Expect More Volatility as the Rhetoric Heats Up…

Stocks marked another week of gains – making this the 4th straight week of gains and what is now the ‘longest winning streak’ of 2020… the S&P makes a new closing high, closing up 11 pts at 3397 leaving it up 5.15% on the year, the Nasdaq gained 46 pts – leaving it up 26% on the year, the Dow while it gained 190 pts is still -2% on the year and the Russell lost 11 pts leaving it down 7% on the year.

Gov’t stimulus from all ports has helped to power the stock market back to these levels after the virus began infecting the US causing that sudden steep drop in stock prices as well as the complete shutdown of the US economy… and with last week’s FOMC mins (Federal Open Market Committee) revealing that the FED brain trust continues to believe that the economy needs even more gov’t support – many analysts think that the record run in stocks has more legs and that investors should look for higher prices in the weeks ahead – as the stimulus is unleashed… and to that I say FULL STOP… let’s not get crazy… the market is well ahead of the economy… so caveat emptor (Buyer beware)… Remember – September and October can be and usually are volatile time periods and with this year’s election – expect even more volatility as the rhetoric heats up.

My sense is that while the market might be poised to go higher – it feels a bit tired now, a bit extended and exhausted… so a pullback would not be out of line at all and while we have all been saying that for some time – my gut tells me that we are here… it just feels tired… but tired does not mean disaster – it just means tired.

We are now in the final stretches of summer 2020… last week brought us the DNC convention and this week brings us the RNC convention – expect lots of drama – just like what we saw last week… but instead of Trump and his administration getting thrown under the bus – expect Joey and Kamala to be the brunt of the jokes this week. Expect to hear lots about the efforts to battle the virus and the efforts to destroy the democracy as we know it. Expect to hear lots about the Biden economic plan and the range of tax increases set to take place… and expect to hear lots more about what the Dems have in store for the country and how the ‘progressives’ or far left intend on dealing with anyone who has been successful.

Eco data this week includes Monday: the Chicago Fed Survey exp of 3.7. On Tuesday we will get new Home Sales – exp of +1.2%, the Richmond Fed Survey of 10. Wednesday brings us Durable goods of 4.5%, Ex transports of +1.8%, Thursday will bring the usual suspects – Initial jobless claims of 1 mil, Continuing Claims of 14.4 mil, final 2Q GDP of -32.5% (not a game changer at all – since everyone knows why and the 3rd qtr is expected to surge to +38% – which won’t be a game changer either since the reports are so infected and affected by the national shutdown…) Any real attempt at deciphering GDP in the months ahead – only means that 2020 is out – any real analysis will most likely have to begin with 2021….but again that also is dependent upon the course of this virus

Thursday and Friday also bring us the annual Kansas City Fed – Jackson Hole Symposium – usually a ‘boondoggle’ of a trip that includes International central bankers, Federal Reserve Officials, academics and private sector economists. It is a highly anticipated event as it gives us an idea of what the global brain trusts are thinking and debating but is usually a big non-event in terms of immediate action… and for most of us – we already know that the US FED is committed to keeping rates at zero thru the end of 2021… so we will have to wait until next year’s symposium to get a sense of what 2022 will look and feel like. This year’s title:

“Navigating the Decade Ahead: Implication for Monetary Policy”

The decade ahead? That’s 10 yrs… we have no clue what’s happening next year and they want to discuss the next 10… good luck with that…

What will be different this year is that they decided that because of the virus, the event will be virtual… or what is now known as ‘zooming’. This event – which has happened every year since 1978 – has always been viewed as an important economic symposium that discusses the most important economic issues facing the global economy –  and while the conversations are great – it is not a game changer for the markets at all… but there is one thing different about it this year… it will be livestreamed to the public – something that has never been done – so it’s just another first for the country and the world in this new pandemic environment. So – if you are interested – pay attention to the details on how you can tune into this live stream.

Last night at 5:30 there was a major ‘break thru’ announcement made by President Trump surrounding the virus and a potential cure… in it – Trump authorized the immediate use of convalescent plasma as a treatment for Covid-19 patients… and while some agree this is a good course of action – there are naturally the naysayers that suggest that the data is too weak. Let’s see how this plays out.

US futures are UP, up and away this morning… Dow +287 pts, S&P +29 pts, Nasdaq +105 pts, Russell 2,000 +18 pts. Gold is up $10 to $1,957. Oil is up 33 cents at $42.67/barrel…

This morning the S&P is at 3,421, pushing up and thru the 3,400 century mark… Expect much of the conversation today to be about this new authorization along with speculation that he may also try to fast track the AstraZeneca vaccine. Sit tight the day is young and the week is just beginning.  Remember – it’s a big vacation week – so lack of participation can lead to exaggerated moves.

Take good care –

Kp


pesto shrimp pasta

Linguine with Herb Pesto & Sautéed Shrimp

I love pesto in the summer… as it is easy to make, and you get the ingredients right from your garden. Today’s pesto is a combination of basil, arugula and parsley, lemon juice, pignoli nuts, grated parmegiana cheese, garlic, and olive oil. (You can also add in spinach if you like).

Begin by making the usual pesto in the blender.  Add the garlic cloves, the basil, arugula, parsley and olive oil.  Blend… Next add 1 tblsp of fresh squeezed lemon juice, pignoli nuts (lightly toasted) and the cheese. You can add some pepper – but do not add salt – the cheese takes care of that. Make sure you add enough oil so that it is not ‘pasty’ – Set aside.

Bring a pot of salted water to a rolling boil. Add the linguine (you can use any type of pasta you prefer – but linguine is always good with this – I mean – How can you go wrong?)

Cook for 8 mins or until aldente. Strain – always reserving a mugful of pasta water to remoisten.

While this is boiling – heat up a large sauté pan and add some butter and a splash of olive oil. When nice and hot – add in the seasoned large, cleaned and deveined shrimp. (Season with just s&p). Cook over med heat until they are nice and pink. Reduce heat to low and add the linguine to the sauté pan and combine. Now add in a couple of scoops of the herb pesto and toss well to coat. If it looks a bit dry – then add in a bit of the pasta water. Turn off heat.

Serve immediately with toasted garlic bread and your favorite summer Rose. Try the Sancerre from the Raimbault Vineyards. This Rose is made from Pinot Noir and is created by lightly pressing the grapes right after the harvest. Its pink color has a light summer fruit bouquet complemented by a burst of raspberry flavor and is a ‘must have’ for the summer season. Retails for about $20.

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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