Stocks pushed higher again on Friday – DOW pierced 13,000 a good psychological boost – on the news that Angie sent the all clear signal on the Draghi plan to Frankie (Hollande) & Mario (Monti) and they all pledged to do everything to protect the Euro….absolutely crushing any doubt that the ECB will be launching their own QE program …..even though the statutes governing outright sovereign bond purchases prohibit the ECB from doing so…..Mkts raced higher in pre-mkt trading and followed thru during the day on the belief that new cash (Euros) will be flowing into the Eurozone banks – where it will find its way into the equity mkts. All this while the US macro data shows that the US economy continues to slip….GDP report prints at +1.5% easily “beating expectations” of 1.4% as some strategists/economists had the audacity to proclaim. Have they gone mad? Have they lost their minds? Beat the expectation? Who – would have said that? At this rate – we are down 25% from the 1Q GDP and sitting on the edge of a recession……personal consumption plunging to just 1%….but we should feel good because we “beat” the expectation? This latest report only clouds the outlook more….growth is slowing, and inflation is below the Fed’s target of 2% – something that a new stimulus program could solve……as newly printed money in the system will cause commodity/food inflation while sending equity prices higher , there continues to be a complete loss of faith in global leaders…money continues to move to the treasury mkt as investors pull out of equities…resulting in the increased volatility of late. ………The Obama administration playing up the fact that the economy continues to “grow” completely ignoring the fact that Europe and the Fiscal Cliff could send us over the edge – this is justified in their minds – because one year ago when Moody’s downgraded the US credit score – the bottom did not fall out…rates did not move higher and in fact – more money moved into US treasuries – so lawmakers do nothing. I still believe that the action we have seen the last two days is massive short covering – a direct result of the supposed European solution – and not real long-term commitment to the markets. The DOW has managed to advance nearly 4% from the lows earlier in the week….and now is less that 1.5% from the highs seen earlier this year. But the picture is not so pretty for other sectors. Semiconductors and small caps, are way off their highs seen earlier this year. The SOX index (semiconductors) remain some 13% below this years highs and the Russell 2000 is still off some 9.5% – so again this reflects a move to safety and if the ECB and the Fed each announce some big QE programs then strap in because large cap stocks will continue to push higher as this huge influx of cash will find its way into the mkts at least for now. Some analysts believe that the mkt has already priced in such a move and urge caution…others continue to jump up and down and scream for more. Buy why? We all know that a QE program only has the benefit of lifting stock and commodity prices – not for creating jobs or fixing what is broken in the economy. As the argument goes – the Fed can force interest rates down and provide banks with excess liquidity through the purchase of government bonds – which in turn should allow them to make small business and real estate loans…..but we have seen that this has not been the case. This money has found its way into equities, inflating the stock market giving consumers a “sense of wealth”. This sense of wealth is supposed get you to go out and spend money……why? Just because your 401K accounts goes up in value? I call BS! Remember that a large number of US taxpayers have little or no exposure to the stock market thus they do not “feel” richer. The trickle down QE effect has not worked. Here is why: Banks got stung in the sub-prime real estate fiasco and have decided that unless you DON’T need a loan or can’t put a large down payment they are not interested in loaning against real estate. They also don’t trust that the small business is going to stay in business. So they have made the loan requirements so high that the only ones who qualify are those who really don’t need the loan. Sounds like real faith in the current state of affairs – when will Washington listen? The banks have found that it is safer if they just participate and create another stock mkt bubble. Stocks are much more liquid than loans and they can get in and out as the market goes up and down. US futures are down 4 pts this morning – not a surprise considering the move last week. Global mkts all moved higher – in Asia the mood was boosted by expectations of both ECB and Fed Reserve stimulus….Early reports indicate that Japan factory output “unexpectedly” fell only means that the worsening European crisis and a slowdown in China is taking its toll….this stagnation puts doubt on the BoJ view that their economy was due for a rebound igniting rumors of further Japanese easing. Japan + +0.8%, Hong Kong +1.3%, ASX +0.8%, China – 0.9% In Europe this morning mkts higher as we await more news on a solution for the crisis. Spain and Italy leading the charge…..Italian bond auctions result in lower yields on the 5 yr and 10 yr. The Eurostoxx index is testing resistance at the 200 DMA – a level it has been unable to pierce since April. The FTSE + 0.5%, CAC 40 + 0.6%, DAX + 0.77%, Eurostoxx + 1%, Spain +1.7% and Italy + 2.2%. This morning we get the Dallas Fed Survey – exp of 2 – this is a regional report indicating manf conditions in that part of the country….note that all of the other regional reports with the exception of Kansas City have all been weaker. Tomorrow kicks off a slew of macro data and Wednesday is the Fed rate decision etc. Expect mkts to digest the explosive move from last week using 1385 ish as resistance and 1350 as support. If we get more accommodation then expect the mkt to test the highs of 1425. Don’t forget the NFP (non farm payroll) report on Friday – exp of 100k jobs created with some estimates as high as 150K. All this while Dick Bove reminds us that the banking/financial services industry is about to lose some 150K jobs this year….. Take Good Care KP Zesty Lemon Pie Zesty Lemon Pie – this recipe comes to me from dear friends at A&S Marketplace in Mt. Kisco, NY. This store is a classic Italian Salumeria. (Sa –Lu-Mer – ia). A salumeria is an Italian delicatessen….but delicatessen does not do this store justice at all…This is like heaven…..Fresh meats, and cheeses – Mozzarella Burrata to die for, prepared foods and an extensive array of imported Italian food products……it is in short spectacular. Anyway – Marilyn (owner) makes this great lemon pie….tastes like cheesecake – but it is NOT….you gotta try it – it is a great summer desert – served cold or at room temp….no worries. As it is her recipe – follow the directions exactly – For the pie – 1 c of graham cracker crumbs, 3 tbsp of powered sugar, 3 tbsp of butter – melted, 6 egg yolks, 2 – 14 oz cans of sweetened condensed milk, 1 c fresh lemon juice. For the whipped topping – For 1 c whipping cream, 2 tbsp powered sugar Preheat oven to 350 degrees. Next mix the graham crackers and powered sugar- now add the butter…blend well. Press the mixture into the pie plate – on bottom and up sides. Place in oven and bake for 10 mins – remove and let cool. Now whisk together the egg yolks, condensed milk, and lemon juice – pour into the crust and bake for 15 mins. Remove and let cool completely – maybe like an hr. Now cover with saran wrap (or tin foil) and chill in the fridge. When ready to serve – beat the whipping cream at high speed with the electric mixer and add in the powered sugar…beat until you get a nice texture whipped cream. Spread out over the pie and serve. Delish.