Jobs data was blah, but roast sirloin is tasty
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!
The markets digested a weaker-than-expected jobs report Tuesday. Investors were as hungry for a strong employment number as you'd be for roast sirloin (which, by the way, I have a recipe for below). But it turned out that employers added just 148,000 workers in September, according to the Labor Department, missing expectations for a gain of 180,000. Still, the unemployment rate dropped to 7.2 percent, the lowest level since November 2008.
But employment is nowhere near where we need it to be. The jobs number says we continue to make slow progress, but will this report really cause the Fed to change course? No. Remember, this report is 18 days past due thanks to the partial government shutdown.
The fact is the 16-day shutdown most likely hurt any economic momentum, leaving the Fed in a somewhat compromised position. As many analysts and strategists have been saying, the disruption caused by the antics in D.C. has pushed out the Fed's timeline for tapering. And the idea of QE's continuing for an extended period has only been made clearer by the nomination of Fed Vice Chair Janet Yellen to succeed Ben Bernanke as chair. Thus, last week's rally.
(Read more: Weak jobs report signals longer Fed easing)
To be sure of economic strength, we'd have to see a few good jobs numbers. But next month's report will be questionable and that takes us into December just when we run into another political firestorm.
The markets have already delivered a strong performance month-to-date, even as the macro, the micro and the political dysfunction continues, but remember the trend is your friend and you CANNOT fight the Fed. Where else is an investor to go?
According to published reports, many emerging markets have enjoyed a rally during the month, including the BRIC and MIKT nations, as well as some in Latin America and the Caribbean. Even Greece managed to rally in October. All this action is credited to the Fed's remaining firmly in control of easy money. Therefore, after some digestion (not a correction), we may continue to see the U.S. markets attempt to create new highs.
As investors refocus on earnings, we continue to see a mixed picture. Fourth-quarter earnings growth is running at about 1 percent, versus the estimated 4 percent.
We remain in a long-term bullish pattern, yet we are a bit overbought in the short term. The McClellan Oscillator is approaching a reading of 80; a reading above 60 qualifies as overbought, so a pullback shouldn't come as a surprise. We continue to hit our head on the trend line at 1,745 and would see short-term support at 1,725. Stay tuned.
And now from the kitchen of Kenny Polcari, here's his recipe of the day!
Get a nice sirloin roast of 5 or 6 lbs. and season with salt. Let rest for 20 minutes on the counter. Slice fresh mushrooms; chop two large carrots, two celery ribs and 1 large onion. Select a nice bottle of red wine (I use a pinot noir), and a can each of low sodium beef broth and tomato paste.
After resting the beef, season it with pepper and sear it in a frying pan with olive oil, making sure to brown on all sides and even letting a crust form. When complete, place in a V rack in a uncovered roasting pan and put in an oven preheated to 275 degrees. Cook for 2.5 to 3 hours or when ready according to the meat thermometer.
After putting the roast in the oven, return to the frying pan. Add the chopped veggies to the oil and sauté until tender, which could be 8 to 10 minutes. Mix in tomato paste. Next, add 1/2 bottle of the red wine and stir. Bring to boil and let the alcohol burn off a bit—maybe 3 minutes or so. Add the beef broth and simmer, stirring occasionally, but don't let it dry out. If necessary, you can always add a bit more broth. After about 30 minutes, give it a taste to make sure you like it. If so, puree 1/2 this mixture and return to the sauté pan and turn off heat.
When beef is ready, take out of the oven and let it rest for 10 minutes; cover in foil. Reheat the sauce, slice the roast and arrange on plate. Top with sauce.
Try a malbec with this dish.
—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 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.