Global Markets are on a Tear!

Stocks jumped again on Thursday as Americans braced for the latest economic data that would detail the pace of the recovery while continuing to tell the story of the economic damage that we suffered. The June NFP (Non-Farm Payroll) report revealed that we added more jobs, 4.8 million vs the expected 3 million – now while it was a ‘surprise’ based on the estimates – the truth is that it was not much of a surprise based on the whispers going around… Unemployment ticked down from 13.3% to 11% – officially – but some still question whether or not that number reflects the real unemployment rate at the moment… at the same time – we learned that the CBO (congressional budget office) assumes that the unemployment rate will remain in the double-digits through year end and that the ‘economic downturn’ will be more severe than the prior forecast. While GDP (Gross Domestic Product) is expected to ricochet back in the second half of 2020 – the sense is that it won’t be enough to ‘overcome the impact’ of the lockdown… and all that means is that investors/traders and algos are assuming that the FED will continue to fill the jugs with more Kool Aid to prime and sustain the economy and therefore the markets.

Stocks opened strong on Thursday and by the end of the day – the Dow added 92 pts or 0.4%, the S&P jumped 14 pts or 0.45% (landing us right at 3130, after trading as high as 3165). The Nasdaq gained 53 pts or 0.5% and the Russell tacked on 4 pts or 0.3%.

Volumes were lower than normal as many were away from their desks in preparation of the long holiday weekend… the media was ablaze with forecasts and predictions about what the weekend would bring in terms of surging infection rates around the country – but most of the media was focusing more specifically on FL, TX and AZ – three key states that the Democrats hope to turn in the 2020 election – although the truth is that cases rose in 39 states, not just those 3. Closed beaches along the east coast of FL and closed bars and restaurants in TX and AZ were hoping to stem the pace of increases and it’s anybody’s guess if that was successful… I guess we have to wait until the 15th of July to see what the rate of new infections will be – but at the rate we are going – It may soon be the 100,000 daily infection rates that Dr. Anthony Fauci and others have predicted… surely we can expect that even between now and then we will see daily surges as test results from those two weeks of protests now begin to be counted in the tally. More testing and more contact tracing being credited for the latest surge – as many are now being ‘assumed’ to be infected if they are within the circle of anyone who has tested positive – whether that ‘’second’ person has tested positive or not… Not sure how that is a real statistic – either you have it or you don’t… How can you be ‘assumed’ to be infected just because you were identified as being in ‘contact’ with someone who does have it? I mean – if I’m interpreting that wrong – let me know… but I don’t think I am…

Global Markets are on a tear!

US futures are SCREAMING higher! Dow futures up 380 pts or 1.5%, S&P’s are ahead by 40 pts or 1.25%, the Nasdaq gaining 127 pts or 1.2% and the Russell is surging by 27 pts or 1.9%. Apparently all the negative news over the weekend, whether it was surging virus cases (not deaths) or more Trump drama is doing little to cause investors any angst at all… Comments from elected officials in TX and FL stealing the headlines but having little to no effect on the bullish sentiment that is currently alive and well. Houston Mayor Sylvester Turner warning that the outbreak is set to ‘overwhelm the city’s hospitals in two weeks’ while Miami’s mayor told us that ‘it is clear that the growth is exponential at this point’. Dr. Fauci is sure to be on the news today re-iterating his concern. Over the weekend – the WHO (World Health Org) announced that Saturday alone saw more than 200k global cases with 45k of those in the US and even that is doing nothing to cause concerns for investors. Other breaking news this morning is that Regeneron is about to initiate a phase 3 (late stage) trial on a cocktail of preventative drugs to be given to people assumed to be ‘exposed but not yet diagnosed’ in an attempt to slow the spread.

Next week begins earnings… and while the expectation is for another round of disappointments – investors/traders and algos are telling you that they don’t seem to care… the disappointments have already been discounted and the markets are focusing on the future. Next, today (at least) the market is also not concerned about a Democratic sweep of the whole executive branch… as it was in the past couple of weeks and that too is adding fuel to today’s advance. Recall – that a sweep would be viewed as a negative for the markets, while continued gridlock would be viewed as a positive. – So while the WH is up for grabs – the GOP is hopeful that the Senate remains in their control… the next 4 months will be very important and the next big announcement will be who the DNC picks for their VP… do not discount that decision – it will be a game changer for so many voters.

OH – and Warren Buffet announces that Berkshire Hathaway is buying Dominion Resources – and this is apparently sending another bullish signal to the markets – because remember – only two months ago – he couldn’t find anything worthy to buy… so today’s news suggests that the ‘maven’ is no longer bearish on the market and so everyone should just jump in…

News overnight in China is setting markets ablaze… A front page article in the China Securities Times made it clear that ‘fostering a healthy bull market after the pandemic is more important than ever’ – suggesting that the Chinese gov’t will also do ‘whatever it takes’ (think ease more) to turn this around… sending stocks soaring as Chinese citizens scoured whatever part of the internet they are allowed to for ‘how to open a stock account’ (如何开设股票账户).

Commentary from local analyst Hao Hong (Bocom Int’l – Head of Research) tells us that the Shanghai composite has finally broken through is 850 day moving average… Ok – I get it, you’re looking for some technical reason to explain away the move – but an 850-day average? Really? That’s a bit of a stretch – but if that makes your story work – then go for it. Take a look at the chart of the Shanghai – it broke out of the more traditional 50,100 and 200 day moving averages in early June – and has done nothing but skyrocket higher as the gov’t continues to support the markets and today’s news only re-iterates that even more… China stocks are up 18% since June 3rd – Jackson Wong – Director at Amber Hill Capital told CNBC that the “bull sentiment in mainland Chinese shares was driving the markets – as investors believe that another bull market is coming and that the sudden surge in interest is because China is being less affected by the outbreak at the moment”.   

By the end of the day – investors/traders and algos sent Chinese stocks up by 5.6%, while Hong Kong rose 3.8%, Japan rose 1.8%, Taiwan gained 1.5% and the Kospi (South Korea) added 1.65%. And while this party was going on – the Australians chose to sit it out and fell by 0.7% – nothing specific at all – the chart appears to look more like consolidation.

And the Europeans are enjoying the mood as well… stocks across the region are surging into positive territory….On Friday – the EU Commission granted ‘conditional approval’ for Gilead’s antiviral drug Remdesivir to be used across the European Union – again this is the first gov’t supported ‘authorized treatment’ for covid 19 and is being seen as a game changer… In addition – The Sunday Times reported that the UK gov’t is close to securing 60 million doses of another potential vaccine manufactured by Sanofi and GlaxoSmithKline. Between Remdesivir and some other treatments in the news lately – there does appear to be light at the end of the tunnel – and so investors are celebrating. Once again detailing how the headlines surrounding the covid 19 can change the mood in either direction – depending on the tone of the headline and the position taken by the writer.  A positive story yields positive results….

As of 6:20 am – the FTSE + 2%, CAC 40 + 1.8%, DAX + 1.9%, EUROSTOXX + 1.95%, SPAIN + 2.6% and ITALY + 2%.

Oil – is up… after having pierced $40 last week… demand projections return to favor – even in the face of rising virus cases in the US and tighter supplies being credited for the recent strength… No matter what – the sense is that global economies are re-opening and the world is awakening… and when that happens – demand will surge… this is not rocket science at all… we remain in the $35/$45 range.

The S&P closed at 3130, after trading as high as 3165… Remember, I said that if we breach 3130 then the May highs of 3230 will be the next milestone that the markets will test – and we are well on our way to testing that level today… With the S&P futures up 37 pts – we will open at that 3165 (Thursday high) and then surge upwards…

Take good care –

Kp


chowder

Corn and Lobster Chowder

This is not a complicated recipe at all… came to me from a friend years ago but is a summer favorite…

For this you need: Two 10-ounce frozen uncooked lobster tails, thawed, or 1 pound freshly cooked lobster meat, cut into bite-size pieces.

8 cups yellow corn kernels, 3 cups low-salt chicken broth, 8 bacon slices, chopped, 2 cups chopped onions, 3/4 cup peeled finely diced carrots, 2/3 cup finely diced celery, 1/4 teaspoon cayenne pepper, 3 cups bottled clam juice, 1 1/2 cups whipping cream, 6 tablespoons sour cream, 2 tablespoons (1/4 stick) butter, 3 tablespoons chopped fresh chives

If using thawed frozen lobster tails, cook in pot of boiling water until almost cooked through, about 6 minutes. Drain. Cool. Using kitchen shears, cut lobster shells open. Remove lobster meat; cut into bite-size pieces. Discard shells.

Puree 4 cups corn with 1 1/4 cups broth in processor until almost smooth.

Sauté bacon in large pot over medium heat until crisp, about 5 minutes. Transfer bacon to paper towels. Pour off and discard all but 3 tablespoons drippings from pot. Add onions to pot; sauté until light golden, about 5 minutes. Add remaining 4 cups corn; sauté 3 minutes. Add carrots, celery, and cayenne; sauté until vegetables soften slightly, about 5 minutes. Add clam juice and 1 3/4 cups broth; simmer 10 minutes. Stir in corn puree and whipping cream; simmer 5 minutes. Season with salt and pepper. Remove soup from heat; stir in sour cream.

Melt butter in medium nonstick skillet over medium heat. Add lobster meat and sauté just until heated through, about 2 minutes. Ladle soup into bowls. Garnish each serving with lobster pieces, bacon, and chives and serve.

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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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