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.