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.