Sunday, February 19, 2017

MONDAY 2/20/17; US Markets Closed for Presidents Day

Australia and Asia stocks begin trading

The NIKK ends t he session

At 3 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading

European indexes end the day …. The DAX

Saturday, February 18, 2017

SUNDAY 2/19/17; United States Democrat (Liberal) and Republican (Conservative) Media Bias Explained

President Trump continues to proclaim that the media is “dishonest” and a “corrupt system” but humorously, he says Fox News is fair. Of course he does since Fox News is part of the republican-leaning press and very instrumental in cheerleading Trump to his November election victory last year.

Former President Obama, a democrat, had the wind at his back for eight years since 70% of the press provides the news with a liberal slant. The other 30% of the media provides news from a republican, or conservative, viewpoint. Neutral, unbiased news does not exist in America; each news outlet sways information to fit a particular political narrative. Of course the exception is the “Daily Chronology of Global Markets and World Economics” that bashes both the corrupt demopublicans and republocrats equally while explaining the dirty dealings inside the Washington, DC, cesspool.

Note that the chronology used to report that 80% of the news sources in the United States sway the information to the democratic and liberal side while 20% sway the information to the republican or conservative side. This percentage split is refined to 70% and 30%, respectively, as explained in the paragraphs below. Not all of the press is against President Trump; he has 30% rooting for him.

However, the 70% of media providing the liberal slant that is denigrating Trump daily dominates the broadcast and cable news television networks which are where the majority of Americans are receiving their news. This is a big advantage for democrats and those touting the liberal agenda. The liberal press selected and elected President Obama in 2008 and reelected him in 2012. A well-orchestrated media campaign by the democratic press denigrated republican Mitt Romney daily which led to an election victory and second term for Obama in 2012.

Comically, CNN news anchor Candy Crowley actually defended Obama during a live presidential debate against Romney (and her assertions were incorrect) taking sides when she should have remained impartial. The damage was done; Crowley harpooned Romney’s boat. The news bias was obvious and glaring; great if you were a democrat rooting for Obama but not so much if you thought the playing field was fair.

CNN is jokingly referred to as the Clinton News Network. The liberal press was in the tank for Hillary Clinton in the Fall election but she lost against Donald Trump due to her lack of campaigning in the Heartland, an arrogant attitude that she was entitled to become president and her untrustworthiness with ongoing scandals dragging her into the mud. Clinton was a poor candidate that also appeared to be physically weak with health issues.

President Obama could operate fast and loose with the facts for many years since the press would either cover up for the president or ignore any negative events. The liberal press, which dominates the television waves, always exalted Obama making him look good no matter what was happening. It is a far easier road as a president when 70% of the media, including broadcast television, is on your side cheerleading all your decisions.

President Trump is correct, from his viewpoint, when he proclaims the “dishonest and unfair press” since 70% of the media is painting the orange-headed showman in a bad light daily trying to delegitimize the president before he is given a fair chance. However, the other 30% of the press that provides news with the republican slant are exalting and cheerleading the president each day. So Trump must watch that he doth not protest too much.

When reading any news story, the first thing to check is the author. Also consider the television station, newspaper or website where the information is posted. That will tell you immediately if the story is going to be slanted in favor of President Trump (a republican and conservative narrative), or not (a democratic and liberal narrative).

The democratic and liberal mindset is embedded into the large East Coast and West Coast cities such as New York City, Los Angeles, San Francisco and Seattle. The democratic press includes CNN, MSNBC, ABC, CBS, NBC, PBS, NPR, New York Times, Washington Post, Huffington Post, USA Today, Boston Globe, New Yorker, Slate, San Francisco Chronicle, LA Times, The Guardian, Al Jazeera America, BBC, The Economist, Salon, Politico, Buzzfeed, Reuters, Associated Press (AP), Yahoo News, Facebook News, Twitter News, Google News and Bloomberg.

The majority of Silicon Valley tech titans are active liberals. The tech big wigs want lenient immigration policies (pro-democrat) so they can keep taking advantage of cheap foreign labor especially software programmers in India and China willing to work for peanuts. The majority of Hollywood celebrities are liberals including comedians and talk show hosts such as Jon Stewart, Bill Maher, Stephen Colbert and Jimmy Fallon. The democrats have lots of fire power and they are blasting away at President Trump hoping he fails even if it hurts the country.

The republican mindset is reflected by the Americans in the Midwest United States and in the manufacturing and coal states; the Heartland. States such as Pennsylvania, Michigan, Wisconsin and Illinois propelled the orange-headed showman to victory last Fall stunning the democrats that took the folks in these hard-working states for granted. The democrats of today are far different than the democrats from a few decades ago. The democrats used to fight for the little people but over the last couple decades morphed into a party that represents the global elites and privileged class in America and the world. The unions in America switched from the democrat to the republican camp helping Trump win the Whitehouse; people need jobs.

The republican and conservative media in the United States, representing about 30% of the pres, includes Fox News/Sean Hannity, Breitbart, Drudge Report, The Blaze, Wall Street Journal (WSJ), American Spectator, Power Line blog and National Review. While the democrats dominate the television networks, the republicans dominate the radio waves. The democrats are unable to put together a liberal talk show format that anyone wants to tune in and listen to; in the past ratings are so abysmal that programs are quickly terminated. The old joke and stereotype is that the republicans are commuting to and from jobs each day so they listen to talk radio while the democrats are lounging each day at home on the government dole.

The republican domination in talk radio helps to slightly offset the huge dominance that the democrats enjoy with the news flow from the broadcast networks such as ABC, CBS and NBC and the cable news outlets such as CNN and MSNBC. The most popular republican talk radio hosts are Rush Limbaugh, Mark Levin and Glenn Beck which cheerlead conservative thinking. The US Chamber of Commerce sways its loyalty towards the republicans. Stereotypically, the majority of Americans that enjoy country music are republican. Ditto the Nascar (auto racing) fans.

Summarizing the media biases in the US explained above, about 70% of the news is slanted in favor of democrats and 30% in favor of republicans. President Obama had an easy row to hoe with 70% of the media cheering every little news event but President Trump only receives support from 30% of the media while the other 70% plans to bash him daily.

Journalism, reporting and the news business has developed into a dirt bag profession. The news profession shot itself in the foot by becoming excessively biased, as explained above, choosing political sides to slant their stories. The media has lost relevancy as more people turn to the internet and real-time individual news feeds on Twitter and other social sites to receive their information. The genie cannot be placed back into the bottle. All news is considered biased these days and the monikers such as “fake news,” and “alternative facts” and “dishonest media” stick.

Broadcast television and the cable news outlets such as CNN and MSNBC will continue to sway minds towards liberal and democratic thinking while talk radio and Fox News will continue to manipulate minds towards republican and conservative ideals.

The first 100 days of any presidency is very critical in setting the tone and path forward and the orange-headed showman is already one-third along. The democrats, supported by 70% of the media, are throwing the kitchen sink at President Trump hoping he will fail even if the United States is hurt in the process. America has developed into a society of adult babies.

The “Blind Sheik” Omar Abdel-Rahman, who was involved in the 1993 bombing of the World Trade Center and other nefarious terrorist activity, dies of natural causes at 78 years old while serving a life sentence in a North Carolina federal prison. Most Americans say, “Good riddance.” Rahman believed in Sharia supremacy and orchestrated murder, mayhem and the killing of the infidels (Christians, Jews and anyone not believing in strict Sharia law) as dictated by the Quran.

The US government will not release statistics on how many Muslim’s are sympathizers to the belief and goal of killing the infidels since the high numbers would shock and surprise Western citizens and likely lead to backlash against Islamic groups. The ongoing Holy War in the Middle East that began under President Obama, that pits the ISIS Islamic radicals against the Christians and Jews, a battle not seen since the Crusades 400 years ago, rages on. The third world war will likely be a holy war.

The USS Carl Vinson and an armada of war ships cruise the South China Sea conducting routine patrols much to China’s displeasure. The United States is taking a more forceful stance in the South China Sea reversing President Obama’s timid and passive foreign policy. China has taken over disputed islands and continues to build military bases and aircraft landing strips. The international courts should settle the disputes with the islands that are claimed by many nations including China, Japan, Indonesia, Philippines and others. China is ignoring everyone else in its zeal to expand its military power and range.

The United States is flexing its muscles in the South China Sea perhaps as a bargaining chip to persuade China to become more active in controlling its communist little brother North Korea. Kim Jong-un is a nutcase that likely just had his half-brother Kim Jong-nam assassinated in Malaysia with poison. After coming to power, Un believed his uncle was plotting against him so he executed him with an anti-aircraft gun turning the body into a bloody unrecognizable mess. The world is a dangerous and ugly place.

At 9:38 AM EST, SpaceX launches a Falcon 9 rocket from the Kennedy Space Center. The spacecraft is delivering supplies to the International Space Station. The launch was delayed from yesterday.

Euro 1.0611. Dollar/yen 112.85. Pound 1.2412. WTIC oil 53.37. Brent oil 55.81. Natural gas 2.84. Gold 1236. Silver 17.98. Copper 2.71.

Treasury yields are; 2-year 1.19%, 5-year 1.91%, 10-year 2.42%, 30-year 3.025%. The 2-10 spread is 123 bips. German bund 0.30%. France 10-year yield 1.05%. The US-German spread is 212 bips. The France-German spread is 75 basis points and requires close watching. The France presidential campaigns is creating angst across the pond and a rise in French yields while German bunds remain well bid (lower yields) which widens the spread.

At 8:15 PM EST (10:15 AM Tokyo Monday morning), Fed’s Mester, a hawk, says 

Friday, February 17, 2017

SATURDAY 2/18/17

SPX 2351. INDU 20624. COMPQ 5839. RUT 1400. NIKK 19235. SPASX200 5806. KOSPI 2081. SSEC 3202. HSI 24034. BSE 28469. DAX 11757. CAC 4868. FTSE 7300. MIB 19006. IBEX 9500. PSI 4641.

Global leaders continue meeting in Europe at the Munich Security Conference and the G20 ministers meetings. US Secretary of State Rex Tillerson meets with Russian Foreign Minister Sergey Lavrov in Bonn, Germany. Lavrov is faced with a tougher negotiator rather than the docile Secretary Kerry and Secretary Clinton that would roll over and give away the store over the last few years. Tillerson says, “Russia needs to work towards deescalating the violence in Ukraine” and “the United States will stand up for the interests and values of America and her allies.”

German Chancellor Merkel, speaking at the Munich Security Conference, says the euro is undervalued to help countries with weak economies such as Portugal and Germany does also benefit. Merkel says, “If we had the D-Mark it would surely have a different value than the euro.” Merkel says the monetary policy is set by the European Central Bank and Germany has no control over the euro currency. By making the statement, Merkel hopes that the rhetoric from President Trump and his administration about “Germany profiting from a grossly undervalued euro” will cease.

At 10 AM EST, SpaceX scrubs a launch of the Falcon 9 rocket from the Kennedy Space Center. The spacecraft is delivering supplies to the International Space Station. The launch will be attempted tomorrow morning.

Five die in California in the ongoing storms and floods. The West Coast was plagued with a five-year drought but now receives weeks of rain wreaking havoc over northern California and in spots of southern California. Flash floods and mud slides are occurring. Sink holes in the earth are opening. 80K people are without electric power. Business activity and commerce will be hampered for several days in the land of fruits and nuts.

At 6 PM EST, President Trump speaks at an airport hangar in Melbourne, Florida, USA, at a campaign-style event (even though the campaign is long over). The president brags about his election win and is playing to and solidifying his base. Trump will be fighting both democrats and republicans in his own party when the legislative battles begin so he wants to maintain his American base firmly on his side to help boost his ideas and leverage.

Presidents Day is Monday with the stock market closed. The US Post Office is closed so there is no mail delivery and the banks are closed. Public schools and federal, state and local courts are closed.

Thousands of people involved in an anti-Trump movement plan to demonstrate in major cities all weekend long under the banner, “Not My President’s Day.” There are anti-Trump demonstrators at the Florida event where the president is speaking. Demonstrations are taking place in Chicago, Los Angeles, Denver, Dallas, New York City, Grand Rapids, Sarasota and others. The #notmypresident hashtag is trending on Twitter. America is divided. One-half of the country wants to give President Trump a chance while the other half is consumed with destroying his presidency even at the expense of hurting the country.

At President Trump’s rally in Florida, 9K people attend cheering the orange-headed showman while 3K anti-Trump protestors demonstrate against his new policies for the United States.

Thursday, February 16, 2017

FRIDAY 2/17/17; OpEx; CPB; DE; FLR; SJM; MCO; VFC; Leading Indicators; SPX, INDU, COMPQ and NDX Print All-Time Record Highs Before Holiday

Australia and Asia stocks begin trading lower. ASX 200 -0.3%. Australian healthcare and materials stocks lead lower. Gold miners are well bid. Resolute Mining is resolute moving +5.6% higher.

NIKK -0.8%. Japanese property and energy stocks trade lower. Toshiba -2.8%. KOSPI -0.4%. Samsung Electronics -0.5%. Samsung executive Jay Lee is arrested and detained on the corruption probe. The Samsung group of companies are down from -1% to -3%. Korean retailer Lotte crashes -9% on news of insider selling.

S&P -3. Dow -22. Nasdaq -6. Euro 1.0664. Dollar/yen 113.39. Pound 1.2484. Aussie dollar 0.7688. Dollar/yuan 6.853.

WTIC oil 53.42. Brent oil 55.65. Natural gas 2.85. Natty prices are lower after yesterday’s inventory data. Gold 1238. Silver 18.13. Copper 2.7245.

Singapore January Exports are up +8.6% year-on-year less than the +9.6% expected and up +5.0% month-on-month. Singapore GDP numbers are stronger than expected. Singapore dollar 1.4180. The Straits Times trades up +0.2%.

Treasury yields are; 2-year 1.22%, 5-year 1.95%, 10-year 2.45%, 30-year 3.05%. The 2-10 spread is 123 bips.

10-year yields are; Brazil 10.43%, Greece 7.57%, Mexico 7.38%, India 6.84%, Portugal 3.93%, Australia 2.78%, US 2.45%, Singapore 2.23%, South Korea 2.13%, Italy 2.12%, Canada 1.74%, Spain 1.58%, UK 1.26%, France 1.01%, Netherlands 0.64%. Germany 0.34%, Japan 0.08%, Switzerland -0.16%. The France-German spread is 67 bips. Italy and Spain yields may sneak lower on news that the ECB may revise the rules for buying bonds under the QE program which will benefit these nations (higher prices lower yields). The central bankers are the market.

The Aussie and Asia trading session is a sea of red screens. Aussie miners and resource stocks sink lower including all the usual suspects such as Fortescue, BHP Billiton and Rio Tinto. Iron ore king Vale is a bright spot reporting record production. Nickel and copper production remains robust around the world despite mine disruptions.

The arrest of Samsung’s Jay Lee creates a dark cloud. Samsung Electronics drops -0.4%. In Japan, Toshiba crashes -9.3%. Mitsubishi will not provide a lifeline to Toshiba and its flailing Westinghouse nuclear business. Mitsubishi Electric -1.6%. Toyota -0.9%. Sony -0.4%.

US futures are flat. Euro 1.0675. Dollar/yen 113.35. Pound 1.2502. USD 100.62. Aussie dollar 0.7693. WTIC oil 53.45. Brent oil 55.77.

The NIKK finishes the session down -0.6% to 19235. The SPASX200 ends down -0.2% to 5806. KOSPI -0.1%.

For the week, the Nikkei Index slips -0.8%. The ASX 200 gains +1.5% this week. South Korea’s KOSPI ekes out a +0.2% gain. The Shanghai Index squeezes out a tiny +0.1% gain. Hong Kong is the big winner with the Hang Seng Index up +2% this week.

At 3 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading flat. Markets are quiet overnight. DAX flat. CAC -0.1%. FTSE -0.1%. S&P -3. Dow -21. Nasdaq -3. Russell -4. VIX 11.84. The Nifty is up 47 points, +0.5%, to 8825.

WTIC 53.41. Brent 55.74. Natty 2.86. Gold 1237. Silver 18.09. Copper 2.72.

Treasury yields are; 2-year 1.22%, 5-year 1.95%, 10-year 2.46%, 30-year 3.06%.

Allianz jumps +3.1% after announcing a buyback. Financial engineering, fueled by central banker easy money, rules the markets. Dutch insurer Aegon bounces +3.3%. Italian media company Mediaset trades +2.5% higher on news of a potential sale of one of its units to unlock value.

Treasury yields are; 2-year 1.21%, 5-year 1.95%, 10-year 2.46%, 30-year 3.06%. German bund 0.36%. France 10-year yield 1.05%. Italy 10-year yield 2.16%.

Euro 1.0649. Euro/yen 120.49. Dollar/yen 113.15. Pound 1.2473. Euro/pound 0.8537. Mexican peso 20.4322. Canadian dollar 1.3071. Dollar/yuan 6.8682. Indian rupee 67.0163. Aussie dollar 0.7679. USD 100.61.

DAX -0.2%. CAC -0.5%. FTSE -0.2%. MIB -0.5%. IBEX -0.5%. PSI -0.3%. SMI -1.2%. OMX -0.3%.

At 4 AM EST, US futures slip south. S&P -5. Dow -40. Nasdaq -7. Russell -7. VIX 11.93. WTIC oil 53.27. Brent oil 55.58.

Treasury yields are; 2-year 1.21%, 5-year 1.93%, 10-year 2.44%, 30-year 3.04%. The 2-year yield remains anchored while the longer durations each drop 2 basis points. The 2-10 spread is 123 basis points. The USD is at 100.62 teasing through a 100.4-100.7 range for the last one-half day.

10-year yields are; Greece 7.56%, Portugal 3.97%, US 2.44%, Italy 2.18%, Spain 1.60%, UK 1.25%, France 1.05%, Germany 0.33%, Japan 0.09%. The France-German 10-year yield spread is 72 bips.

US Vice President Pence is in Munich, Germany, meeting with top European officials and representatives at the Munich Security Conference. Pence then travels to the G20 minister's meeting in Brussels, Belgium. The Group of 20 is an international consortium of the European Union and 19 individual nations including the United States, Canada, Mexico, United Kingdom, Germany, France, Japan, China and Russia. The global elites are meeting to discuss how to calm the huddled masses.

President Trump did not tell VP Pence about the trouble with National Security Advisor Flynn for two or three weeks. So Pence was a chump talking to the media unaware of what the president knew. Therefore, European leaders may view Pence as not having much clout.

Former UK PM Tony Blair is speaking leading the charge for a vote to overturn Brexit. The establishment politicians continue to disrupt governments after they lose elections. It is dangerous for UK leaders to tout a reversal of Brexit since it may lead to social unrest and violence. The same ‘sore-loser’ mentality occurs in the States. President Trump won fair and square but the establishment politicians are now throwing obstacles in front of the orange-headed showman.

Establishment politicians do not want to lose their power and comfortable lifestyles supported by the taxpayer’s dime. It is a very dangerous trend for politicians to fan the flames of discontent among the huddled masses since social unrest and violence may be created that cannot be controlled. The days of congratulating an opponent after an election, and allowing that side a chance to implement their ideas, is long over. The modern-day global elitist politicians are adult babies playing daily petty games, enriching themselves, and willing to do anything, including damaging their own country, to hold on to their personal power and wealth. The bread and circus days continue.

Blair proclaims, “Britons have a right to change their mind about Brexit.” The former prime minister says his mission is to find a way out of the “cliff’s edge.” He says “Britain is in a surreal situation.” Blair continues to throw insults around like candy saying, “The Theresa May government is a jumble of contradictions.” Blair was a weak leader and often labeled as President George W Bush’s lapdog. Blair likely wants to make himself relevant again.

At 4:30 AM EST (9:30 AM London), UK January Retail Sales are down -0.3% missing the +0.1% expected. Perhaps Brexit is taking a bite. Pound 1.2430. Holiday and early 2017 retail sales are weaker than expected. Euro 1.0643. Dollar/yen 112.90.

S&P -7. Dow -55. Nasdaq -11. Russell -9. The VIX sneaks above 12 to 12.02. WTIC oil 53.33. Brent oil 55.60. Gold is up 2 bucks to 1242.

US Treasury yield sink lower; 2-year 1.19%, 5-year 1.92%, 10-year 2.43%, 30-year 3.03%. Traders are seeking safety driving note and bond prices higher and yields lower. The majority of Wall Street touted the start of rampant inflation two days ago as Fed Chair Yellen provided testimony to Congress. The 10-year yield danced above the 2.52% level this week and now retreats nearly 10 basis points to 2.43%. No one is talking about inflation this morning.

At 5 AM EST, UK’s Blair continues speaking proclaiming, “Brexit is an immense decision with consequences.” Pound 1.2423. The British polls generally disagree with Blair and instead support May’s path ahead (over one-half of Brit’s support May). May plans to trigger Article 50 within the next month which will begin a two-year process for Britain to negotiate and exit the European Union. Blair comically touts “democracy” and “values” as he makes a plea to overturn an election result. Pound 1.2406.

At 5:05 AM EST (10:05 AM London), Tony Blair finishes his talk and says, “Brexit is not inevitable.” Blair is not a popular politician in Britain. The Brexit ship has sailed and Blair needs to either jump on board or get out of the way. The pound slips under 1.24 to 1.2396. DAX -0.4%. CAC -0.8%. FTSE -0.2%. The footsie recovers off the day’s lows as the euro slips lower during Blair’s divisive speech.

S&P -8. Dow -66.60. Nasdaq -12. Russell -10. VIX 12.06. WTIC 53.24. Brent 55.51. Gold 1242.

Treasury yields are; 2-year 1.19%, 5-year 1.91%, 10-year 2.41%, 30-year 3.02%. The 2-10 spread slips a touch lower to 122 bips reflecting a flattening yield curve. The banks led the upside rally in the stock market the last few weeks in part to traders expecting a rapidly steepening yield curve as rates rise, however, this is not occurring. Lots of investor’s now have suitcases stuffed full of banking shares and are wondering if they got a little carried away with the euphoric bull party.

WTIC oil 53.03. Brent oil 55.22. Lower oil prices create a soggy tape. Gold 1241. Silver 18.09. Copper is down -0.9% to 2.71.

Treasury yields are; 2-year 1.19%, 5-year 1.91%, 10-year 2.42%, 30-year 3.03%.

S&P -6. Dow -44. Nasdaq -7. Russell -8. VIX 11.94. WTIC 53.24. Brent 55.51. Gold 1242.

The Nifty ends the session up +0.5% to 8822. The BSE gains +0.5% to 28469. The Bombay Sensex Index is up +0.4%

DAX -0.2%. CAC -0.8%. FTSE +0.2%. The pound is 1.2415 dropping after the Blair speech and the weaker currency sends stocks higher the footsie is the only green index across the pond. MIB -0.8%. IBEX -0.4%. PSI -0.2%.

S&P -5. Dow -40. Nasdaq -6. Russell -8. VIX 11.92. Euro 1.0645. Dollar/yen 112.93. Pound 1.2416. USD 100.72. WTIC 53.16. Brent 55.36. Gold 1245.

Treasury yields are; 2-year 1.19%, 5-year 1.91%, 10-year 2.42%, 30-year 3.02%. France 10-year yield 1.03%. German bund 0.31%. The France-German 10-year yield spread is 72 bips.

BTIG technician Katie Stockton says short-term momentum in the stock market is positive. Stockton is targeting SPX 2400 even though a couple bumps may occur in the short term. She says that a pause in stocks perhaps into March is a buying opportunity to go long the market and ride the trend to SPX 2400. The bullish prognostications continue. The bears are as rare as hen’s teeth.

Wells Capital strategist Jim Paulsen says Trump’s policies should lead to amazing economic growth going forward. He says basis fundamentals have already been in play boosting the economy. Paulsen says global economic activity is increasing and forecasts a higher stock market ahead with the SPX tagging 2600. Paulsen forecasts the 10-year yield to move higher to 3.25 % to 3.50%.

JPM strategist Jason Hunter says there is more upside in the stock market ahead. Hunter says the rally is accelerating and stocks continue breaking out higher. He likes consumer discretionary and homebuilding stocks. Strategist Ed Yardeni calls for SPX 2500 this year.

UNH sinks -3% in the pre-market after United Health is accused of overcharging Medicare
 Kraft Heinz and Unilever are in takeover talks. KHC +6.1%. UN +10%. UL +11%. The stocks receive huge call option and stock buying over the last couple days obviously the insiders knew of the potential deal-making ahead of time and collect big profits without performing any work except receiving the information from a nefarious source and tapping a few computer keys. Wall Street is a crooked insider’s game. MDLZ tanks -5.3% since it may no longer be as attractive to suitors in the food space. CL +0.3%.

SQ gains +1.4% on a by rating from C. WBMD pops +3% on news of putting itself up for sale. HTZ drives -3.6% lower on a CS downgrade adding to yesterday’s -4% loss. TRUE +14.5%. NUS -9.2%.

Several companies are scheduled to release earnings and are trading in the pre-market. CPB -0.8%. DE +3.2%. VFC -3.31%. FLR +1.4%. MCO +0.7%. BLMN -0.1%. SJM slips on a glob of peanut butter and jelly on the dirty linoleum floor dropping -2.8%. RUTH beats on EPS but misses on the top line. SE -2.3%.

Today is OpEx so volume will be robust at the opening and closing bells. US markets are closed on Monday in observance of Presidents Day. The stock market is typically bullish into a three-day holiday weekend but the morning futures are negative and soggy.

At 9 AM, S&P -7. Dow -65. Nasdaq -6. Russell -10. VIX 12.10. DAX -0.4%. CAC -1%. FTSE +0.2%.
Treasury yields are; 2-year 1.19%, 5-year 1.90%, 10-year 2.41%, 30-year 3.01%. The 2-10 spread is 122 bips.

Fed Funds futures indicate a 36% chance of a rate hike in March, 57% chance in May, 77% chance in June 80% in July and 88% in September. Bond traders indicate that the first hike this year is not expected until June.  The March percentage was at 42% yesterday as the inflation frenzy was running wild. Fed Chair Yellen may like to think that all the FOMC meetings are ‘live’, however, with only a one in three chance of a hike in March, market participants do not perceive the two-day meeting on 3/14/17 and 3/15/17 to be a live meeting (a meeting where a rate hike may be announced).

At 9:30 AM EST (2:30 PM London), US stocks begin trading sinking like a stone. The SPX is down 7 points to 2340. The Dow drops 73 points to 20547. The Nazzy Composite slips 10 points to 5805. The RUT sinks 4 points to 1394. VIX 12.17. KHC +5.4%. UL +11%.

Euro 1.0666. Euro/yen 120.31. Dollar/yen 112.81. Pound 1.2432. Euro/pound 0.8579. Indian rupee 67.02. Mexican peso 20.4742. Canadian dollar 1.3083. Dollar/yuan 6.865. Russian ruble 58.067.

DAX -0.4%. CAC -1%. FTSE +0.2%. WTIC oil 53.22. Brent oil 55.42. Natural gas 2.88. Gold 1242. Silver 18.08. Copper 2.708. VIX 12.25.

Treasury yields are; 2-year 1.19%, 5-year 1.90%, 10-year 2.41%, 30-year 3.02%. The 2-10 spread is 122 bips.

At 10 AM, Leading Indicators are up +0.6% more than the +0.4% expected and above the prior +0.5%. Factory activity is encouraging for the economy. WTIC 53.21. Brent oil 55.63.

The Nasdaq turns positive on the session. The VIX drops under 12 to 11.98 so the bears will be slapped in the face again. SPX 2344. INDU 20582. COMPQ 5816. RUT 1386. VIX 12.00.

Euro 1.0642. Dollar/yen 112.79. Pound 1.2425. Gold 1243. Silver 18.03. Copper 2.70.

European indexes end the day mixed. The DAX ends flat at 11757. The CAC finishes down -0.7% to 4868. The FTSE gains +0.3% to 7300.  The MIB loses -0.4% to 19006. The IBEX drops -0.6% to 9500. The PSI gains +0.3% to 4641. France, Italy and Spain finish the week on a down beat. France is soggy due to worries over the presidential race. The France 10-year yield is at 1.05% and German bund at 0.30% for a 75 bip spread that is widening so the concern in France is measurable and real.

For the week, the DAX gains +0.8%. Ditto the CAC up +0.8% this week. FTSE +0.6%. MIB +0.8%. IBEX gains +1.7% this week. PSI +0.8%. European indexes print nice gains on the week with Italy leading the way.

At 1 PM, the BHI Oil Rig Count is up 6 rigs to 591 rigs. The number of active rigs reach a 16-month high. Oil rises after the data and WTIC tags 53.40 at 2:30 PM.

President Trump travels to South Carolina for a rally at a Boeing facility that hypes the new Dreamliner aircraft. BA gains +1.2% printing above 173 at an all-time record high. Brent oil tags 55.80.

UNH tanks -4% on the Medicare scandal and creates about 40 negative points for the Dow Jones Industrials Index. Telecom merger and takeover chatter continues each day. TMUS +5.5%. S +3.3%. VZ +1.5%. T +0.6%.

Stocks remain soggy for most of the session but moving towards the close the holiday positive seasonality begins to send stocks higher and volatility lower. VIX 11.47.

Euro 1.0609. Euro/yen 119.77. Dollar/yen 112.89. Pound 1.2412. Euro/pound 0.8517. Mexican peso 20.4378. Canadian dollar 1.3099. Dollar/yuan 6.8666.

WTIC oil 53.38. Brent oil 55.75. Natural gas 2.85. Gold 1235. Silver 18.08. Copper 2.72.

Treasury yields are; 2-year 1.19%, 5-year 1.91%, 10-year 2.42%, 30-year 3.03%. The 2-10 spread is 123 bips.

Volume picks up due to OpEx into the closing bell. The VIX drops like a stone sending the stock market higher in the last few minutes creating new record highs.

US stocks end the session flat to higher ramping up into the closing bell. The SPX finishes up 4 points, +0.2%, to 2351.16 a new all-time closing high but the HOD at 2351.16 is 15 pennies shy of a new all-time high. The INDU, or DJI, gains 4 points to 20624.05 an all-time closing high but the HOD at 20624.05 falls 16 points shy of a new all-time high.

The COMPQ finishes up 24 points, +0.4%, to 5838.58 a new all-time closing and intraday high. The NDX ends up 24 points, +0.5%, to 5324.72 a new all-time closing and intraday high. Tech leads. The XLF ETF is at multi-year highs up over 3.5% this year. AMZN is at all-time highs.

The RUT gains 1 point to 1400 finishing at the highs but not printing all-time highs. The NYA is flat at 11511. TRAN finishes positive at 9495. The VIX drops from 11.64 to 11.42 during the last 20 minutes of trading sending stocks higher into the closing bell and painting the major indexes green in the final minutes. US markets are closed on Monday for Presidents Day and will reopen on Tuesday, 2/21/17.

For the week, the SPX gains +1.5%. The Dow Industrials are up +1.8% this week. The Nasdaq Composite gains +1.8%. NDX +1.9%. RUT +0.8%. NYA +1.2%. TRAN is up +1.2% this week.

Sectors are higher this week except for energy that tanks with Chevron and Exxon retreating. XLE -1.8%. CVX -1.5%. XOM -0.9%. XLB +0.4%. XHB +0.5%. XLU +0.6%. SOX +0.6%. XLK +1.7%. XLI +1.8%. XLV +2.5%. XLF +2.9%. IBB +3.5%.Technology, healthcare, financials and biotech rocket higher this week.

The AGMANHASFUN (“A G-Man Has Fun”) high-flying stocks continue to drive the upside gains in the broad indexes over the last three years especially the Nasdaq 100 index. GOOGL (Alphabet) +1.4%. GE +2.2%. MSFT +1.6%. AAPL +2.7%. NFLX -1.8%. HD +2.3%. AMZN +2.1%. SBUX +2%. FB -0.5%. UAA +1.3%. NKE +0.9%. Netflix and Facebook are the two skunks at the garden party. Apple is on fire to the upside at record highs with the expectations for the iPhone 8 through the roof. Traders keep buying the Under Armour falling knife. Amazon is a powerhouse and Home Depot and Starbucks post gains so the contractors are busy picking up supplies and coffee each morning.

WTIC oil is flat this week at 53.78. Brent oil is down -1.6% to 55.73. Natural gas loses -7% this week to 2.83. Gold is flat this week at 1239 hugging the 200-week MA at 1243. Silver gains +0.5% to 18.03 kissing its 200-week MA at 18.05. Gold and silver will pivot from these levels next week. Copper drops -2.2% this week to 2.71 also at its 200-week MA at 2.72.

The TNX, 10-year yield, finishes at 2.43% moving through the 2.40% to 2.52% range this week. The TYX, 30-year yield, finishes at 3.03% at its 200-week MA at 3.05%, moving through a range of 3.00% to 3.11% this week.

After the closing bell, under the cover of Friday night when no one is paying attention, like thieves in the night, BAC CEO Moynihan’s pay is boosted by 25% to $20 million for 2016. The banksters always take care of themselves before anything else. BAC trades marginally lower in late trading.

BAC has rallied from 13.00 to 24.50, a +88% gain, in only seven months. From November to present, about three months, BAC rallies from 16.30 to 24.50, a +50% gain. Traders believe that Treasury yields will increase and the yield curve will steepen as inflation takes hold, however, they have been wrong since late 2009 when the first proclamations of inflation began. The global economy remains mired in disinflation and deflation.

Moody’s raises the outlook on Russia’s credit rating from negative to stable with the government bond rating remaining unchanged.

A record outflow occurs one week ago from the DIA ETF, which mimics the activity in the Dow Industrials. The activity in the SPY ETF, which mimics the price action in the S&P 500, sees increases. Net-net there is some money coming off the table in the stock market.

Data reported by Morningstar and CNBC business news reports $3.6 trillion held in US actively-managed equity funds while $3.1 trillion is held in passive funds. A trend is occurring where money is flowing out of actively-managed funds and into passive funds such as ETF’s. Investors realize their returns are not bolstered by the so-called smart money managers in the active funds that charge high fees.

More interestingly, and more simply, perhaps the shift in funds show the smart money taking their dough off the table while Ma and Pa Kettle, and their nephew Joe Sixpack, are investing their life savings into the stock market caught up in the hype and excitement of new record highs. So it is not so much a move from active investing to passive investing but instead may represent the smart money slowly and diligently sneaking out the back door. If a multi-year top is currently printing in the stock market, you will not see the current highs in equities for perhaps five to eight years and perhaps never again for many individual stocks. Smart investors are ditching long positions, taking profits, moving into cash and planning to sit out the next few months.

President Trump’s motorcade is struck by two projectiles in West Palm Beach driving from the airport to the Mar-a-Lago resort. The president is not injured. Protestors are in the area. The Secret Service is investigating and gathering videotape of the event.

Wednesday, February 15, 2017

THURSDAY 2/16/17; AVP; CAB; CHTR; DF; DUK; H; LH; MPEL; MGM; RS; SWC; WEN; ZTS; Housing Starts; Philly Fed; SPX (S&P 500), INDU or DJI (Dow Industrials), COMPQ (Nasdaq Composite), NDX (Nasdaq 100) and NYA (NYSE Composite) New All-Time Highs; President Trump Press Conference; ARII; ED; DLR; FLS

Australia’s ASX 200 is trading marginally lower down -0.1%. The Australia jobs data is strong adding 13.5K jobs versus the 10.0K expected. The Aussie jobless rate is at 5.7%. Part-time jobs account for much of the gains. The labor participation rate drifts lower. Aussie dollar 0.7723.

BOJ Governor Kuroda is speaking and discussing banking regulations. Dollar/yen 113.98. NIKK -0.2%. Topix +0.1%. Sick Toshiba sinks another -3.3%. KOSPI flat. Samsung +1.2%. Korean won 1135.88. Taiwan dollar 30.733.

S&P -2. Dow -13. Nasdaq -2. WTIC 53.03. Brent 55.75. Natural gas 2.94. Gold 1234. Silver 17.99. Copper 2.763.

Treasury yields are; 2-year 1.25%, 5-year 1.98%, 10-year 2.48%, 30-year 3.07%. Traders in the States were buying banks like madmen as yields rise but on closer inspection, the 2-10 spread is 123 bips, about where it has been this week and not reflecting a steepening yield curve. The curve maintains its profile across all durations; all yields are rising by the same number of basis points. Traders chasing into banks proclaiming that a steepening yield curve has arrived, as well as inflation, may be chasing a ghost.

The Shanghai Index comes on line trading flat while Hong Kong’s Hang Seng Index rises +0.4% continuing the upside joy. ASX -0.1%. Telstra -4.4%. Rio Tinto +0.8%. Origin Energy -1.8%. Samsung Electronics +0.5%. The drama with Samsung executive Jay Lee continues with his arrest expected today.

NIKK -0.6%. Topix -0.5%. The stronger yen drops the dollar/yen currency pair to 113.80 and the Japanese exporters trade lower. Japanese banks and insurers support the upside in the Nikkei. The global banksters are enjoying big gains since November.

Euro 1.0621. Pound 1.2464. Aussie dollar 0.7721. Dollar/yuan 6.856.

Treasury yields are; 2-year 1.24%, 5-year 1.98%, 10-year 2.48%, 30-year 3.07%.

S&P -3. Dow -21. Nasdaq -2. WTIC oil 53.07. Brent oil 55.73. Natty 2.94. Gold 1236. Silver 18.00. Copper 2.77.

The NIKK ends the session down -0.5% to 19348. The SPASX200 finishes up a smidgeon+0.1% to 5816. The KOSPI is down a hair -0.1% to 2082. The SSEC ends up +0.5% to 3229. The HSI gains +0.5% to 24108. India trading continues with the Nifty up 50 points, +0.6%, to 8775.

At 3 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading flat. DAX -0.1%. CAC -0.2%. FTSE -0.3%. SMI -0.2%.

S&P -2. Dow -16. Nasdaq +1. Russell -2. VIX 12.01. Volatility prints a 12-handle as traders are buying protection after the epic rally in stocks. The VIX is above the 50-day MA at 11.80 but not above the 200-day MA at 13.90. The VIX 200-day MA is an important short-term market signal where bulls are in control below while bears rule the markets above.

Treasury yields are; 2-year 1.24%, 5-year 1.98%, 10-year 2.48%, 30-year 3.07%. The 2-10 spread is 124 bips with the yield curve steady.

The euro is up to 1.0634 as the USD drops to 100.70. Euro/yen 120.85. Dollar.yen 113.64. Pound 1.2496. Euro/pound 0.8510. Mexican peso 20.2812. Canadian dollar 1.3039. Dollar/yuan 6.8587. Indian rupee 66.93. Aussie dollar 0.7710.

WTIC oil is up marginally at 53.18 steady after yesterday’s inventory report. Brent oil 55.88. Natty 2.92. Natural gas inventories are on tap this morning. Gold 1238. Silver 18.01. Copper 2.75.

Nestle drops -1.1% after lowering guidance. Dutch insurer NN Group sinks -8%. Engineering company Cobham crashes -22%. That will leave a mark. Cobham has to writedown big losses due to overruns on the Boeing air tanker project.

French authorities are continuing their probe into Francois Fillon which will sink his hopes to become the next president of France. It is looking more like a race between National Front firebrand Marine Le Pen and Emmanuel Macron. The polls say Le Pen cannot win but each day her chances continue to inch higher. The first round election is in late April and the final round in early May.

Everyone touts inflation but yields are up a paltry 3 bips over the last couple days  and the US dollar is not moving higher. In fact, the USD drops to 100.69 sending the euro higher above 1.06. The higher euro creates the sogginess in European trading. Interestingly, from Fed Chair Yellen’s testimony yesterday between 10 AM EST and 11 AM EST, until now, the USD drops from 101.80 to 100.69. The dollar should be rising if traders expect inflation and a March rate hike. Pundits are touting inflation every 10 minutes but yields remain subdued, the yield curve remains flattish, the dollar is dropping and the chances of a March Fed hike is only 42%.

At 4:30 AM EST (9:30 AM London), the morning is quiet. DAX -0.2%. CAC -0.3%. FTSE -0.4%. MIB -0.5%. IBEX -0.2%. PSI -0.2%. SMI -0.5%. OMX flat. The Nifty is up +0.6% to 8779.

S&P -4. Dow -23. Nasdaq -1. Russell  -3. VIX 12.05. Euro 1.0636. Dollar/yen 113.66. Pound 1.25. USD 100.69.

At 5 AM EST, S&P -4. Dow -28. Nasdaq -3. Russell  -4. VIX 12.06. CSCO is up +1.4% in early trading but is not helping the Nazzy futures.

At 6:10 AM EST, S&P -4. Dow -29. Nasdaq -1. Russell  -4. VIX 12.04. USD 100.75.

Treasury yields are dead flat and not moving; 2-year 1.24%, 5-year 1.98%, 10-year 2.48%, 30-year 3.07%. The 2-10 spread is 124 bips. The spread had popped above 126 bips with the inflation chatter over the last couple days but has since retreated. German bund 0.37%. Japan 10-year yield 0.09%. UK gilt 1.29%. France 10-year yield 1.07%.

The France yield sneaks higher as presidential candidate Fillon sinks further into the corruption quagmire. The France-German 10-year yield spread is 70 basis points. The Nifty ends at 8778.

The earnings releases keep on coming resulting in the following moves. AVP crashes -19%. ALXN -1.2%. CAB -4.8%. CHTR -0.2%. DF collapses -8%. DISH -0.3%. DUK +2.8%. H -1.6%. LH +2%. MPEL -4.5%. MGM crashes -9.3%. RS +2.2%. SWC +0.3%. TPX +4%. WM -0.2%. Hamburger queen Wendy’s is slapped lower. WEN -4.5%. ZTS -4.3%. TM is down -0.2% on news that Toyota Prius sales are flat in China.

The new SNAP IPO has a projected value of between $19.5 billion and $22.0 billion and will price between 14 and 16 per share. The Snap IPO will be the largest tech offering coming to market since Alibaba, BABA, in 2014. CSCO +1.3%. NTAP +6%.

S&P -5. Dow -42. Nasdaq -4. Russell -6. VIX 12.09. Euro 1.0632. Dollar/yen 113.55. Pound 1.25. WTIC 53.34. Brent 56.03. Natty is flat at 2.92. Gold 1237. Silver 18.04. Copper 2.75.

Treasury yields are; 2-year 1.23%, 5-year 1.97%, 10-year 2.47%, 30-year 3.07%. The 2-10 spread is 124 bips. Federal Reserve Vice Chairman Fischer is interviewed on Bloomberg television. Fischer says the Fed is moving towards the 2% inflation goal.

The Spain 10-year yield drops to 1.63% The ECB may change the rules allowing further purchases of Italian and Spanish debt as part of the ongoing QE program. Yields drop since bonds are bought due to the ongoing support by the central bank in buying bonds (price up yields down). The central bankers are the market. If you do not understand this after eight years, you are stupid.

At 8:30 AM, Housing Starts are down -2.6% to 1.246 million units more than the 1.232 million expected but below the prior revised-higher 1.279 million units. Permits are up +4.5% to 1.285 million units above the 1.233 million expected and above last month’s revised-higher t1.228 million units. The wealthy are cashing in on huge stock market gains and laying down some dough on a new home. Multi-unit construction outpaces single-family homes by five to one. Developers are building lots of apartments for the young adults that are not interested in owning a home and would rather rent.

Jobless Claims are up 5K to 239K below the 246K expected and above the prior week’s 234K. The Philadelphia Fed Business Outlook Survey is 43.3. Traders are taken back. This is the highest Philly Fed since 1984 over 33 years ago. The expectation was 19.3 and last month was 23.6.

S&P -6. Dow -42. Nasdaq -5. DAX -0.3%. CAC -0.4%. FTSE -0.3%. WTIC oil 53.34. Brent oil 56.01. Natural gas 2.91. Gold 1238. Silver 18.03. Copper 2.73. The 10-year yield is at 2.477%.

Minutes before the opening bell, S&P -3. Dow -16. Nasdaq -3. Russell -3. VIX 12.08. DAX -0.2%. WTIC oil 53.52. Brent oil 56.17.

Euro 1.0637. Euro/yen 120.59. Dollar/yen 113.74. Pound 1.2489. Euro/pound 0.8517. Mexican peso 20.3380. Canadian dollar 1.3047. Dollar/yuan 6.858. Indian rupee 67.0725. Aussie dollar 0.7701.

Treasury yields are; 2-year 1.23%, 5-year 1.97%, 10-year 2.48%, 30-year 3.08%. The 2-10 spread is 125 basis points.

At 9:30 AM EST (2:30 PM London), US stocks begin trading flat. SPX 2349. INDU 20624. COMPQ 5824. RUT 1404. VIX 12.17. TRIP -9%. WEN -4%. CBS -1%.

The SPX makes a new all-time high by one single penny at 2351.31. The Dow Industrials, Nasdaq Composite and Nasdaq 100 print new all-time record highs. The S&P 500, Russell 2000 and Dow Jones Transports do not print a new record high as yet.

DAX _0.3%. CAC -0.4%. FTSE -0.2%. Euro 1.0648. Dollar/yen 113.67. Pound 1.2498. Mexican peso 20.322. Canadian dollar 1.3049.

WTIC oil 53.44. Brent oil 56.03. Natural gas is down -0.6% to 2.907 with inventories hitting within the hour.

Natural Gas Inventories are a robust 114 BCF build less than last week’s build at 152 BCF. Natty price drops from 2.92 to 2.88 bounces a touch to 2.89 then flushes down to 2.86.

European indexes end the day lower sand Italy. The DAX ends down -0.3% to 11757. The CAC drops -0.5% to 4899. The FTSE loses -0.3% to 7278. The MIB gains +0.2% to 19088. The IBEX loses -0.3% to 9555.

A 30-Year TIPS Auction goes off at 1 PM at 0.923%. Stocks are bumping along sideways with the SPX moving through the 2340-2347 range.

President Trump calls an unscheduled press conference on very short notice in the East Room of the Whitehouse. The event is very fast and loose with the media, that the president calls dishonest, held to task by the orange-headed showman. Trump says, “The Russia thing is a ruse.” Democrats and the liberal-leaning press led by CNN accuse the president and his team of talking about sanction and deals with Russia before the election which is illegal.

President Trump unequivocally states that neither he nor anyone on his staff discussed such matters with Russia. Trump calls the news stories “fake news.” The president had better hope that none of his team is identified as having talks. The spooks have transcripts of the telephone calls with the Ruskies but these documents remain privy only to the intelligence agencies (FBI, CIA, NSA, etc…).

President Trump says, “This administration is running like a fine-tuned machine.” This statement is comical. The situation around the new president is not as chaotic as described by the liberal press such as CNN, nor is it all wine and roses as the republican press such as Fox News describes, but it is by no means a fine-tuned machine. People have short memories. When President Obama took office eight years ago, his first few weeks in office were very similar. The drama should settle down.

Trump say the rollout of the immigration ban was smooth but the bad courts interfered. He also blames the Delta computer system outage as having caused trouble at airports. He is painting a rosy picture. Trump needed to allow 24 hour or 48 hours before the travel ban came into effect but he and his team blew it by not thinking of this ahead of time. The travel ban was rollout his first mistake; he should simply admit it.

The president says, “A Russia deal would be best for the world” and “I don’t think Putin is testing me.”Trump proclaims, “I have nothing to do with Russia.” The president spends a little time batting Hillary Clinton around and criticizing her for selling off uranium assets to Russia a few years ago. President Trump says, “I have no deals or loans in Russia.”

The president says, “I inherited a mess” and “Obamacare is a mess.” Trump is in campaign form talking fast and loose. President Trump takes credit for the rally in the stock market proclaiming, “The stock market has hit record numbers as you know.” Performing a victory lap in the stock market is unwise since circumstances can change quickly. Will he take credit for a big selloff in stocks when it occurs?

The president drones on about the unfair media sounding more like a whiner as he keeps repeating the same themes. The president rejects news reports that say ‘the Whitehouse is in chaos’. The news conference ends after about 80 minutes at 2:18 PM EST.

SPX is down 7 points to 2342. INDU 20582. COMPQ 5803. RUT 1394. VIX 12.01.

Euro 1.0666. Euro/yen 120.81. Dollar/yen 113.25. Pound 1.2484. Euro/pound 0.8545. Mexican peso 20.2905. Canadian dollar 1.3061.

Treasury yields are; 2-year 1.21%, 5-year 1.93%, 10-year 2.44%, 30-year 3.04%. The 2-10 spread is 123 basis points. The yield curve flattens slightly as yields retreat. All the inflation cheerleaders from one day ago are quiet today.

WTIC 53.29. Brent 55.61. Natty 2.86. Gold 1290. Silver 18.08. Copper 2.73.

Food companies once rumored for takeovers are no longer. MDLZ -5%. KHC -4.2%. GIS -2.6%. MGM -9.3%. TRIP trips -11%. CSCO +2.4%. KATE jumps +1%% on news of putting itself up for sale. Airlines nosedive. XAL -1.3%. AAL -1.5%. JBLU -1%. LUV -2%. Warren Buffett clutches his chest and falls back into his leather easy chair. Buffett is heavily invested in the airlines and the largest stock holder in both DAL and UAL. Buffett is the second largest stockholder in LUV and AAL.

SRCL +7.7%. NTAP +4.2%. LILA +16%. SHPG +2.6%. Investors are buying consumer staples believing in the defensive and dividend plays. XLP +0.1%. KO +1.9%. KMB +1.8%. CLX +1.3%. COTY -5.5%. RRC -5.3%. SWN -4.7%. TSLA -3.9%.

SPX 2346. INDU 20614. COMPQ 5812. The RUT is down 7 points to 1397. VIX 11.83.

Euro 1.0671. Euro/yen 120.81. Dollar/yen 113.22. Pound 1.2499. Euro/pound 0.8537. Indian rupee 67.0725. Mexican peso 20.3769. Canadian dollar 1.3077. Dollar/yuan 6.853.

Treasury yields are; 2-year 1.21%, 5-year 1.94%, 10-year 2.45%, 30-year 3.05%. The 2-10 spread is 124 bips.

The Dow turns positive on the day during the last one-half hour of trading. WTIC oil 53.42. Brent oil 55.73. Natty is down -2.9% to 2.84 after the inventories. Gold is up 6 dollars to 1240. Silver 18.08. Copper is down -1.1% to 2.732.

US stocks end the session mixed. The SPX is down 2 points, -0.1%, to 2347 and the HOD is 2351.31 a new all-time high by one penny. The Dow gains 8 points printing a new all-time closing high at 20619.77 and a new all-time high at 20639.87. The COMPQ gains loses 5 points to 5815 and the HOD is 5835.15 a new all-time high. The NDX finishes down 2 points to 5301 and the HOD is at 5316.79 a new all-time high.

The RUT loses 5 points, -0.4%, to 1399. The NYA loses 10 points to 11504 and the HOD is 11525.21 an all-time record high. The Dow transports, TRAN or DJT, drops -0.8% to 9475.

After the closing bell, the earnings reports continue. ARII trades flat. ED is flat. DLR +1%. FLS -4.2%. NUS is skinned -7.5%. TrueCar drives higher. TRUE +14%.

A suicide bomber detonates himself inside a shrine in Pakistan killing 75 people and injuring a few dozen others. The Muslim terrorist group responsible for the heinous act says the Shiite Muslim gathering was purposely targeted. The 1400 years of Sunni-Shiite hatred continues to fester in the violent Middle East.

Tuesday, February 14, 2017

WEDNESDAY 2/15/17; ADI; ATHM; BG; HUN; PEP; CPI (Consumer Price Index); Retail Sales; Empire State Mfg Survey; Industrial Production; Business Inventories; Fed Speak Including Chair Yellen’s Semiannual Testimony Before the House Financial Services Committee; SPX, INDU, COMPQ, NDX, RUT, NYA and TRAN Print New All-Time Highs; Dow Theory Confirmation; US Stocks Melting-Up Led By Banks; AMAT; ANDE; NLY; CAR; CBS; CF; CSCO; DENN; GRPN; KHC; LBTYA; MRO; MAR; TNH; TIVO; TRIP; WMB

Australia and Asia stocks begin trading with the ASX 200 up +0.9% above the 5800 to 5807. Aussie banks gain from +1% to +3% boosted by Commonwealth Bank of Australia up +2.2% on an earnings beat. Aussie conglomerate Wesfarmers gains +2.3%. Aussie dollar 0.7664.

The NIKK and Topix are each up +1%. It appears that a new global cascading rally may be starting from the joy in US trading. Dollar/yen 114.33. Softbank rises +0.8% on news of buying New York’s Fortress for $3.3 billion. Softbank is a conglomerate gobbling up assets. Toshiba collapses -12% as the problems with the Westinghouse nuclear business continues. The KOSPI is marginally lower in early trading. Samsung Electronics sinks -1.3%.

US futures are a hair negative. S&P -2. Dow -11. Nasdaq -4. Russell -16. Euro 1.0572. Pound 1.2464. USD 101.29. Dollar/yuan 6.8675. Taiwan dollar 30.833.

WTIC oil 53.07. Brent 55.97. Natty 2.93. Gold 1228. Silver 17.95. Copper 2.7420.

Treasury yields are; 2-year 1.23%, 5-year 1.97%, 10-year 2.48%, 30-year 3.06%. The 2-10 spread is 125 bips. Yields are about 3 basis points higher than before Fed Chair Yellen’s testimony before the Senate Banking Committee yesterday; a very small rise. Yellen testifies before the House Financial Services Committee today but this testimony will repeat yesterday’s themes. Yellen would not hint whether a rate hike is coming in March, or May, or June but she warns that ‘waiting too long to hike rates is unwise’.

Fed Funds futures indicate a 34% chance for a March rate hike, 51% chance in May and 74% chance in June. The bond traders are thinking that a Fed rate hike in June is more likely than a hike in March. Nonetheless, Treasury yields float higher yesterday and remain buoyant today.

Kim Jong Nam, the step brother of North Korean dictator Kim Jong Un, is murdered in Malaysia with poison; a victim of femme fatale. Two female North Korean agents are suspected and one woman is arrested at Kuala Lumpur International Airport in Malaysia. Kim Jong Nam was critical of his half-brother and was likely assassinated with poison from a needle or a spray. The world is a dangerous place.

The Asia session proceeds with stocks running joyously higher. NIKK +1.2%. Topix +1.2%. ASX 200 +0.9%. The KOSPI joins the bull party up +0.3%.

Softbank +1.6%. Commonwealth Bank of Australia +2.3%. National Australia Bank (NAB) +2.4%. Westpac +1.8%. BHP Billiton +1.3%. Euro 1.0570. Aussie dollar 0.7665. USD 101.29.

The Asia session finishes higher with the Shanghai Index a smidgeon lower. A cascading global rally continues from the States through Asia and onto Europe that is set for a positive start for the major indexes. India trading continues with the Nifty down 66.60 points, -0.8%, to 8725.

The NIKK ends the session up +1% to 19438. The ASX 200 gains +0.9% to 5809. The KOSPI finishes up +0.5% to 2084. The SSEC ends down -0.2% to 3213.

The HSI gains +1.2% to 23995 a hair from 24K. Hong Kong is the big winner. The Hang Seng Index is testing the highs from last September-October and further highs will equate back to August 2015 levels. The HSI has rallied for 21.5K to 24.0K, +11.6%, in less than 8 weeks.

At 3 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading higher as the futures indicate. DAX +0.4%. CAC +0.2%. FTSE +0.3%. SMI +0.3%. OMX +0.3%. European banks lead the upside. European Banking Index +1.4%.

Credit Ag reports a drop in profits but trades +3.5% higher. ABN Amro +2.4%. Heineken is up +4.5% on strong sales. People are drinking their troubles away. Akzo Nobel is punished -3.7%. Sweden’s Riksbank leaves the repo rate at -0.50% as expected.

S&P -1. Dow +22. Nasdaq +2. Russell -3. VIX 10.74. WTIC oil is down -0.666% to 52.83. Brent oil loses -0.5% to 55.72. Natural gas is up +1.6% to 2.95. Gold 1225. Silver 17.86. Copper 2.7355.

Euro 1.0565. Euro/yen 120.96. Dollar/yen 114.50. Pound 1.2456. Euro/pound 0.8482. Mexican peso 20.2666. Canadian dollar 1.3071. Dollar/yuan 6.8688. Indian rupee 66.9238. Aussie dollar 0.7673.

Treasury yields are; 2-year 1.23%, 5-year 1.97%, 10-year 2.48%, 30-year 3.07%. The 2-10 spread is 125 bips. Yields are not moving higher so bond traders are not buying the hawkishness that Yellen was trying to sell yesterday.

At 3:30 AM EST, DAX +0.5%. CAC +0.3%. FTSE +0.5%. Euro 1.0569. Dollar/yen 114.49. Pound 1.2460. Aussie dollar 0.7680. South African rand is at 12.995 the rand strengthens below 13 for the first time since 2015. Turkish lira 3.66. USD 100.43. WTIC oil 52.86.

Treasury yields are; 2-year 1.23%, 5-year 1.96%, 10-year 2.47%, 30-year 3.07%. The 2-10 spread is 124 bips. Traders wildly bought the banks yesterday believing that Yellen’s hawkishness will cause rates to run higher and the yield curve to steepen, however, at 124 basis points, the yield curve is going nowhere.

At 4 AM EST (9 AM London), the banks are leading Europe higher. The banks pumped US stocks higher yesterday. European Banking Index +1.6%. The Trump administration is slashing financial regulations that will allow the banks to rape the markets for huge profits going forward. The wealthy always protect their own.

European computer screens are a sea of green. DAX +0.6%. CAC +0.5%. FTSE +0.4%. MIB +0.6%. IBEX +0.8%. PSI +0.4%. SMI +0.5%. OMX +0.5%. France 10-year yield 1.06%. German bund 0.38%. The France-German 10-year yield spread is 68 basis points.

S&P +1. Dow +32. Nasdaq +3. Russell -2. VIX 10.87.

UK unemployment rate is unchanged at 4.8% matching expectations. UK Q4 basic wage growth slows to an annual pace of +2.6% from +2.7%. The global central bankers are too optimistic about wage growth and inflation will not occur without wage inflation. The annual wage growth needs to move above the +4.0% to +4.5% level for sustainable inflation to be locked on course. This is a dirty little secret the Federal Reserve, BOE and other global central bankers do not discuss in public.

At 5 AM, US futures and European indexes are steady. Ditto US Treasury yields. The Nifty is down -0.8% at 8725.

Euro 1.0557. Dollar/yen 114.48. Pound 1.2427. Mexican peso 20.3035. Canadian dollar 1.3076. Aussie dollar 0.7682. Indian rupee 66.9212. USD 101.43.

WTIC oil 52.89. Brent oil 55.73. Natty is up +2% to 2.96. Natural gas is becoming sticky around the 3.00 level. Gold 1226. Silver 17.88. Copper 2.7385.

At 6:30 AM EST, markets remain steady. The morning is quiet in contrast to the drama, turmoil and political theater occurring in Washington, DC. S&P -2. Dow +15. Nazzy -2. Russell -5. VIX 10.95. Market bears have zero hope with the central bankers maintaining their jack boots on the neck of volatility. India trading ends with the Nifty at 8725.

Treasury yields are; 2-year 1.23%, 5-year 1.97%, 10-year 2.48%, 30-year 3.07%.

US Mortgage Applications are down -3.7% this week with the refi’s down -3% and mortgage loans down -5%. Consumers are willing to take on mortgage loans even though the rates are about 70 basis points above last year’s levels.

The earnings parade continues and significant economic data hits the tape over the next 3-1/2 hours. PEP beats on EPS but guides lower. PEP -0.3%. ADI launches +4.8% after earnings. Bunge springs higher. BG +10%. HUN -2.4%. PGR +2.5%. CSX  is off the tracks down -1.7%.

Quarterly filings report that George Soros sold all of his stake in PG. Soros is buying the banks such as GS and BAC and option calls in the banking sector. Even though Soros sold his Procter & Gamble, a couple of hedge funds are buying the stock with both hands. PG +3%. GS +0.4%. BAC +1.1%. Hedge funds and other large investors are loading up on Bank of America.

At 8:30 AM, CPI (Consumer Price Index) is hot up +0.6% month-on-month beating the expected and prior +0.3%. Traders become immediately excited over the higher inflation. CPI year-on-year is up +2.5% above the prior +2.1%. Less food and energy is up +0.3% month-on-month a tick above the expected and prior +0.2%. Year-on-year is up +2.3% versus the prior +2.2%. The inflation is driven by energy and a big +7.8% jump in gasoline prices. Commodities and apparel also had big price gains. These items are likely not to repeat so the numbers may relax next month. Air fares are up +2%.

Traders focus on the headline number that is twice the estimate and the biggest gain in four years. Analysts view the data as strongly inflationary. The 10-year yield immediately pops above 2.50%. Yields pop so banks move reflexively higher.

JPM and MS are at all-time record highs. GS is at the highest level in a decade and only a couple bucks from an all-time record. BAC is at the highest level in nine years. Banks have gone parabolic after President Trump, and his lieutenants Cohn and Mnuchin announced plans to slash banking regulations.

The Empire State Mfg Survey is at 18.7 above the 7.5 expected and prior 6.5. The manufacturing sector is strong.

Retail Sales are up +0.4% month-on-month a nice beat of the +0.1% expected but below the prior revised-higher +1.0%. Less autos are up +0.8% month-on-month more than the +0.5% expected and above the prior +0.4%. Less autos and gas is up +0.7% month-on-month beating the +0.3% expected and above t he prior +0.1%. Vehicle sales are strong. Retail store sales are strong with robust electronics and appliance sales.

Retail CEO’s from Autozone, BestBuy, Target, Walgreens, Gap, JC Penney, Tracto Supply and others arrive at the Whitehouse to meet with President Trump. The retailers are concerned about the president’s border tax and other proposals. President Trump tells the retail CEO’s that taxes will be cut. In early trading, AZO +0.5%. BBY +1.4%. TGT +0.2%. WBA +0.6%.

The Trump administration is receiving pressure from media concerning the relationship with the Russian government. Many documents are being leaked from the US government likely by democrat sympathizers. This activity is hurting President Trump creating distractions from his agenda. When the spooks (intelligence agencies) are involved, you will never know the truth about what is going on.

Democrats accuse the Trump administration of talking and negotiating with Russia before Trump was elected which is illegal but there is no evidence that his behavior occurred as yet. The democrat-leaning press is damaging the country by creating turmoil around the Trump administration pumping negative unproven stories into American minds. This behavior is disturbing since it may create serious social unrest and violence in the United States. The press is trying to delegitimize the new orange-headed leader and create chaos which will prevent Trump’s agenda from proceeding and set him up as a one-term president. The Washington, DC, crowd is sick.

President Trump is meeting with Israeli Prime Minister Netanyahu today after the meeting wraps up with the retail executives. The two leaders plan a press conference but oddly, the joint presser will take place before they have a one-on-one meeting.

S&P -4. Dow +10. Nasdaq -8. Russell -9. VIX 10.98. The DAX is at +0.1% slipping in and out of negative territory. CAC +0.6%. FTSE +0.5%.

Euro 1.0527. Dollar/yen 114.91. Pound 1.2388. Euro/pound 0.8498. Mexican peso 20.4307. Canadian dollar 1.3104. Aussie dollar 0.7645. USD 101.68.

Treasury yields are; 2-year 1.26%, 5-year 2.01%, 10-year 2.52%, 30-year 3.10%. The 2-10 spread is 126 bips. Yields pop. The yield curve is a hair steeper.

WTIC 52.96. Brent 55.75. Natty 2.97. Gold is down 10 dollars to 1218. Silver 17.81. Copper 2.7350.

BTIG technician Katie Stockton says more highs are ahead for the stock market with momentum driving price higher. Stockton says 2.65% is resistance for the 10-year yield that, if breached, will send yield to 3.00%. On the dollar, she says a major breakout has occurred and the US dollar index has an upward bias in the short and long terms. USD is at 101.43. Stockton says the AAPL gap-up and follow through is a very strong event and will lead to new highs for Apple. AAPL is at 135.50 and Stockton has a 169 target. On GS, she says more new highs are on tap. GS is at 250.44. Stockton says energy and industrials will outperform going forward and proclaims, “I am a believer in the breakout (of the broad stock market) and in the momentum.” It all sounds like rainbows and blue skies.

At 9:15 AM EST, Industrial Production is down -0.3% month-on-month below the 0.0% expected and under the prior revised-lower +0.6%. Manufacturing is up +0.2% month-on-month matching the expected and prior +0.2%. Capacity Utilization Rate is 75.3% below the expected 75.5% and below the prior 75.6%. Manufacturing is weak in contrast to the Empire State Mfg Survey.

During OpEx week each month, a Tuesday low typically leads to a high on Wednesday. The low occurs yesterday at 11 AM EST so it will be interesting to see how today plays out. The CPC and CPCE put/calls are uber low signaling rampant complacency when a near-term top typically occurs in the stock market. This timing may jive with the expected OpEx behavior.

In the pre-market, BAC +1.2%, AAPL +0.3%, PG +2.1%, GOOGL +0.1%, FB -0.2%, MSFT flat and DE -0.9%. Warren Buffett sold his position in Deere. AAL +2.8%. UAL +2.1%. LUV is feeling lots of love soaring +3% higher. MON +1.3%.

FIG catapults +30% higher on the Softbank takeover. The insider traders are enjoying easy profits from the jump in Fortress. In the options market, hours before the takeover announcement, big blocks of call options are bought betting on a move higher in FIG price. Options volume in Fortress is eight times its normal range. The insider traders placing those bets on Fortress made profits of +400% in a few hours time.

Wall Street is a corrupt cesspool just like Washington, DC. New York City is the playground of the white collar business criminals while the beltway swamp is where the conniving politicians carry out their corruption and nefarious deeds. The talking heads and business big shots that parade across television screens and walk the clean Manhattan streets, in the $4,000 custom-made Armani suits, are not generating huge profits because they are great stock pickers. Wall Street is an insider’s game and Joe Sixpack is used as cannon fodder and a bagholder.

At 9:30 AM EST (2:30 PM London), US stocks begin trading with the Dow Industrial sprinting a new all-time record high. The other indexes are marginally negative. SPX 2336. INDU 20509. COMPQ 5782. RUT 1392. VIX 11.87.

DAX -0.2%. CAC +0.4%. FTSE +0.4%. MIB -0.5%. IBEX +0.3%. PSI +0.1%.Germany and Italy are the sick men of Europe today.

Euro 1.0537. Euro/yen 121.00. Dollar/yen 114.82. Pound 1.2395. Euro/pound 0.8504. Indian rupee 66.9063. Mexican peso 20.3947. Canadian dollar 1.3105. Dollar/yuan 6.8761. USD 101.61.

WTIC oil is down -0.6% at 52.91. Brent oil is down -0.6% to 55.66. EIA Oil Inventories hit the tape within the hour. Natty is up +2.1% to 2.97. Gold 1221. Silver 17.83. Copper 2.7260.

At 10 AM EST (3 PM London), Business Inventories are up +0.4% matching expectations below the prior revised-higher +0.8%. Inventories are building but the robust retail sales handled the increases. The NAHB Housing Market Index is 65 lower than the expected 68 and below the prior 67. The homebuilder optimism after the Trump election is petering out.

Fed Chair Yellen begins her semiannual monetary policy testimony before the House Financial Services Committee. Today is a repeat of yesterday’s testimony. Yellen repeats the statement that it is ‘unwise to wait too long before raising rates’. Traders do not pay as much attention to Yellen today although everyone has one ear pointed in her direction.

Fed Funds futures indicate a 42% chance for a March rate hike. There is a 59% chance of a Fed hike in May, 78% in June and 82% in July. The June meeting continues to appear where the first rate hike will occur this year. The chances for March are moving higher after the inflation data a short time ago.

SPX 2335. INDU 20517. COMPQ 5784. RUT 1395. VIX 11.69. DAX flat. CAC +0.6%. FTSE +0.4%.

Treasury yields are; 2-year 1.25%, 5-year 1.99%, 10-year 2.50%, 30-year 3.08%. The 2-10 spread is 125 bips.

Euro 1.0571. Dollar/yen 114.48. Pound 1.2450. Euro/pound 0.8492. Indian rupee 66.9063. Mexican peso 20.3390. Canadian dollar 1.3091. WTIC oil 53.18. Brent 55.89.

EIA Oil Inventories are a big 9.5 million barrel build less than last week’s 13.8 million barrel build but another biggie nonetheless. Tanks are bloated with oil. Gasoline inventories are higher and distillates lower. Oil prices are flat, then spike sharply higher with WTIC oil to 53.38 and Brent to 56.15. Traders are willing to look past the inventory data since refinery maintenance is creating part of the build. Storms across the south are also creating a temporary build. Next week’s inventory data now takes on much more importance. Oil prices come back down again. WTIC 52.98. Brent 55.75.

European indexes end the day higher but Italy is booted lower. The DAX gains +0.2% to 11794. The CAC is up +0.6% to 4925. The FTSE gains +0.5% to 7302. Italy’s MIB sinks -0.7% to 19056. The IBEX gains +0.8% to 9584. Portugal’s PSI gains +0.5% to 4628.

President Trump meets with Israel PM Benjamin Netanyahu at the Whitehouse. The two leaders conduct a press conference. The gentlemen appear to have a good rapport with each other and mutual respect. Prime Minister Netanyahu says, “The US has no better ally than Israel.” President Trump suggests that any further settlements into the disputed territories with the Palestinians should be avoided. Netanyahu says the settlements will be discussed in their meeting after the press conference. The prime minister is genuinely happy receiving a much warmer reception to the Whitehouse in stark contrast to the cold shoulder diplomacy Bibi received from former President Obama.

Fed’s Rosengren is hawkish saying that more than three hikes may be needed this year. Fed’s Harker says three rate hikes this year is a reasonable objective. Harker says he is not factoring in fiscal policies from the Trump administration into his forecast.

After the meeting with retailers, President Trump appears on television screens from the Whitehouse promising to simplify the tax system. Trump says comprehensive tax reform will positively impact the economy. Trump says, “The new tax plan will be provided in the not too distant future.” He says the tax code will be simplified and businesses and middle-income families will benefit.

The stock market begins ramping higher and not looking back keying off President Trump’s words that the tax plan will be provided in the “not too distant future.” That sounds like the tax plan is coming fairly quickly. The stock market joy and euphoria increases.

The price action is historic. President Trump promises tax relief and creates another push higher for the stock market. President Trump says that everyone will like the new simpler tax plan except H&R Block (the tax preparers). HRB drops -0.6%. King Trump chooses the winners and losers in the stock market.

The Russell 2000 small caps, RUT, moves above 1400 for the first time in history. The Dow is over 20.6K. The COMPQ is above 5800 for the first time. NDX moves above 5300 for the first time ever. VIX 11.56. Oddly, volatility is up and stocks are up. PG +3.2%. PFE +1.6%. BAC +2.8%.

SPX 2346. INDU 20601. COMPQ 5808. RUT 1401. Euro 1.0591.Euro/yen 121.01. Dollar/yen 114.26. Pound 1.2447. Euro/pound 0.8508. Mexican peso 20.2568. Canadian loonie 1.3085.

Treasury yields are; 2-year 1.25%, 5-year 2.00%, 10-year 2.51%, 30-year 3.10%. The 2-10 spread is 126 bips.

WTIC oil 53.17. Brent oil 55.83. Natural gas 2.93. Gold 1232. Silver 17.96. Copper 2.742.

ENDP +8.3%. FLIR +8%. WYN is a winner up +4.7%. ADI +4.6%. NRG +4.4%. SIRI +3%. PG +3.6%. Cisco reports earnings after the bell. CSCO +1.5%. JPM +1.2%. TEVA +5.6%. IBB +1.8%. REGN +1.9%. MYL +4.2%. GILD +3.4%. CELG +3%. PFE +2.2%.

AIG crashes -9.2% after the long 12-year lawsuit involving Hank Greenberg is mediated. CF -4%. DVN -3.4%. NBR -2.9%. FCX -3.2%. HP -2.8%. INCY -1.9%. VRSK -1.6%. DLTR -1.3%. CSX derails -1.3%. MRK -0.8%. Three small competing biotechs trade big numbers. EDIT +29%. CRSP -12%. NTLA -9.3%.

The FHA mortgage delinquency rate jumps in Q4 for the first time in 11 years. The Federal Housing Administration mainly handles low down-payment mortgages for first-time home buyers. The delinquency rate rises to 9.02% from the prior Q3 at 8.30%. The delinquency rate may develop into a trend which obviously does not end pretty. Traders do not care about the mortgage delinquencies since they are too busy buying stocks with reckless abandon and total disregard for price.

At 3 PM, the Dow Industrials are up over 100 points above 20.6K to 20606. The SPX is u 10 points to 2348. The Nasdaq Composite is up 33 points to 5815. The Russell 2000 gains 7 points to 1404. VIX 11.54.

Euro 1.0591. Euro/yen 121.00. Dollar/yen 114.24. Pound 1.2446. Aussie dollar 0.8509. Mexican peso 20.2621. Canadian dollar 1.3085. Dollar/yuan 6.8711.

WTIC oil 53.12. Brent 55.77. Natural gas 2.92. Gold 1232. Silver 17.96. Copper 2.75.

Treasury yields are; 2-year 1.255%, 5-year 2.00%, 10-year 2.50%, 30-year 3.09%.

Stocks are melting-up for another day. This is historic market action. The SPX, INDU, COMPQ, NDX and RUT are each up +0.6% the robots are running stocks uniformly higher. The charts have gone parabolic and the major stock indexes are trading like commodities. It will be interesting to see how the parabolic run ends. Energy and utilities are the laggards. XLE -0.3%. XLU -0.4%. UTIL is at 664 under the critical 50-week MA at 666.

Financials continue running higher goosing the broad indexes higher. XLF +0.8%. C +1.2%. The hedge funds are buying a lot of Bank of America. BAC +2.1%. JPM +1.3%. KRE +0.5%. RF +0.7%. PNC +1.3%.

Traders, investors and analysts are all a flutter proclaiming that inflation is guaranteed going forward. The whiff of inflation in the data this morning is only the beginning. The bulls expect a steepening yield curve so they keep pumping the banks higher. The 2-10 spread is 124 basis points. The yield curve is simply adjusting higher equally across all durations. All yields are up about 5 basis points over the last couple days. Traders are blindly buying banks thinking high yields are automatically creating a steeper yield curve; they are not.

Treasury yields are; 2-year 1.255%, 5-year 2.00%, 10-year 2.50%, 30-year 3.09%.

The markets are whacko. The VIX is up +9% today to 11.67 while stocks run higher. Volatility has held steady during the session while the stock market rallies higher. The expectation is that the VIX should be plummeting under 11 back to a 10-handle but this is not happening.

US stocks end the session joyfully higher after President Trump promises significant tax reform. The banks are driving the upside gains. Several major indexes print new all-time highs in unison day after day. This price behavior has not been seen since 1992.

The SPX gains 12 points, +0.5%, to 2349.25 a new all-time closing high and 2351.30 a new all-time high. The S&P 500 is up for seven consecutive days. The Dow gains 107 points, +0.5%, to 20611.86 a new all-time closing high and 20620.45 a new all-time record high. INDU is up five days in a row.

The hits keep on coming. The Nasdaq Composite finishes up 37 points, +0.6%, to 5819.44 a new all-time closing high and 5821.95 a new all-time high. The Nasdaq 100 gains 31 points, +0.6%, to 5302.39 a new all-time closing high and 5304.34 a new all-time high. The Russell 2000 ends up 8 points, +0.5%, to 1404.21 a new all-time closing high and 1405.21 a new all-time high. The RUT also closes above the 1400 level. The NYA gains 46 points, +0.4%, to 11514.40 a new all-time closing high and 11523.93 a new all-time high.

A Dow Theory confirmation occurs with TRAN up 110 points, a big +1.2%, to 9554.35 a new all-time closing high and 9566.10 a new all-time high. The new record high in the trannies now confirms the record highs in the industrials and forecasts more upside for stocks ahead.

After the closing bell, CSCO jumps +1.7% on earnings. Cisco will create joy in the tech sector and Nasdaq indexes tomorrow. CBS -0.666%. AMAT +0.3%. NLY +0.9%. CAR crashes -7.2%. CF -4.3%. DENN +1.2%. GRPN -0.2%. KHC -2.3%. MAR +0.9%. Molina needs healthcare after MOH crashes -12.3%.TIVO +12%. TRIP -4.9. WMB +0.9%. MRO +0.6%. ANDE, LBTYA, OIS and TNH report earnings but are not trading.

The TIC data reports a $12.9 billion net outflow of long-term Treasury securities month-on-month. Foreign accounts are big sellers this month such as Japan reducing holdings by $18 billion. China is the second largest holder of US debt and increase their holding by $9 billion to $1.1 trillion.

Fed’s Dudley says the FOMC plans to gradually remove monetary accommodation. Dudley says it is hard to factor fiscal policy into the forecast at the moment. He says the new fiscal policies from the Trump administration are unclear. Dudley expects rate hikes in the months ahead. Dudley says, “China still faces challenges.”