the ISM Non-Manufacturing Index is set at 37.9 – both horrific numbers but 37.9 is clearly much better than 27. Tomorrow brings us ADP employment report – expectations are for a drop of 20 million jobs not created, while Friday’s Non-Farm Payroll report expects a loss of 21 million jobs. Both of these are key numbers and will be closely watched. Thursday brings us another round of initial jobless claims – this week we expect an increase of another 3 million people.

Oil is on the rise again today after rising yesterday taking WTI (West Texas Intermediate) up and thru $20/barrel. This morning it is up another $2 or 10% at $22/barrel while North Sea Brent is up 4% at $28.30/barrel as the expectation is for demand to rise in the US, Spain, Italy, Portugal, India and Thailand as those countries get ready to allow people to get back to work. The sense is that as other countries ease back on restrictions then demand should continue to rise as the world wakes up from this nightmare. WTI downtrending resistance stands at $28.60 – and it appears as if oil wants to test it – the question is what happens when that happens? Do we back off or do we break up and through. If countries begin the process of getting back to work and there are NO signs of a resurgence – then we could expect that oil will blast right thru that trendline as it attempts to normalize somewhere in the $30s. Clearly if a resurgence raises its ugly head and causes another round of closures – you will see oil collapse again. My gut tells me that we will not see a resurgence in infections as the new normal takes hold. For now, the upside target is trendline resistance and right now it is at $28.60, but with each passing day – the trendline will continue to move lower as oil attempts to move higher resulting in a convergence somewhere around $25.

The S&P closed at 2842 after having broken 2800 and trading as low as 2797. This morning we see futures are up leaving us solidly in between both short term and long term trendlines – forcing a range of 2750/3000. I suspect that we will remain in this range for a while until we get more clarity on what happens next. Like oil – if we reopen and there is no resurgence of infections – I would expect the market to rocket higher up and through longer term resistance as investors celebrate the re-awakening.  And if there is a resurgence – then I would suspect that the sell off will be painful as the algos will run wild. So – be patient – don’t go chasing – talk to your advisor – keep some cash on the side and continue to tweak your portfolio as opportunities present themselves.

Stay tuned – more to come.

Take good care.



Mahogany Roasted Chicken

You need: Chicken parts – on the bone. (thighs and breasts; skin on); Olive oil, Garlic – 1 whole head, but more depending on how much chicken you are making; Fresh rosemary, Fresh sage, Fresh thyme, Bay Leaves, onion, Olives – green and/or black, Kosher salt & fresh ground pepper, and a good quality ‘thick’ Balsamic vinegar

Soak & clean the chicken. Pat dry on paper towels. Arrange in a roasting pan. Drizzle with olive oil, rub it onto each piece. Season with salt & freshly ground pepper.

Peel garlic and arrange around and under the chicken parts. Add rosemary, thyme, sage & bay leaves. Put the herbs around and under the larger pieces of chicken. Add 2 cut up large onions and spread it around the chicken. Use Vidalia onions if you have them, but any onion will work.

Roast the chicken in the middle of a 400-degree oven for about 45 minutes. Check the pan every 15 minutes or so and remove any excess liquid with a turkey baster. The object is for the chicken to roast, not braise. – Save the juice on the side in case someone wants some with their meal.

After 45 minutes, drizzle the chicken with the balsamic vinegar, add the olives, turn the heat up to 450 degrees, and roast for 15 minutes more. (It is the balsamic that gives it the mahogany color)

You can serve this with roasted vegetables, roasted potatoes or rice.  Always include a tossed green salad.

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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