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.