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.