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  • Where Are The Clowns? Send In The Clowns…By Kenny Polcari

    Where Are The Clowns? Send In The Clowns…

    by Kenny Polcari

    The mkt action last week speaks volumes to the investor psyche….on Monday - when the world was handed a very unexpected Italian election result - we saw major fissures occur in global mkts - the earth shook - as investors wondered whether or not Italy would be thrown into turmoil once again - dragging the rest of the Eurozone with it……Algorithms that are written to "interpret" the headlines sent global mkts lower…selling begets selling as the algo's feed upon each other….- such is the state of affairs… Buyers - who actually read the news and understood the implications placed strategic interest on the way down and took advantage of the tremors in world mkts…. In the end - the buyers were handsomely rewarded - because starting 24 little hrs later - investors around the world - re-assessed the drama, realized that mkts over reacted and then proceeded to take it all back - so much that they even teased (unsuccessfully) the all time Dow high on Thursday….(more on that later)

    On Friday - mkts began the day weaker - down some 6 pts as we awaited -Sequestration - The next crisis! ….We listened to analysts & politicians tell us of the coming devastation that would happen within hours -(it seemed).... - well guess what? The economy did not explode.....there are no bread lines in the city....I did not see an increase in homeless people overnight... and our old friend Warren B - suggests that the "sequester won't slow economy too much".......The weakness lasted only mins really - and then the mkt turned around and once again moved higher - it became clear that something was lurking in the background - Who? What? Was it the Fed? Did Uncle Benny stand in the background with a steady hand as analysts and strategists discussed the 'devastation' that the cuts were about to impose…Or was it that this was not new news at all….the mkt was expecting this - so no reason to panic......Panic no - caution yes.....

    As discussed - the mkt feels a bit tired... and while the Dow finished at a new five yr high (vs. a record high) the fact that it can't pierce the all time high is causing some concern for investors… I have been saying - the push higher doesn't feel strong or robust - irritation with gridlock in DC, unclear fiscal & tax policies - (monetary policy very clear), renewed concern about Europe & Asia all weigh on investors. Again this morning - US futures are weaker - on the back of softer mkts in Asia overnight as well as weakness in Europe this morning.

    Any pullback would be welcomed and with sequestration now in effect - investors/traders around the world will be watching every macro data point to assess the impact of the cuts on individual stocks as well as on the overall US economy…..March is also the month that we will begin to see analysts "revise earnings estimates" ahead of the coming earnings season in April. Any downward revisions will be met with selling prior to the actual reports so when the reports are official in April - the actual earnings will "beat the estimate" and BOOM - it's off to the races once again…..Sounds like a broken record to me……

    "Isn't it bliss, Don't you approve, One who keeps tearing around, One who can't move - Where are the clowns, Send in the clowns….." Steven Sondheim 1973 musical - A Little Night Music.
    Friday morning brought the Personal Income report and we learned that 'disposable income' fell 4% - the biggest plunge since 1959….higher gas prices, 2% increase in payroll taxes, new Obamacare taxes, and higher food prices…all contributing factors. Could that possibly be derailing the US economy?

    This morning's WSJ has a headline article - "Investors Rethink Consumer Resilience" - Tom Soviero - a Fidelity fund manager - (manages $6.7 bil) discusses how while at dinner one night - he listened to friends "lament" about rising gas prices, rising taxes, rising food prices and what it meant to the family bottom line - how increasingly difficult it was becoming - most indicated that they were eliminating - unnecessary spending...leaving Tom to worry - is the consumer tapped out? Will all of these increases in the cost of living finally take its toll on the retail sector? - He thinks yes and has reduced his exposure to "underweight" in the retailing sector....Another manager - Ms. LaRosa of Philly based Glenmede Investment - had the same conversation with friends - all about the difficulty in saving money w/smaller paychecks and rising costs....Go outside and talk to your neighbor - you don't need some portfolio manager to tell you what you already add insult to injury - even Wal-Mart and Target have confirmed that sales are off to a slow start....

    This leaves one to wonder - What about the massive stimulus that the Fed has injected? How has that really helped? - oh yeah - that is causing oil to rise, thus gas prices to rise, food commodities to rise, thus food prices to rise all putting pressure on the consumer - but it has kept interest rates artificially low now causing bidding wars in the housing I guess all is good - forget the fact that you can't heat it or put food on the table. And the administration says that if our economy loses 700k jobs and GDP loses 0.5% - it will this cause the US economy to stumble. HELLO??? The US economy is already beginning to stumble....

    Overnight in Asia - mkts were lower - with the exception of Japan - and how come? Because Mr. Kuroda has pledged that he would do "everything possible to beat deflation".....indicating that the BoJ will be launching a massive monetary easing... and in China - Chinese developers leading the decline on reports of new tightening measures....Japan +0.4%, Hong Kong -1.5%, China -3.6% and ASX -1.5%.

    In Europe...... mkts all lower as that major selloff in China is taking its toll on the European basic resources sector (huge Chinese exposure).. and HSBC earnings disappointment - shares down some 2.5% but remember - the stock was up some 28% during the past yr - so again - understand the broader picture. FTSE -0.6% CAC 40 -0.3%, DAX -0.65%, EUROSTOXX -0.5%, SPAIN +0.2% and ITALY -1.22%.

    US futures are down 5taking us back to 1511 - the chatter this morning is all about the Chinese announcement to increase down payments and interest rates on homes in cities where prices are rising too quickly - in addition - the European weakness is not helping the tone. That being said - we remain stuck in the 1500/1525 range... The tone continues to feel a bit tired so the path of least resistance appears to be lower for now. The antics in DC will continue and the mkt will essentially ignore it until it appears more realistic - but a pullback to test the recent support levels should not be unexpected. Has anything really changed to cause investors to become aggressive?

    Grilled Swordfish Steak w/Spinach & Feta

    This is one of my favorite dishes and we made it for dinner on Friday night when we had some friends over to share a bottle of wine and discuss the state of affairs...

    You need 7 things - Swordfish, Spinach, Crumbled Feta cheese, butter, s&p, olive oil and fresh lemon juice.

    Start with fresh swordfish steaks. Marinate in: Olive oil, S&P, fresh lemon juice - cover with saran wrap and let sit at least 1 hour on the counter. You want it to be room temp when you put it on the grill.

    In a separate pan - sauté a bag of fresh spinach in a bit of butter and Olive Oil. Season with s&p. After it wilts down then turn off heat and set aside.

    Preheat the grill on high for 10 mins....when ready - place the swordfish steaks on the grill and sear. Leave for 4 mins or so (depending on thickness) then flip. At this point - cover each swordfish steak with the sautéed spinach. Add crumbled Feta cheese and close cover. Turn heat to med and leave for an additional 4 / 5 mins until done. The feta will be soft but not melted.

    Arrange the swordfish steaks on a warmed serving platter and complement with fresh steamed green beans seasoned lightly with s&p and a mixed green salad. Your favorite chilled white wine is the perfect complement - we had a chilled Pouilly Fuisse...a white wine (Chardonnay) from the Maconnais subregion of Burgundy.

    Buon Appetito

    Mar 04 11:19 AM | Link | Comment!
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