FRIDAY 2/28/14; EOM; Consumer Sentiment; Russia Invades Crimea

Japan factory output data is better than expected indicating a strong start to the year. Japan’s inflation surprises to the upside. Retail Sales post strong gains up +4.4% year over year. The Nikkei and Topix sell off, however, since the dollar/yen drops under 102 (stronger yen). The Japanese data may indicate a cyclical rebound rather than a sustainable recovery. The Chinese Yuan is set for biggest weekly loss ever. China is watching the Asian currencies weaken and is weakening the renminbi to keep pace. By weakening the .....



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For the month, the major indexes are all up from +4% to +5% printing the best February since 1998. February is typically one of the worst stock months of the year. The SOX is up +6.6% during the month with semiconductors leading the way. Airlines, XAL, fly +9% higher and biotech, IBB, is up +7.5%. Long traders continue to chase airlines, biotech, tech and healthcare stocks; the leaders from 2013. After the bell, Fast Retailing out of Japan is in talks to buy J Crew. DRI gains +2.5% as it avoids and muzzles questions from activist investors.

At 5 PM, President Obama delivers remarks concerning the crisis in Ukraine. The president is “deeply concerned” over military movements by the Russian Federation inside Crimea. He says the latest developments do not benefit Ukraine, Russia or Europe (did not mention the US) and that the Ukrainians need to decide their own path forward. He stresses that everyone should remain calm and any violation of Ukraine sovereignty would be “deeply destabilizing.” The president said that the US “will stand with the international community” and “there will be costs” if the Russian aggression continues but he did not say what the costs were or who would administer these costs.

The president’s statement is very terse, only a few minutes, and he exits the Whitehouse briefing room without taking any questions. An hour later he is shown on television having fun at a democratic fund raising happy hour party. Russia will likely pay little attention to his comments. Approximately 2000 soldiers are clearly in control of Crimea but the uniforms display no clear identification. Cargo planes are arriving at the airports unloading Russian military vehicles. The soldiers are presumed to be contractors and mercenaries working for Russia; a hybrid military force. Russia is clearly occupying Crimea. Putin’s actions will dictate the fate of Ukraine. A Russian spy ship is docked at a Cuban port over the last two days and is capable of monitoring both US military and non-military communications and activities.

Technical Outage

The web site was down yesterday due to a power outage. Systems are returning to normal.

THURSDAY 2/27/14; Durable Goods; Fed Chair Yellen

Australia is weak overnight losing -0.5% as copper continues to stumble lower. Housing, automobiles and China are the three main users of copper and all three appear challenged moving forward. Commodities are lower across the board. Struggling airliner Quantas crash lands -9% after announcing losses and job cuts. Australia banks are weak. The NIKK drops -0.3% as the dollar/yen remains flat at 102.35. Panasonic gains +2.6% due to the TSLA battery factory news. Japan retailers are slapped hard selling off from -2% to -4%. Nintendo loses -4%.

China markets are buoyant. SSEC +0.3%. HIS +1.7%. Chinese banks recover but the property stocks continue to be sold off about -2%. The dollar/yuan is 6.1284 moving sideways after the steep decline in recent days. The PBOC, however, is not done weakening the yuan. Thailand gains +1% as Prime Minister Yingluck Shinawatra faces a corruption probe. A bitcoin ATM kiosk opens in Sinagapore despite the Mt Gox debacle. Bitcoin is holding its own as more US companies express interest in accepting bitcoin transactions.

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After the bell, Deckers Outdoor reports beautiful results but ugly guidance saying Q1 will be very weak. UGG boot sales are uglier than expected. DECK shares collapse -12% triggering a halt to trading. Gap reports better than expected EPS but misses on the top line retail sales and guides lower. GPS trades lower. CRM drops -1% despite an earnings beat. CRM gained +4% in the regular session. UAL forecasts lower revenues for Q1 telling analysts to expect results “well below expectations.” The airline sector remains a darling of long traders, carrying-over from last year, along with biotech and retail. UAL sputters -4%.

Snowden, the American whistle blower that exposed the NSA spying scandal, releases additional details on the extent of governments spying on citizens. YHOO webcam chats were intercepted by the UK spy agency GCHQ, the equivalent agency to the NSA, under a program called Optic Nerve, and the information was stored on databases. Some of the information recorded includes sexually explicit photos and video adding a tawdry twist to the ongoing spy scandals by major governments. Anyone using a webcam must realize that all your communications are recorded and archived. Big Brother is watching.

WEDNESDAY 2/26/14

The dollar/yen falls to 102.10 and lower so the NIKK loses -0.5%. TM drops -1.3% so there must be continued weakness expected for exports. Sumitomo Mitsui Financial Group lost -1.7% overnight. Panasonic gained +6% on news of a potential partnership with TSLA. Fukishima’s radioactive contamination plume is moving across the Pacific Ocean and reaches Canada’s Coast. Water samples from Vancouver, British Columbia, show elevated radiation readings. WHOI scientists will continue monitoring the coastal waters and say the contamination is well within safe limits and will not harm marine and animal life. Millions of dead starfish are ignored and scientists will not connect this baffling tragedy to the Fukishima contamination. Hawaii is receiving elevated levels of contaminated water and the West Coast of the US will receive the affects of the contamination plume moving forward. The scientists say do not worry but they are not the ones swimming and exposed to the Pacific Ocean each day.

China’s property stocks recover slightly from the recent beatings. Chinese banks are weak with ICBC losing -1.9% and Bank of China dumping -1.2%. Traders are increasingly worried about the Chinese credit markets since the current behavior is reminiscent of the trouble in the US ahead of the Lehman Brothers failure and financial crisis of late 2008 early 2009. The Shanghai and Hang Seng end higher. The rapid drop in the yuan, now at 6.1243, creates concern over future Treasury demand from Asian banks. Asian currencies are beginning to align more with the renminbi (yuan) rather than the dollar. In recent years, Asian currencies have appreciated against the dollar helping to create Treasury demand; however, as Asian currencies follow the yuan lower, this may negatively affect Treasury demand going forward. China owns $1.3 trillion of US government debt and Japan holds $1.2 trillion. Korean stocks gain overnight. The Thailand turmoil and social unrest continues. Thai Airways moves sideways after reporting losses for the last nine consecutive months as the violence destroys Thailand’s tourism industry.

Ukraine vows to protect bank deposits as 7% of bank funds have fled the country in recent days. Turchynov, the interim Ukraine president, assumes full control of the Armed Forces and voices concern over a risk of the country separating. The IMF says aid to Ukraine will be provided to cover its debts and help stabilize the country. The Uganda shilling drops the most in two years, to 2513 per dollar, as nation donors cut aid due to ...........




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Retail and biotech stocks rocket launch higher with traders returning to these leading sectors from last year. Retail earnings are nothing to write home about but the buybacks send stocks higher anyway. Financials were supposed to lead in 2014 but traders have abandoned that ship and are running towards the retail and biotech shiny objects. TGT catapults +7% higher. ANF +10%. WMT +1.5%. BIIB +1.2%. ALXN +1.1%. MYL +1.3%. Tech continues to fly higher when typically the late February period is where traders typically begin cycling out of tech stocks. Q4 is the strongest quarter for technology. GOOG, AMZN and FB are all higher. Chip maker AVGO gains +4.7% on strong earnings. RGR is shot in the foot losing -9.5% after missing earnings for the first time since 2009. Logistics company UTIW is lost stumbling -24% lower.

Europe closes flat to lower with Greece up a big +3%. Greece is up +12% this year with this economically troubled nation outperforming the continent. Tesco, a large retailer, loses -3%. DAL bounces +1.3% after announcing a plan to provide frequent flier miles based on ticket price rather than miles. IBM opens up the ‘Watson’ platform hoping that developers can create new lines of business. Watson was made famous after appearing on the Jeopardy television show.

The dollar/yen is up to 102.56 keeping equities elevated today. The SPX keeps knocking at the 1851-1853 resistance. VIX keeps dancing above and below the 14 level. The 5-Year Note Auction is well received with the yield now trading at 1.50%. Natty gas continues to slide lower to 4.58 but traders remain bullish as the cold weather and snow continues across the northern US. Activist Icahn keeps stirring the pot with eBay sending EBAY up +2.6%. Tech, biotech and retail sectors are pushing stocks higher. The bears are trying to keep a lid on the upside by keeping the VIX above 14. A few minutes before 2 PM, stocks top out for the day and slide strongly lower.

The day ends with the SPX dead flat at 1845. This is the third consecutive day that price breaks up through the closing high at 1848.38 but fails to close above. The Dow ends flat to slightly higher at 16198 remaining above the 50-day MA at 16130.  The Nasdaq is flat and RUT small caps gain +0.7% due to the ongoing bullishness in speculative biotech stocks. The SOX gains +0.7% showing a strong demand for semiconductor stocks in recent days. SOX is up about +11% during February. LNKD is up +1.4% continuing a seven-day +16% rally. A cloud covers FSLR sending this solar play -9% lower. Fast-casual restaurant chain NDLS, still a young IPO but darling of long traders, jumps +8% ahead of earnings after the bell.

After the bell, NDLS misses earnings estimates and pukes -8% giving up the gains during the regular trading session. JCP bounces +18% with a short-covering rally after posting a profit for the first time in years and stating that the hard part of the restructuring is over. TSLA announces plans for a new ‘gigafactory’ that will supply lithium-ion batteries and electric storage applications. There are four sites targeted for the battery factory; Texas, Arizona, Nevada and New Mexico. TSLA is up +4.2% in AH trading. 

TUESDAY 2/25/14; Consumer Confidence

The Aussie ASX 200 winning streak ends at six days. China stocks drop the most in seven weeks with the SSEC falling -2%. Further data is surfacing showing that Chinese home prices are dropping for the first time in over one year. The long awaited-popping and collapse of the China housing bubble may be in progress. Copper is weak again today. Traders are ignoring the copper canary in the coal mine. Doctor Copper is ill and it is a key market leader. The dollar/yuan is 6.1243. The dollar/yen is 102.35 trailing lower from 102.50 but the Nikkei plays catch up to US markets and gains +1.5%. Fast Retailing and Rakuten gain about +2%. SNE sells off. Japan markets are positive believing that the BOJ will continue the easy money policies. Korea promises to boost growth by +4% by 2017. The Thailand violence continues but the SET Index finishes the day higher.

Ukraine drama continues with the forming of a new coalition government now delayed for two days until Thursday. Kiev is in a somber mood laying flowers around the protest area where folks were shot in the head by snipers a couple days ago. The Ukraine currency keeps weakening and depreciating with the dollar/hryvnia currency pair moving higher to 9.845. Ukraine can probably hold its own in the short term concerning currency and debt issues, however, the intermediate and longer term are highly in question. Capital controls may be implemented on banks if a flight of money occurs. 100 binders of dumped documents are recovered from the river near Yanukovych’s presidential palace. Volunteers are drying the documents ironically making use of the heated floors in the palace. Yanukovych lived like a king surrounded in gold leaf splendor with heated marble floors and every luxury at his fingertips. The average Ukraine citizen is poor only earnings about $4K per year.

The Turkish lira continues weakening as a tape recording is released concerning Prime Minister Erdogan instructing his son on how to hide money. Erdogan calls the recoding a fake but the potential proof of nefarious activity and corruption destabilizes the Turkey. TUR drops nearly -4%. The turmoil in Turkey is now on the front burner again. Basic resource stocks are beaten in European trading as worries grow over a China slowdown. German exports rise the most in three years. The FTSE touches 1999 highs. The EC increases the euro zone growth forecast to 1.2% for 2014. European indexes trade flat. Brazil and the EU are planning to install an undersea cable from Brazil to Portugal that can allow communication between Europe and Brazil free of NSA spying.

The Mt Gox bitcoin exchange goes dark. The last bitcoin price listed is 135 and it appears that the site is closed down permanently. Anyone storing bitcoin at Mt Gox may lose all their money. The bitcoin topped at a price of 1151 on 12/4/13. Other exchanges are distancing themselves from Mt Gox and bitcoin price remains 450 at these exchanges. Bitcoin enthusiasts are concerned about the virtual currencies fate going forward. Will bitcoin survive? About 700K bitcoin were hacked and have gone missing due to the .....




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The major indexes are negative at the closing bell but only marginally. The SPX, INDU, COMPQ and RUT are all down -0.1% in sync showing the robots completely in control of trading. The S&P 500 prints 33 new highs. The retail sector, RTH, jumped +1.1%. HD jumps +4%. TSLA is the top performer up +14%. Shorts got run over today by a Model S. BBRY gains +8%. CSCO loses -1.3% after a bond offering shows muted interest. TMUS -6%. BA -2%. RVBD jumps +4%. FSLR pukes -11% on an earnings miss. The illustrators at DWA animate sad-faced characters this evening after reporting an earnings miss and dropping -6%. SAM staggers lower losing -5.2% after missing on EPS and guiding lower. Gold is up 14 of the last 16 sessions moving from 1240 to 1340, a 100-dollar, +8% gain.

Chicago has sub-zero temperatures for 22 consecutive days making this winter one of the top five coldest in history. Natty gas is at 5 as the contract rolls over for the month. Traders expect natty gas prices to remain elevated since the severe winter does not want to quit.

MONDAY 2/24/14

Australia’s ASX 200 ends a hair above the flat line creating a seven day winning streak. Mining and resource stocks are trading lower on a projected China slowdown. Copper trades lower.  China continues pulling back on the liquidity available for property loans. Property shares stumble lower as much as -7% and -8% and the SSEC loses -1.8%; the biggest loss in seven weeks. Hang Seng -0.8%. China home prices are dropping in the big cities due to the property curbs for the first time in over one year. The PBOC easy money party is ending and the central bank is attempting to engineer a soft landing. China banks are sold off with Minsheng Bank losing -3.3% and ICBC and Bank of China both losing more than -2%. Korea finishes lower. NIKK -0.2%. Asia is weak across the board in overnight trading. A bombing occurs near the protest areas in Bangkok which will continue to kill the Thailand tourism industry.

The dollar/yen drops to 102.35 so the stronger yen sends the US futures towards the flat line. European indexes open higher but leak towards the flat line and turn slightly negative following Asia’s lead. German IFO business confidence is slightly better than expected showing mild optimism. VW offers to buy the remaining part of Scania it does not already own but the Swedish truck maker prefers to maintain a Stockholm stock listing. Scania catapults +32% and VW drops -6%.

HSBC misses on top line revenue. The UK bank reports a profit gain of +9% but the Latin America business plummets -60%. HSBC also has ongoing legal obligations concerning the Madoff scandal. HSBC loses -4%. UBS is seeking immunity in the Forex-rigging scandal and would prefer to throw other banks under the bus to save their own skin like last year’s deal with the Libor scandal. UBS trades slightly lower. Euro zone inflation is in line with estimates with the CPI a touch above consensus at 0.8%. Disinflation and deflation is more of a concern than inflation in Europe. The euro remains elevated at 1.3766 boosted by the German confidence data and CPI. Merkel praises the new Italian leader Renzi wishing him congratulations and good luck. Renzi’s cabinet is completed with several women added and the majority of the cabinet is under 50 years old. Renzi, nicknamed the ‘demolition man’, is playing into the narrative that this youth, vigor and enthusiasm will pull Italy out of its economic slump.

Ukraine issues a warrant for ex President Yanukovych’s arrest charging him with mass murder and war crimes. A rumor says Yanukovych was spotted in Crimea which is a port city in the Black Sea and home of the Russian fleet. The ex-president is fleeing like a rat. The use of snipers to kill citizens was a turning point in the multi-month movement. Asaad stays and fights in Syria, with the help of Russia, but Yanukovych is running for his life. Russia is not commenting and Putin will likely not want to be associated with Yanukovych’s weakness. Ukranians tour the presidential grounds and palace and are shocked at the luxury that Yanukovych enjoyed while the common people suffer to put food on the table each day.

Ukraine now faces loan defaults. $35 billion is needed in financing immediately so it is likely that a default is imminent. Investment by both citizens and foreign corporations and ....



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 WhatsApp CEO Jan Koum announces plans to release a voice messaging service. The move will aid FB, which is purchasing WhatsApp, in competing with other messaging apps that already offer voice. The disruptions continue in the telecom sector. RFMD and TQNT agree to merge. VZ sees higher profit margins ahead but traders are not impressed dumping the stock -0.8% pre-market. PANW gains +5.3%. HSBC -3.2%. NFLX loses -0.7% after striking a deal to pay Comcast to obtain faster video service speeds. At 8 AM, NFLX reverses course and is up +0.9%. MW increases the bid for JOSB continuing this long saga and both stocks run higher. The dollar/yen moves higher to 102.50 so the weaker yen sends US futures higher. S&P +5. Dow +30. Nasdaq +10.

The opening bell rings and stocks sky rocket higher as the dollar/yen climbs higher. The SPX prints new all-time highs above 1854 now positive on the year. The retail sector provides strength as well as healthcare and technology. Copper remains weak and volatility remains elevated although down on the day. The 10-year yield moves higher to 2.75%. DDS reports weak sales and earnings and drops -6%. PFE jumps +4% on news that a pneumonia vaccine appears promising and headed for approval. 3-D printing stock DDD is downgraded and drops -5%. The bulls push markets strongly higher to begin the week and equities remain elevated into lunch time. The Pentagon plans to reduce spending but the defense stock jump higher anyway. VZ promises to make a deal with NFLX moving forward. VZ drops -1%. NFLX +2.6%. CMCSA +1.1%. FB +3.2%.

Ukraine is calm but protestors remain in place in Kiev saying they will not leave until a deal is made with the EU. The 10-year Ukraine bond is 9.33% dropping about -10% since the violence stopped and Yanukovych fled. The yield drops as some investors buy Ukraine debt hoping the stability will continue. Europe ends the day higher receiving encouragement with the big up in US stocks.

The bullish euphoria is alive and well in markets. The SPX is up nearly 20 points, the Dow up over 150 points and the Nasdaq up over 40 points as the day proceeds. The RUT moves towards the mid-January all-time highs at 1180. The Nasdaq prints new 13-1/2 year highs. All four major indexes are up +1.0% indicating that the computers are running the markets today. Volume is below average. The brokerage sites report stronger bullishness among retail investors. Unfortunately, this behavior tends to occur towards market tops. The Dow is up nearly 200 points. The stock market peaks during lunch time and then chokes on a ham sandwich. The SPX drops from 1859, which is a new all-time intraday high, to 1840 during the afternoon.

The SPX ends the day at 1847.61 unable to print a new closing high above 1848.38. A new intraday high prints at 1858.71. The SPX gains +0.6% but well off the intraday highs. The Dow gains 104 points but was up as near 200 earlier in the day. The Dow gains +0.6% to 16.2K but remains under the 16.6K all-time highs. The Nasdaq jumps +0.7% to 4293 printing another 13-1/2 year high. Intraday, the COMPQ touched 4311. The RUT gains +0.9% to 1175. The broad indexes move up and down in sync indicating that the algorithms are running the show. Volume is below average but on pace with recent days. The VIX 14 level holds as support with price closing at 14.23 placing a firm lid on the equity market upside late-day. XLB is down -0.4% on the day. If the economy was strong, basic materials should be strong, not weak. Copper collapses but then recovers off the lows. Doctor Copper is ill in the emergency room but traders are not worried or concerned. The BPSPX remains above 70 maintaining a market buy signal.

SINA jumps +4%. HAL finishes up +2% after receiving an upgrade by one analyst and downgrade by another. FB jumps nearly +4% today on further joyous hype concerning WhatsApp. MW jumps +6% and JOSB +9% as the merger saga continues for these two drama queens. DDD collapses -5.4%. Composite building materials company TREX gains +21% which is an encouraging sign for the housing sector. BIDU moves higher after GS upgrades the price target to 220 (now at 173) but ended the day lower. After the bell, TSCO motors higher on strong earnings. SCTY drops -1% on lackluster earnings.

JCP is slapped -7.2% to 5.23 as analysts keep yelling the bankruptcy word every chance they get. SHLD loses -7%. Retail stores remain challenged especially mall stores since young folks are transitioning more and more to buying via mobile phones and foregoing the mall. The higher gasoline and natural gas prices are hitting consumers as well this winter. Everyone has received a monthly heating bill by now; hopefully they were sitting down to receive the shocking news. The loss in unemployment benefits will also hurt retailers especially WMT and food stores. The median income of US families was 57K a few years ago now 51K. 75% of the new jobs available are low-paying, part-time and minimum wage style jobs. This level of employment does not boost spending. Adding all these factors together it is easy to understand why retailers are up all night worrying. Analysts say pent-up demand will be created to jump-start the retail sector since folks are shut-in due to winter weather and will be ready to spend heavily. As friends in Brooklyn say, “Good luck wit dat.” Typically, retailers never fully recover the sales lost due to events such as this winter’s severe weather.

US and Russia relations are strained over Ukraine. Russia considers the developments a power-grab from the West and warns of grave danger. The rhetoric increases the talk of a potential military strike by Russia and increased troop movements are detected moving towards the Ukraine border. The Whitehouse says this is not a US-Russia problem. The Ukraine citizens supportive of Russia are circling the statues of Lenin to prohibit them from being torn down by opposition protestors. Approximately 100 Lenin statues have been pulled to the ground and destroyed mainly in the pro-EU western side of Ukraine. A poll shows that 53% of Americans, over one-half the country, think that other world leaders do not respect President Obama as a leader.

Uganda decides to outlaw homosexuality and will jail all gays for life. The African nation also outlaws lesbianism for the first time. Uganda’s position will likely hurt its economy moving forward since modern-day progressive companies will not be able to do business. Israeli jets strike locations along the Syria-Lebanon border to destroy weapons shipments moving between Syria and the Hezbollah guerillas. As is always the case, Israel avoids commenting on the strikes but does say they will do everything required to protect Israeli citizens. Crude oil prices remain elevated on the news.

SUNDAY 2/23/14

Russia complains that the Ukraine opposition protestors did not follow through with the 2/21/14 agreement. President Yanukovych was to stay in power a few months but the parliament voted to oust Yanukovych instead who has fled Kiev and vows not to resign. Russia and US relations are strained. Most Ukrainians do not want the country to split. The opposition wants Yanukovych out due to his dictatorial rule the last few years and unrest will likely continue until he resigns. Former Prime Minister Yulia Tymoshenko is freed from prison after 30 months and immediately goes to Independence Square vowing she will run for president. The parliament votes to grant presidential powers to the leader of parliament.

Turkey unrest continues as riot police use tear gas against 3K protestors in Istanbul. The protestors are marching against new legislation that creates stricter government control over internet use. The Venezuela riots now result in 10 deaths and 100’s wounded and tensions are increasing. President Maduro is in crisis management and worries that protestors will take over the government emboldened by the developments in Ukraine. Venezuela is growing more unstable since the jailing of opposition leader Lopez and the riot police shooting indiscriminately into a crowd of protestors last week.

The G-20 communiqué out of Sydney says policies will be developed to increase global growth. IMF’s Lagarde heralds the ‘action-oriented’ plan. MSFT is lowering the price that manufacturers pay for Windows operating system software. This will allows the companies to provide tablets and computers that compete more directly with the low-cost providers such as GOOG Chromebook. This action is deflationary. AAPL and SSNGY continue to work with a mediator to resolve a patent dispute but are barreling towards a court trial beginning next month. Apple’s CEO Cook and Samsung’s CEO JK Shin are involved in the mediation talks. AAPL continues to address the software security flaw that exposes users email, financial data and other private information to computer hackers. Mobile Apple devices are provided a fix. Personal computers running the Mac OS X operating system remain vulnerable.

The WhatsApp messaging service, that FB just announced buying last week for billions of dollars, goes down for several hours. The extended outage is blamed on higher traffic due to the publicity over the acquisition but perhaps Zuckerberg should have kicked the tires better. The retail sector is beaten further with more negative mall news. One person dies and nearly 30 others are injured due to a carbon monoxide leak from malfunctioning heating equipment at a Legal Sea Foods restaurant in New York. The US braces for another cold snap so natty gas prices will remain elevated. The Fed comes to agreement with large banks GS, JPM, C, MS, BK, NTRS, STT and USB concerning capital requirements. Others such as WFC and BAC continue the process.

The G-20 finishes the weekend meeting and essentially serves as the ‘global economic PR’ department. Member countries agree to the stronger growth message and vow to show progress before the next meeting in mid-November in Brisbane, Queensland, Australia. The air pollution and smog in Beijing is at dangerous levels. Particulates are extremely high so folks are breathing in dust. The air is as thick as pea soup fog with low visibility. Chinese and foreign nationals are leaving the city in droves since it is too difficult and unhealthy to deal with the pollution on a daily non-stop basis. China’s athletic fields are now constructed with domes and air filters creating the vision of a bubble society where folks must only live indoors. To attract more students, schools brag that they have more air filters than a competing school. The uncontrolled coal plants are creating much of the pollution. The dollar/yuan is 6.0945. The dollar/yen is 102.56.

SATURDAY 2/22/14; Ukraine's Yanukovych Flees

Ukraine protestors are in full control of Kiev and President Yanukovych flees the city. No one knows if Yanukovych is actually in charge anymore. Rumors surface that he fled to Abu Dhabi (the capital of the United Arab Emirates). Opposition protestors remain unhappy that Yanukovych has not stepped down. A member of parliament is in panic saying Ukraine is on the verge of economic, social and civil war that may lead to geopolitical war between the East and West. Tensions remain elevated. Mid-day Yanukovych calls the political crisis a ‘coup d’etat’ comparing the situation to the rise of the Nazi’s in the 1930’s. Yanukovych says he will not resign. Italy’s Renzi is sworn in as the youngest prime minister in the nation’s history. People hope for change and a better economy but ...............





[Text is Redacted: Purchase February 2014-02 to Read the Complete Chronology]

A major flaw is discovered in AAPL software. The security flaw creates vulnerabilities in all Apple products including iPhones, iPads and MacBooks. An update is available for users but concerns grow that the problem may be far more extensive. The Apple analyst downgrade yesterday appears prescient. AAPL loses -3.4% during the week with price at 525.

FRIDAY 2/21/14; OpEx

NIKK  pops +3% due to the weaker yen. The Nikkei is a roller coaster ride this week with up and down moves of 300 to 400 points occurring on a daily basis. NIKK bounces through the 14K-15K sideways range and sits directly at the 200-day MA at 14450. Asia markets are up except for SSEC dropping -1.2%. Beijing tells residents to stay indoors since the air pollution is at elevated levels. China voices displeasure that President Obama will meet with Dalai Lama this morning in Washington, DC.

G-20 leaders are meeting in Sydney and stress the concern over emerging markets especially as global rates rise. The G-20 supports the continued withdrawal of monetary stimulus. Of course they do, until the economies weaken, then these folks will quickly return to their Keynesian ways. Treasury Secretary Lew says China can manage the shadow banking situation. When bosses, officials or other power people tell you not to worry, that is typically the time to worry. Germany’s Schauble says emerging markets need to “do their homework” and make corrections and reforms to their economies now before asking for help later.

Ukraine drama continues with many conflicting stories appearing across news wires. The death count is up to between 75 and 100 deaths over the last few days. Ukraine police say 67 officers were captured. News video shows that Ukraine riot police were positioned as snipers against the opposition protestors. Fear runs rampant among the population since anyone can be picked off by a sniper if walking in the street. A tentative deal is reached with the help of Poland, German and France officials, but the agreement must be signed in the hours ahead. The deal would return the Ukraine government rule back to the 2004 constitution. Back then the political system and parliament had more power rather than the current unilateral rule coming from President Yanukovych, who is in essence, a Putin puppet.

Yanukovych will likely allow elections but in question is whether he stays or goes. The key demand of the opposition is that Yanukovych must go. Gunshots continue to ring out in Kiev. S&P lowers Ukraine credit rating to CCC and looks for a default to likely occur. EU officials are placing sanctions on Ukraine officials including freezing of assets and limiting travel to the Euro zone. The situation remains fluid, but calm, as everyone waits for an official signing of the agreement to end the violence. The Russian ruble continues to weaken against the dollar at 35.8225.

UK retail sales are weaker than expected and analysts quickly blame the weather. Gucci reports the slowest sales growth in our years. Luxury-provider Kering (previously PPR) reports weaker sales as luxury brand sales are trailing off. Today’s softness in luxury reinforces the weak results from Nordstrom last evening and indicates that the rich are tightening their spending habits. The FTSE is above 6800. Pound 1.6671. RBS is cutting 25% of its over 100K employees about 30,000 investment banking jobs. RBS warns of earnings losses coming next week. RBS bounces +1.3% on the news since firings are bullish. Interestingly, the UK government owns about 80% of RBS.

VOD bounces +4% as the deal with VZ closes. VZ trades slightly lower. European markets bounce about +0.5% in early trading. US futures are up on the weaker yen with the dollar/yen up to 102.45. S&P +6. Dow +54. A DB Tokyo salesman is charged with bribery and leaves the bank. Nickel rises for three weeks as traders believe steel and construction demand will increase. Copper is weak. GRPN -13% pre-market. PCLN +2%.

President Yanukovych announces that an agreement is reached and Ukraine will hold an early presidential election and the government will return to the 2004 constitution. A truce is apparently reached but everyone continues looking over their shoulders. Opposition protestors celebrated the news since they thought Yanukovych had resigned but the mood turns sour again when this was not the case. The opposition does not trust Yanukovych and the existing government. About 60% of the Ukraine population sides with the opposition, EU and the West, with 40% backing Yanukovych and the Putin side. EU says violence from either side is unacceptable and they have not yet seen a formal agreement.

Minutes before the opening bell, news wires confirm that an agreement has been signed by both Ukraine officials and the opposition. The opposition protestors express disappointment since they want Yanukovych to resign. Ukraine Health Ministry says 77 died and 581 are injured from the several days of violence. SPX begins on the upside now up 9 of the last 11 days. Copper turns positive. VIX is 14.70 teetering exactly at the bull-bear 200-day MA line in the sand. VOD +1.7%. The dollar/yen is strongly higher at 102.70 (weaker yen) providing stock market bull juice. The 10-year yield is 2.76% and hit 2.78% earlier so yield is challenging the three-week 2.76% resistance level. The 10-year yield has closed between 2.71% and 2.76% for the last eight consecutive days.

GRPN is pooped-on losing -16%. January Existing Home Sales are down -5.1% a big miss. The weak sales are not blamed on weather. The buyers are simply drying up. First time home buyers are at the lowest level since data collection began now only 26% of the overall market. First-time buyers should make up 40% or more of the housing market. Something very unhealthy is occurring in the economy. The median home price is $188,900. California housing sales decrease -7% and the winter weather obviously did not have an effect. Sales are simply weak across the board. Equities take the news in stride and remain elevated since the dollar/yen remains elevated at 102.68. The BOJ and Fed control the markets. Financials remain elevated which also helps equities remain buoyant.

INTU jumps +5.2% as the new TurboTax software release is well received as the heart of tax season begins. MSFT +1%. UA is up +5% after announcing a new deal with the US speed skating team and promises that the next Olympics will bring home gold. The US was highlighted to win 10 gold medals in skating at Sochi and instead end up with one silver medal. Under Armour was blamed for providing high-tech racing suits that actually slowed the skaters although the team has since downplayed the excuse. HPQ loses -1.5% quickly forgetting all of CEO Whitman’s positive talk. Equities float higher into lunch time fueled by the weaker yen.

Credit Suisse, the Zurich-based bank, will pay $196 million in fees and admit wrong doing concerning services offered to wealthy individuals without first registering with the SEC. CS trades flat on the news. The SEC moves ahead with a test program that will permit small-cap stocks to trade in wider increments. SEC Chair Mary Jo White spearheads the ‘tick size’ pilot program. The Fed releases transcripts from the meetings during the financial crisis and market crash in late 2008. Detroit bankruptcy proceedings continue with plans for all parties to absorb pain to remedy the excessive debt. Companies, investors, stock and bond holders and pensioners will all take a hit. Public pensions may be reduced by as much 34% and set a US-wide statute that pensions and bonds are susceptible to losses in other troubled cities. The final decision will impact the municipal bond market.

Biotech and pharma remain hot with ISIS up +17%. GILD gains +0.7% receiving European approval for limited use of the Hepatitis C drugs. Tech infrastructure company COMM catapults +18% after providing strong earnings. Fed’s Bullard admits there is softness in the economy but says the QE taper will continue. Warren Buffett’s Business Wire, which publishes economic data and company news releases, will terminate the selling of direct data feeds to high-speed traders. Buffett is concerned about Berkshire Hathaway’s reputation since the HFT computers have an advantage over the common trader receiving the data earlier. President Obama and President Putin speak on the telephone concerning Ukraine. A new coalition government must be formed within 10 days. Protestors remain in Kiev. The Ukraine hryvnia currency is 8.90.

At 2 PM, the Dow turns negative. The dollar/yen falls from above 102.70 down to 102.58 so the stronger yen creates stock market weakness. At 2:15 PM, the SPX turns negative. At 2:30 PM, the COMPQ turns negative and a more negative tone develops into the OpEx close and the weekend. Equities attempt a comeback but the wheels fall off during the last one-half hour of trading into OpEx.

The SPX finishes lower losing 4 points, -0.2%, to 1836. The INDU loses 30 points, -0.2%, to 16103 exactly at the 50-day MA at 16110. The Nasdaq drops -0.1% but places a new 13-1/2 year intraday top at 4285. The RUT gains +0.2% to 1165. For the week, the SPX drops -0.1%, Dow -0.3%, Nasdaq +0.5% and RUT gains a large +1.3% fueled by big moves in biotech and pharma small cap stocks. The Nasdaq is up for three consecutive weeks. The CPC put/call ratio is 0.69 signaling rampant complacency and lack of fear remaining in the markets. Traders believe in the Fed, BOJ and other central bankers that they can keep the stock market elevated indefinitely. The uber low CPC indicates that a significant market top is at hand over the coming days or couple weeks. The low CPC put/call ratio in late December forecasted the January-February market selloff. Traders are far too complacent and will likely experience fear and panic moving forward for the weeks ahead.

Traders are blaming the weather for the lackluster stock market performance this week. However, much of the data is not weather-related as illustrated with the weakness in California housing sales above. Bitcoin collapses on the Mt Gox exchange to 100 although the cyber currency remains elevated at 583 on other exchanges. The dysfunction of the Mt Gox exchange creates much of the negativity around bitcoin lately. The Mt Gox exchange is fighting for survival in the days and couple weeks ahead.

Moody’s upgrades Spain’s debt rating to Baa2 with a positive outlook moving forward. Spain remains extremely sick economically. The Great Lakes are 90% frozen so ice breakers are clearing shipping lanes around the clock. Iron ore, coal and grain shipments continue experiencing delays where a one-day trip now takes as much as one week. Shamefully, IRS officials are exposed for avoiding the payment of taxes concerning executive travel regulations. There are two sets of rules; one for the officials in control and the other for the people. These are the same IRS tax officials that are monitoring all personal information provided by the new Obamacare health law as well as intruding in many other facets of American life.

There are five weeks remaining in the open enrollment period for Obamacare. President Obama posts a video to the internet encouraging folks to sign up for health care insurance but the link on the screen to HealthCare.gov does not function. The Obamacare site goes down overnight and continues to experience intermittent outages. The ACA needs a total of 7 million paid enrollees within the next five weeks to support the program financially. The CDO accounting office has lowered estimates to 6 million and Vice President Biden said the number may be as low as 5 million. Others say lower. California’s health care exchanges are experiencing outages due to computer glitches. Democrats are concerned that the ongoing Obamacare problems will negatively impact their election hopes this year. The taxpayer will likely have to bail out Obamacare in the future.

THURSDAY 2/20/14; WMT; CPI

Japan imports are rising dramatically because of increased energy needs due to idle nuke plants. Dollar/yen falls through 102 so the stronger yen sends the Nikkei -2.2% lower losing over 300 points to 14449. The Fukishima nuclear disaster continues with 100 cubic meters of contaminated radioactive water leaking from the storage tank area. This is over 25,000 gallons which is not a leak; it is more of a spill and tank failure. There is no way to know for sure, however, since Japan continues to hide all news from the ongoing triple meltdown disaster at Fukishima. Tokyo Electric Power, the Fukishima operator, loses -2.3%. China Mfg Index PMI drops the most in seven months from 49.5 to 48.3, sliding deeper into contraction and in contraction under 50 for two consecutive months. Chinese banks and property stocks are weak. Copper drops. SSEC finishes marginally lower to 2139. The Hang Seng dumps -1.2% and Kospi -0.7%. Aussie dollar is at a one-week low at 0.8949.

The Ukraine truce crumbles after only a few hours. Protestors capture several police but lead them to medical care. Another 11 people are killed, some estimates are 20 or more, and dozens wounded. Ukraine snipers are positioning on roof tops but police claim officers are shot by an opposition protestor sniper. Kiev officials are panicking especially as the gunfire increases. The government offices are closed. A meeting between Ukraine and EU officials to discuss potential sanctions and a need for elections is cancelled. Diplomacy falls by the wayside and Kiev remains in chaos. As news about sniper fire travels around the globe and begins to rattle markets, Yanukovych says the opposition protestors are the snipers not the Ukraine police. WTIC crude oil remains above 103 since oil and gas pipelines are threatened due to the ongoing violence.

Europe moves lower. Euro 1.3702. Euro zone PMI’s miss targets. France PMI is very disappointing at 46.9 indicating a country mired in economic contraction. CAC -1.0%. Germany’s PMI was the lone bright spot but the DAX loses -1.5%. Porsche drops -1.7% due to problems with the car engines. European basic materials companies and banks are weak since they maintain strong exposure to China. Insurer Swiss Re raises the dividend.  Italy’s Renzi will announce his cabinet on Saturday. Defense company BAE loses -9% due to lackluster earnings so yesterdays joy quickly fades. Danone expresses concern over the ongoing milk-price inflation. The California drought continues sending milk, beef, fruit, nut and vegetable prices higher.

Facebook buys mobile messaging company WhatsApp for a huge $19 billion price tag. FB drops -4%. WhatsApp is the biggest internet acquisition in one decade. The small company is five years old with only 55 employees. WhatsApp has 450 million users gaining one million users per day so Facebook is buying growth. Analysts question the move since there are many other companies that do the same thing. Fickle users can easily jump ship and despite FB’s cash war chest, it is not large enough to buy every competitor that comes along. The current tech atmosphere rhymes with the dotcom bubble. Whatsapp, TWTR and other tech start-ups are at obscene valuations for companies not yet profitable; just like Webvan and Pets.com in the late 1990’s. Large-cap tech companies are flush with cash and likely paying far more for these companies than prudent further fueling the frenzy.

The 10-year yield is 2.72%. Walmart misses by 25 cents, top line revenue is light and guidance is lowered. WMT drops -0.8% pre-market. Futures remain weak all morning and begin leaking lower. At 7:30 AM, S&P -5. Dow -40. Nasdaq -15. Dollar/yen is 101.98 so the 102 level serves as a pivot point today. Activist Peltz presses the case for splitting PEP to unlock value. GPS plans on raising the minimum wage it pays to $9 per hour this summer and to $10 one year from now. TSLA trades +12% pre-market. DTV gains +2% on strong earning. The CPI inflation data is exactly in line as expected. Futures recover to the flat line and above as the dollar/yen moves higher to 102.25.

The opening bell rings and equities float higher. WMT is a loser down -2%. TSLA prints a historic high at 212. A CROX loss is not as bad as expected so the shorts cover kicking the price +6.4% higher. The 10-year yield is 2.74% and very sticky at this level over the last week. Philly Fed is -6.3 dropping from last month’s 9.4 positive reading. The dollar/yen drops to 102.00, hence the stock market sells off. The dollar/yen recovers to 102.10 so stocks recover to the flat line. The BOJ controls the markets. Financials are weak and are lower around the globe overnight which creates doubt about any sustainable market upside moving forward. XLF is -0.4% leading lower. The dollar/yen moves higher above 102.30 so equities move higher as the session moves along into the closing bell.

The SPX ends the day up 11 points, +0.6%, to 1840 recovering yesterday’s loss. The Dow is up 93 points, +0.6%, to 16133. The Nasdaq gains 30 points, +0.7%. The RUT is up +1.1%. The rally is broad-based. All 10 S&P sectors are positive today. Biotech and pharma remain strong. The dollar/yen is 102.32 and the weaker yen sends stocks higher. WMT is weak all day ending down -1.8%. AAPL loses -1.2% after receiving a downgrade from a long-time bullish Apple analyst. FB recovers from the -2% deficit to finish up +2.3% as the WhatsApp acquisition is touted as a smart move despite the high price and other competition in the space. BBRY gains +5% since the BlackBerry Messenger service is more attractive in light of the WhatsApp deal. Texting is decreasing in use which will hurt the providers of data minutes as the internet messaging applications take over in this fast-moving technology-driven world.

KO gains +0.5% after increasing the dividend. CONN, a company involved in retail sales and delivery of consumer products such as electronics, appliances, furniture and mattresses, collapses -43%. This crash is in line with the weak data recently reported from the furniture companies as well as lackluster WHR appliance sales. This weakness in durable goods sales indicates that the housing recovery is far weaker than anyone realizes. Rental car company CAR drives +9% higher. Gold miners are up strongly. Natty gas drops to 6 with some traders calling for 8 in the future. The winter weather will be ending and the summer air conditioning season is a few months away so natty price should pull back further.

After the bell, Hewlett-Packard beats on earnings and raises guidance. HPQ pops +1.5% in AH trading but fades after a few minutes slipping negative. GRPN beats and pops a large +8% but then leaks lower, to the flat line, then drops -9%, all in a span of about 15 minutes. PCLN beats and bounces +1.3% now printing over 1300. High end retailer JWN beats on EPS but the top line is weak and guidance is lowered. JWN loses -1%. The wealthy continue to reduce their spending on luxury goods. MRVL beats and pops higher. ‘Big-data’ darling FUEL beats and pops +6%.

Pandora says they can identify the political party of individuals based on music selections. For example, folks that listen to country music are typically republican and folks that prefer jazz are typically democrat (not exactly an Einstein epiphany). P has developed algorithms that will target these individuals with pertinent ads. Bitcoin falls to 588 down -18% as the first kiosk becomes available in Texas and plans are announced for future bitcoin ETF’s and other derivative products. Bitcoin withdrawals are suspended on the Mt Gox exchange.

The FCC is investigating broadcasters, journalists, newspapers and magazines, to determine the extent of media bias and to learn how editorial choices are made. This is frightening from a ‘Big Brother’ perspective. More and more rights provided by the Constitution are destroyed each day. The FCC does not need to know this information, there is a small thing called free speech in the way, and back pedals already eliminating many of the unconstitutional and prying questions. The FCC requests are reminiscent of the German Gestapo asking for “your papers please.” The media ignores the story.

There are many mysterious banker deaths occurring around the world recently fueling conspiracy theories. The latest banker death is a JPM investment banker, only 33-year young, that leaps to his death from a Hong Kong skyscraper two days ago. A JPM banker in the UK jumped to his death from a London skyscraper last month. Another JPM banker out of New York was found dead at his Connecticut home three weeks ago. There is a total of five apparent ‘suicides’ by bank employees this year; a pace of over one apparent suicide every two weeks. Stress is provided as a reason for the deaths but the families indicate the individuals were happy and content. All the deaths are suspicious and investigating their backgrounds and prior jobs indicate many ties and connections with the central bankers, DB, JPM, big oil and Wall Street. Banksters must constantly make amoral decisions daily which rots the soul from within over time. The media ignores the story. News outlets are far more interested in Miley Cyrus’s half-naked twerking which leads to higher ratings and ad revenue.

Georg Soros is betting over $1.3 billion against the equity markets and has dumped about 80% of his financial holdings. Soros is known for making large timely bets that turn out correct. If another financial crisis occurs, cash and hard assets will remain attractive. Three key things to remember are that the banks have written in limits on allowable withdrawals during a crisis period, there is currently no ID necessary to make deposits in banks and the FDIC only protects failed banks, not banks that undergo a Cyprus-style bail-in (a percentage of deposits are confiscated to help pay off the debt) or banks that experience a cyber attack. Thus, the banks have stacked the cards in their favor to prepare for potential trouble ahead getting their hands on any money available while having rules in place to limit withdrawals while also protecting themselves with legal jargon. A prudent course is to keep raising cash in accounts and physically setting aside cash in a hidden fireproof box; a little bit each month is all it takes to prepare for the rainy day coming.

WEDNESDAY 2/19/14; Housing Starts; PPI; FOMC Minutes

Japan financials lag and the NIKK gives back -0.5% of yesterday’s large gain. The dollar/yen is soft down to 102.18 (stronger yen) hence the Nikkei trades lower. China rebounds ahead of the PMI data on tap tomorrow. SSEC gains +1.1%. The Kospi finishes slightly down and Australia slightly up. Aussie dollar 0.9020. The Thai baht weakens as violence continues but the Thailand leadership, perhaps learning from the escalating Ukraine riots, is urging calm and avoiding using brute force to remove demonstrators.

The Ukraine death count is 25 with 100’s of people injured. Kiev looks like a war zone with thick black smoke wafting from the rubble. The violent clashes continue. Police tell women .........





[Text is Redacted: Purchase February 2014-02 to Read the Complete Chronology]

Equities sell off into the closing bell. The SPX ends down 12 points, -0.7%, to 1829. The Dow loses 90 points, -0.6%, to 16041. The Dow was up 90 after the opening bell so the reversal is nearly 200 points intraday. The Nasdaq drops -0.8% to 4238 backing away from the 13-1/2 year highs. The Nasdaq ends an eight-day winning streak. The RUT loses -1.1% to 1149. Small caps and tech lead lower. The VIX explodes above 15. The higher volatility, and lower copper and financials create the market weakness. XLF drops -1.4%. Bullish traders expect the banks to lead markets higher this year and the collapse into the close would indicate otherwise. Higher volatility will create more wild market point swings.

After the bell, Tesla reports strong earnings and plans on increasing production of the Model S. TSLA jumps over +10% in AH trading. SWY jumps over +4% as it plans to explore options for selling the company. A warning is issued to all commercial airlines to be on the outlook for a potential shoe-bomber. Officials say increased communication chatter hints that a potential terrorism incident may occur. It is a shame that Americans are trained to live in fear when the warning will most likely result in a non-event and no need to be concerned. President Obama remains steadfastly against the Keystone XL program as the Three Amigo’s Summit ends. Folks need jobs but the president will not approve the pipeline project even though all the environmental studies have provided the green light.

Ukraine leadership announces a truce with the opposition forces so both sides settle in for a long night ahead and tentative calm. Fires continue burning. Social and civil unrest continues around the world. Venezuela is at 56% inflation with food shortages. Thailand protests continue with the Thai baht continuing to weaken.

The US government is buying ammunition at an alarming pace with standing orders of 704 million rounds over the next four years. Ammo stocks such as OLN are up over +300% the last few years. Particularly disturbing is that all government departments are buying guns and ammunition at an accelerated pace, even the benign Department of Education. The US is militarizing and centralizing law enforcement under the Homeland Security catch-all umbrella. At the same time, periodic terrorism alerts released by Homeland Security frighten everyone so the natural response for many folks is to seek safety from a perceived threat, thereby willing to give up more of their liberty.

The national license plate tracking system program is cancelled but only because the information can be obtained from local sources rather than for the obvious civil rights and constitutional violations reasons. One-third of America, about 93 million people, are no longer employable and either too old, disabled or otherwise unable to find work. Government employees, however, are well taken care of as the storm trooper ranks are increased. Obviously, the US expects social and civil unrest to appear in America in the not too distant future. The separation of the ‘haves’ and ‘have nots’ increases daily. The bankers are wealthier than ever courtesy of the Fed, which consists to a large extent of ex-GS and other bank employees, while the middle class and poor suffer each day with structural unemployment, lack of opportunity and rising taxes and costs. The increase in security forces, ammunition orders and gun purchases by the US government is likely in preparation for future social unrest coming to American cities.

TUESDAY 2/18/14

BP gains +3% on a big profit jump thanks to China. LVS gambling web sites are up and running again after a cyber attack shut them down for a few days. Pacific Brands, that supplies the majority of work uniforms for mining and construction industries, reports the weakest sales numbers in three years. RBA releases the minutes from this year’s first meeting and keeps policy unchanged. Aussie dollar 0.9035. AA is closing an Aussie aluminum smelter due to overcapacity. Smelters are large users of electricity and natty gas so prices may soften as this will add to supply. The ASX 200 creates a three-day rally closing at a three-month high. Investment banks are pulling out of India as the landscape for attractive business deals diminishes. The dollar/yen is 102.11 moving above 102 over the last day as traders anticipate the BOJ meeting decision. The consensus is that the BOJ will leave policy unchanged, however, the weaker yen (higher dollar/yen) hints that at least some jaw-boning promising more stimulus is expected.

The BOJ meeting ends with the central bank remaining on course with monetary policy. The BOJ extends a special loan program for another year and says there is room for more easing moving forward. The Japanese banks are already awash in liquidity so the move will likely not help to increase lending. Just like the US, there is ‘no velocity of money’ (loaning it out and getting it into circulation so it can create a multiplication affect) so the economies remain stagnant despite the obscene money-printing. The dollar/yen pops to 102.70 and settles nearer to 102.45. The NIKK catapults 450 points, +3.1%, to 14843, on the easy money talk. Japan banks jump +5%. Asian markets continue a several week rally. Equity markets are like junkies needing to inject the central banker heroin to experience highs.

China FID (foreign direct investment) increases more than expected. The PBOC decreases liquidity in the banking system due to the large jump in lending numbers released over the weekend and the SSEC drops -0.8%. Copper drops. China surpasses India as the largest consumer of gold in the world. Singapore is not permitting an Indonesian warship to enter port. The Thai baht drops against most major currency pairs as continued violence results in three deaths. The whiff of contagion remains in the air as the South African rand and Indonesian rupiah both weaken. Brazil’s economy stumbles lower as growth slows.

Italy yields are at 8-year lows as Renzi begins forming a coalition government. Germany’s confidence drops from a seven-year high. Germany’s Bundesbank warns of a housing bubble and says that houses may be as much as 25% overpriced. Germany desires to end subsidies for renewable technologies which may soften prices of solar and other green companies. UK inflation unexpectedly drops under 2% to 1.9%, below the BOE’s target printing the lowest rate of inflation since late 2009. The pound moves lower to 1.6675 as concern grows over a slowing recovery in the UK. Euro 1.3722. European car registrations rise +5.2% fueled by the UK and Germany and a ‘cash for clunker’ program in Spain. European markets trade flat to lower not following through with the Japanese joy.

At 4:45 AM, the S&P, Dow and Nasdaq futures turn negative but remain flat overall. FRX bounces +20% on news that ACT will acquire the pharma company to increase generic drug production. Activist Carl Icahn owns Forest Labs and tweets his pleasure about the Actavis acquisition. As the Forrest Gump movie says, “Run, Forrest, Run!” Venezuela violence increases. Three US embassy officials are expelled. The Ukraine violence continues with anti-government protestors remaining entrenched in camps. Ukraine opposition protestors continue marching against the government wanting to increase ties with the EU. Merkel pledges support for the Ukraine protestors. Major nations conduct talks in Austria concerning Iran’s nuclear program. George Soros doubles his short position against the S&P 500. The computer hackers appear unstoppable considering all the recent security breaches at Forbes, Silk Road, Kickstarter, TGT, LVS, Neiman-Marcus and many other companies. The instability with the bitcoin virtual currency continues but price holds in the 600’s.

Coke earnings are exactly in line with EPS but top line revenue misses. Sales are challenged in both emerging and developed markets just like PEP. KO trades negatively pre-market. Carbonated beverage sales continue to drop globally. Futures are flat as the US prepares to begin trading after the three-day holiday weekend. The 10-year holds steady for a few days at 2.73%. The dollar/yen is 102.47. WTIC moves above 101 as global social unrest increases. Brent oil is 109.50. Natty gas jumps a huge +6% to 5.521. Gold is flat at 1317. The pharma M&A heralds the day as ACT jumps +11% and FRX is now running +32% higher. WM drops -5% after earnings and lower guidance appear in the garbage pile. TSLA jumps +3.3% on a news story that Elon Musk had met with AAPL to discuss potential partnerships or more.

Empire State Mfg Survey is 4.48 below last month’s 12.51. Analysts keep blaming the weather but the bad winter has been battering the States since December. Futures keep drifting above and below the flat line. The Presidents Day holiday sales should have unloaded more merchandise but retail sales remain challenged. The promotions and sales will increase further which is deflationary. Stores have already placed spring merchandise on the shelves but very few in the US are ready for spring as they shovel snow each day. Marc Faber warns that the US stock market upside may come to an abrupt end and to stay away from stocks.

The opening bell rings and US markets stagger out of the gate sideways with the Nasdaq up, Dow down and SPX flat; something for everyone. Materials, consumer discretionary, tech and industrial sectors are strong. Dollar/yen 102.37. Ukraine violence grows ugly with fires openly burning in Kiev. Buildings are set on fire. US equities are unaffected by the Ukraine images on television. The bullish euphoria continues uninterrupted and the major indexes all turn positive. The SPX attacks the strong 1843 resistance level. Oddly, volatility moves higher as well with the VIX above 14. One of them is wrong.

European auto sales beat expectations earlier but upon closer inspection and applying seasonal adjustments actually shows negative sales. NAHB Home Sales fall down the steps with a very weak housing report so the homebuilders sell off about -1%. Trannies are dragged lower by the railroads. Kansas City Southern is downgraded. KSU -5.3%. Biotech and healthcare run higher due to the ACT and FRX joy. MYL +5.7%. HUM +2.1%. AGN +0.8%. Safeway is exploring strategic alternatives, magic words for stock traders, so SWY bounces +2.4%. Utilities are strong.

UAL is grounded losing -1.2% after announcing that computer glitches are causing system delays. Flights are cancelled and travelers take to Twitter to voice their frustration. UAL is working to restore service. Activist investor Dan Loeb buys BBRY which leaps +7% higher. The session continues with the bulls battling to move the SPX up through 1842-1843 resistance that will unleash strong upside while the bears battle to push the VIX above 14 to unleash strong market downside. Neither side is able to attain their respective goal as yet. Copper strength is helping the bulls as well as WTIC crude oil now at 102.

Ukraine riot police set a time deadline for protestors to vacate the encampments in Kiev. Time expires and tents are set ablaze escalating the violence. Iranian computer hackers have infiltrated Navy computers accessing information for the last few months. The Navy says classified information was not hacked. Stocks sputter along sideways as the holiday-shortened week begins at a lazy pace. KO is knocked-out losing -4.1%. Dollar/yen is idle at 102.30. The CBO says 500K jobs would be lost by 2016 if the $10.10 minimum wage is implemented and 100K jobs would be lost if the minimum wage increased to $9.00 per hour. The current US minimum wage is $7.25 per hour. The higher minimum wage would lift 100’s of thousands of people out of poverty as long as they did not lose their job as a result of the rate increase.

At the closing bell, the SPX is flat at 1841. The Dow is a few points lower at 16130.  The Nasdaq gains +0.7% to 4273 printing new 13 year highs. The RUT gaps higher today leaping +1.1% to 1161. Tech and small caps lead mainly by healthcare, biotech and pharma. Volatility moves higher with equities which occurs only about 10% of the time, indicating that markets are likely at an inflection point. Traders ignore the Ukraine violence even as it streams on television before the closing bell. Flames rise from the protest camps. Early reports indicate that 4 police are killed, another 40 are shot and about 100 are injured. Real bullets are flying in addition to the rubber bullets, water cannons, tear gas and other mayhem. The Ukraine crossed the Rubicon today. The country is forever changed and there is no turning back. Kiev burns. A Ukraine revolution begins.

After the bell, PNRA provides stale earnings and loses -2% in AH trading in addition to the -3% during the regular session. HLF beats on earnings and pops +2% adding to a +4% gain today. ADI beats by only a single hair on both the EPS and top line revenue and gains +1.5%. NBR gains +2.4%. LZB misses on earnings and is dumped out of the easy chair losing -9%. Weak furniture sales are a negative sign for the housing sector. PBPB loses -3% on weak earnings. Potbelly develops a potbelly from eating the sandwiches that the customers are no longer eating.

The Ukraine death count increases to 18. Global social unrest breaks out in the Ukraine, Syria, Venezuela, Brazil, Thailand and Egypt, to name only a few of the hot spots. Traders are not pricing in geopolitical risk. This was easily visible late in the trading session as Kiev burns but traders yawn only asking each other what was on tap for dinner this evening. The Ukraine is the size of Texas, USA, and has a population of 50 million people, about one-seventh the population of the US. The Ukraine is more similar in size to Spain and other European countries. One-half of the country favors the Russian approach to government, politics and economics while the other half of the country wants to move in the direction of the West and hook up with a European style of rule and economics. The Ukraine violence today may be the shot heard round the world that begins a civil war. President Viktor Yanukovych and the opposition leader Vitali Klitschko agree to meet tomorrow. Yanukovych will likely have to make concessions to restore peace. The Ukraine situation is very fluid. At 2 AM local time, Kiev is lit up like day time as the city burns. Australia shares trade flat in early trading.

MONDAY 2/17/14; Presidents Day Holiday; US Markets Closed

Japan is hit with heavy snow fall in recent days which creates worry since the nuclear plants are shut down. The weak GDP is due to the weaker than expected lift in exports due to the weaker yen along with the big increase in LNG and other fuel deliveries to replace the lost nuke power. Chubu nuclear plant, directly in an active earthquake zone, applies for a restart. Japan continues to stifle any news flow concerning the ongoing Fukishima nuclear disaster. Japan is a country getting squeezed from many sides and may be the weak link about to break and collapse the global market and economic chain. Rakuten plummets -9% experiencing the worst sell off in over a decade. The luster is off the VoIP acquisition rose.

Three former Barclays employees are charged with conspiring to commit fraud over the ongoing Libor scandal. There are about one dozen folks involved in the currency fixing scandal thus far. Barclays trades -1.3%. GOOG buys Israeli start-up company Slicklogin, a security firm that is five months old and only became a company a couple months ago. The company has technology that emits a tone that a smartphone can identify and verify to add an extra level of security to computers. The Italy 10-year bond is 3.65% the lowest yield since early 2006. Folks are buying the paper and willing to hold the debt. Italy’s Renzi meets with President Napolitano and makes plans to form a coalition government. New elections will be needed in Italy to create legitimacy to the government. One party continuing to install new leaders on an ongoing basis is not a proper way to govern Italy and the instability hurts the economy.

The German 10-year yield is 1.69%. UK 10-year is 2.80%. Portugal 10-year yield 4.84% and Spain at 3.56%. A top official in Merkel’s new coalition government is told to leave and a crisis meeting will convene tomorrow. European markets trade flat. The euro sits at 1.37. Pound 1.6736. European officials say it would be difficult for Scotland to join the EU if it splits from the UK adding to the confusion over this ongoing riff. Interestingly, RBS is actually owned in majority by the UK. The NIKK finishes at +0.6% and SSEC at +0.9%. Copper and gold miners trade higher. Cyclical stocks perform well. An Ethiopian hijacker, the co-pilot, diverts a BA airplane to Geneva where he claims asylum.

During the Presidents Day holiday in the States, the republicans emphasize the anniversary of President Obama’s $800 billion QE1 stimulus package which was touted as the infamous ‘shovel-ready’ jobs program. The president admitted later that there were really no shovel ready-jobs. Less than 10% of the money went to infrastructure and only a small portion of that rebuilt bridges that are now falling apart all over the US. Instead the money went to teachers unions and other programs to simply keep idle people working resulting in a waste of money. The young folks now have another failed Keynesian policy to pay for in their future. Everyone likes the good side of capitalism when the living is easy but no one wants to allow the down side of capitalism to play out to flush the weak companies and create a stronger future economy. Therefore, capitalism does not exist and worse, the Keynesian policies pump the stock market higher to make the wealthy wealthier. The president goes golfing for the third consecutive day and resembles Roman leader Nero riding along in a golf cart.

The $1.6 billion Ivanpah Solar plant, the world’s largest solar project, in the Las Vegas desert begins operating. The technology works but the facility could only be built with government subsidies and actually generates electricity at about 2 to 3 times the cost of coal and natural gas. Birds are mistaking the 300K mirrors as a large lake and fly into the area only to be hit with a massive heat wave that has them dropping out of the sky like dead ducks. Environmentalists will ignore the loss of wildlife just as they do with the wind turbine blades killing bald eagles each week. Forced and manipulative actions such as government renewable subsidies to boost wind and solar projects and Keynesian money printing policies, always have unintended consequences. An asteroid the size of three football fields flies by the earth at a distance of about 2 million miles which is actually very close from a scientific perspective. 1-800-Flowers receives bad press as folks take to the internet to complain that emails and phone calls were not answered as sweethearts went without flowers for Valentine’s Day. The company blames the severe winter weather for a challenging few days.

SUNDAY 2/16/14

Thailand’s tourism industry is taking a major hit due to the ongoing political violence. Indian businessmen and tourists would flock to Thailand as a top destination spot but now avoid this troubled country labeling it as dangerous and unstable. What is bad for Thailand is good for Malaysia, Singapore and Dubai that now see an increase in travel bookings. Venezuela’s inflation accelerates as citizens struggle to obtain even the most basic goods and supplies. Street protests in Caracas and other cities are increasing and the violence over the last couple weeks creates elevated crude oil prices. More than two dozen people are injured as riot police use tear gas and water cannons against the anti-government protestors. The growing gap between rich and poor in most countries around the world fuel more and more social unrest and violence.

The US Army has constructed a ‘fake’ city in Virginia complete with a bank, school, subway and other common structures. The site will aid the Army and other branches of the military and law enforcement in conducting practice drills for terrorism, occupations in foreign cities and perhaps most concerning, dealing with domestic social unrest.

Further NSA spying scandal details become available showing that a law firm representing Indonesia is under surveillance. The NSA simply conducts spying operations with zero accountability. France and Germany discuss plans to set up a communication network that will exclude the US so these European Allies can be assured their messages are maintained private. Big Brother’s presence increases daily in America. The government now wants to develop a vehicle-surveillance data base by installing tracking devices in all cars and also continues operating complex computer algorithms that exploit all personal information existing on the internet.

Syrian peace talks end and are in jeopardy of not continuing. 200 illegal miners are trapped in an abandoned South African gold mine. Individuals are willing to take on enormous risks to their lives hoping for quick money. The fundraising site that raises money for start-up companies, film projects, video games and other ideas, Kickstarter, reveals that the site was hacked last week. Individual phone numbers, addresses, emails and other personal information was taken. Kickstarter tells users to change passwords and says security improvements are underway as the investigation continues. The relentless winter saga continues in the States with another one foot of snow (30 cm) falling in the northeast creating ongoing travel concerns.

A bombing in Egypt kills three South Koreans and an Egyptian driver. Egypt is killing their tourism and economy just like Thailand. Thailand’s consumer confidence is the lowest in two years. Thai police try to clear protestors but fail. Parts of Bankkok are shut down and Thailand is quickly developing a negative reputation. China instructs citizens to be cautious if traveling to Thailand so many simply cancel trips and change their travel destinations. 11 of the trapped South African miners are rescued once the obstruction at the mine entrance is removed but oddly, dozens of miners do not want rescued since they fear arrest if they exit the mine.

China announces a huge jump in loans likely fueled by the New Year’s celebrations. The record new credit growth is astounding and boosts the economic outlook. Copper runs higher and optimism is created in global markets. After worries over a cash-crunch recently which would have slowed growth, instead loan growth explodes higher. The data may be a positive at first blush; however, it may actually signal that the lending is out of control at this point now culminating in the proverbial unsustainable house of cards scenario. More capital has flowed out of emerging markets this year, in less than two months, than all of last year; both numbers are at about $29 billion.

Japan Q4 GDP misses. Growth is far weaker than expected especially with the obscene stimulus program ongoing. The annualized GDP is 1% far short of the 2.8% expectation. Japan GDP was -3.2% in Q3 2012 and 0.6% in Q4 2012. For 2013, GDP is 4.5% in Q1, 3.6% Q2, 1.1% Q3 and now 1.0% in Q4. Pitiful for how the BOJ is destroying the yen with their money printing. Like the US, the Keynesian policies can provide short-term sugar highs, although the US sugar high is five years old now, but all the policies do is dig a deeper debt hole while making the rich richer that benefit from a goosed stock market. The dollar/yen drops to 101.65. The Nikkei does not sell off, however, and trades higher to begin the session. Japan takes the bad news in stride and most stocks trade higher. Japan’s consumption tax rate increase hits in April and is expected to stall the Japanese economy which will maintain ongoing concern.

SATURDAY 2/15/14

Over the last 10 weeks, a record 75K airline flights have been cancelled in the US. The XAL moves higher, however, with airline stocks such as LUV far higher. The eastern US is hit with another snowstorm overnight with five deaths occurring due to the storms in recent days. FB updates the site with 56 preset options identifying gender including intersex, androgynous and bi-gender. The world has come a long way from the two original choices; male or female. Auto workers at Tennessee’s Volkswagen factory reject unionization demoralizing the United Auto Workers union. The UAW wants to expand its presence in the southern US but the prospects appear weak going forward. Unions continue to lose their clout each passing year.

President Obama promotes a $1 billion “Climate Resilience Fund.” Politicians cannot stop spending money; they are addicted. Interestingly, President Bush was reading “My Pet Goat” when 911 occurred and also was photographed playing guitar as Hurricane Katrina devastated Louisiana which created the image of Nero fiddling while Rome was burning. President Obama is in the pickle barrel now taking to Twitter the other day urging folks to not play spoiler for the television shows he watches. Today he wants to create another fund and spend taxpayer money on unproven climate science. The president needs to realign priorities since 25 million Americans remain unemployed or underemployed and the economy remains weak with the middle-class and poor suffering daily. The president needs to log some additional hours at the oval office as well as start working more closely with Congress rather than watching television while donning Nero’s crown.