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Stimulus Goes Nowhere – Try the Stuffed Calamari

Stocks ended the day lower on Monday… as investors chose to ignore any of the good news out of DC – i.e. a stimulus plan (which proved once again to be ‘fake news’) and instead focused on the surging cases and increasing lockdowns…..Energy taking it on the chin falling 2.3%, as concerns over the lockdown raised the level of anxiety about demand and then the Farmer’s Almanac is predicting that there is warm weather coming to the Eastern Seaboard – causing demand for natural gas to fall as there may not be a need to spend as much money trying to heat the house this year – and if you are not spending the money, then that means you are not ‘demanding’ the gas and you know what that means… there’s a supply overload which depresses prices. The XLE – Energy ETF – which has risen a stunning 46% since November 1st, broken through all 3 trendlines saw investors take some cash off the table. Investors also sold the Industrials (XLI), Financials (XLF), Consumer Discretionary and Staples (XLY) & (XLP), Healthcare (XLV) and Retail (XRT) to re-invest in Tech (XLK), Work From Home (WFH), Utes (XLU), Communications (XLC), Biotechs (XBI), Semis (SMH), Homebuilders (XHB) and Treasuries (TLT).  By the end of the day – The Dow lost 148 pts, the S&P gave back 7 pts, the Nasdaq rose 55 pts and the Russell gave up 16 pts.

It was all about the virus, comments and analysis about the latest move by California Governor Gavin Newsome as he shut down the state, and then you have NY’s Governor Cuomo threatening to shut down the city in 4 days if infection rates don’t settle down. Look – in April, NYC converted the 18,000 sq ft Jacob Javits Center into a military style hospital (Think M*A*S*H) for what was expected to be an onslaught of virus and infection cases, by May they shut it down after treating 1000 patients after it appeared that the worst was over… well apparently that isn’t the case – so let’s go – re-open the Javits Center – or send in the Red Cross military style hospital ship that also came to the rescue. I mean Andy – stop creating hysteria and lead. And New Mexico is also on the verge of shutting down as the cases in that state are beginning to overwhelm the system – Governor Michelle Lujan Grisham is on the brink of ‘rationing health care’ forcing Drs. to pick and choose – who lives and who dies! …So – do you notice anything in common with all of this… not making a judgment – just curious if anyone can explain.

Stimulus talks – while they were supposedly happening – went nowhere. So once again investors showed their displeasure by taking money off the table – after plowing money into stocks after ‘they’ assured us that both sides would come together and strike a deal. What we found out is that Senate Majority Leader Mitchy McConnell is standing in the way citing the Democrats Federal limits on Covid 19 related lawsuits against businesses – calling it too limited forcing the talks to stall leaving millions of Americans potentially without any protection on December 26th. In the end – the Dems want massive money to bail out Democratic run states, while the GOP wants employers to be protected from what is expected to be a bevy of lawsuits over ‘poor protection’ against the spread of the virus.  And you know how the legal industry is lining up… they are licking their chops over what is expected to be a load of class action suits on behalf of employees. It’s shameful really.

Overnight – the UK launched what they are calling “V” Day… (Vaccination day) and remember these two names – Maggie Keenan and William Shakespeare (not kidding) … both in their 90’s, both are considered ‘at risk’ and both were the first (male/female) to take the vaccine. Many in the UK are excited – while there is a core group of Brits that have no intention of taking the vaccine (much like here in the US) …leaving that up for debate about how effective it will be if it is not widely accepted.

And on the geo-political side it’s all about the ongoing BREXIT discussions… UK PM BoJo is on his way to Brussels to meet with EU Commission President Ursula von der Leyen after the lead negotiators failed to make any progress yesterday. At 6:45 European market are all lower… as traders and investors ‘trim their risk’ – something that no one should be surprised at.  FTSE -0.39%, CAC 40 -0.65%, DAX -0.38%, EUROSTOXX -0.56%, SPAIN  -0.57% and ITALY -0.66%.

US futures are lower again this morning as the Risk Off trimming continues… again – it’s not panicky at all, it’s just the methodical reallocation of risk as we move into month end. Remember – in my opinion – Santa Claus has already made his rounds – the Dow has rallied 12%, the S&P is up 14%, The Nasdaq has gained 15% and the Russell is up a whopping 25% all since November 1st! And with the uncertainty surrounding the stimulus (at this point if we get it – it will be a scaled down version so it won’t be much of driver – Now we might get more once Joey takes over but that’s a February story…), the availability of the vaccine and the exponential rate of infections are sure to keep a lid on stocks. And news that PFE is expected to only ship half of what we expected is being denied… PFE fell 2% yesterday on this news… and then fell another 1% after hours – management telling us that the WSJ article that cited raw material shortages was out of date and overdone, they went onto say that their guidance (Nov 9th) has always been 50 mil doses this year and 1.3 bil doses in 2021. (The story implied that PFE was shipping 100 mil doses).

As of 7 pm – the Dow futures are -162 pts, the S&P’s are off by 21 pts, the Nasdaq is down 52 pts the Russell is off by 12 pts.

Remember – congress is due to go on vacation on Friday – and with no stimulus deal done yet, it just raises the temperature in the room… Now, I fully expect that there WILL BE a deal by end of the week – there will be an 11thhour deal where both sides will try to claim they won… Away from that there are no other macro data points today that will drive the action… later in the week will get CPI, Real Avg Hourly Earnings, PPI, and Empire Manufacturing in addition to the usual weekly suspects.  And as we move further into the month – expect that to be less so as the world begins to prepare for the holidays. Hannukah starts on Thursday night and goes through Friday the 18th and then Christmas on the 24th & 25th followed by Kwanza from the 26th thru the 1st which then overlaps with what is sure to be a muted New Year’s Eve celebration around the world – or will it? We’ll see. Scientists and Drs reminding us that if you thought Thanksgiving was an issue – just wait… as January/March is expected to be a long ‘dark’ period (after the holidays) and the vaccine while now available will do little to stop the darkness – just because there isn’t enough of it to inoculate everyone and it’s a process – so while it is here, it will take time to get it done.

Oil is under a bit of pressure as the gloom grows… but again, I think it is just some profit taking after the surge and ahead of year end. Nothing to write home about. I do expect the latest restrictive measures and lockdowns to keep a lid on prices in the near term… but I expect that this will be short lived and continue to believe that we remain in the $41.50 (trendline support) and $50 range.

Gold holding steady at $1870/oz while Bit Coin falls $320 to $18,754/coin.

The S&P closed at 3691. Renewed lockdown restrictions, lack of a deal and normal re-allocation and re-balancing is what is driving the markets. Unless we get some blockbuster announcement out of DC – I don’t see any reason for the market to rally much from here, in fact I suspect it will continue to consolidate. While the spring/summer promises to be exciting – the next couple of months could prove to be volatile causing prices to swing – offering new opportunities to put money to work. Remember we are now in unchartered territory… we are smack in the middle of a very broad trendline channel… 3400/3900… and we are only weeks away from year end… My sense is that we have seen the years high… but remember – 3700 is just another big round number that tends to get everyone excited… the algo’s could attempt to push us up and through, but the smart money will most likely unload some of the high flyers as they expect a re-pricing in the early part of the new year.  As the long-term investor – stay focused and stay the course, keep balanced.

Take good care.

Kp

Stuffed Calamari 

First you have to make the Marinara…..

Sauté garlic – 5 / 6 crushed cloves with 2 large sliced Spanish onions until soft.  8 / 10 mins.

Add 3 – 28 oz cans of kitchen ready CRUSHED tomatoes – Not PUREE… just CRUSHED.

If unavailable – then buy the cans of plum tomatoes and crush them yourself in the food processor.

Season with S&P and fresh basil.  Keep heat on Med high until it starts to boil then cover and reduce heat to simmer…stirring about every 8 / 10 mins.

 Next – Stuffing the Calamari!

 Take the breadcrumbs (that you used for the filet of sole) – mix with olive oil and white wine (2:1)… just enough to make them moist but not real WET. Capisce?

 You need to buy the Calamari bodies for stuffing – these are the large Calamari – not the small ones… If you can have them cleaned then do so…if not – you will need to clean the Calamari…this is a delicate task and takes a bit of time…but in the end….you will wonder how you have done without.  Carefully – rinse the body – turning inside out to remove the membrane then return to its original position.  Once cleaned… proceed to stuff the Calamari with the home-made breadcrumbs.  You will need to carefully use a teaspoon to get the breadcrumbs into the calamari and then use your finger to push the breadcrumbs down into the body – careful not to overstuff otherwise they will explode in the sauce. Once stuffed – close the end with a toothpick and set aside.  Once you have completed this total task – move over to the marinara sauce made in step 1. Carefully plop the Calamari into the sauce stirring gently so as not to cause the Calamari to tear or explode. Keep heat on simmer and cover.  Make sure to stir every 3 /5 mins for about 20 mins… Calamari are done. You can eat now OR you can turn off the heat, cool down, refrigerate until tomorrow. This sauce is ALWAYS BETTER ON T + 1  (day 2).  Trust me! When reheating – take the pot out of the fridge and let it warm up to room temp before putting back on the heat… When you do – use the simmer function and reheat slowly… stirring attentively.

If done right – these are soooooo good…

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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