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 ....



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

 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.