In this September 22, 2023 YouTube briefing, Kenny Polcari opens with a quick personal greeting before delivering a detailed morning market update. He notes that the Nasdaq closed at an all‑time high, driven by a tech rally centered on Meta’s new agentic AI, Muse, which sparked gains in semiconductor and AI‑infrastructure stocks such as AMD, Intel, Arm, and Nvidia. While the S&P 500 and Dow posted modest gains, the Dow Transports index fell below its 200‑day moving average, a classic Dow Theory warning sign that Polcari emphasizes as a reason for caution despite the headline strength. He breaks down sector performance, highlights the outsized impact of a few mega‑cap tech names, and explains why a broad‑based rally is preferable. Polcari then links the tech surge to the broader macro environment: oil prices dropped about 5% after satellite images showed Saudi Arabia increasing exports, while the 10‑year Treasury yield slipped to 4.94% and the 30‑year to 5.28%, keeping bond markets relatively calm. Gold fell 1% as the market’s risk premium eased. He reiterates his “two biggest tells” mantra – oil and the 10‑year yield – and explains how their movements historically affect equities. Geopolitical context is woven in: UN Week in New York, Trump’s upcoming address to the General Assembly, potential meetings with Iran’s president, Ukraine’s Zelensky, and Xi Jinping, all of which could influence market sentiment. Polcari previews the day’s economic releases (Philadelphia Fed Non‑Manufacturing Index, Richmond Fed Manufacturing Index, upcoming PMI data, and new‑home sales) and notes that they are unlikely to shift the market’s cautious tone. He provides a quick futures snapshot, European market moves, and reiterates the importance of watching oil, yields, and transport stocks for confirmation of a sustainable rally. Polcari ends the market segment with a call‑to‑action for portfolio reviews, offering his contact information and a complimentary risk assessment. The video concludes with a step‑by‑step recipe for creamy pesto ditalini, detailing ingredients, cooking method, and plating suggestions, delivered in a friendly, enthusiastic tone. Overall, the briefing blends analytical market commentary, cautionary technical signals, macro‑geopolitical insights, and a personal lifestyle touch, positioning Polcari as both a market analyst and a personable host.
Chapters
Well, good morning. Yes, it's me and I'm back. Kenny Polcari, your host of the party. And today is Tuesday, September 22nd, 2023. And here are the things that you need to know to get your day started. Well, yesterday tech powered the NASDAQ to a new all-time closing high. Now it's Meta's Muse, their agentic AI, that took center stage yesterday, lighting everything tech. Up. Transports broke down below their 200-day moving average, and that screams caution. UN Week in New York City. Trump is to address the assembly today at 10 AM. And what do we have for dinner tonight? We're gonna have the creamy pesto ditalini. Delicious. All right, what a day it was. The NASDAQ gained 2.25% and closed at an all-time high. The S&P up 1.5%. Not bad. Not a high, but not bad. The The Dow added 0.7%, the Russell's up 0.5%, the transports lost 0.5% and now is below their 200-day moving average, and that is a yellow flag. The equal weight S&P gained 0.5% while the Mag 7 surged, adding 3.5% to the bottom line. Now let's pull back the sheets a little bit and take a peek at what's happening underneath. Mega-cap technology stocks exploded higher yesterday and almost anything else tech Also gained cybersecurity up 3.3%, semis up 5%, memory names up 3.3%, software up 2.7%, disruptive tech up 2.8%, quantum names up better than 3%. So let's be clear, yesterday was a powerful tech rally, but there are some reasons to remain a little bit cautious. The first one is the Dow Transports. They broke down below their 200-day moving average. And that matters because the transports are often viewed as a barometer of the underlying economic strength and activity of the economy. Now, just one day below its 200-day moving average is not necessarily a disaster, but we're going to need to see whether or not the transports can quickly reclaim it or if they're going to confirm a further breakdown. With the NASDAQ at record high and mega-cap technology doing most of the heavy lifting, Weakness in the transports is another sign that the broader market is not necessarily confirming all the excitement. In Dow Theory terms, the divergence between the Dow and the Dow Transports screams caution, not panic, but it does scream caution. Now currently, the Dow is hugging its intermediate-term trend line while the transports have broken down through their long-term trend line. That's, that's the caution sign. A healthy rally should have participation from everything— technology, small caps, the equal weight, uh, the economically sensitive transports, basic materials, industrials, right? Right now we don't have that confirmation. And remember, when a handful of mega-cap names are doing most of the heavy lifting, the headline indexes can look spectacular, but the average stock essentially goes nowhere. Now that works beautifully while the leaders are rising, but if they stumble There may not be enough participation underneath the market to support all the broader indexes. So what caused the surge in tech? Can you say Muse? Muse is Meta's newest AI agent, and it climbed to the top of the App Store, reigniting all kinds of enthusiasm around anything agentic AI. You see, Muse reminded everybody, including the algos, that agentic AI is going to require enormous amounts of computing power. Not only GPUs, but CPUs, servers, and all the infrastructure necessary to allow AI agents to perform millions of real-world tasks in seconds, right? And that argument caused AMD to explode, gaining 10%, giving it now a trillion-dollar value. Intel added 12%. Arm Holdings up 17%. Nvidia added 2.5%. Away from tech, we saw strength in communication services up 3.5%, consumer discretionary up 1.3%. Healthcare, industrials, real estate, financials all finished modestly higher, up by only about 0.2%. Energy lost 3% as oil prices sank. Utilities, consumer staples, and basic materials also fell by 0.4%. And what else happened on the way to the forum? Well, oil fell nearly 5%. To end the day at 95.42. The move a direct result of these satellite images showing that the Saudis in fact are boosting exports through the Strait of Hormuz, easing last week's concerns that the damage to that east-west pipeline across Saudi Arabia was going to cause a supply shock. I mean, it's amazing what we can see from space though, because all that was satellite images. And then there were rumors of diplomatic progress with Iran. circulating kind of around the street, and that's always a potential boon for the markets. Any prospect of diplomacy takes some of the geopolitical risk premium out of the market. In addition, we saw both the TLT and TLH, which are the longer-term bond ETFs, gain 0.7%, and that caused the 10-year Treasury to slip by 5 basis points, ending the day at 4.94%, while the 30-year fell 2 bps, ending the day at 5.28%. Gold lost 1% to end the day at $4,350, and this morning it's down another $30. The message is clear: a hawkish Fed means another possible rate hike, while rising bond yields are increasing the cost of holding an asset that pays you nothing to own it. Gold pays you nothing to own it. In addition, some of the geopolitical safety trade that was priced in is coming out. as investors are hoping that diplomacy can lower the temperature across the Middle East. In the end, gold's longer-term story may remain intact, but in the short term, the conflict and the bond market are clearly in charge. Now, this morning it's sitting right on its trend line, its intermediate-term trend line, where I think it actually finds some support. The VIX, that was quiet yesterday. It's quiet again this morning. It ended the day yesterday at 14.87 and continues to trade well inside that 13.80, 16.50 complacency zone. Suggesting that investors are pricing in very little near-term trouble. That doesn't mean that the risks have disappeared. It just means that nobody apparently is paying up to be protected. It's also UN Week in New York City. Trump is scheduled to address the General Assembly this morning, and he has said that he would probably be open to meeting Iranian President Masoud Pesechian. Open, yes. Confirmed, not yet. Trump's also expected to meet Ukrainian President Zelensky. Well, he's going to have a meeting with Xi Jinping in DC on Thursday. The hope there is that they can extend the trade truce and make progress on tariffs, critical minerals, investment in AI. It also appears that the algorithms are interpreting all of this as good news. Money moving out of gold, traders removing some of the risk premium from oil, and the bond market easing just enough to allow everybody to breathe just once again. And remember what we've been saying all along— oil and the 10-year Treasury have become the market's 2 biggest tells. When oil rises and the 10-year pushes above 5%, stocks struggle, right? We've seen that every time. When oil retreats and the 10-year falls below 5%, investors get to breathe again, and growth stocks and stocks in general tend to benefit, right? Growth stocks will benefit the most. Then there was no meaningful economic data yesterday, but today we're gonna get the Philadelphia Fed Non-Manufacturing Index. So that's all about services. And remember, we're a services economy, followed by the Richmond Fed Manufacturing Index and its Business Conditions Survey. Now, I don't expect that any of that's gonna move the markets today at all, but they will give us another look at how regional businesses are holding up. Tomorrow we're gonna get preliminary S&P Global Manufacturing And services PMIs, right? Both are expected to remain in the expansion zone where they've been for months at 53.7 and 55.9 respectively. Then on Thursday, we're going to get new home sales, which are expected to rise by 1.3%. But pay close attention to what's driving those sales because builders are offering mortgage rate buydowns, they're helping with closing costs, and offering all kinds of free upgrades. to attract buyers, right? This morning, US futures are pushing cautiously higher. Tech seems to be holding on to yesterday's gains, but the overall tone is still a bit cautious. Dow futures are up 130, the S&P's are up 5, the NASDAQ's up 50, and the Russell is up 15 points. European markets this morning are mixed. Italy's down 4/10 while Spain is up 0.5%. Everything else is just in between, just north of their unchanged line, so they're up just slightly. Oil and the 10-year are going to continue to control the conversation. WTI is down another 1% this morning at $94.70. Brent's down 1% at $99.30. The 10-year yield is now down to 4.94%. It's down one bit as Trump prepares to address the UN at 10 AM. So the setup is fairly straightforward. The AI trade remains alive and well, but the broader market remains cautious. If oil moves lower and the 10-year stays below 5%, then the sense is tech can continue to lead the market higher. If oil, uh, and oil and yields reverse and turn higher, then the macro pressures that caused all the unrest last week are certainly going to return. Now look, in the end, investors want to focus on AI in the 3rd quarter earnings that begin in just 2 weeks. But as long as oil, inflation, and the Fed are still in focus, the action will remain cautious. The S&P closed at 7,764 yesterday, up 114 points. We're now in the 7,720-7,800 trading range, very tight. And with the NASDAQ closing in on record territory yesterday, all eyes are going to be focused on the broader market to see if it confirms the excitement. 7,798 is the target on the S&P. It's just 0.4% away from kissing it. Now keep your eyes on the equal weight, the Russell, and most importantly, the transports, because if they reverse and they join the move higher, it tells us that the rally will be broadening. If they continue to lag while mega-cap technology does all the heavy lifting, the S&P can still kiss and even penetrate its record high at 7,798, but it will remain a narrow rally sitting on a much weaker foundation. That does not scream sell everything, but it absolutely screams caution ahead. If you'd like to discuss your goals, evaluate your risk in your portfolio, or simply just get a second opinion, You can give me a call at 561-931-0190, or better yet, you can go to the website slatestone.com and click on the Contact Us page, and the email will come straight to me. I'm always happy to provide a complimentary portfolio review and risk assessment for you and for your portfolio. Okay. So now what do we have for dinner tonight? So this one's simple, delicious. It's kind of a feel-good dish. It's a creamy pesto ditalini. Now you can use any kind of small pasta you want. This one is ditalini, right? For this, you need a half a pound of ditalinis. You need fresh-made pesto. You can either buy it or make it. You need heavy cream. You can use light. Fresh grated Parmigiano cheese. You need beef broth. You can use chicken broth. Olive oil, salt and pepper, garlic crushed, and those tiny mozzarella balls that are called pearls, right? Begin by heating up a bit of the olive oil in the sauté pan. Add the crushed garlic. Sauté that for 3 minutes or so. Don't burn it. Now add the dry pasta directly to the pan. Stir it to coat it in the oil and garlic. Now add enough of the beef broth to cover the pasta. You just want to cover it, right? Stir it till you mix it, bring it to a boil, and then turn the heat down to medium-low. Let the pasta cook until it's almost done. It will suck up some of the, some of the broth. If it sucks it all up, just add a little bit more because you want to keep it moist. You don't want it to dry out. Now when it's done, you're going to add a cup of heavy cream. You're going to mix that well, season it with a bit of salt and pepper. Just a bit. Now you're going to add in a dollop or 2 of fresh-made pesto sauce. Again, stir it right in and mix it well, right? When you're serving it, you're going to place it in warm bowls, and then you're going to take some of those pearl mozzarella balls and put them right on top and dust it with a little bit more of the fresh grated Parmigiano. It is delicious. You will thank me tomorrow. In any event, until tomorrow, take good care. Ciao.
