Friday, January 31, 2014

FRIDAY 1/31/14; EOM

The NIKK did not follow the direction of the US and instead drops -0.6% to 14915, losing the 15K level, and starting the year with a -8.5% loss. Volume in Asian markets is light with new year celebrations in full swing. India’s central banker Rajan is taking the US to task for hooking the emerging markets on easy money but is now pulling the punch bowl away creating turmoil. Rajan says the emerging markets pulled the US out of the doldrums during the 2008 and 2009 financial crisis and now the US should extend a helping hand.

The US throws emerging markets under the bus as the QE tapering continues and views the current global turmoil as country-specific issues rather than contagion; namely problems in Argentina, Turkey, South Africa and Hungary. The Hungarian forint weakens due to off-hand remarks by officials and this ..........

[Text is Redacted: Purchase January 2014-01 to Read the Complete Chronology]

Emerging market funds experience the largest withdrawals since August 2011. The China slowdown places a drag on the global economy. Commodity currencies and countries such as Australia and Canada are hurt by the emerging market slump. The US dollar is stronger as money flows into Treasuries sending yields lower. Germany, the UK and even Japan bonds all experience a similar flight to perceived safety. India, South African and Turkey central banks raise rates to stop the currencies from collapsing but the situation remains tenuous. China and Japan tensions increase over the air space above the East and South China Seas.

The State Department finishes an environmental report that provides an all-clear signal to approve the Keystone XL oil pipeline project; however, President Obama continues to stall any progress. Keystone has been delayed for four years and would provide nearly 50,000 high-paying jobs. The president delays the project since he does not want to lose the voting support of the environmentalists that oppose the pipeline. The politicians, democrats and republicans, always place their own selfish interests ahead of the people.

The Obamacare web site problems continue. The president is put on the spot during an internet chat session when a lady in poor health describes extensive problems dealing with the new health care law. To create further embarrassment with the ongoing Obamacare debacle, House Minority Leader Pelosi, infamous for saying “we must pass the bill to find out what is in it,” appears on the Jon Stewart television comedy show and says ‘she does not know what went wrong, or what is going wrong with Obamacare, and it is not her responsibility’. Pelosi is made a laughing stock since obviously if she is clueless about Obamacare, than how can any American make sense of the new heath care law? The participation by young healthy folks in Obamacare is negligible so the taxpayers will have to bail out the insurance companies in the future.

A train hauling chemicals and fuel oil derails in New Augusta, Mississippi, forcing 50 people from their homes. White powder is discovered at hotels near the Super Bowl as well as the mayor’s office but the FBI tests the powder showing it is non-hazardous. The incident sparks fears that a deadly anthrax attack may have been in the offing.

Thursday, January 30, 2014

THURSDAY 1/30/14

China HSBC PMI is 49.5, the weakest number in six months, now contracting, dropping one point from last month’s 50.5. The combination of a continued Fed tapering and the weak China PMI sends Asia stocks lower. The emerging markets are left out in the cold with the Fed stimulus slowly disappearing each month forward. NIKK sells off almost 400 points, -2.5%. SSEC loses -0.8%. Dollar/yen 102.28. Asia markets are now closed until 2/7/14 to celebrate the new year. Nintendo troubles continue as investors are not impressed with the company’s business plan forward. The Wii is simply not as popular anymore.

The Turkish lira continues to weaken to 2.2931 so Turkey remains in turmoil. Turkish business owners complain about the higher rates and the currency continues to weaken anyways. Tensions are running high and Turkey’s stock market continues to drop with TUR down -10% over the last week and down -33% in the last three months.

German employment data is better than expected creating a happy tone but confidence is weaker than expected. Euro zone confidence rises overall. Worries of deflation across Europe continue with markets trading lower. Diageo drops -6% on disappointing earnings; shareholders will need a drink. Pirelli drops -6% after rumors about going private are rebuffed. Euro retailers Tod’s and H&M, that sponsors soccer star Beckham, sell off -7% and -4%, respectively. H&M will receive publicity from an upcoming Super Bowl ad featuring Beckham.

GOOG sells the Motorola Mobility unit to Lenovo for $3 billion. The unit was a money loser but Google will retain patents. Traders think Lenovo got the short end of the stick so it is beaten -8%. About three hours before the opening bell, US markets stabilize with S&P futures +7. Dow +45. Nasdaq +16. Gold, silver and copper are weak. The dollar/yen is plotting a path higher to 102.40 which elevates the US futures. The 10-year is 2.69%. The dollar continues higher towards 81.

The Turkish lira stabilizes in the 2.27-2.29 range at 2.2717. The South African rand recovers to 11.264 so the rate hikes yesterday help to steady these troubled currencies. The Russian ruble, however, becomes an increasing worry diving -10% this year to a 5-year low. The ongoing currency dilemma is far reaching across many countries. Fear increases that Hungary is going to miss a bond payment which will exacerbate the ongoing global financial stress.

Subprime auto loans are increasing substantially. Folks that cannot afford new cars are provided loans and these folks are buying more expensive vehicles. This behavior is reminiscent of the housing bubble where anyone that could fog a mirror was given a mortgage, even those without jobs and unable to verify income. The auto industry is a main driver of the economic recovery so if it stalls, or worse yet, collapses, in some form due to the obscene subprime lending ongoing, the US economy would be negatively affected.

V beats on earnings and jumps +3.4%. MMM bears and bounces +1.3%. COP beats on earnings. XOM misses by a penny reporting flat production levels and drifts lower pre-market. Global bellwether UPS beats on EPS but misses on the top line. UPS trades flat which is a shock since the company announces a $2.7 billion buyback to pump the price higher. SYMC drops -1.7% hurt by weak PC sales. S&P futures are +6. Dow +60. The dollar/yen continues higher to 102.53 so the weaker yen provides lift in the markets.

Q4 GDP is 3.2% a touch lower than the anticipated 3.3%. Q3 was 4.1%. Consumer spending is robust and business expenditures on equipment rise. The government shutdown is blamed for 0.3% of GDP so the inference is that GDP would have printed 3.5% if the shutdown did not occur. Inventories increase so folks had better show up during Q1 to buy this robust supply of goods.  Initial Jobless Claims jump 19K. The dollar/yen remains at 102.55 so the S&P continues to point to a higher open at +5. Dow +55. Nasdaq +20. Crude oil moves higher with West Texas testing 98 and Brent testing 108. FB is up +18%. UPS +1%. UA +12%.

The dollar/yen continues higher to 102.77 so the weaker yen sends US futures strongly higher. S&P +13. Dow +100. Nasdaq +32. The intraday and daily market moves are becoming more violent due to the increased volatility (higher VIX). The opening bell rings and equities explode higher. CTXS is beaten -10% after receiving multiple downgrades. WHR is up +2.4% providing encouragement to the housing sector. XOM is selling off -1.7%. The 10-year yield recovers to 2.72%. The SPX recovers the week’s losses printing 1790 and strengthening.

December Pending Home Sales plummet -9%. Weather is blamed as well as increasing house prices due to the foreign wealthy and hedge funds buying property. GME collapses -3% now down -40% in three months. ADT collapses -19.3%. Telecom company ADT is smashed -18%. WHR gives up the ghost now down -1.2%. The paint is wet as SHW loses -3%. The housing sector support stocks as appliances and paint are weakening. XOM -1.2%.  Many other stocks run higher as the dip-buyers gain confidence.

Equities continue to the upside as the morning progresses. Gold dumps 21 to 1241. Silver and gold both drop -2%. PBI jumps +14% after beating on earnings and providing higher guidance. The dollar/yen remains elevated at 102.72 with the BOJ creating the happy stock market today by bludgeoning the yen. Social and internet stocks such as FB, YELP, LNKD and TWTR catapult +3% to +9% higher as traders chase the high-flyers. GOOG gains over +3% ahead of earnings after the bell today. European markets recover into the close following along with the US optimism.

The SPX gains 20 points, +1.1%, to 1794, with the bulls receiving a snap-back rally. The Dow gains 110 points, +0.7%, to 15849. The Nasdaq gains +1.8% and RUT +1.5%. The dip-buyers rush in buying small cap biotech stocks and high-flying tech stocks. The RUT back kisses the 50-day MA at 1140 and sits here overnight. IBB +3%. Biotech pharma ALXN jumps +21% after beating on earnings and guiding higher. WLP +3%. XLF gains 1.4%. BX +4.2%. WYNN gains +4% on strong earnings but has been beaten down in recent days. The market bulls ignore copper collapsing. JCP is beaten -8% on very strong volume which may create a capitulatory bottom for this punching bag.

After the bell, Amazon beats on EPS but falls short on revenue and plans to raise the cost of the Prime service. Amazon experiences the slowest growth in five years. AMZN collapses -5% AH’s. Google misses on EPS but beats on the top line. GOOG jumps +4.3% higher despite the lackluster numbers. ZNGA runs +22% higher after announcing plans to cut 15% of its workforce. The YHOO mail server was attacked creating a security breach with email accounts. YHOO drops -1%. The higher dollar/yen (weaker yen) creates the relief rally.

Traders and analysts come out in force defending Google’s earnings miss providing excuses for this favorite child. Many pundits and talking heads defend the broader markets as well. Much of this behavior is reminiscent of market tops where excuses are provided to keep the rally party going. In the dotcom bubble, most high-flying tech stocks did not have any earnings (think TWTR now) and instead analysts defend high valuations by using arcane data such as web site clicks and page views. Analysts tout Google’s search superiority this evening citing the number of clicks and other data to defend the lackluster earnings. Sound familiar?

Put/call ratios remain low indicating that complacency and lack of fear remain in the markets despite the -4% market pull back. This behavior favors the bears moving forward. In addition, the VIX finished relatively flat on the day despite the strong rally indicating the push higher in equities may be more of a dead cat bounce. The emerging market global currency concerns continue with the South African rand and Hungarian forint a major focus. Both currencies recover today. 

Wednesday, January 29, 2014


Asia jumps higher on the happy Turkey central banker action. NIKK gains over 400 points up +2.7%. The dollar/yen teeters at 103. Advantest, the largest maker of chip testing equipment, loses -10% after lowering forecasts. Lenovo pops +4.6% announcing two new business divisions to branch out services. Corning warns over falling LCD glass prices. SSEC gains +0.6%. Asia across the board is higher as the pressure on emerging markets evaporates due to Turkey. The Lunar New Year celebrations begin in Asia and this year is the Year of the Horse for China. Will the horse win the race this year catapulting the stock market higher, or, will the horse gallop to the glue factory? China, South Korea, Taiwan and Vietnam markets will be closed to celebrate the new year.

Deutshe Bank issues a profit warning and warns about litigation costs. The bank is taking steps to reduce leverage moving forward which will lower profits but create a more stable bank. Retailer Mulberry takes the pipe collapsing -28% after lowering guidance. The retailer says holiday discounting creates a deteriorating retail environment. The market mood turns sour on the news. Fiat reports a slight miss on earnings and suspends the dividend so it collapses -4%. Basic resources and miners are strong. Metals are up and oil down. Gold 1259. European markets begin higher but steadily leak lower as the session proceeds. The CAC slips negative.

The Turish lira starts to weaken again laying an egg in last evening’s happy meal. Over the last 24 hours, the lira moved above 2.39 (representing its weakest point) and then the central bank raising rates last evening strengthened the lira to 2.18 stabilizing the crisis. At 4 AM EST, the lira begins softening again now at 2.2293. Turkey did not receive much bang for the buck. Concerns reignite over troubled global currencies. The South African rand continues weakening, now at 11.129, and the central bank is in a meeting to develop a path forward. The Argentine peso continues weakening with the currency pair now above 8 again. The global market mood sours.

[Text is Redacted: Purchase January 2014-01 to Read the Complete Chronology]

The day ends with the SPX down 18 points, -1%, to 1774. This is where the markets launched higher after the December Fed meeting so all the market gains over the last month are gone. The Dow drops 190 points, -1.2%, to 15739. The Nasdaq loses -1.1% to 4051 and the RUT drops -1.4%. 

Semiconductors, SOX, held up better only losing -0.5%, awaiting QCOM earnings after the bell. QCOM -1.2%. FSL leaps +15%. YHOO collapses -9%. Yahoo is down -17% this year. Today is an ugly market day with concern growing that emerging markets may be brutally beaten moving forward.

After the bell, FB beats on top and bottom lines and catapults +12%. QCOM beats on EPS but misses slightly on the top line and jumps +2%. The tech sector will receive a boost tomorrow. A second bank executive death occurs in London when a former DB manager is found hanging in his home. The other incident was a JPM executive that jumped to his death. The authorities believe both are suicides but suspicions surround the tragedies.

Tuesday, January 28, 2014

TUESDAY 1/28/14

The global currency worries subside as the Turkey central bank intervention strengthens the lira to 2.2615 (from above 2.33) and other troubled currencies recover higher. Argentine peso is 7.98, under the 8 level reflecting a strengthening peso. The RBI announces a surprise rate hike moving the Indian benchmark rate from 7.75% to 8.00%. The rupee stabilizes at 62.77. The Korean won is 1081. Asian markets trade flat. The dollar/yen climbs to 102.93 so the weaker yen sends US futures higher with the S&P +9 and Dow +91. The Nasdaq is -13 due to the AAPL earnings disappointment. The producer of Apple products, Foxconn, says they are looking at sites in the US to expand factories. Apple-associated companies are slammed across the glove. Dialog Semi dumps -5%.

Steel-maker Posco’s profit falls but a better 2014 is promised. Platinum stockpiles and inventories are increased to provide a cushion if plant strikes continue. Metals and oil markets trade higher. A senior Egyptian ministry official is shot dead in front of his home by Islamist extremists. Ukraine PM Azarov offers his resignation as parliament convenes in an attempt to bring the protestors to the table. A solution is difficult since the government has chosen to associate the Ukraine with Russia rather than the EU so there is no wiggle room for either side.

UK GDP is 2.8% as the consensus expected the highest growth in six years. RBS loses -1%. European markets move marginally higher with Spain’s IBEX up +1%. Siemens trades higher +1% after beating on EPS but missing on top line revenue. The dollar/yen moves above 103 to 103.11. Banzai! 

[Text is Redacted: Purchase January 2014-01 to Read the Complete Chronology]

Global markets react positively to Turkey’s shock and awe. Emerging markets jump over one percent and US futures move strongly higher. The dollar/yen jumps to 103.32. Banzai! Weaker yen = higher dollar/yen = higher stock market.

Further disclosure occurs concerning NSA spying that the popular Angry Birds video game is targeted to gather information on American citizens. Anyone playing Angry Birds has had their personal information hacked including family names, addresses, telephone numbers and contacts. What is very disturbing and causing serious concern is that the NSA uses the location function of mobile devices and tracks your movement in addition to monitoring, recording and archiving all your messages and actions. George Orwell’s 1984 world becomes scarier each day.

President Obama provides the State of the Union speech in the evening. He vows to act alone on the US economy using executive powers to bypass Congress all together. Americans want to see cooperation between the president and Congress rather than this constant conflict. This is why the presidents poll ratings continue to fall since the people see a completely dysfunctional government. The president says the US is becoming a leader in solar technology, just what the long traders in solar stocks were hoping to hear.

The president complains about lack of jobs and how the middle class and poor are disadvantaged, but ironically, it is his policies that are causing the situation he complains about. After all, he has been driving the bus for five years and his programs are ongoing. The higher taxes and regulations, Obamacare, business bashing, confrontational rather than cooperative behavior between himself and Congress, and support of the Fed that encourages a higher stock market at the expense of the little people, create the structural unemployment and continuing poor economic environment. The speech has no effect on global markets.

Monday, January 27, 2014

MONDAY 1/27/14

Asian markets sell off substantially overnight. Japan’s exports rise but imports rise far greater due to the rising fuel and energy bill as a result of the ongoing Fukishima meltdowns. The US is the largest buyer of Japanese goods outpacing China for the first time in five years. The NIKK is down -2.5% playing catch-up to the US sell off and despite the weaker yen. The dollar/yen moves higher to 102.50. US futures are positive due to the weaker yen with the S&P +5 and Dow +15. China’s SSEC is down -1.0%. The maker of AAPL products, Foxconn, drops -1.3%. Interestingly, China IPO’s are well bid with several reaching limit-up due to demand.

[Text is Redacted: Purchase January 2014-01 to Read the Complete Chronology]

XRX loses -6% due to emerging market exposure. SNE -3% on its debt downgrade. MRK jumps above 54, +3%, to a new record high before pulling back sharply. Nasdaq is underperforming today with the social media stocks selling off. FB -1.6%. TWTR drops -6.2%. LNKD -5.6%. GOOG -2%. YELP -5%. AEO is a retail winner up +3.1%. The tape is very jump today with the major indexes fluctuating above and below the flat line with tech and small caps remaining weak. Today is a digestion day after the big drop late last week.

At the closing bell, the SPX loses 9 points, -0.5%, to 1782. The Dow drops 41 points, -0.3%, to 15838. The Nasdaq loses 45 points, -1.1%, to 4084, closing under the 50-day MA at 4085. The RUT dumps 16 points, -1.4%, to 1128, dropping under the 50-day MA at 1139. The SPX, Dow, Nasdaq and RUT are all under their respective 50-day MA’s; a very bearish indication. Tech and small caps led the way lower today. CAT finishes up +6% creating 50 positive Dow points today.

AAPL closes at 550.50 gaining +0.8% ahead of earnings. Apple beats on EPS and barely squeaks by on top line revenue. AAPL lowers guidance moving forward and reports iPhone sales at only 51 million far below the 58 million estimate. Apple has been slow to respond to screen size and folks are likely not interested in a small skinny screen. AAPL is beaten -3%, then -4%, then -5%, deteriorating as each minute passes. Seven minutes after the release, AAPL is down 30 bucks, -5.5%, to 520.00, in erratic trading. AAPL finishes down 39 bucks, -7%, to 512. Obviously, the Apple results will dampen the mood for the Nadsaq and the tech sector tomorrow after a bad day today.

Over 70% of the people that have accessed the Obamacare web site have had to deal with errors and problems. The First Lady requests help from democratic election donors to help support Obamacare. The State of the Union expectations are being played down so traders are thinking the speech may not have much of an impact on markets. Typically, markets rally the day after since lots of candy is promised to everyone. President Obama may continue his war on coal and natty gas so these industries may be affected negatively.

US Attorney Bharara charges a CEO and broker at the BitInstant bitcoin exchange with laundering drug money. BitInstant backers include the Winklevoss twins (originators of FB).

Sunday, January 26, 2014

SUNDAY 1/26/14

Global violence continues. The US, Germany, France and other Euro nations urge President Yanukovich to bring calm to Kiev, otherwise, trade and Euro zone economics may be negatively affected. Russia warns the west to not interfere with the Ukraine. 300 tourists take ill with stomach flu aboard a Royal Caribbean Cruises ship. RCL may puke tomorrow morning. France’s Hollande splits from his long time companion and First Lady Valerie Trierweiler choosing the young film actress Julie Gayet instead who will now accompany him as he performs political duties. Perhaps Hollande can now focus more on France’s economic problems rather than his love life.

The FBI, SEC and other government regulators continue to target the large banks concerning market manipulation, price fixing and other nefarious behavior in the commodities, currency and futures markets. BAC is under investigation for front running the trades of clients. Michaels Stores is investigating possible fraudulent activity with customer card accounts a la the Target and Nieman-Marcus problems.

Edward Snowden says the NSA performs industrial espionage. If the NSA comes across foreign corporate secrets as it fulfills its mission to provide security, the spy agency will download the information, but it is unsure what exactly the NSA does with the economic intelligence. Snowden insists that he acted alone. He comments on how he suspects the US secret service likely wants him dead and will probably either put a bullet in his head or poison him and watch him die slowly in the shower.
China voices concern over the US imposing duties on solar panels and products. The protectionism wars continue to develop. Each country tries to protect its interests as the global economy falters and in the end, everyone is dragged lower. President Obama’s State of the Union speech is Tuesday night and his words will greatly affect solar, natty gas, coal and energy stocks.

Australia markets are closed for Australia Day. Nikkei opens and drops like a stone -2.6%. The KOSPI is -1.5%. BOJ releases minutes saying inflation is in play not deflation. The dollar/yen is lower to 102.05. The futures start out negative with the S&P -5, Dow -50 and Nasdaq -9 but recover back to the flat line as the Shanghai opens for trading. Currency fears escalate as the Turkish lira moves above 2.33, Argentine peso above 8.00 and South African rand at 11.11. The Indonesian rupiah continues to weaken now at 12190 and Philippine peso at 45.423 also causing concern. Ditto the Brazilian real and Malaysian ringgit. All these currencies are weakening against the dollar which sends all these currency numbers higher day after day.

Gold spot 1272. Silver 19.955. Brent crude oil lower at 107.72. WTIC crude oil 97.05. Natty gas continues higher to 5.32. The early voting in Thailand elections is disrupted as one protestor is shot dead. Thailand deteriorates but the government says 90% of the country is not affected by the protests and the elections will continue. The Thailand tourism industry is in collapse. Travel and leisure stocks in Asia are punished.

Clarity is provided concerning the financial worries in China. The Shagxi mining trust failed and will require a bailout. More importantly this trust failure will set the ground rules moving forward for China’s debt dilemma. The failure of the trust worries global bankers since precedent is about to be set and the Chinese trust market is huge. The unraveling of a thick wool sweater can start with one loose thread.

Saturday, January 25, 2014

SATURDAY 1/25/14

Egypt violence continues with tear gas filling the air on the 3-year anniversary of the beginning of the Egyptian Revolution. Several folks are killed in more bombings. The supporters of the military and new government square off against the Muslim Brotherhood. Egypt is very violent and in chaos. In the Ukraine, the city of Kiev burns as the anti-government protestors now demand President Yanukovich to step down. Many government buildings in Ukraine cities are now occupied by the protestors as the situation deteriorates. Terrorist warnings continue for the Sochi Olympics creating worry among athletes, families and spectators. Financial concerns grow over Russia spending $51 billion to host the Olympics; the most expensive games ever. The delicate and fragile Syria peace talks continue.

The Whitehouse says that 3 million people have signed up for Obamacare but refuse to say how many have actually paid the premiums. A total of 7 million paid enrollees are needed by March. Judging by the 3-months of data thus far, the taxpayer will have to bailout another mistake. A shooting occurs at a ZUMZ store at a Columbia, Maryland, shopping mall. Consumers will continue to decrease the shopping trips to physical stores and instead buy via the Internet. The World Economic Council wraps up in Davos and was overshadowed by other global events. ECB’s Draghi says there is dramatic improvement in Europe’s economy and inflation will gradually recover higher. Draghi also sees no signs of deflation occurring. Perhaps if he removed the rose-colored glasses his eye sight may improve?

Friday, January 24, 2014

FRIDAY 1/24/14

Aussie dollar drops below 0.87 as the China slowdown concerns create worry around the globe. BOJ’s Kuroda speaks positively on Japan’s recovery. The dollar/yen is 103.15 dropping from the overnight highs so the Nikkei sells off -2%. SSEC is up +0.6%. Samsung reports the lowest growth in the last three years. Novartis heart drug is denied approval so NVS is sold off. The 10-year yield is 2.77% and 2-year 0.35% dropping the 2-10 spread to 242. Fitch maintains Germany’s AAA debt rating with a stable outlook, affirming the S&P’s positive rating for this European leader about one month ago. Europe begins trading and starts the day flat to positive. Euro 1.3679. Pound 1.6658.

The BOE sees no need for a rate increase, walking back prior guidance, since the unemployment rate has quickly dropped to 7.1%, only one tick from the 7.0% rate target. The BOE is in the same pickle as the States. The Fed has set a 6.5% unemployment rate target as a basis to increase tapering and raise benchmark interest rates (the tapering is not tightening ongoing discussion) and the unemployment rate is dropping much faster than expected. Typically, the unemployment rate decreases for good reasons; more people are working and less are looking for work since the economy is strong (like the late 1990’s and 2004-2008).

But currently, unemployment benefits are ending creating a sick and longer-term structural unemployment problem. People are no longer counted in the unemployment statistics and those that are say they are not looking for work since there are no jobs available. This sends the unemployment rate lower but for the wrong reasons creating a problem for central bankers that want to tighten based on the dropping unemployment rate. Companies are taking the Fed’s easy money and funding buybacks to pump stock prices higher instead of buying equipment or hiring employees. There is no demand in the economy and along with rising healthcare costs and other regulations, companies see no reason to expand and instead are simply trying to hang on and keep the doors open.

The falling unemployment rates are a problem for central bankers since their guidance for raising benchmark interest rates are based on the falling unemployment rate. Central banker policies are hurting not helping since the unemployment situation only worsens while at the same time the easy money is creating new asset bubbles in markets. Comically, or tragically, at Davos, many of the big wigs involved in creating this global dilemma congratulate each other on their Keynesian approach to economics as they sip champagne from crystal flutes.

At about 3:30 AM EST, markets deteriorate with Europe turning negative and the futures drop from flat to S&P -5. The dollar/yen drops to the 103 level so the stronger yen sends markets lower. The 10-year yield drops to 2.75% exhibiting risk-off type behavior as traders seek the safety of Treasuries (price moves up and yields down). At 4 AM, S&P -6.5. Dow -60. Nasdaq -12.5.

The Argentine Peso is at 7.90 plummeting in value weaker than the 2002 financial crisis. Argentina becomes more troublesome daily and the concern is contagion spreading to Brazil, Venezuela, and other nations. A collapse in Venezuela could spike oil. Euro banks are exposed to Latin America. The Turkish Lira is 2.327 as the central bank attempts to prop up the weak currency but fails. Turkey woes will greatly affect Europe. The Argentina and Turkey financial situations create concern around the globe. Older traders immediately recall the Thai Baht crisis leading into the Asian Financial Crisis in 1997. No one knew what a baht was. Kind of like an Argentine Peso and Turkish Lira. The Mexico Peso Crisis of 1994 is another example of how a small butterfly flapping its wings can have a dramatic impact on the world.

Brazil speaks optimistically about an economic recovery but bases this confidence on the US, UK, Europe and Japan driving the recovery. Conditions deteriorate in Libya with regional wars killing dozens of people and wounding hundreds. Several explosions occur at Cairo police stations and one near the pyramids killing four and leaving nearly 80 injured. Egypt is in chaos with the travel and tourist industry in collapse.

The Ukraine violence continues as the anti-government activists agree to a ‘truce’ where the government will not use rubber bullets or live ammunition against protestors, will release protestors from jail and will convene parliament to consider reversing the new anti-protest law. The protests are spreading to more cities with the western side of the Ukraine siding with Russia and the left side siding with Europe.

At 4:30 AM, the dollar/yen drops to 102.83. S&P -7. Dow -64. Nasdaq -14. Oil, gold, silver and copper are flat to negative. European markets are down -0.5% or more. Global markets take on a negative, contagion-type, vibe. The talk of a currency crisis is dominating the news flow. Emerging markets are weak. At 5:30 AM, S&P -10. Dow -91. Nasdaq -21. European indexes are selling off from -1.0% to -1.5%. The CAC 40 is -1.4%. Spain’s IBEX is dropping -3.2% due to exposure to Latin America where stocks are selling off strongly. Brazil’s BBVA is down -6% today and down -9% on the week. Perhaps Argentina contagion is underway. The deteriorating Argentina and Turkey financial situations are dominating the discussions at Davos and creating global contagion fears. The Puerto Rico debt mess is another ongoing problem as officials attempt to find solutions to handle $70 billion in debt.

At 6:30 AM, the dollar/yen drops to 102.13 down well over 2 points from only one day ago. Yen shorts are likely covering creating more upside fuel which drives the yen higher, dollar/yen lower, and sends global stock markets lower. S&P -15. Dow -125. Nasdaq -29. Markets are soggy underneath and deteriorating with support levels weakening. WTIC crude oil drops under 97. Gold 1271. Silver 20.21. The 10-year Treasury yield is 2.72%. PG trades flat after beating by a penny but missing on the top line. HON beats on top and bottom lines and jumps +1.4%. The euro moves above 1.37 which will hurt growth prospects for Europe. BAC drops -1.1% pre-market. JNPR is up +4.4%. SWK pops +1.6% on an earnings beat. The earnings releases are positive this morning but overshadowed by the global negativity. HON reverses course and begins selling off.

A few minutes before the bell, the dollar/yen is 102.36 with S&P -12. Dow -104. Nasdaq -20. The broad indexes drop as the opening bell. The VIX spikes above 15. The SPX drops through the critical 50-day MA at 1813. The Dow loses the 50-day MA at 16158.19. The COMPQ loses the 20-day MA at 4174. The RUT is selling off strongly to 1151, below the 20-day MA, and above the 50-day MA at 1139. Moving into lunch time, the RUT is leading the other major indexes lower. Biotech stocks are whacked with IBB -3%. VRTX -4%.

Trannies are getting smoked today down -3.5% (worst sell off for trannies in nine months) so the Dow Theory confirmation signal with the Dow Industrials does not occur. KSU is beaten -15%. Kansas City Southern earnings do not confirm the rosy picture provided by NSC and UNP earlier this week. The airlines are beaten with XAL -3.4% so airlines and railroads send TRAN lower. UAL loses altitude down -4.2%. Market volume is running above average and very robust which is a very bearish indication. The VIX moves above 16. Germany closes at the lows.

 Around lunch time, the Dow is down over 200 points and the SPX prints an 1800 handle not seen for one month. Natty gas tags 5 bucks for the first time since 2010 due to the winter weather (the coldest winter since 1979 which are 100-year type events), low supplies and pipeline disruptions. PG is up +3.2% helped by earnings and traders seeking defensive stocks. WFM also bucks the negative trend up +1%. DFS beats on earnings and gains +5%. CAT is beaten -2.6% and AAPL -1.8% both ahead of earnings releases on Monday. Natty gas is now at 5.07 up 33 cents today, over +7%. Folks will see their winter heating bills increase. Natty prints 5.18 with short traders covering and running for their lives.

At 2 PM, Google’s gmail and blogger Intenet programs crash and will not function properly. GOOG is down -3.2% at 1123. TESS -15.3%. ACAT -9.5%. MCD comments on light consumer traffic in restaurants. Retailers continue to discount leftover goods from the holiday and begin to layoff employees. The severe winter weather continues in the northeast further hurting retailers. The top line revenue numbers remain weak for companies across many different sectors which is an unhealthy sign for the economy. The SPX collapses under the psychological 1800 level. The Dow is down over 250 points falling below 16K. Natty gas is now 5.21 up over +10% today! VIX is up 25% to 17.27.  Traders are concerned that a currency event may occur this weekend creating global financial contagion so they are trimming shares.

The bell rings and the carnage ends with the SPX losing 38 points, -2.1%, to 1790, losing the 1800 level. The Dow plummets 318 points, -2.0%, to 15879, losing the 15.9K level. The Nasdaq loses 91 points, -2.2%, to 4128. The RUT collapses 28 points, -2.4%, to 1144. The SPX and Dow lost the 50-day MA but the COMPQ and RUT have not. SOX drops -2.3%. NYA -2.3%. Gold is higher to 1269. This is the worst week for the major indexes since 2011. For the week, the SPX loses -2.6%, the Dow -3.5%, Nasdaq -1.7%, RUT -2.1%, NYA -3.0%, TRAN -2.3%, SOX -1.7%, XLV -2.4% and XLF -3.7%. The financials were bludgeoned questioning the bullish strategy that the banks would lead the broad indexes higher this year. Instead the financials are leading markets lower. Transportation and healthcare sectors are beaten.

The major indexes have lost the following percentages off their respective tops; SPX -3.2%, Dow -4.3%, Nasdaq -2.9%, RUT -3.4% and NYA -3.8%. A sell off of -10% is considered a correction and -20% a bear market. The VIX explodes +46% higher this week to 18.14 so fear is finally arriving in markets. Natty gas ends at 5.16 up +20% this week. Anyone heating with natural gas will receive higher monthly bills. GWW is slapped -8.4% this week which is particularly worrisome since Grainger is a supplier for small manufacturers and lackluster sales indicate a slowing economy.

 Emerging markets are big losers on the week with TUR -7.6%, EWZ -5.3%, EWY -4.6%, EWM -3.3% and EWW -3.9%. Other losers include WYNN -10.5%, IGT -15.4%, KSU -14.5% and ISRG -5%. Notable winners this week are MSFT up +1.2%, JNPR +6.6% and FFIV +8.2%. Economist Shiller’s CAPE PE is 25.4. After the bell WMT announces 2400 firings from Sam’s Club stores. Retailers do not need as many employees if store traffic is light. The coming layoffs and store closings in the retail sector will be bloody.

Thursday, January 23, 2014

THURSDAY 1/23/14

The dollar/yen moves strongly higher to 104.70 so the NIKK jumps +1% higher in early trading. In Davos, Japan’s Abe says “Japan is back.” He speaks about ‘womenomics’ where Japan needs to place more women into the work force to help combat the future demographics of an aging population. The US faces the same demographics problem with a population growing older each year increasing in proportion to the number of young people. TM promises another strong automobile sales year.

China HSBC PMI surprisingly drops to 49.6 under 50 indicating a slowing economy and the first contraction in the last half year. China export orders continue to fade indicating a weaker global economic environment. The Aussie dollar drops to 0.8794. Asia’s mood sours quickly and the major indexes sell off. The dollar/yen collapses lower down to 104.34. The NIKK reverses the earlier gains due to the strengthening yen and ends the day down -0.8%. The Shanghai loses -0.5%. US futures drop overnight with S&P -7. Dow -65. Nasdaq -1. The US courts rule that four Chinese divisions of accounting firms Deloitte and Touche, PricewaterhouseCoopers, KPMG and Ernst and Young, will be barred from practicing in the US for six months. The SEC is frustrated over receiving fraudulent accounting information concerning ongoing investigations into Chinese companies such as QIHU, BIDU, SINA and SOHU. The ruling will be appealed.

Creating a triumphant of bad China news, rumors circulate that a large China trust bank is in trouble and the PBOC is adding liquidity propping up more than just the seasonally-expected new year’s celebrations. Concern grows that China will force individuals investors to take some of the pain of bad financial paper. The circumstances developing are reminiscent of moving into the Lehman event in the States in late 2008.

Concern grows over South African platinum strikes that begin today since there is a past history of horrific violence. Platinum oddly trades lower when the expectation would be turmoil and lower supply with prices moving higher. Copper is down -0.5%. Oil is flat to lower. A terrorism threat against the Olympics received via email is exposed as a hoax. Protestors and police clash in Kiev, Ukraine, which now looks like a war zone, with people fatally shot. Opposition leader Klitshko calls for snap elections but President Yanukovych ignores the plea increasing the violence. The Thailand Baht falls the most in recent days as the protests and social unrest continues in Bangkok and other cities.

Spain’s unemployment rate remains over 26% at depression levels. The structural unemployment is now deep-rooted and will hurt Spain moving forward, especially with jobless benefits expired for many. One-third of Europe’s unemployed are in Spain. Almost two-thirds of the unemployed in Spain are out of work for over two years. Spain’s 10-year yield is 3.74%. German yields are near 7-month lows. Portugal’s 10-year yield is under 5% for the first time since June 2010. Airline easyJet misses forecasts and is beaten -2.6%. Mouse-maker Logitech, now branching deeper into tablet accessories and earphones, beats on earnings and guides higher so the stock jumps +11%. Pearson, owner of the FT and other educational resources, disappoints with earnings and guidance and is smacked -6%.

France PMI is 48.8 remaining in contraction although beating the consensus estimate. Euro zone PMI is a healthy and encouraging 53.9. European indexes trade lower in the early going but then recover to the flat line and higher as morning approaches on the East Coast. The euro launches higher up through 1.36 to 1.3635 which will disappoint European exporters and manufacturers. Swiss bank Credit Suisse and US officials are in talks over an $800 million settlement to put to rest allegations that the bank helped Americans evade taxes. The big wigs continue enjoying the lavish luxury offered by Davos. The world leaders wax worry and concern over growing ‘income inequality’ as they are waited on hand and foot, sip expensive champagne from crystal flutes and sample rare finger foods and delicacies such as caviar. Iran President Rouhani speaks in Davos.

Lenovo confirms the purchase of IBM’s low-end server business. The 10-year yield is 2.84% and 2-year 0.39%. The JNS Biodiesel plant in northern Mississippi, that uses poultry fat as fuel, explodes into a mushroom cloud completely destroying the facility. MCD beats by a penny with top line revenue light. McDonald’s mentions a “challenging” year so it is beaten -1% lower. EBAY is +2% but far off its ecstatic move in the AH’s last evening. UNP beats on earnings reinforcing the NSC positivity from yesterday and gains +1%. South Africa officials agree to meet with striking platinum miners. Traders were privy to this news that is why platinum price is not yet affected by the strike to any great extent. Futures deteriorate as the morning proceeds with the S&P -10 and Dow down -110.

Equities drop like a stone at the opening bell. Volatility spikes higher. The broad indexes are continuing to make new lows moving into the lunch hour with the Dow down almost 200 points. Janus Capital Group is dropping as folks continue to pull their money. HLF plummets -13% on news that Congress may investigate the company. Banks are hit today in response to worries over the China financial markets and the accounting spat. QIHU -10%. BIDU -4%. SINA -6%. SOHU -5%. XLF -1.6%. SLM -5.2%. GS -1.8%. JPM -2.1%. MS -2.5%. FB is down -3% after an article yesterday said Facebook could lose 80% of its users within the next 3 years. SC, the Santander Consumer USA IPO, trades for the first time today bouncing +8%.

The dollar/yen has collapsed over the last few hours from 104.70 down through 104 now way lower at 103.60. The stronger yen is sending the stock market lower. European markets deteriorate and turn strongly negative trading in sync with the US weakness. Existing Home Sales are higher but less than expected. December is typically a slow month. House inventory is flat-lining at 4.6 months showing continued interest. Shockingly, the number of first-time home buyers, the typical young family that everyone envisions when it comes to home sales, is missing in action and buying the least number of homes ever since data has been collected. The hedge funds, speculators, cash buyers and Chinese, Russian and Malaysian wealthy are buying the homes and driving prices higher while the young family with a newborn baby live in the parent’s basement. The central banker policies encourage this reckless market behavior. The rich are richer, thanks to the Fed pumping the stock market, so now the wealthy take the cash and fuel a new real estate bubble.

AMD is down -2% and has collapsed -22% in the last five days. NFLX is up +16%. EBAY +1%. The broad indexes are down about -1%. The 10-year yield is 2.81% as some traders seek safety. Trannies are positive with TRAN printing another all-time high near 7600 as the Dow diverges lower. Equities continue lower with the SPX down -20 and Dow -200. The 10-year yield is down to 2.78% with money moving from stocks to bonds. Dollar/yen 103.44. Markets are strongly negative with copper and financials driving stocks lower. The volume is strong.

AAPL is one of the very few bright spots gaining nearly +1% as Icahn adds more Apple shares. LMT is down -4%, NOC down -3% but GD is up +2%. NE plummets -9%. DO -5%. RIG -4%. Argentina’s financial problems and runaway inflation worries increase with stocks such as BMA, YPF, BFR and TEO, massacred down from -9% to -20%. Brazil stocks such as GOL, EWZ, VALE and PBR are down from -3% to -7%. Emerging markets are all smacked lower. Equities sell off until about 2 PM where a bottom is placed for the day and the indexes float higher into the closing bell.

The SPX loses 16 points, -0.9%, to 1828, with the LOD 24 points down at 1820. The Dow drops 176 points, -1.1%, to 16197, with the LOD 233 points down at 16140. The Nasdaq loses 24 points, -0.6%, to 4219. The RUT loses 9 points, -0.8%, to 1172. Tech and small caps did not lead lower and on the up days did lead higher so this is favorable for bulls. TRAN rockets higher in a down tape printing another record high, however, the Dow Industrials diverge lower. The US stock market selling creates angst among traders that blame the selling on China. After the bell, MSFT handily beats on earnings and gains +4.4% in AH trading. Starbucks beats on EPS but barely meets the top line sales estimate. SBUX trades flat then leaks lower. Despite the large down day, the bullishness among traders and analysts generally continues.

Wednesday, January 22, 2014


The BOJ continues monetary policy as expected. The dollar/yen is 104.36 slightly higher overnight so the NIKK is slightly higher as well as US futures. A major Chinese internet outage occurs with the cause not yet identified. SSEC gains +2% due to the liquidity injections. European markets are flat. UK unemployment rate drops to 7.1%. Pound is higher to 1.6545. ABB drops -4% on weak Q4 results blaming project delays. Geneva II peace talks are underway concerning Syria with US Secretary Kerry stating that Asaad cannot be part of the transitional government. The World Economic Council meetings and interviews are in full swing in Davos.

Nobel Prize economist Shiller continues to encourage investment in the stock market even though markets are in bubble-like conditions. Market bears cite Shiller’s PE calculation, which uses average inflation-adjusted earnings over 10 years, now at 25, as an indicator of an overextended market. Shiller agrees with this assessment but says the PE climbed to 46 before the 2000 market top so equities can continue higher. Interestingly, now even renowned economists doubt their own work that signals a market top at hand or very near and instead drink the long-side Koolaid, not wanting the party to end. The bitter cold and snow continues in the northeastern US, also in Washington, D.C., slowing business and government.

IBM is down -4% pre-market. UTX beats on EPS but misses on top line and trades flat. COH misses earnings on top and bottom lines and is bludgeoned -6.4%. Coach reports a big drop in sales and did not discount merchandise to the extent of other retailers so it paid the price. UBS beats and trades flat. ABT beats on EPS but misses on the top line sales so it deteriorates lower. MS -1.1%. FCX misses on earnings and is beaten -2%. ORCL is downgraded and slapped -0.6% lower. NSC reports healthy results for moving products by rail so it jumps over +6% and creates an upbeat mood. Ditto EAT that reports bullish numbers and it jumps +6%.

Markets move flat to higher as the session begins. VMW drops-2% on news it is buying Airwatch but then recovers and moves higher on the day. XLNX +2.3%. NUAN +8%. GILD is parabolic up another +0.7%. Biotech is parabolic with IBB up +0.7%. Activist investor Carl Icahn says investing in AAPL is a “no-brainer” so Apple gains +0.4%. FB’s Sandberg is one of the youngest women to ever become a billionaire. Target axes about 475 people at the headquarters and tells part-time workers to sign up for Obamacare. TGT dumps -0.6%. The gaming stocks WYNN, MGM and LVS are thwacked -2% or more creating a near-term ceiling for the parabolic price moves.

The SPX ends the day flat at 1845. The Dow is down 41 points, -0.3%, due to IBM weakness. The Nasdaq is up +0.4% and RUT +0.5%. Tech and small caps are leading higher. All four major indexes exhibit tight standard deviations bands on the daily charts so a big squeeze move in the market is expected over the coming days. The COMPQ and RUT are already starting to break to the upside; tomorrow will dictate if up is the direction, or, a fake-out. The dollar/yen is 104.52 moving up today from 104.25 this morning so the BOJ pumped the stock market higher with the weaker yen. TRAN prints a new record high at 7555 but the Dow lags and does not print new highs providing a non-confirmation from a Dow Theory perspective. Five weeks ago the trannies and the Dow were in sync but not now TRAN is running parabolic higher and Dow diverging flat to lower. The retail sector, RTH, is smacked again losing -0.3%.

After the bell, NFLX beats big on earnings but only by a smidge on the top line revenue and launches +17%. NetFlix runs to the 390’s matching the prior record highs printed in the Fall. NFLX short interest is about 14% so much of the launch will be short covering. FFIV +11%. EBAY beats by a penny and misses on the top line, however, activist investor Carl Icahn announces a position in the stock so it catapults +11% higher instead of selling off. AEO collapses -4.3% on news of naming an interim chairman. WDC pukes -2.1% after guiding lower. STX loses -2.1% in sympathy. SNDK drops -1.6%.

Aetna CEO Bertolini says US health care costs are out-of-control and change is needed. AET has doubled over the last year from 33 to 72 benefiting greatly from the turmoil and worry he describes. Secretary Lew sends a letter to Speaker Boehner concerning the debt ceiling limit. In the Fall, Lew had said he could take extraordinary measures to extend the debt limit into late February or early March but now says Congress will need to reach an agreement by late February. Suddenly, the debt limit theatrics are front and center with the deadline now only five weeks away.

Tuesday, January 21, 2014

TUESDAY 1/21/14

Concern over an Aussie property bubble grows as home prices surged strongly higher in 2013. Dollar/yen continues higher to 104.63 so the weaker yen pumps the NIKK up +1.0% and the S&P futures +4. SSEC is up +0.9% as the PBOC saves the day with liquidity again. The central bankers are the markets. China liquor sales surprisingly slump ahead of the new year celebrations. Lenovo is in talks to take over IBM’s low-end servers. IBM wants to focus more on the software side. Lenovo has been very successful after buying IBM’s PC business a few years ago.

[Text is Redacted: Purchase January 2014-01 to Read the Complete Chronology]

Thailand declares a State of Emergency in Bangkok, Thailand, as the violence continues. Authorities will now use a heavier hand to stamp out the protests. Governments, such as the Ukraine and Thailand, are pursuing these heavy-handed approaches to protestors that will only guarantee long-term political instability. A huge security breach occurs in South Korea that may affect as much as 40% of the entire population. Credit card information and other details such as phone numbers and addresses are stolen and distributed to marketing firms. The Internet appears to be a leaking sieve in respect to security with hackers holding free reign. South Korean President Park Geun-hye is impacted by the security breach as well as UN Chief Ban Ki-moon. An Oxfam report says 85 people own the equivalent wealth of the 3.5 billion poor people which is one-half of the world’s population. Pope Francis asks the financial and political leaders gathering in Davos, Switzerland, for the World Economic Forum, to use their wealth and influence to help the poor and disadvantaged.

Jim McCoggin, Principal Global Investors, remains bullish and says “the S&P 500 is not in bubble territory and is not over extended,” and “buy on setbacks.” Trader Stephanie Link says the “health of the market is good” and to “buy the pull backs in the blue chip companies.” A CNBC business television survey shows nearly 90% of financial planners are bullish on stocks. MS Strategist Adam Parker says “we continue to be bullish on the market.” Floor trader Ben Lichtenstein,, remains bullish and says the upside “can continue a lot longer.” The rampant bullishness continues in the markets. There are no bears remaining. Virtually every well-known analyst, trader or pundit is bullish looking for SPX 2000 in 2014. The markets are likely ready to make an epic move to the downside.

Monday, January 20, 2014

MONDAY 1/20/14

China Q4 GDP is 7.7% slightly better than expected with consensus at 7.6%. China GDP in Q4 2012 was 7.9%. Q1 2013 was 7.7%. Q2 7.5%. Q3 7.8%. Thus, the GDP average for 2013 is 7.7% (7.675) and will be an important number to reference during 2014. A break under 7.5% in future quarters will be a watershed event. China is trying to engineer a steady slowing of the growth rate as the transition from an export-led economy to a domestic-led economy occurs. This is a difficult task like walking across a trampoline while holding nitroglycerin. The 7-day repo rate surges souring the mood in China and Asia. China property prices are up 23% during 2013; an obscene and unsustainable pace. DB trades down -4.2% due to the negative news last evening. The Deutsche Bank profit numbers appear even weaker than first thought.  NIKK ends -0.6% at 15642. SSEC -0.7%. Nintendo continues lower ending down -6%. Dollar/yen 104.16. Euro 1.3548. Pound 1.6446. Peugeot Citroen auto sales are disappointing and it is crushed -7%. DB -5%. Europe trades flat to lower.

Today is Dr Martin Luther King Jr Day holiday in the States honoring the great civil rights leader and US markets are closed. The 10-year yield is 2.82%. The US Postal Service union workers are concerned over the placement of small USPS stores inside other stores such as office supply chain Staples. The counters at SPLS are manned by store staff indicating that the era of privatization and decreased union participation is beginning for the USPS. US retailers continue to slash prices. The malls and stores are ghost towns with very thin traffic so retailers are anxious to unload inventory.

President Obama expresses a very open and relaxed view on the decriminalization of marijuana. The comments will boost the marijuana industry and probably encourage more States to allow the medical use of pot as well as pass more lenient pot laws. The Obamacare law changes again with a delay to the stipulation that higher-up executives cannot receive a better health care plan than the low-level employees. The IRS cannot identify clear rules for the arcane law causing the delay. Congressional leaders accuse Snowden, the whistleblower that exposed the NSA spying, as having ties with Russia before the leaks occurred, but they do not provide any proof. Investigations are continuing and a potential discrediting campaign against Snowden is likely underway.

The Iran nuclear deal goes into affect beginning today. Billions in sanctions are lifted as Iran supposedly delays its nuclear enrichment. Congress continues developing a bill to actually stiffen the sanctions going against the president’s position. An American missionary held in North Korea begs for help on video. Kim Jong-un is likely using the poor soul as a pawn to receive aid from the US. China’s 7-day REPO rate is approaching the lofty levels from December. The PBOC intervenes with liquidity. China is becoming very shaky and the liquidity injections are needed with greater frequency. Oil and copper move lower. The BOJ begins a 2-day policy meeting. The dollar/yen is moving higher to 104.38 so the NIKK is up +0.9% and S&P futures +3.

Sunday, January 19, 2014

SUNDAY 1/19/14

Even though the Charleston, West Virginia, water ban is lifted after the chemical spill, residents are becoming sick and questioning the safety of the water. EMN, the maker of MCHM which spilled into the Elk River, now faces lawsuits. The majority of the 2.2 million Obamacare enrollees were already previously insured. Only 11% were previously uninsured; a paltry couple hundred thousand of the enrollees. Obamacare intended to enroll 30 million uninsured Americans. Concerns grow that the insurance companies may need bailouts due to the serious disruption that the AHA law is causing to the health insurance industry.

The Bangkok, Thailand, protests turn more violent with daily bomb blasts occurring. Authorities accuse the protestors of setting off bombs injuring their own followers which only adds to the distrust and confusion ongoing in Thailand. People are injured and vehicles are set ablaze in Kiev, Ukraine, as protests become more violent. Authorities are trying to place limits on the protestors which only escalates the mayhem and violence. In Russia, ahead of the Sochi Olympics, two terrorists believed to be the suicide bombers at Volgograd (Stalingrad), appear on a video promising further terrorism during the Olympics. Putin says a “ring of steel” is protecting the Olympics with 40K troops providing security. Ticket sales are weak as concern grows over the safety of the transportation routes to and from the games.

China’s air pollution levels rise due to increased coal-burning in the colder weather. The air pollution is 25 times greater than the safe levels identified by WHO and the sick air causes many wealthy to live abroad. Australia and Japan markets open down about -0.5%. Troubled TEPCO, the operator of the Fukishima nuclear plant, dealing with the continued triple meltdowns, seeks to spend $26 billion to provide energy through other means such as LNG. Japan continues to hide news about the ongoing nuclear disaster, the worst ecological disaster in human history that continues to pour thousands of gallons of radioactively-contaminated water into the Pacific Ocean every day. The Macau gambling boom continues and pumps the gaming stocks to bubble levels (WYNN, LVS, MGM). German bank DB posts a surprising Q4 loss as legal costs increase which should weigh on the global banking sector. The dollar/yen drops to 104, then briefly sub 104, so the yen is stronger and the NIKK is -0.7%.

Saturday, January 18, 2014

SATURDAY 1/18/14

Iraq violence increases daily with regional war and conflicts developing rendering the multi-year US war effort a futile exercise. Afghanistan grows more violent with a suicide bomber and gunmen killing 21 people at a restaurant in Kabul including three US citizens, two Canadians and two Briton nationals. Turkey’s political power-struggle and social unrest continues. The Geneva II peace talks are days away and the Middle East is a mess deteriorating daily. Arab countries are fragmenting and falling into chaos. Millions of refugees fleeing Syria are straining neighboring countries.

Friday, January 17, 2014

FRIDAY 1/17/14

Aussie miners are up but retailers down. The dollar/yen is 104.34 off its high yesterday at 104.70. Japan’s consumer sentiment drops. NIKK and SSEC trade lower. The Shanghai is at a 5-month low. UBS Bank is boosting bonuses for Asian top performers. Nintendo reports weak results with the WII U. Consumers keep moving towards mobile gaming devices instead of consoles. China Mobile begins selling the iPhone in China. Pre-orders are well over one million. Tim Cook is in China to promote Apple but he displays all the enthusiasm of an undertaker. More and more consumers, especially Asian, prefer the larger smartphone screens which may prove challenging for the skinny iPhone. Thailand’s social unrest turns ugly with over 20 people hurt in an explosion targeting anti-government protestors. An investigation begins into a rice corruption and price-fixing scandal. Thailand’s GDP may be cut in half to 2% or 3% due to the increasing social unrest and violence. Shell says profit will fall far below expectations. Shell drops -3%. UK holiday retail sales are far better than expected especially with small boutique shops. The pound jumps strongly to 1.6440. European markets are flat to higher. HSBC Bank’s capital holdings may be overstated according to a research report. UK banks are trading lower. The 10-year Gilts (UK) and US 10-year Treasury yields are both at 2.84%. The euro sits at the 1.36 pivot trying to decide which way to go. 

[Text is Redacted: Purchase January 2014-01 to Read the Complete Chronology]

Chinese millionaires continue to leave the country to hide assets abroad to protect them from government seizure. This behavior only serves to fuel the ongoing asset bubbles in dividend stocks, biotech, specialized tech stocks, real estate, art, and many other areas. Chinese property values have jumped over 20% in the last four years fueling the property bubble that is ripe for popping. US margin interest sets another all-time record high well above the lofty peaks that identified the 2000 and 2007 stock market tops. CBOE SKEW is at 137 at very high levels that identify increased likelihood for a black swan event. Greece and Spain remain very troubled economically.Greece and Spain remain very troubled economically. Spanish banks continue to fail at record levels.

Thursday, January 16, 2014

THURSDAY 1/16/14

Aussie dollar drops to a 3-year low with potential rate cuts on the table. Australia is up +1.3%. The dollar/yen is 104.72. The BOJ is very upbeat on the economy. Japan machinery orders spike strongly higher. NIKK closes down -0.4% perhaps now experiencing the good news is bad news outcome, like the States, since the BOJ may pull back on stimulus. Global markets are hooked on central banker easy money. Egypt elections end with 11 dead and 500 arrested. The new constitution is approved by 90% of the voters and a military-style rule may develop for this troubled nation similar to the Mubarak years. Europe December car sales provide a positive surprise up 13%, the biggest monthly gain in four years, however, the overall year is slightly down posting the lowest auto sales in a couple decades. The central banker money makes the rich richer so the wealthy must have purchased new cars as holiday gifts. Europe CPI is up a paltry +0.8%, with core +0.7%, verifying continuing deflation risks ahead. LaGarde warns about the “deflation ogre.” The ECB pretends to be tough on banks by wanting to raise capital requirements for the ongoing stress tests. The criteria to assess the banks are actually being watered down. Projected housing drop criteria are mild not accurately reflecting what would happen in a serious financial downturn. Government bonds may be separated from the risk assessment. Bad debt and non-performing loan problems can be explained away by writing lenient rules on how a bad debt is recognized. In other words, the credibility of the banking stress tests is already in question. The ECB is taking the whole year to perform the stress tests to provide plenty of time to fudge and massage the outcome. The statement about raising capital requirements is meaningless bravado to simply keep up appearances. Europe trades flat.

Brazil hikes interest rates 50 basis points ....

[Text is Redacted: Purchase January 2014-01 to Read the Complete Chronology]

After the bell, Intel misses EPS by a penny and beats slightly on the top line. Gross margin guidance is lowered so INTC is beaten -3% in the AH’s. American Express misses by a nickel and barely matches revenue. AXP is beaten -2%. COF misses earnings and it is thwacked -2.3%. SYY dumps -2.1%. BBT beats but it is sold off slightly. RDEN needs makeup to hide the tears of sadness as it plummets -22% on weak earnings and guidance. The bears growl in the AH trading but AXP recovers near the flat line. Canada says the bitcoin digital currency is not recognized as legal tender. Hollande admits to relationship struggles and must choose between the First Lady and the mistress since his trip to the US occurs next month. This romantic tryst is a distraction from handling the serious economic problems ongoing in France. Computer hacking experts testify that the Obamacare website security is getting worse. 

Wednesday, January 15, 2014


Asia markets bounce higher. NIKK gains +2.5%. Dollar/yen is 104.35. SSEC is flat. The World Bank says the global economy is at a “turning point” and raises its growth forecast to 3.4% but warns that emerging markets may struggle if the US decreases stimulus. Egypt votes for the second and final day on a new constitution. Europe is up from +0.3% to +0.9% with the DAX strongly higher. German GDP disappoints. Luxury goods maker Burberry is up +5.6%. 30 AMZN technicians and mechanics in Delaware are voting on unionization today. The 10-year yield is 2.88% and 2-year 0.38%. The NSA has placed a spy pathway in 100K computers that are currently operating in foreign nations. Recently legalized New Jersey on-line gambling is not receiving the interest expected. BAC beats on earnings and pops +2.3%. US futures are higher with the S&P +4.  Mortgage Applications bounce almost 12% (off multi-year lows) forecasting a stronger than expected spring season for the housing sector. INTC delays the opening of the new “Fab 42” chip facility in Arizona that President Obama touted as a shining example of state-of-the-art manufacturing. WTIC crude oil moves above 93. PPI is up +0.4% with core up +0.3%. Empire State Mfg Index is 12.51 much stronger than expected for manufacturing activity in and around New York. The dollar/yen is higher to 104.40 so the futures remain elevated due to the weaker yen.

Equities run higher after the opening bell. TRAN prints a new all-time high above 7506. The Dow is up triple digits but not making new all-time highs. Dow Theorists will want to see a new all-time high to confirm the robust trannies. The SPX prints a new all-time intraday high at 1850.84 at 11 AM, punching into positive territory for the year, and may close at an all-time new high. FAST, a construction and industrial parts company, drops -2.6% on lower sales. NFLX dumps -3.2% since the court ruling against net neutrality will likely increase operating costs. The dollar/yen runs to 104.63 so the weaker yen creates the upside stock market orgy. The BOJ and Fed are the markets. The 10-year yield pops to 2.92% then settles in at 2.90%. European markets all close higher with gains of well over 1% and higher in the DAX, MIB and CAC. European stocks are at the highest levels since the spring of 2008 pumped by the World Bank’s positive outlook. A surge in bank stocks, with the European bank index up about +8% this year, is helping fuel the upside. In addition, regulators are already watering down the requirements for the European banking stress tests ongoing this year which creates the upside in the banks. P prints a new all-time high above 35 up 3%. Equities remain elevated about +0.6% to +0.7% into the Beige Book at 2 PM. The report is positive stating increases in economic activity for 5 of the 12 districts. Holiday sales are in line or a bit better than expected. The report has something for everyone reporting steady growth in manufacturing but slowing activity in home sales and construction. Equities are non-responsive to the data. Dow remains up triple digits and the SPX remains at new all-time highs at 1848-1850. Fed’s Evans says tapering should continue at a steady pace. Evans is a dove so it is surprising to hear him comment this way but even more surprising, the markets ignore his comments. The stock market does not sell off on the hawkish comments by hawks yesterday and also not on the hawkish comments from a dove today. Traders have full faith and trust that the Fed will keep pumping the stock market higher forever. The CPC put/call ratio prints another low at 0.68, at multi-year lows, continuing to signal a significant market top at hand due to the rampant complacency and lack of fear in the stock market. WTIC oil moves above 94 and Brent oil is above 107. Copper recovers strongly today well into positive territory. CAT gains +2%.

The bulls keep equities elevated into the closing bell with the SPX printing a new all-time closing high at 1848.38 (overtaking the previous record high from 12/31/13 by two pennies). The new all-time intraday high is 1850.84 printed this morning. The SPX gains 10 points, +0.5%. The SPX is now officially up on the year—by 2 cents. The Dow gains 108 points, +0.7%, to 16481 but did not print new all-time highs. The Nasdaq is up 32 points, +0.8%, to 4215 printing new 13-year highs. The RUT jumps 8 points, +0.7%, to a new all-time intraday high at 1171.96 and new all-time closing high at 1170.95. XLF leaps +1.2% to 22.15. BAC +2.3%. MS +3.6%. GS is +1.2% ahead of earnings tomorrow. Traders are convinced that financials will lead the markets higher and the action bolsters their theory. Semiconductors receive a strong bid with the SOX up +0.9%. Tech and financials are leading markets higher. AAPL jumps +2%. XONE drops -9% as the 3D printer punishment continues. AA +2.7%. FEYE gains +11%. NUS collapses -16% on news that the company may be a potential Ponzi scheme (similar to the ongoing HLF drama). After the bell, CSX misses on EPS and is in line with revenue. Coal shipments slump. CSX drops -1.7%. JCP announces a plan to close 33 stores and can 2K employees. Typically a stock would pop on this news but JCP drops -2%. The dollar/yen is 104.59 remaining elevated all day long so the weaker yen provided the stock market fuel. The DuckDuckGo search engine is gaining strong popularity in light of the constant news about NSA spying. The search engine provides privacy since it does not record your information like GOOG does. YHOO drops -0.3% after sending COO de Castro packing. Mayer hired de Castro away from GOOG and now will have to pay him a hefty severance package of $40 million or more. The House approves a $1.1 trillion funding bill that the Senate will also pass ending four years of government dysfunction operating without a proper budget. This clears the deck for the debt ceiling limit fight that will heat up in February and March.

Tuesday, January 14, 2014

TUESDAY 1/14/14

The NIKK collapses -2.5% at the opening bell in sympathy to the US’s bad day. Asia markets tumble lower across the board with the SSEC bucking the trend +0.9%. The Chinese Yuan remains strong at 6.04. The Nikkei finishes down -3.1% losing almost 500 points to 15422. Dollar/yen 103.57. Aussie dollar 0.9016. France’s Hollande fights for his political career, providing a speech on the economy, while wrestling with his triangle love affair. Euro 1.3678. Pound jumps to 1.64 on news that UK inflation is easing around the 2% level. European markets trade lower as the US negativity cascades around the globe. Egypt votes on a new constitution when an explosion occurs in Cairo killing one person. The Egypt stock market is up +6% thus far this year. US futures are slightly positive in the early hours on the East Coast. TWC rejects the $61 billion Charter bid. The FBI is investigating rate-rigging and front-running in the Fannie and Freddie swaps market. Traders are colluding and profiting from the manipulation by as much as $100 million. As George Carling the comedian would quip, “it’s a big club, and you ain’t in it.” In a different matter, the Libor scandal, three ex-Rabobank traders, Robson, Thompson and Motomura, are charged with manipulating and price-fixing the Yen Libor benchmark interest rate.

The 10-year yield is 2.85% and 2-year 0.37% for a 248 2-10 spread well off the 264 spread a week ago indicating a flattening rather than steepening yield curve. Nearly 90% of the S&P 500 companies that pre-announced in the confessional season have lowered earnings estimates. The bar is so low now that even Aunt Edna in her white orthopedic shoes can easily step over. JPM misses on earnings by a nickel but beats on the top line. After sorting through the mixed numbers and adjustments, the earnings appear to beat by a nickel. JPM drops -1.3% pre-market on a knee-jerk reaction but then returns to the flat line minutes later and begins inching higher. CEO Dimon says progress is made on placing the litigation issues behind them and the bank is ready to move forward. NFIB Small Business Index is up again this month but remains far under the pre-2006 robust numbers. Companies say sales remain weak and more extensive regulations, Obamacare and higher taxes are all a worry. Capital spending was likely pulled forward into 2013 which decreases expectations for early 2014 and businesses do not see a need to boost inventories. Thus, businesses are optimistic, but very tentative. WFC beats by 2 cents and the top line misses. WFC trades flat initially and then leaks lower -0.6%, then -1.2%. Wells Fargo handles about one-third of all mortgages in the US. MSFT is downgraded and drops -0.7%. Retail Sales are better than expected but the prior months are revised lower. S&P futures are +4 pointing to a recovery rally.

Equities move higher after the opening bell. The SPX runs to 1827 but then drifts lower. GIS is downgraded and drops -0.7%. SSYS 3D printing company lowers guidance and is bludgeoned -10%. GME cuts the outlook and is punished -18%. The NRF says holiday retail sales are up +3.8% over last year at $601 billion, a better than expected result although a touch below the higher estimates. Somehow folks always find the money to buy for Christmas and the holidays, however, evidence is mounting that many sales were pulled forward from 2014 into 2013 which may create very weak Q1 results. In addition, it is easy to print a robust sales number when stores are giving the merchandise away like JCP unloading pants for one dollar but this obviously leads to trouble with the margins moving forward. At 10 AM, Business Inventories are stronger than expected. The pipeline is stocked with goods. The consumer needs to buy the stuff to keep the party going. Considering that many Americans blew their Christmas budget, and are now eating franks and beans each evening, and millions remains structurally unemployed, the growing inventories may prove worrisome. JPM trades slightly up and WFC trades slightly down. ISRG gains +10% after guiding higher. The broad indexes recover strongly moving into the noon hour. Another battery problem occurs with a BA 787 where a malfunctioning cell creates smoke during a pre-flight check. BA drops -1.4%. The banks trade flat with the exception of BAC, which has become a darling for long traders, that pops +1%. The VIX drops down to 12 on the dot like yesterday, but bounces. Tesla recalls 29K Model S cars to fix the power adapter overheating problem. TSLA pops +3.3% as it also announces that auto production is 20% above estimated levels. Television trader Stephen L Weiss says to buy stocks and “the markets will not have a significant correction.” Equities are printing the highs of the day during the lunch hour on fumes and vapor for volume. Yesterday’s sell off was on strong volume.

Fed’s Plosser, a hawk, says the “future rate increases may have to be aggressive.” Markets are leaking lower off the intraday highs. Fed’s Fisher says he would have preferred a $20 billion taper per month rather than $10 billion and will vote to continue tapering even if the stock market sells off. Equities are resilient and remain elevated in the face of the hawkish comments. The retail sector is flat. M is a strong retail stock up +1%. Tech and biotech are providing leadership retracing yesterday’s drop. Copper is weak. The equity markets continue higher into the closing bell retracing all of Monday’s losses and printing the biggest up day of the year. The dollar/yen dropped from 104 to 103 yesterday (stronger yen), thus, equities sold off. Today the dollar/yen climbs from 103 to over 104 to 104.18 (weaker yen), which means the BOJ was printing yen like madmen yelling Banzai! and pumping the markets higher. The Fed and BOJ central bankers are the market.

The SPX gains 20 points, +1.1%, to 1839. The Dow jumps 116 points, +0.7%, to 16374. The Nasdaq leaps a huge 70 points, +1.7%, printing new 13-year highs, intraday at 4183.84, and closing at 4183.02. The RUT gains 15 points, +1.3%, to 1163. Tech and small caps lead higher today with tech overtaking yesterday’s losses but small caps could not. Volume is lighter today than yesterday. INTC gains +4% printing a new 52-week high. JBL +7.8%. AAPL +2%. GOOG +2.4% printing a new all-time high at 1151. TSLA +16%. FB +3.3%. LNKD +1.3%. CTRL jumps +38% as traders chase companies involved in home technology a la the GOOG takeover of NEXT. 3D printing stocks are all lower in sympathy to SSYS dropping -8.2%. After the bell, GM announces a 30 cent dividend, a 3% yield, and bounces +3.2% in AH trading. 11 people are killed during the Egyptian voting today. The Iran nuclear talks intensify with rhetoric heating up in the Iran, Israel and US camps. Television show host Larry Kudlow tells folks to “stay in stocks and stay away from bonds.” The courts rule against ‘net-neutrality’ and in favor of the larger telecom companies such as VZ and T in regards to transmitting data across the Internet. The large companies can continue to play favorites providing faster service to clients that pay higher fees and slower service for anyone aligned with non-favorite affiliates.