Markets gear up amid earnings surge, election anticipation, and Fed's next move

• Stocks start the week with a bang.

• Energy gets walloped – 5% as demand (supposedly) underwhelms.

• Bonds continue to lose ground and yields continue to go up.

• BIG week of earnings…and eco data.

• Try Fantasia’s Shrimp Scampi.

Stocks started week on an upbeat….It is the busiest week of the season for corporate earnings, and it’s a big economic week as well…..NFP report due out on Friday…and we are now one week away from the election (or should we say ‘clown show’) to be over….and all of this is setting the stage for what we will hear from JJ on Thursday November 7th at the next FOMC meeting.

At the end of the day – the Dow added 275 pts, the S&P up 15, the Nasdaq gained 50, the Russell up 36, the Transports up 185 while the Equal Weight S&P gained 40.

Energy was the ONLY sector to end the day lower…. Why?  Because they are pushing that waning demand story again…..while also trying to push a ‘conflict’ easing story (Benny did say that he was open to a ‘truce’ )….so, if demand is waning, and supply is increasing and if the conflict is easing (I’m not sure I believe that) then the pressure is on for prices to go lower….and that’s what happened.  Oil fell 5.25% or $3.80/barrel to end the day at $67.35 Now we have not broken the low established on September 10th - $64.16 – and so we remain in the $64/72 range.

This morning oil is up 0.7% or 46 cts at $67.81- this after the trader types are hoping for more Chinese stimulus (that has not been confirmed) and on the hopes that the Saudi’s will not raise production into year-end – given that there is already a supposed global surplus. Now the Crown Prince has left the option on the table to do nothing if the situation does not change…..so it is not clear yet what’s next and so I believe that the path of least resistance is lower….and if Donny wins – and opens the spigots – then get ready for more oil to hit the markets. 

Btw – if oil and energy prices move lower – then that will help push inflation lower as well….think - the cost to transports goods goes lower and then that should relieve some of the pressure that companies have to charge for products and it should also help the cost of electricity to go lower…bringing down the cost to heat and air condition your home. Both are major parts of the household budget.

Of the other sectors – Financials – outperformed…. rising by 1.25%, followed by Utilities and Basic Materials up 0.8%.  Communication added 0.65%, Industrials, Real Estate gained 0.3%, Consumer Discretionary up 0.25%, Consumer Staples up 0.20%, Healthcare up 0.15%, and Tech was flat.

Interestingly enough – Bitcoin +3% or 70% ytd, DJT +19% or 170% ytd and Rumble added 14% or 44% ytd and all of these assets have been ‘semi-proxies’ for Trump and a Trump win and with exactly 7 days to go, it is coming down to the wire.

A Bloomberg survey suggests that a win by Trump will be better for stocks and crypto currencies vs. a Harris win. In the end – all we can hope for would be a split congress – with the GOP taking the Senate while the DEM’s taking the house and that should ‘control’ the WH from going off the rails…although I will say, it did not stop the Biden/Harris administration from forgiving more than $175 billion of student loans…..If you recall, the Supreme court said NO, but JoJo and Kammy said yes and so it was done.

Bonds lost ground – the media is saying it was because of weak demand for a pair of note sales – and that sent yields higher….and that is what we need to be concerned about….because as Janet Yellen (treasury secretary) is forced to bring MORE supply to the markets – prices will move lower and send yields higher…I on the other hand believe that while that is true,  bonds are also losing ground - the TLT -7% ytd and the TLH – 4.6% ytd is because investors believe that yields are going higher because inflation is about to rear its ugly head again.

 I hope I’m wrong, but it just doesn’t feel like it…. This morning the 2 yr. is yielding 4.14% and the 10 yr. is yielding 4.30% - those yields are up 18% and 20% in the last MONTH….  Now remember what I said 2 weeks ago…. if the 10 yr. pierced long term resistance at 4.17% it would swiftly test the July 24th high of 4.3% and boom – look what we did…. We pierced it on the 22nd and we tested it on the 29th.

Gold didn’t do much yesterday….it closed at $2754 – down 6 pts…and this morning it is up $7 at $2761 – remaining in the 2700/2800 trading range…The trendline drawn from the April high of $2465 to now – suggests that we are now hitting our heads on resistance…..So let’s see how this goes.

Earnings today include about 50 companies…. GLW, MAS, PSX, ECL, PYPL, RCL, MCD, AMT, THC, SOFI, all before the bell, and then after the bell, we will hear from EXEL, SNAP, EQT, V, and……drum roll please!  GOOG!  META, AAPL, AMZN & MSFT all due out later in the week.  NVDA not due until November 21st

Eco data includes Wholesale and Retail inventories, JOLTS report and the Conference Board consumer confidence number.  I am not sure that any of these is going to change the narrative so do not look for guidance from any of these.  Earnings reports and future guidance is more important.

US futures are down - Dow futures -55, S&P’s down 4, Nasdaq +5 while the Russell is down 8 pts.  Investors awaiting all of the earnings and eco data due out today.

European markets are up slightly…. The UK up 0.15% while Italy is up 0.35%...Spain is the only mkt center that is down on the day…. currently – 0.26%. 

The S&P closed at 5823 – up 15 pts…. Futures are churning this morning…Near term it is about the TECH earnings this week and Friday’s NFP report…. the longer view is about the election and what that means for taxes, regulation, and the country.  Remember – stick to the plan…do not make emotional decisions…We are coming into the year-end, where we typically see markets rally.  You can draw a couple of trendlines to find resistance….and they would suggest that we could see the S&P trade between 6000 & 6200 IF we continue to rally and if we do not…then short term trendline support is 5700, Intermediate support is at 5580 and long term trendline support is at 5350 . 

So ultimately there is a wide 800-point range between low and high. I do not think nor am I suggesting we will test the long-term support; I’m just laying out the levels.  My guess is that once the election is over and the winners (WH, Senate and House) are determined, then investors can focus back on what the economy would be expected to do under either administration.

Remember - Do not go changing your portfolio based on who will live in the WH…. politics do not price stocks in the long term – although it can and does create short term chaos and long-term opportunity.

Fantasia's famous shrimp scampi

Fantasias was a local Italian restaurant located in Cambridge, MA – (around the corner from where I grew up in Belmont, MA) – that my family use to frequent quite often. It was one of those places that you could always count on – they knew you and they knew what you liked,  

For this you need: 10 shrimp, jumbo, 1 small can evaporate milk, 1 egg. lightly beaten, butter, 2 cloves garlic, minced, 4 tablespoons lemon juice, s&p to taste, ¼ cup flour, for dredging, 3 tablespoons chopped parsley, for garnish.

Clean and wash the shrimp, then dredge in flour. Set aside.

Make an egg wash by beating together the evaporated milk and the egg. Dip the flour coated shrimp in the egg wash, let the excess drip off, then dredge them once again in the flour.

Heat the butter in a large sauté pan over medium high heat. add the garlic and then the shrimp. Sauté the shrimp on both sides until golden brown.

When the shrimp are cooked, squeeze the lemon juice over the top and add salt and pepper. Remove the shrimp from the sauté pan and place on a platter. Pour a little of the melted garlic butter (from the sauté pan) over the shrimp. Garnish with chopped parsley and serve.

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