MONDAY 1/13/14

Japan markets are closed for Coming of Age Day when the 20-year olds move into adulthood. The 7th Asian Financial Forum (AFF) kicks off in Hong Kong. The dollar/yen collapses to 103.37 so the stronger yen sends US futures lower with the S&P -3, Dow -30 and Nasdaq -8.

The anti-government Thailand protestors block city intersections demanding that PM Yingluck Shinawatra step down. The Chinese Yuan is at a 20-year high against the dollar at 6.04. Asian markets trade flat. VW outsells GM in China for the first time in years. BMW retains the top spot in the luxury car market with Mercedes close behind. Mercedes is updating vehicle interiors adding touch screens and other electronic gadgetry. The Mount Sinabung volcano in Sumatra, Indonesia, continues to erupt and spew ash covering the crops and fields. 25K people are now displaced from the active volcano and hundreds are experiencing respiratory illness due to the ash and dangerous gases. Indonesia will allow the export of copper, lead, zinc and iron ore to continue while banning other minerals such as nickel. Copper weakens. Nickel pops higher.

Vice President Biden attends Sharon’s funeral in Israel leading the American delegation. A timetable is developing for an Iran nuclear deal to begin 1/20/14 which would relax sanctions, however, President Obama must fight both democrats and republicans in Congress that want to maintain and increase the sanctions against Iran since the restrictions are finally working and have brought Iran to the table. Crude oil trades lower with Brent oil at 106.96. WTIC crude oil 92.25. Basel regulators ease the restrictions on banks. The Basel Accords are global standards that attempt to prevent future banking crises by strengthening capital requirements and decreasing bank leverage. Regulations, however, decrease earnings. Airbus announces record orders. Europe trades flat. Euro 1.3660. Pound 1.6443.

TSN recalls 34K pounds of chicken that may be contaminated with salmonella. The poultry industry cannot get their act together with these scares continuing to occur with frequency. Gasoline prices in the States hits a 12-week high despite the weaker oil price. WTIC crude oil drops under 92. The West Virginia chemical spill situation is in day five seriously crippling small businesses due to the lack of water. The 10-year yield is 2.86% and 2-year 0.37%. Oil services company Amec offers to buy FWLT for $3.2 billion. Infrastructure stocks may be in play in 2014. BEAM jumps +25% on news that Suntory will acquire the booze-maker for $16 billion. LULU drops into a downward-dog position losing -11% pre-market after cutting forecasts. GS says stocks are at lofty levels, but at the same time says stocks are fairly priced and a pullback may occur. Sounds like Goldman is covering their behind in case markets sell off since they, and the majority of Wall Street traders, analysts and strategists, have told Ma and Pa to buy with both hands and place their entire life savings in the stock market over the last month. EXPR plummets -5.4%. ICPT collapses -27% after its huge run-up last week.Activist fund Elliott Management is targeting JNPR which pops +6%. WEN jumps +7.8% on happy earnings news and forward guidance. Equities drift slightly lower after the opening bell. MCD and SBUX leak lower. VIX breaks under 12 encouraging the bulls.

Fed’s Lockhart speaks very positively about the economy and hints that tapering will proceed on schedule moving forward. He also says the stock market is not “in a bubble in any way.” Lockhart’s comments strikes a sour bearish tone with equities (since tapering will continue) that begin leaking lower from 10:30 AM forward. The dollar/yen drops under 103 briefly so the stronger yen sends equities lower. Gold moves above 1250. NMBL is upgraded and pops +9.4%. SODA spills -26%. Trannies pop to a new all-time high at 7485.34 and then collapse printing an outside reversal candlestick day ending at 7361.84 down -1.4%. From a Dow Theory perspective, TRAN prints a new high but the Dow could not confirm the new high to keep the upward trend in place. Biotech darling CELG prints a new high and then announces lower guidance for 2014 but raises guidance for 2015 and beyond. CELG is beaten -3% on strong negative volume printing an outside reversal candlestick day. MCK collapses -5% on news the Celesio deal is in jeopardy. ISRG collapses -6.4%. SNI -7%. Retailers KSS and GPS are beaten -6.2% and -4.0%, respectively. The retail sector collapses today creating the broad market negativity. Retailers are discounting merchandise with after-holiday sales but stores report very thin traffic. Retail earnings in general are lower than expected and guidance is weak a big change from when retail could do no wrong in 2013. Biotech is slapped hard to day with IBB down -1.4% printing an outside reversal candlestick day. The VIX, after dropping under 11 indicating rampant trader complacency, catapults higher well over 13. The day ends with the SPX dropping 23 points, -1.3%, to 1819. The high was over 1843 and low under 1816, a 27-point range. The Dow loses 179 points, -1.1%, to 16258. The Nasdaq drops 61 points, -1.5%, to 4113. The RUT small caps lose 16 points, -1.4%, to 1148. Tech and small caps lead lower.

After the bell, GOOG buys NEXT for $3.2 billion, a company specializing in digital thermostats and smoke alarms. Google pops on the news but leaks lower in the AH’s down -0.6% to 1123. Charter bids $61 billion for TWC. Bellwether YUM drops -2.2% after disclosing weak sales in China. The Detroit Auto Show names the Chevy Silverado as truck of the year, so much for the timing on the recall, and the Chevy Corvette as car of the year. 24% of the enrollees in Obamacare are young folks under 34 years old. The Whitehouse needs over 40% of the young people to sign up to make the new health care program viable, otherwise, the taxpayers will have to bail out another mistake.