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Markets getting grilled? Try grilled pizza

Editor's Note: Combining his passions for the markets, humor and food, "What's cookin' with Kenny Polcari" is a blog published twice weekly on CNBC.com. With more than 30 years of experience on Wall Street, Polcari provides insight and analysis on the markets, as well as a recipe du jour. Buon Appetito!

Stocks moved lower again on Monday—causing the S&P to break below its 50-day moving average (DMA) to close at 1,646, and this now changes the landscape a bit. Monday's action was clear. There is not current reason for buyers to be aggressive at all. After all, the markets are getting grilled. (Hey, that reminds me: I have an excellent recipe for grilled pizza, but more on that later).

They are expecting pressure and volatility in the days ahead. Considering that on Monday—there were no economic reports out—the action is being driven by the technicals. Last week, the market broke some key technical supports at 1,680 and then 1,670 to end the week at 1,655—directly on top of the S&P 50 DMA. Monday's break now sets us up for a test of the 1,625 range.

On top of this, U.S. and international central bankers, academics and policy advisors are getting together around the BBQ out in Jackson Hole, Wyo. Lots to discuss—Europe, Asia, the BRICs and future Fed policy as well as continued speculation over Ben Bernanke's successor. The uncertainty over our next 'leader' is causing more angst. Will s/he be dovish? Hawkish? What comes out of this symposium will be the foundation for the market trend through year end.

Ever since the suggestion of Fed tapering, the capital markets have been on a roller coaster while most recently coming under even more pressure as investors reassess. The very possibility of tapering is causing a vacuum in the bond market, forcing investors to reset prices. I mean why would investors want to buy bonds at these levels when the biggest buyer of products is announcing a pull out? There's no "buy the dip" mentality. In addition, we have witnessed foreign countries beginning to "take some money off the table" only adding to the nervousness.

TrimTabs reported on Monday that $25 billion has come out of the bond mutual funds and bond ETFs this month. A more astounding $103 billion has come out of these funds since June 1. Hello? Does that say anything to you? Does that tell you that bond investors are reallocating assets based on perceived future Fed action? I mean the Fed has said that it's data dependent, yet the market is hearing a different tune causing holders to get out, driving prices down while yields move up. The Fed needs to manage this process very carefully as higher rates will certainly cause some heartburn.

Equity market action is now accepting the eventuality of a reduction of Fed stimulus. In fact, no matter what the Fed seems to be saying at the moment, the market is discounting that very possibility. The Fed knows that it is creating real risks by driving up the price of oil, food, equities and housing. The more the Fed pumps, the greater the risk to the global financial markets. And that song is being sung by 65 percent of economists surveyed, as they now believe the Fed will cut the program at least by some $10 billion. Again, I am an outlier. I am not so sure they can justify an easing, considering that we have NOT met one of the Bernanke targets, (unemployment or inflation), and has the macro data haven't improved to the point that everyone is getting comfortable. ... BUT the market will speak.

We have seen emerging markets take a real "grilling" at the thought of a Fed pullback. In fact overnight global markets all under pressure again. Monday night, the big story was Indonesia, whose market was down 10 percent in two trading days and 22 percent since May. Now I know that may not mean much to the average U.S. investor, but it speaks volumes about the perception of Fed policy and the impact it will have around the world: Asian and European markets all lower by 1.5 percent. Emerging markets are under even more pressure as the reality of Fed speak causes a global reassessment. The global selloff will not abate until we get more clarity out of the Fed.

Expect some churning and volatility ahead with the broader macro issues as the directional driver for the markets.

Grilled Pizza

Source: Kenny Polcari

Since the markets are taking a grilling, let's try grilled pizza with fresh garden tomatoes, buffalo mozzarella and basil.

It's fun. Everyone can join in and create what you want. If you have never tried it, may I ask, why not? Once you cook it up on the grill, you'll find that you get a completely different texture: It comes out lighter, crispier and crunchy. Delish!

When you're doing pizza on the grill, there are so many things you make it with. The only important key is whatever you decide to use, make sure you have it ready to go. So set up an outdoor table with your ingredients and get ready to rumble. You need a wooden pizza peel, the dough and toppings of your choice.

Today we will use everything from your garden:

  • Fresh garden tomatoes
  • Basil
  • Grilled zucchini
  • Caramelized onions
  • Olive oil
  • Salt and pepper

Allow the dough to come to room temperature before you even try to roll it out. If you buy a store-bought pizza dough, remove it from the package, flour it up and let it sit out on a plate covered in Saran Wrap until it expands and is ready to go. Usually takes about 30 minutes or so to come to room temperature.

Light the grill, heat it up really hot. Use your grill brush to clean it and then turn the heat to medium. If you have a brush, quickly oil the grate (do not use a spray to oil the grill grates while the grill is on - Hello!).

Next, flour the counter and roll it out. Flour the pizza board and place the dough on it. Transfer to the grill. Once it's on the grill, do not move it around. Using tongs, check it out once it starts to bubble (within 4 mins or so). The bottom should be crispy with nice grill marks. Remove and place back on the pizza board with cooked side up. Now, add the sliced tomatoes, caramelized onions, grilled zucchini and slices of fresh mozzarella. Return to the grill. Once the cheese begins to melt, it should be done. Check it out with the tongs and using the pizza board, remove from the grill. At this point if you want you can now add fresh chopped arugula. Using a pizza knife, cut and serve.

—By Kenny Polcari, director of NYSE floor operations, O'Neil Securities and CNBC contributor, often appearing on "Power Lunch." The author is not compensated by CNBC for this or any other written materials found on CNBC.com.

About Kenny: Kenny has more than 30 years of experience on Wall Street. Currently director of NYSE floor operations on behalf of O'Neil Securities, he has also worked for Icap Corps and Salomon Brothers. You can follow Kenny on Twitter @kennypolcari and visit him at kennypolcari.com.

Disclosure: The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.