Market jitters: Santa rally debate, Fed on the fence, and tech stocks lead the way

• Stocks mixed – but Tech continues to rally.

• Oil and Gold flat.

• Lots of FED speak – They all ‘sit on the fence’.

• ADP tomorrow, NFP on Friday.

• Try Grandpa D’s Key Lime Pie (Holidays are coming).

So, bonds got sold while tech stocks saw gains…the rest of the market came under pressure – the TLT and TLH both lost 0.1% while the Dow lost 130 pts, the S&P gained 15 pts (think the tech names within), the Nasdaq advanced by 185 pts or 1% (there’s the tech), the Russell lost 1 pt, the Transports gave back 74 pts while the equal weighted S&P lost 20 pts (again – note how when they give equal weight to all the stocks – the strength in tech gets neutered).

We keep getting mixed reviews on what happens next and into year-end…. Where is Santa? Is he still coming or has he come already? (I’m in the he came already camp). Tom Lee (Fund Strat Fame) still thinks Santa is coming and we move higher into year-end – Let’s hope he’s right!

Fed Gov Chrissy Waller did exactly what he always does (which is nothing) – he was speaking at the American Institute for Economic Research when he said – and I quote –

“At present I lean toward supporting a cut to the policy rate at our December meeting, BUT the decision will depend on whether data that we will receive before then surprises to the upside and alters my forecast for the path of inflation.”

Do you see what he did? Instead of growing a pair – he does what is safe…he sits on the fence - not committing to an action – but rather committing to ‘following the herd’ – he’s like a ‘go along, not held’ order rather than a ‘held, take no prisoners type order’ - refusing to take a stand – he ended up saying nothing. Who wants to hear a FED Governor say nothing? I mean – does he not see what the rest of us are seeing? Apparently not, recall he also went along with the ‘transitory’ narrative for 9 months…. Atlanta’s Raffi Bostic is also sitting on the fence – leaning towards holding steady, but ‘OPEN’ to changing his mind.

In any event – I’d point both of them to the latest PPI and PCE data – both inflationary measures that suggest inflation is heating up – recall both came in ‘hotter’ than the prior month. In addition, I’d say refer back to the NFP reports over the past 6 months (excluding last month due to extenuating circumstances) that continue to show a robust job market, I’d suggest he look at the unemployment rate that is holding steady at 4.1% - hardly a disaster, I’d point them to the yesterday’s Cyber Monday Spending data – do you realize that Americans spent money like it ‘grows on trees’? U.S. consumers spent approximately $13.2 billion online, marking a 6.1% increase from the previous year's $12.4 billion. The peak spending period occurred between 8 p.m. and 10 p.m., during which shoppers spent more than $12 million per minute. (think AMZN, WMT, TGT) And you want to tell me that consumers are economically challenged? Really?

I’d also say that the FED needs to consider the new administration and what the potential policy effects might be – before they just cut the rate again…I mean – is another 25-bps rate cut really going to change the cost of your living day to day? Nah…so, I am in the camp that the FED needs to do nothing, they need to sit tight and consider what they have already done.

Today we will hear from another Fed Governor - Adriana Kugler along with Chicago Fed President Austan Goolsbee (who is very much a dove – he is dying to slash and burn rates). Adriana, on the other hand, is considered a neutral figure in terms of monetary policy as she has yet to make substantive policy remarks since her confirmation one year ago, therefore, she has not been clearly categorized as either a "hawk" or a "dove”.

Tomorrow brings Fed Chair JJ Powell along with St Louis Fed President Alberto (Musalem) – he’s like Beyonce or Madonna – he goes by his first name only; I mean with a name like Alberto – why would you use anything else? Now he, is considered more of a dove as he keeps saying that ‘it’s about easing off the brake at this stage’ and making monetary policy ‘gradually less restrictive’…. assuming that you think it IS restrictive. I do not, but that’s me.

Eco data today includes the JOLTS report – (Job Openings and Labor Turnover Survey) – which is a monthly report published by the BLS. It details the number of job openings, hires, and separations (including quits and layoffs) in the labor market, providing insight into the overall health of the job market by highlighting labor demand through its job opening data. Sounds extensive, doesn’t it? Listen to me – there are 33 million businesses in the US and only 21,000 respond to the survey…. (Thats a response rate of 0.0006%), which is why I do not ‘overreact’ to this data point. Just not sure that a 0.0006% response rate really paints a full picture. But again – that’s me…You do you.

Tomorrow its about the ADP employment report – that is expected to show an increase of 158k new jobs created along with the Services PMI’s both from S&P and the ISM and both are expected to be well into expansionary territory. In addition, we will get Factory Orders and Durable Goods Orders….and then its onto Friday’s NFP report…that is the one that investors want to see….and that’s the one that the FED needs to see (as if they haven’t already seen it -). I’d say – pay attention to what JJ says tomorrow – my guess is that he too will sit on the fence – but I am expecting him to lean hawkish… Let’s wait and see.

Bonds as I pointed out at the beginning of this rant got sold yesterday and that sent yields a bit higher…the 2-yr yielding 4.17% (up from 4.15%) while the 10 yr is yielding 4.20% (up from 4.17%). I’m still in the camp where the 10 yr is going up to 4.5% before it goes to 4%. 12-month CDs are paying you 5%! Helloooo Santa!

Oil is holding steady in the $66/$70 range awaiting the OPEC+ meeting on Thursday, December 5th. The chart is forming a triangle pattern – with support right here at $68 while resistance is at $70.80…at some point – it will have to break out one way or the other…..and that move could come on Thursday – after we hear what OPEC and the Saudi’s say.

Gold as well – hasn’t really moved in the last week – holding tight in the $2640/$2670 range. This morning it is up $9 at $2667…. The catalyst for gold will be the coming eco data and the FED meeting in 2 weeks.

If the FED keeps rates steady, then we could see gold retreat, but if the FED cuts rates, then we could see gold rally – remember - when the Fed cuts rates, the opportunity cost of holding gold decreases because alternative interest-bearing investments (like bonds) offer lower returns. It can also lead to a weaker U.S. dollar, as lower interest rates make dollar-denominated assets less attractive to investors.

A weaker dollar generally supports gold prices, as gold is priced in dollars and becomes cheaper for buyers using other currencies. Rate cuts are also often accompanied by increased monetary stimulus by the government, which can raise inflation expectations. (here we go again) and Gold is traditionally viewed as an inflation hedge, so higher inflation expectations can drive demand. Which is why I say – sit tight and let’s see how this plays out.

The VIX (fear index) as you might expect continues to churn in the ‘no fear’ zone…now even lower than last week at 13.38 - well below all 3 trendlines and this is just another reason stocks keep going up…..the market is telling you that there is ‘absolutely nothing to see here, nothing to worry about’ and so the momo guys keep taking stocks higher.

US futures are teasing flat…. Dow futures down 3, S&P’s up 3, Nasdaq down 3 while the Russell is +2 – this as the market awaits the remarks from Kugler and Goolsbee. Street analysts continue to act like FED heads – playing on both sides of the fence…..Goldman telling us that the US economy is strong and the broadening out of growth is positive for stocks and that ‘IF we get the domestic growth story coupled with the normalization of rates that’s a very favorable cycle for the smids’. And that implies that IF we do not get that story then its negative for stocks – Duh!

This as Eddy Lecubarri – a JPM strategist told us that SMIDs have the potential to deliver double digit gains next year under a ‘best case scenario’ although ‘a lot could go wrong’ – No sh*t….which is why you need to make a plan, build a diversified portfolio, and then stick to the plan. Revisiting it on a quarterly or bi-annual basis to make sure the plan is on track. It’s not rocket science but for so many you need the assistance of an advisor to help guide you to the goal posts.

European markets are up…. even as French gov’t is on the edge of toppling over – French lawmakers to hold a vote of ‘no confidence” on Wednesday with Far right leader Marine Le Pen expected to join the far left wing coalition to push Prime Minister Michel Barnier out which would leave Manny Macron in a severely wounded position…Remember – Macron appointed Barnier so his failure is a reflection on Macron…leaving Manny to appoint a new PM….under duress….but as I say all the time – political headlines cause short term chaos but hardly ever prices stocks in the long term – the CAC 40 is up 0.8% today…after being down yesterday on the original headline. The rest of Europe is up between 0.2% (Germany) & 1.1% (Italy).

The S&P closed at 6047 up 15 pts. Yesterday I said that if you draw a trendline – it suggests upper resistance to be 6080 – with support down at 5838 (50 dma). It looks like the momo guys want to test it –…HO, HO, HO….

Grandpa D’s key lime Pie

Ok – the holidays are upon us…so as you know I will start to give you the 7 fish recipes that we have on Christmas Eve – (Feast of the 7 Fishes – it’s an Italian tradition) but today I am giving you a Key Lime Pie Recipe -because the holidays are also about deserts! And this one comes to you from a very dear friend of mine – Grandpa D who got it from his mother years ago…. This recipe is easily 70 yrs old.

For this you need – 1 c of Lime Juice, 8 oz of soft cream cheese –(Philadelphia always works), 12 oz of cool whip, 14 oz of Eagle brand sweetened condensed milk, and 2 graham cracker crusts – you can make them or you can just go out to the grocery store and buy the pre-made ones.

Start by whipping the 4 ingredients together until smooth and creamy.

Next pour it into the 2 pie crusts and then refrigerate for 2 hours.

Yummy! I love Key Lime Pie…so this is a favorite.