It is risk on as investors go bargain hunting

It is risk on as investors go bargain hunting

  • Nothing changed but investors are going on a global shopping spree – European markets surging while US futures follow suit.
  • Vlad continues to push deeper into Ukraine.
  • More multinational companies join forces and cut ties with Russia.
  • Crypto’s rise…. shorts running to cover.
  • Try the Sweet Corn Crème Brulé.

Stocks extend declines – but did thrash around getting whiplash as investors search for stability. Stocks all over the place as investors and algo’s reacted to the latest headlines. And then Joey takes the stage telling us that the US will no longer import Russian energy, oil or natural gas – telling us that we need to be ‘energy independent’ – which is comical -We were independent but that’s another story….and in a new twist – recent polls show that 55% of the Democratic party wants the US to produce more oil – which is also comical…but you can’t make this up…who would believe you? By the end of the day – it was a mixed performance – the Dow lost 185 pts, the S&P off 31, the Nasdaq down 35, the Transports down 56 while the Russell ended the day UP 12 pts.

The 10 yr. treasury ended the day yielding 1.89% up from 1.75%. Gold up another 3% to end the day at $2,060/oz – up 12% since February 24th…. the day Putin marched into Ukraine. Oil – continues to rise – as the tension builds and as Joey and BoJo (UK PM) announce bans on Russian energy……the rest of the EU choosing to sit this one out – since they are utterly dependent on the Russians (now painfully obvious) )….but it is not known yet what is next….Vlad – has suggested that he doesn’t need them to ban his energy he can stop delivering it…and that sent markets lower once again….comments like this continuing to add angst to an already nervous market.

It was interesting for sure…only two of the 11 major sectors rose yesterday…. Energy – XLE up 1.6% and Consumer Discretionary – XLY up 0.2%…. which was interesting…. Energy, I understand, but Consumer Discretionary? If you look further you’ll find that ‘retail’ also was a beneficiary….the XRT (Retail ETF) gained 2.2% and if you look more – you might better understand…..those two sectors are among the ‘worst’ performers This year….the XLY and the XRT were both down 21% coming into the morning….leaving them among the worst performers ytd…in fact – even Tech – XLK is doing better than retail and discretionary….having been down 18% coming into the day. So, if the tone is beginning to change, if investors are looking for ‘opportunities’ or ‘bargains’, if algo’s are combing the landscape looking for dislocated names, then look no further…. those are just two examples of what has become a ‘value’ opportunity.

Other areas that might offer longer term opportunities include Communication – XLC down 17% ytd, Basic Materials – XLB down 12%, And if you look outside of the majors – you’ll find opportunities in the Super Regional Banks – KRE which is down 5 % and is sure to benefit along with the majors as the FED promises to stay the course and raise rates multiple times in 2022. The XLF which is off nearly 9% ytd gives you exposure to all of the ‘big boys’ and with individual names like JPM and BAC down 20% and 15% ytd…. provides longer term opportunities for investors.

Other sectors I like include the ones I’ve been talking about – Cyber ​​Security is going to become even more important as we navigate the future – HACK is one way to play this – down 11% ytd and this morning news hits the tape that GOOG announces its intent to buy Cybersecurity firm – Mandiant (MNDT) for $5.4 billion….or $23/share in an all cash offer….that is a 21% premium over where it was trading on Tuesday when rumors of these discussions leaked out to the marketplace…….AI is a place to plant some money -BOTZ down 25% ytd……Alternative energy offers opportunities for those that have the time and risk tolerance…IEA is one way to consider this….it was flat until yesterday when it popped by 9% after reporting earnings, beating forecasts and upping guidance. The push up and thru its long term trendline suggests that we could see it rally another 3 – 5 pts resulting in a 25% to 40% move up.

This morning the tone is very different…. European markets are surging……up better than 4% across the board…. the ‘buy the dippers’ are scouring the landscape for all of those ‘dislocated’ names as they make a bet that the economic impact of the sanctions on Moscow are priced into the markets and that the recent selloff has provided some interesting opportunities for the longer -term investor while providing short term opportunities for the day trader types.

Look – the drama is far from over…. global investors need to brace themselves for surging global inflation from the commodity price rally that we are all witnessing…. add in the possibility of slower global growth due to rates and it is a tangled rising web we weave for central bankers. Expect to hear more from these talking heads in the days ahead… Australian Reserve Bank Governor – Phil Lowe said that a rate increase is ‘plausible’ given the recent Russian action. Thursday we will hear from Christine Lagarde – Press of the ECB (European Central Bank) and many are now expecting that her comments will reflect caution as this crisis has upended the global outlook. Then next week – we will hear from the FED – which shouldn’t be a surprise – since he pre-empted the meeting telling us last week that we can expect a 25-bps rate increase in March with more to come in the months ahead . Now, if we hear something different than what we expect – then all bets are off…. because investors have priced in the moves that Jay suggested were on the horizon. Remember – the markets can deal with clarity, good or bad, what it has trouble with is inconsistency and uncertainty.

US futures are following in Europe’s footsteps…. Early indications are for a bang up rally the moment the bell rings – some of this is the result of shorts running for cover while others are longer term investors scouring for opportunities.… At 5:30 am Dow futures are up 525 pts, S&P’s up 75, the Nasdaq surging by nearly 300 pts and the Russell ahead by 40 pts. And this does make sense…. I mean the push lower was wide and at time indiscriminate…. over time investors will correct those inconsistencies.

Tomorrow brings us the monthly CPI report… and by now you know that it is expected to show that inflation is NOT abating…. the m/m numbers up 0.8% and 0.5% while the y/y numbers are up 7.8% and 6.4% respectively.

Oil which pierced $130/barrel yesterday is trading lower – currently $122/barrel after its parabolic rise over the last couple of weeks.

Crypto’s have also joined the fun…. after having been under pressure of late…. This morning we are seeing Bitcoin surge by more than $4k to trade at $42,500 while Ethereum is up $300 at $2,750. Trading volume is up 10%. Many of the shorts now ‘covering’ their short positions which sent both assets surging…. the idea that Nickel has been halted after trading was frenzied and shorts attempted to cover is only adding interest to this story as well. Shorts do not want to be caught with their pants down if the tone suddenly changes and prices surge and if nickel is any indication of what could happen, better to be safe than sorry.

The S&P ended the day down 30 pts….at 4170. We did test as low as 4,157…. just 40 pts away from the key 4,114 level I have been discussing. Today appears to be a risk on day….so I would expect to see stocks rally hard in an attempt to correct the recent selling. We remain in the 4114/4460 trading range. 4114 is key to watch…. I suspect any advance will most likely be met with significant resistance unless of course there is a change in the narrative.

Sweet corn creme brulee

This is a dish I had at the Quality Bistro in NYC last year…. (120 W 55th St). Be sure to stop in and have dinner – trust me you won’t be disappointed at all. Anyway – one of the dishes I had was the Sweet Corn Crème Brulé – this was a side with dinner and NOT a desert. It was spectacular – so here it is – and if you don’t want to make it – just go to dinner at the Quality Bistro.

For this you need: 1 and a half cups of corn, 4 and a half teaspoons butter, 3 cups heavy whipping cream, 1 cup 2% milk, 8 large egg yolks, 1 ¼ c plus 2 tablespoons sugar, divided, 2 tablespoons vanilla extract.

In a large saucepan, sauté corn in butter until tender. Reduce heat. Add cream and milk, heat until bubbles form around sides of pan. Cool slightly. Transfer to a blender; cover and process until smooth. Strain and discard corn pulp. Return to pan.

In a small bowl, whisk egg yolks and 1 quarter cups sugar. Stir a small amount of hot cream into egg mixture. Return all to the pan, stirring constantly. Stir in vanilla.

Transfer to six 6-oz. ramekins. Place in a baking pan; add 1 in. of boiling water to pan. Bake, uncovered, at 325 degrees for 40-45 minutes or until centers are just set (mixture will jiggle). Remove ramekins from water bath; cool for 10 minutes. Cover and refrigerate for at least 4 hours. Then remove.

Now, place ramekins on a baking sheet; let stand at room temperature for 15 minutes. Sprinkle with sugar. Broil 8 in. from the heat for 4-7 minutes or until sugar is caramelized. Serve immediately if you are using as a dinner side – or refrigerate and serve as a desert!


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