Things you need to know.
- Markets make new highs (again) – Excitement over the recovery play and more stimulus.
- Oil – blasts higher…WTI now teasing $60/barrel.
- Dollar weakens – supporting commodity complex and big multi-nationals.
- The MEME trade? This is ridiculous!
- Bitcoin surges toward $49,000
- Try the Stuffed Chicken Breasts
Spend, Spend, Spend……and it is exactly that that has the markets in a frenzy….going higher and higher day in and day out -without not even a hint of wanting to consolidate……as long as the talk of ‘robust spending plans’ and ‘robust stimulus/relief packages’ and slowing rates of infections and deaths permeate the news…..Investors and algo’s took the markets all higher….sending the S&P up and thru 3900 to end the day at 3915 well into the new century. (A new high……Yawn…)
The Dow, Nasdaq, and Russell all followed suit – rising by 237 pts, 131 pts, 56 pts respectively as investors/traders and algo’s could not get enough…. also closing at new highs….
Oil continued to surge higher – with Brent crude piercing $60/barrel and WTI (West Tx Intermediate) trading as high as $58+/barrel in what has become the story of the year…. The energy ETF (XLE) is now up 58% off the November lows, it is up 18% since January 1st – Oil is up 66% since November and up 22% this year…. all on the idea that a recovering global economy will cause energy demand to explode! Duh! – Why is that such a surprise? Did you think that once the world wakes up that there would be no need for energy? It is the same argument that they are making for the travel industry, hotel industry, cruise industry, discretionary spending industry, automotive industry, lumber, soybeans, corn, and precious metals…. the expectation is that demand has been artificially caged – so when you take the cage off – Oh boy…. Watch out! And think of all the energy needed to run the world and run all these industries…I mean – this is not rocket science…. it is common sense…. Are planes and boats and trucks going to suddenly run-on solar batteries? Of course, not….
And to add to all the excitement yesterday – Lonnie Musk (of TESLA fame) along with Snoopy Doggy Dog, and someone else tweets out that they all love Dogecoin (pronounced Dog – E – Coin) – which sent that ‘dog’ up another 3 cts or 40%….to $0.084945 but Lonnie went onto say that TESLA has made a $1.5 billion investment in Bitcoin and that you will be able to buy a Tesla using Bitcoin……and that caused the cryptocurrency to soar……up more than $5300 in the session to end the day at $43,210 only to explode overnight trading as high as $49,000 before catching its breath and settling in at $46,200 at 5:30 am on Tuesday. (think widespread adoption of the coin as a real asset).
So think of this – if you want exposure to Bitcoin but don’t want to buy it directly (because you’re still not sure about what its future role will be) – then just go out and buy TSLA to get the exposure to this rather volatile asset class (think $862 vs. $46,000) ….and that is what some investors appear to be doing…..buying TSLA to get exposure to Bitcoin…..TSLA ended the day up $9 at $862/sh but traded as high as $877/sh. The sense is that Lonnie is being revered almost as much as the mythical Greek Gods…. think Zeus (King of Gods), Poseidon (God of the Sea), & Hades (God of the Underworld) all the sons of Cronus and Rhea – but that is another story….
It is the way investors/traders and the algos’ react whenever Lonnie appears…. how they react when he tweets and how they react when he talks …It is what is now known as the ‘MEME’ trade…. (which surely should mark the top!) …. It is nothing short of ‘cult like’ – but hey – if you jumped on board you have nothing to complain about – TSLA is up more than 4200% since its debut on the public markets in June 2010. The company went public at $17 – higher than the expected $14 – $16 range and managed to surge by 41% that day – ending the day at $23.89 and the rest is history…. Yesterday – TSLA ended the day at $862 post the 5:1 split!
Having Lonnie ‘in the game’ clearly changes the investment thesis for some…..Just wait until Chamath chimes in and tells you how he bought X dollars of Bitcoin as well….in an attempt to jam the asset class higher – just like he did with GME stop two weeks ago……when he ‘innocently’ bot $115k worth of February 115 calls when the stock was trading at $70 – and TWEETED ABOUT IT – SO THAT EVERYONE WOULD SEE IT…and what happened then? The stock which was already chaotic shot up to $150/sh within mins on its way to $450 share as the frenzy ignited the animal instincts in a few. Recall that Chamath went on CNBC the next day and sheepishly apologized for his actions but tried to make it right by telling the world that he was going to take ALL the money he made ~$500k on that trade and donate it to the Barstool Sports charitable fund supporting closed down small businesses….in an attempt to deflect any of the negative press that he was also beginning to get….
Then began to reprimand regulators, short sellers, institutional money, and the big banks as he ‘fights for the little guy’ including Robin Hood – which was a joke…..Just to be clear – Robin Hood blew up because they couldn’t handle the flow and more importantly they RAN OUT OF MONEY so the clearing house (NSCC) collared them forcing them to restrict trading…It was NOT a big boy vs. the little boy story at all…..but that gets lost in the hysteria….It’s exhausting to discuss with people that don’t understand the industry and the regulations that exist to do exactly that – protect the small investor and if you couldn’t trade on RH – that’s because RH was NOT prepared for the onslaught – enough of the BS….And btw – the big hedge funds were NOT trading on the RH platform – thus they didn’t have an issue….so if you were on RH – you made the wrong bet….so grow up.
And that was all the rage yesterday…. because there was not eco data, no fed speaks, no high-profile earnings to focus on – so the excitement was all about the TSLA trade along with some discussions in DC over the stimulus bill, the reconciliation tactic, and the upcoming Trump trial…. Now today is a different story…
US futures are DOWN – go figure……How could that be? I am calling the S&P police – this is an outrage……. or is it? European markets are lower, and the action in the US is directly tied to the exhaustion that investors/traders and even the algo’s are beginning to feel. Remember what I said yesterday…. everything was up in the morning INCLUDING inflation expectations….and that is the canary in the coal mine….10 yr yields creeping up, 30 yr treasuries creeping up in what is a signal to investors that the markets are expecting inflation to rear its ugly head…. Now – they (the FED) tell us not to worry…. they have it under control…. Oh boy……
In the end – the trend continues to be up and the only thing that will change this narrative is a substantial change in the story…. It will have to be something that no one expects….and it will have to be defined by the FED…because it will not be a vaccine story, or a virus story, or a stimulus story. It will be a change in policy from the FED that will suddenly change the fundamental story for the economy…. until then enjoy the ride….
And if the FED keeps printing money – the dollar will weaken, supporting the whole commodity complex (think oil, lumber, corn, wheat, soybeans, precious metals…) as well as all the big multi-nationals…because when they convert earnings in Euro’s (or other strong currencies) back into dollars they will have more dollars in their pockets and that will be reflected in future earnings…. Capisce? It is semantics really because a falling dollar hurts the US consumer…. (weaker dollar diminishes purchasing power – thus you need more dollars to buy everything and that sounds like inflation to me……but we will let the FED decide.) …. So, if you are concerned about a weak dollar then make sure you have some big multi-nationals in your portfolio to protect you against this event. (Think – KO, IBM, MSFT, PG, PEP, C, SNE, MCD, WMT, AMZN, GOOG, TSLA, you get it right?)
Dow futures are down 62 pts, the S&P’s – 8 pts, the Nasdaq -26 pts, and the Russell down 2 pts…Now this is nothing to write home about…. these moves are negligible – what you want to see is for these indexes to be down by 5 – 7% – now that would be something to talk about.
Eco data today includes: Nothing…. but tomorrow we will get CPI, Real Avg Hourly Earnings, Wholesale Inventories, Mortgage Delinquencies and Mortgage Foreclosures.
European markets are all lower…. again – not dramatic but trending lower…. the focus on a few earnings reports, an update to the virus lockdown status and a rally around the AstraZeneca vaccine after news showed that it offered minimal protection against the latest strain of the virus…. At 6:45 am the FTSE -0.06%, CAC 40 -0.04%, DAX -0.43%, EUROSTOXX -0.22%, SPAIN -0.93% and ITALY -0.39%.
Gold – which has been under pressure of late has now rallied back by $50 over the past 3 days….and is trading at $1,844/oz up from $1,795 last week. (think weaker dollar supporting commodities) as well as technical data points that caused gold to find support. Look it has broken all trendline supports then tested support at $1,795 ish – which held and was used as a pivot point. The bounce is welcomed but it is approaching 3 trendlines that will offer big resistance…. $1860, $1871, and then $1883….
Bitcoin is up $1600 at $46,331…
The S&P closed at 3915 – surging up and thru 3900 like a ‘hot knife thru butta’ (you can hear Barbara Streisand, can’t you?) I have been pointing out that we were in an upward channel bound by 3715 and 3900 – anywhere within that range would be considered normal…. Yesterday I did say that:
“while I did not see a breakout above 3900 – if everything stays the same this morning – we will certainly give it the ‘old college try’…. I still believe that we will see more backing and filling and that is ok…in fact, that would be welcomed.”
Now we did pierce it – but my gut tells me we are about to retreat…. Let us see….
Call me to discuss your portfolio.
Text INVEST to 21000 to get my digital business card – give me a call if you want to discuss what Slatestone can do for you.
Take good care.
Consultant, Market Strategist
kpolcari@slatestone.com
Stuffed Chicken Cutlets – Topped w/White Wine Dijon Mustard Sauce
This is easy to make – looks more complicated, but it really is not.
For this you need: 4 thick cut boneless breasts, olive oil, white mushrooms – sliced thin, 1 med leek – whites only, garlic, fresh thyme leaves, fresh lemon juice, dry white wine, chicken broth and cooking twine.
For the sauce you need: Dijon mustard, butter, s&p.
Butterfly the chicken breasts and pound thin. (or you can just go to the butcher and buy them already butterflied and pounded). Trim the breasts just enough to make them into near rectangles – set the trimmed chicken in a bowl (to be used in a min). Now place the trimmings into your food processor and pulse until smooth – maybe 15 seconds or so. Set aside.
In a skillet – heat up a splash of olive oil – add the mushrooms and cook – allowing the moisture to evaporate and the mushrooms are golden brown. 10 mins maybe. Add a splash more of oil and now toss in the sliced/chopped leeks and sauté for 5 more mins. Next add in the chopped garlic and ½ tsp of fresh thyme. Sauté for 1 min…. add in the 1 tsp of the lemon juice and cook until the juice evaporates. Transfer this mixture to the food processor bowl.
Now return the pan to the heat and add in ½ c of the wine scraping up any bits. Transfer this to a separate bowl.
Now pulse the mushroom mixture in the food processor until it is just finely chopped. Do not make it into mush. Add this mix to the chicken that you processed above. Season with s&p. Mix well.
Now take your cutlets and spread the mixture over it -leaving room around the edges. Roll the cutlets as tightly as possible w/o squeezing too hard. Tie it up with cooking twine.
Now season the rolled chicken with s&p – in the same skillet – heat up a splash of olive oil…. – add the rolled chicken pieces and brown on all sides. Add back the wine and 1 c of the chicken broth. – bring to a boil and then reduce to simmer. Cover and cook for 15 mins or so.
Remove the chicken and place on a serving platter and tent with foil while you make the sauce.
In the same skillet – with the wine – whisk 1 tsp of mustard into the sauce. Turn the heat up high and reduce to about ½ cup. 5 mins or so. Remove from heat and add 2 tbls of butter, the lemon juice – season with s&p….
Cut the twine and slice the chicken into medallion pieces…. Each roll should produce 4 – 6 medallions. Spoon the sauce over the medallions and serve with sauteed spinach (garlic and oil).
Buon Appetito.
