Monday, March 31, 2014

TUESDAY 4/1/14; PMI's; ISM

Aussie home prices jump 3.5% during Q1 but homebuilders trade about -1% lower across the board. The RBA maintains the benchmark interest rate at 2.5%. The Aussie dollar reacts wildly printing a 4-month high above 0.9310 then collapsing to 0.9260. Asian markets are trading lower ahead of the critical PMI data. It is odd to see the Asian markets not follow through with the US euphoria. Japan’s Tankan Survey is below estimates. The dollar/yen remains well above 103 at 103.29. Japan’s sales tax increase from 5% to 8% begins. Japanese retailers will likely experience weakness moving forward.

China’s March PMI is 50.3 remaining above 50 indicating expansion and above last month’s 50.2 but below January’s 50.5 and maintaining a downward trend for months. The lackluster PMI may prompt the PBOC to announce stimulus. Markets idle sideways for one-half hour waiting on the HSBC PMI which is more reflective of smaller manufacturers in China and a slightly more credible number than the official China PMI. The HSBC PMI is lower than expected at 48.0 below last month’s 48.1. China’s PMI’s indicate a continually slowing economy......

[Text is Redacted: Purchase April 2014-04 to Read the Complete Chronology]

The day ends with the bulls running strongly higher for the second day this week. The SPX gains 13 points, +0.7%, to 1886. The SPX is breaking up and out of the two-month sideways 1840-1880 range. The SPX prints a new all-time record high at 1885.84 and new all-time closing high at 1885.52. This is the seventh record high print this year. The Dow is up 75 points, +0.5%, to 16533. The Nasdaq is up a huge 69 points, +1.6%, to 4268. The RUT leaps 16 points, +1.3%, to 1189. CLF drops -2.1%. RAD +1.9%. KBH +3%.

GM’s Barra weathers the storm testifying before the House and is back on Capitol Hill tomorrow for day two in front of the Senate. Several politicians are frustrated with Barra’s lack of details. GM closes down -0.2% giving up all the earlier stronger gains but the vehicle sales data is much better than expected. Mediation specialist Ken Feinberg is hired by General Motors to handle future settlements concerning the growing litigation. Feinberg is famous for handling settlements for high priority disasters such as the 9-11 Victims Fund, the BP Gulf Oil Spill and Hurricane Katrina.

An 8.2 earthquake hits off the coast of Chile as the gravitational forces on the Earth due to the new moon and upcoming eclipses continue to wreak havoc. A tsunami wave is spotted in the ocean. Tens of thousands of people are evacuating along the west coast of South America and the west coast of the US is on a tsunami warning as well as Australia’s coast. Inspection teams prepare to investigate the radiation leaks from the Chihuahuan Desert nuclear waste disposal site in New Mexico. The facility is the US’s only permanent repository for nuclear waste and has been leaking radiation for weeks causing over 20 workers to become sick.

CNBC business television personality James Cramer says the markets are “not in a bubble.” Cramer tells the average Ma and Pa investor to not sit on the sidelines anymore. The bullish market euphoria increases greatly with the two-day rally. The CPCE put/call ratio collapses to 0.47 and VIX tumbles down to close near the low at 13.10 pennies from a 12 handle verifying the uber complacency in markets. The VIX is now at lows not seen since January. Traders are not worried about any market downside. Markets are moving higher fueled by the Russian aggression decreasing ever so slightly, Chinese stimulus expectations, the Yellen rally, end-of-quarter window dressing, the BOJ weakening the yen, the ECB perhaps providing stimulus Thursday morning and the continuing buyback programs.

MONDAY 3/31/14; EOM; EOQ1; Yellen Rally

China takes into custody and seizes $15 billion in assets of over 300 family members, relatives, friends and associates of Zhou Younkang, the oil and gas magnet that has been under investigation for corruption for a few years. Zhou promotes a more transparent and capitalistic path for China which is not in favor with the ruling party so the move is likely centered in retribution. The danger of investing in Russian and China is that on any given day you may wake and find company assets seized.

China Construction Bank reports strong earnings. IPO mania hits China just like the US with 48 IPO’s hitting the market thus far this year. If you have an idea and can fog a mirror and your company does not make money, it may be worth billions. The dollar/yen is 102.91 remaining under 103. Investor Jeffrey Laydon alleges widespread fraud occurred at 20 global banks and develops a class action lawsuit to seek damages. Banks will not comment on the action. JPM offices are searched in Hong Kong by the ICAC corruption authorities. J P Morgan Chase refuses to comment. Protestors march against a chemical plant in the southern Chinese city of Maoming throwing rocks and bottles. The rioters are sick, literally, of living in all the pollution.

Australia begins the week higher with the Aussie dollar at 0.9253. US futures are higher. S&P +6. Japan’s Abe is concerned that foreign money is leaving the country. About $10 billion was pulled from Japan in recent weeks. Japan Industrial Production and Factory Output surprisingly drop. The new sales tax comes into effect tomorrow and the expectation was actually for a pop in economic activity ahead of the tax. NIKK gains +0.9%. Asian markets trade higher all bulled up expecting a China stimulus announcement after the PMI data this evening. North and South Korea trade artillery fire directed towards their respective western oceans with each side balming the other for the escalation. The North test fired a missile across the demarcation line creating the melee. South Korea scrambles F-15 fighter jets. The KOSPI finishes positive.

Turkey’s Erdogan wins reelection. Of course he did since he squashed the Internet. Erdogan vies to track down the “traitors” and discipline anyone involved in placing negative comments on Twitter, Facebook and YouTube. The Turkish Lira is 2.1623 rallying to a 2-month high. Turkish GDP is 4.4% better than expected. In France, the Hollande Socialists lose ground in the elections. Voters shift to the right slapping Hollande in the face. The Socialists, however, elect a female mayor for Paris. The French economy is sick and people simply want jobs and opportunities.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

The broad indexes remain elevated with a strong up day but copper remains weak. At the closing bell, the SPX is up 15 points, +0.8%, to 1872. The Dow is up 135 points, +0.8%, to 16458. The Nasdaq gains 43 points, +1%, to 4199 remaining under the 50-day MA at 4221. The RUT gains 21 points, +1.8%, to 1173. Yellen creates a big up day to end the month and quarter and begin the new week. MU, that benefits from the collusion of funds holding the stock long, jumps +8%. ORCL gains +3.4%. Today’s losers are TSLA finishing down -1.9% and GMCR spilling the coffee losing -2.4%. GM drives into the ditch losing -0.9%. CMI drives +2.1% higher as the truck market remains robust requiring diesel engines which is an encouraging sign for the global economy if it continues.

The month of March is an up month. For the month, the SPX is up +0.7% and the Dow +0.8%. March is not as kind to tech and small caps with the Nasdaq puking -2.5% and RUT -0.8%. During Q1, the high-flying stocks and biotech’s were sold off in favor of old school tech stocks like HPQ and MSFT. S&P prints its fifth quarterly gain.

After the bell, GM dumps -1% after announcing yet another recall. GM’s Barra will be answering questions before Congress tomorrow. Documents indicate that General Motors had two different fixes planned for the faulty ignition switches but chose not to do either. This revelation probably creates long-lasting negativity and damage to the brand since GM may have placed profits before human life. Many politicians, including the president, kept bragging about ‘saving’ GM a few years ago but now they are all quiet. Caterpillar is in hot water with the Senate concerning tax dodges the company may have employed. CAT loses -1.1% in AH’s trading but remains at the lofty 99-100 level. VRNT beats on earnings and bounces +3%.

The popular future IPO Weibo, the Twitter of China, will list on the Nasdaq under the symbol WB. Bitcoin drops -10% to 455 as China’s PBOC slams the virtual currency as a casino play. Michael Lewis’s book Flash Boys creates lots of discussions today about the pros and cons of high-frequency trading. The FBI announces ongoing investigations into HFT for a few months. The confessional season is in swing for companies to announce bad news before the actual earnings release. Earnings warnings maintain a record high pace the opposite of what is expected for a global economy supposedly in recovery.

Sunday, March 30, 2014

SUNDAY 3/30/14

The Flight 370 missing airplane mystery continues for three weeks with daily searches coming up empty. Turkey begins voting but Erdogan is already expected to win and maintain his dictatorial rule especially since the Internet was shut-down to eliminate bad press. Secretary Kerry diverts his return flight home to Paris as President’s Obama and Putin agree that their lieutenants should continue dialogue. Kerry is meeting with his counterpart Lavrov to find solutions to the Ukraine crisis. Italy’s new young leader Renzi auctions off government luxury vehicles on the Internet implementing a plan to cut government costs and waste. Italy remains mired in high unemployment and is the most debt-ridden country in Europe besides Greece.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

A study finds that continuous daily consumption of diet drinks may lead to a higher likelihood of heart disease. Global diet soda sales continue falling in recent months verified by PEP and KO earnings reports.

Saturday, March 29, 2014

SATURDAY 3/29/14; GM Recalls Continue

The General Motors recall debacle continues with another 824K recall for additional Chevy, Pontiac and Saturn vehicles. The bleeding in GM stock will likely continue since a new problem develops each day. GM’s reputation is taking a hit. A 5.1 earthquake hits southern California creating gas and water main breaks. Dozens of tremors and aftershocks continue. GlaxoSmithKline diet drug Alli is recalled due to tampering so GSK may see active trading on Monday.

Presidents Obama and Putin talk on the telephone but cannot even agree on what was said during the conversation afterwards let alone provide a path forward to deescalate the ongoing East versus West showdown. Meanwhile the Russian troop movements increase along the Ukraine border. Ukraine activist Vitali Klitschko, the ex-boxer and hero of the revolution, will not seek the presidency but instead run for mayor of Kiev to prevent Russian control of this capital city with all his might. A new moon peaks this afternoon at about 2 PM EST; the stock market is typically bearish moving through the new moon. The darkness of the new moon provides a military advantage to those with infrared technology and night-vision equipment and is an ideal time to launch an offensive.

The Obamacare six-month enrollment period ends on Monday. The Whitehouse implements a new comical rules change where a blue box is added to the enrollment form that allows the applicant to check the box if they started the application process before 3/31/14. The government will not verify anyone that checks the box and is relying on ‘honor system’. The move provides more time for people to sign-up without officially changing the deadline date. Obviously, this extends the sign-up period indefinitely since all you do is check the box and swear you started the process earlier.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

General Motors announces more vehicle recalls this time about 400K Chevy and GMC trucks. They should change the name to ‘Bucket-o-Bolts’ Motors. The GM auto recalls now total 4.8 million vehicles double the vehicles they sold all of last year. GM may see active trading on Monday as traders are beginning to lose faith in the troubled auto maker. New female GM CEO Barra is under pressure experiencing trial by fire.

Friday, March 28, 2014

FRIDAY 3/28/14; Consumer Sentiment; Russian Troops Mass at Ukraine Border

The Aussie dollar teases four-month highs near 0.93. A Sydney property agency is accepting bitcoin to lure in Chinese and other buyers. The NIKK gains +1.5% over the last two days to near 14700 a fresh two-week high. The dollar/yen moves flat across 102.15. Japanese sentiment is improving with folks believing that the two-decade deflation funk can be overcome. Japanese retail stocks continue to pump higher with Fast Retailing, Aeon and Takashimaya each up +2%. April is a key meeting for the BOJ but the central bank may not provide as much QE if inflation is on the rise. Yahoo Japan collapses -10% after agreeing to a deal to buy eAccess from Softbank.

Chinese Premier Li hints at monetary stimulus on tap so the Asian region takes on a positive mood. The major indexes are all up except for the SSEC slightly lower. HSI is up+1.1%. ICBC +2.2%. One of China’s largest automobile manufacturer’s, SAIC Motor, jumps +13% higher on strong earnings. Chinese banks and shipping companies remain challenged moving forward. Chinese President Xi continues the European tour traveling from France to Germany to meet with PM Merkel. China is Germany’s third largest trading partner. The Uber car service expands to Hong Kong, Beijing and Jakarta. The KOSPI is now positive on the year as foreign money keeps rotating from place to place around the world. Global investors are holding more cash in accounts than 2012 so there is caution developing as asset prices inflate to lofty levels.

European indexes open about +0.5% higher across the board encouraged by the Chinese leaders promising contracts and stimulus. The euro is 1.3747 trailing lower. Italy’s second largest bank Intesa Sanpaulo reports lackluster results but pops +2%. Tire maker Pirelli misses earnings numbers but promises to increase margins moving forward so traders pump it +3.2% higher. US futures move steadily higher over the last couple hours with S&P +6 at 4:30 AM. The euro drops to 1.3715. Germany’s 10-year yield drops to 1.51%, a four basis point drop in the last few hours, as European money seeks perceived safety. Spain 10-year yield is 3.20% the lowest in many years. Spain is slipping deeper into deflation keeping Draghi up at night. Portugal 10-year yield drops toward 4% the lowest yield since 2010. Gold 1296.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

The VIX climbs higher in the early afternoon sending equities lower. The dollar/yen drops from the near 103 number to 102.84 so the stronger yen creates weakness in the broad indexes. Copper is strongly higher today which helps maintain an elevated stock market. The China stimulus talk also creates market buoyancy. Many traders refer to today as a short-covering rally that faded.

The Nasdaq and RUT small caps lose all the earlier gains and briefly turn negative. The Nasdaq was up 52 points earlier with tech and the high-flying stocks all recovering but now they are selling off again. The healthcare sector was leading the way higher this morning but has reversed course and is the leading sector lower. Utilities and telecom are also leading lower. NFLX drops -1.5% selling off 16 of the last 18 days down over -20% off the top in a bear market. AMBC is downgraded and collapses -2.6%. CTSH is upgraded and catapults +5.6% higher. ELY drives higher gaining +6.2% on encouraging analyst words as golf season swings into play.

At the bell, the SPX gains 9 points, +0.5%, to 1858 one-point under the starting number for March at 1859 with Monday the EOM. The Dow jumps 59 points, +0.4%, to 16323. The 20-day MA support is 16301. The Nasdaq gains 5 points a hair positive on the day to 4156. The 20-week MA support is 4153. The RUT is dead flat on the day closing exactly at the 20-week MA support is 1152. The RUT lost the 50-day MA support at 1163. The price action is bearish today since prices leap strongly higher only to collapse as the day plays out closing below the halfway point on the price candlesticks for all four indexes.

For the week, the SPX loses -0.5%. The Dow is flat a hair positive on the week. The Nasdaq dumps -2.8% and RUT loses -3.5%. Tech and small caps are bludgeoned painting a dire picture for the stock market. Geopolitical risk continues to be ignored for the most part. Even the massing of 50K to 80K Russian troops on the Ukraine border does not appear to cause any worry or angst. A tentative date for an iPhone 6 release that will finally have a larger screen to catch up with Samsung and other smartphones is planned for September about six months away.

Thursday, March 27, 2014

THURSDAY 3/27/14; IMF Provides Aid to Ukraine; GDP; MSFT CEO Nadella Speaks

The New Zealand Dollar hits a record high at 0.8676 as their rate hike period begins. Asia markets are generally lower following the US negativity. The NIKK gains +1% after a large drop at the opening bell since the dollar/yen recovers from a low at 101.71 to 102.20. Sharp and Fast Retailing both receive +3% gains. Japanese banks are weak. KOSPI gains +0.7% with Samsung +4% higher. China markets are negative and a large shipping company, China Shipping Container Lines, falls more than -2% after announcing losses; a troubling sign for the economy. Tencent loses lots of cents collapsing -6%. Gold breaks under 1300 so the gold and other metal miners are hit from -1% to -9% overnight. Gold and silver are down but copper is +1% higher a hair under 3.00. WTIC oil moves above 101. Brent crude oil is 107.59.

Turkish courts overturn the ban on Twitter but the ruling is meaningless. Twitter will be permitted to come back on line but only after an appeal which will probably occur after the Turkey elections; very convenient for PM Erdogan. President Obama visits the Pope at Vatican City. Norway’s central banker Karen Helene Ultveit-Moe stirs the political pot by speaking openly about creating a plan for when the oil reserves no longer support the Norwegian economy.

Ukraine bonds rise to a two-month high as the IMF provides a $15 billion aid package. In total, the West will provide about $27 billion in aid to Ukraine over the next couple years. Some of the money will no doubt find its way to Putin’s hands in Russia. Crimea, now taken over by Russia, has a $1.5 billion debt so plans are under development to make Crimea a gambling destination especially for wealthy Russian oligarchs. Is Crimea on the Black Sea the next Macau? Perhaps the future gamblers will be locked inside the casino and not allowed to leave until they lose all their money. The Russian Ruble is slightly weaker at 35.5968 but remains stationary showing that the sanctions are not creating any further problems at this time. Trouble will appear in Russia if the ruble moves to 37, 38, 39 and higher above 40, which represents a collapsing ruble currency. For now, the ruble is weak, but stable. The US foreign policy with Syria is viewed as a failure since very few chemical weapons are destroyed and Asaad continues to murder his citizens.

China’s leader Xi tours Europe signing billions in deals. Hollande welcomes Xi to France hoping for a slice of the China pie. UBS suspends Forex traders in Switzerland, Singapore and the US concerning the ongoing currency-trading scandals. European stocks trade lower across the board. The pound is 1.6569 but jumps to 1.6629 after strong UK retail sales are reported. Spain and Italy bonds rise (lower yields) as JPM chases into these instruments fully believing in the European recovery story.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

MSFT CEO Nadella speaks at his first official public media press event after taking the reins at Mr Softy. Nadella discusses the combination of cloud and mobile in today’s world. He unveils Office software for the iPad. The release immediately launches to the number one sales ranking in the Apple Store. The more extensive use of tablets to perform work better suited for laptops and desktops launches the debate about content-users versus content-creators. The Office suite faces challenges to make it appealing on a tablet due to the limited screen area; half of which will be taken up by the digital keyboard (unless using a detachable keyboard). Content-creators will likely remain with a sturdy laptop that can handle the daily demand. Content-users, that employ the tablets for gaming, shopping, surfing the Internet or watching a movie will likely show little interest in Office software. However, many analysts say the Office software offering for all tablets is long overdue and will boost profits in Microsoft’s services unit in the months ahead. Nadella is opening-up Microsoft software to all devices moving forward. MSFT trades lower -1%. INTC -0.3%.

The SPX uses the March starting number at 1859 as a ceiling and the starting number for the year at 1848 as support. Natty gas price moves +1.5% higher after inventories drop more than expected. Social gaming stocks are smacked today led by GME crumbling -7.3%. Social media stocks are up. TWTR +3.4%. KING loses -3% on its second day of trading dishing out sour candy. The House and Senate approve $1 billion in aid to Ukraine. Brazil is up strongly today with EWZ gaining +4.6% and PBR +7.7%. EEM +1.3%.

Turkey takes action against YouTube. PM Erdogan continues to limit and prevent citizens from accessing Twitter, Facebook and YouTube especially ahead of the elections. PVH bounces +1.3% but the retail sector is crumbling. RTH is down -2.2% and XRT is down -3.5% this week. CZR loses -4.5% at the gambling table. CAB trades -0.5% lower wounded by comments from CS. NMBL pops +5% on a positive media story. BBRY is downgraded and drops -1.5% ahead of earnings tomorrow morning.

The day ends with the SPX and Dow only marginally lower but the Nasdaq loses -0.5% and RUT small caps drop -0.4% down -3.5% for the week. The Nasdaq is negatively affected by the high-flyers crumbling such as NFLX and TWTR. For March, NFLX is down -18%, TSLA -15% and ZNGA -12%. TSLA, however, pops +4.3% today. XLF is down -0.5%. C gaps down puking -5.4%. XLK -0.4%. MSFT loses -1.1% after the Office for iPad announcement. KSS is a bright spot in retail popping +2.1% to a 5-month high.

Trannies are weak all day long. XOM gains +1.6% as WTIC crude oil gains +1% to 101.32. Higher oil means higher gasoline prices at the pump and provides another excuse for consumers to stay home. AA is a huge winner catapulting +6.2% with a potential ascending triangle pattern upside breakout. CLF pops +2.4%. The cyclicals are bid higher since traders believe in the global recovery story. GOGO goes in the down direction -2.4%. WMT and V are flat after Walmart accuses Visa of overcharging with unreasonable high swipe fees. SYMC pops +2.6% after its recent drubbing.

After the bell, RHT is up +4% on better than expected earnings. Guidance and the outlook for the year ahead are lowered so Red Hat price immediately drops to the flat line. CZR announces a share offering which will dilute the stock so it plummets -6%. The weakness in Caesars Entertainment in recent days is obviously due to insider trading that knew of this pending offering and jumped ship ahead of time letting suckers hold the bag. There are always two sets of rules in trading; one for the privileged insiders and one for everyone else. ZNGA pops in the AH’s on news that SAC Capital is buying shares.

Many stocks have fallen into bear markets. A -10% selloff is considered a correction move and a -20% selloff is considered a bear market. P is down -21.4% off the top, DD -22% and PCYC -28%; all three are in bear markets. NFLX now slips into a bear market at -20% losing 100 bucks off the 460 high. AMZN is down about -17% off its top definitely in correction mode on the verge of tumbling into a bear market. PCLN has slipped about -15% off its top. IBB is down -15% off the top representing the bubble popping in biotech. Homebuilders are hit with companies such as TOL and DHI down between -12% and -16%. AEO is down -30% off the top and other retailers are very challenged moving forward. Elon Musk receives the double whammy with SCTY down about -30% off the top and TSLA -22% from its top but do not worry he will not have to eat franks and beans for dinner.

Obamacare hits a milestone with 6 million sign-ups. Originally, the goal was 7 million needed by now (deadline is 3/31/14) to support the program but this was lowered to a 6 million target due to all the problems. The sign-ups are not enrollees, however, since the Whitehouse refuses to provide how many sign-ups have actually paid the premiums. Using California as a guideline, the actual payees run about 80% to 85% so the official enrollees into Obamacare may only be around 4.8 million to 5.1 million which is well under the 7 million needed to financially support the program. No worries, however, since the politicians will force taxpayers to bailout the ACA debacle in the years ahead.

Wednesday, March 26, 2014

WEDNESDAY 3/26/14; Durable Goods Orders; Bank Stress Tests Part Two

Asia indexes are higher from +0.4% to +1.2% except for China’s SSEC which trades slightly lower. Markets are buoyant since global traders are expecting the ECB to provide stimulus to Europe. China is lower as trading floor rumors say that two Chinese banks are insolvent and about to go belly-up. China places limits on cars to decrease the air pollution. The Aussie dollar is at a four-month high at 0.9217 and Australian stocks are at the highest levels in two weeks. India’s benchmark BSE Sensex index prints an all-time high at 22172 logging six new highs during March. Foreign investors are rushing into India with both hands chasing stocks higher. TM offers a buyback no doubt to pump the stock price higher with the same accounting gimmicks used in the States.

The effects of sanctions against Russia are moot as the Micex Index rises +1% to 1338 and the ruble gains strength to 35.467 rather than weakening. Ukraine needs from $15 to $20 billion in funding and the IMF is providing a decision today. The euro remains elevated above the 1.38 pivot at 1.3814. UK raises funds by selling more of its Lloyds Bank stake now reduced to a 25% holding. The UK owns portions of many banks and is attempting to reduce these holding and pay off government debt with the proceeds. Lloyd’s collapses -5.2% from 79 to 75. The pound jumps higher to 1.6548. The US Dollar index drops under 80 to 79.95. Gold 1315. Copper trades flat.

European futures are higher following Asia’s lead and stocks open to the upside about +0.5% across the board. Peugot jumps +2%. European banks are weak in early trading. The US Dollar index drops under 80 to 79.95. Gold 1315. Copper trades flat. US futures are flat overnight but begin lifting after Europe opens. The DAX is up over +1%. S&P +4. Dow +41. Nasdaq +10. The dollar/yen rises to 102.31 so the weaker yen fuels the stock market higher. Copper weakens. WTIC oil is under 100 and Brent is above 107.

Mortgage Applications fall -3.5%. The new mortgages are very thin and the hot hedge fund money and wealthy Chinese and Russian buyers are playing out. Fed’s Bullard says the unemployment rate will probably be under 6% by the end of the year and the recovery is strong. He says there is no month-specific date set to end QE. He says the end to QE and the rate hike will be data-driven and not time-driven. Fed’s Lockhart says the Fed will wait at least six months between the end of QE and the first rate hike, and possible longer. Fed members keep walking back Chair Yellen’s statements about a rate hike occurring six months after the end of QE and this provides bullish lift to markets. Yellen said QE would end this Fall so this yields the following consensus schedule for the Fed moving forward; QE should end between September and November of this year; then, adding from 6 to 9 months, the first rate hike would occur between March and August 2015, only 12 to 17 months ahead. The DAX jumps +1.4%. CAC +1.1%. Dollar/yen climbs higher to 102.39 so US futures run higher. S&P +7. Dow +68. Nasdaq +18.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Capital One maintains the existing divvy and increases the buyback by $2.5 billion. COF launches +.4%. PNC announces a 1.5 billion buyback. USB plans to increase the divvy and buyback and bounces +0.4%. Interestingly, the MS buyback joy fades quickly in the AH and it is now trading negatively. C keeps puking now down -5.6%. JPM plans to buy back $6.5 billion of stock and will increase the divvy. JPM pops +0.4%. BAC is offering a larger buyback so it recovers to the flat line in AH trading. The FHFA Fannie and Freddie regulators announce a $9.3 billion settlement with BAC for its mortgage fraud. The bank buyback news creates an orgy of excitement late day; however, the moves appear lackluster having the feel of a sell-the-news event. Perhaps much of the buyback joy was already priced into banks.

American Express raises the divvy and will buyback $4.4 billion of stock this year. AXP pops +0.4%. WFC increases the dividend and will repurchase 350 million shares. WFC pops +0.3%. Again, the upside moves are a bit tame. The banks are not getting as much bang for their buyback buck. GS provides a vague statement about their capital plan but pops +0.5% anyway. JPM is up +1%. C is collapsing down -6.2%. USB turns negative. STT provides a $1.7 billion buyback and dividend boost so it pops +2.2%.

Essex Property Trust will replace Cliff Natural Resources in the S&P 500 on 4/1/14. ESS gains +2% in the AH and CLF is beaten -1.5%. The shameful automobile recalls continue. Today’s announcement is Nissan recalling one million vehicles due to the passenger air bags sometimes activating without incident punching the passenger in the face. There are a limited number of injuries. When equities have strong down Wednesday’s the weakness typically carries into Thursday. 

Tuesday, March 25, 2014

TUESDAY 3/25/14; New Home Sales; Consumer Confidence

Asia stocks are mixed favoring the negative side. Dollar/yen 102.19. NIKK gains +0.4%. SSEC ends flat. HSI -0.5%. Taiwan Taiex gains +1% receiving a boost from bullishness in the tech sector these days. Iron ore stocks are up and gold stocks are down. Gold is flat at 1314. Copper is strongly higher at 2.99.

Russia is kicked out of the G-8 which now becomes the G-7. The G-8 meeting in June in Sochi, Russia, is cancelled and replaced with a G-7 meeting in Brussels. The G-7 threatens that stronger sanctions will hurt Russia and will increase if Russia’s aggression does not cease. The sanctions are not having a significant effect on Russia with the ruble stabilizing in the 35.70 area and not weakening further. Russia wants to continue contact with the G-8 and is concerned over the outflows of money leaving the country. Capital outflows from Russia will hit about $70 billion in Q1 and this easily surpasses the $63 billion outflow for all of 2013. Fitch issues negative outlooks for nine Russian companies. Deeper sanctions would likely reaccelerate the move lower for the ruble and Russian stocks and force Russia to implement capital controls which will be the first sign of big trouble for the Russian banks and economy. A recession would be guaranteed and the least of their worries, however, the West appears to have no spine to increase sanctions since it will also negatively impact Europe.

European indexes open higher about +0.7% across the board except for Spain’s IBEX that trades flat. Spain is sputtering lately. Luxotica (Ray-Ban and Oakley designer and sports eyewear) catapults +3.4% higher on news of a partnership with GOOG to stylize the goofy-looking Google glasses and make the glasses more attractive to the general public. US futures are higher. S&P +3. Dow +35.

German IFO confidence is lower than expected reflecting the Russia, Ukraine and Crimea turmoil. The IFO outlook drops for the first time in five months. ECB’s Weidmann says negative rates may be a way to stimulate the economy. The Bundesbank surprisingly says the ECB can provide stimulus to the European economy by buying debt of euro zone banks. Germany was strongly against such actions previously. In the end, everyone turns into a Keynesian. The euro drops to 1.3811. European indexes climb higher with the major indexes up over +1%......

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Data shows that Americans are having difficulty affording new cars and are instead opting for used vehicles. Activist investor Dan Loeb, Third Point, sues BID over the poison pill. Sotherby’s offered board seats but that deal is rebuffed and instead Loeb desires to buy more stock which the poison pill now prohibits. BID is up +0.5% today. Jamie Dimon’s potential successor at JPM, Michael J Cavanaugh, plans to leave the bank. Cavanaugh joins CG and must have felt he did not have a chance at the future top job at J P Morgan Chase. CG drops -1%. JPM loses -0.2%. The financials are weak ahead of more stress test results tomorrow.

Sunday, March 23, 2014

MONDAY 3/24/14; PMI's

Russian Ruble continues weakening to 36.2825. Aussie dollar is strengthening slightly to 0.9093. ASX 200 leaks slightly lower as the new week of trading begins. Dollar/yen 102.25. Japan markets were closed on Friday and reopen today. Sinopec misses profit estimates. WTIC oil is under 100 at 99.25 and Brent crude oil is under 107.

Chinese HSBC PMI is 48.1, lower for the fifth straight month, down from the previous 48.5 indicating a slowing China economy. Traders ignore the negative news since stimulus programs will now be expected to boost the Chinese economy; the bad news is good news scenario. The Aussie dollar bumps higher to 0.9106. Australian and Asia stocks rally higher. NIKK jumps +1.8% receiving fuel from the weaker yen as the dollar/yen moves higher to 102.54. SSEC +0.9%. HSI +1.9%. KOSPI +0.6%.

Euro zone PMI falls to 53 below expectations. Germany’s PMI is weaker than expected at 53.8 but France PMI unexpectedly jumps over the 50% level to 51.9. The expectation was for France to remain in contraction under 50. The ECB says it “stands ready to take decisive action” to boost the economy so the euro drops to 1.3789. Europe trades negatively across the board impacted from the ongoing Ukraine, Crimea and Turkey turmoil. Turkey’s 10-year bond remains elevated at 9.5%....

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Many market participants say there are no bubbles in the market for the simple reason that too many folks are starting to call attention to bubbles. Bubbles do usually burst after a melt-up and blow-off top occurs when everyone is chasing the bubble creating frenzy to the point where it collapses the bubble, however, the Internet has changed the playing field in stock trading in recent years. Retail traders are far savvier these days and receive information in much shorter time frames. Years ago the average stock was held for five years, now it is five months. Perhaps the current bubbles bursting in biotech, high-flying momo stocks, 3-D stocks, dividend stocks and high-yield bonds, are occurring under a new paradigm. Those waiting for bubbles to be identified by the old methods of excessive euphoria may have already missed the top as the retail trader is far smarter this time around. The dumb money may not be as dumb anymore.

Permabull Jim Paulsen with Wells Capital Management calls for SPX 1900 and potentially 2000 this year despite any selloff in the near term. That is 150 SPX handles higher from here. Traders and analysts remain strongly bullish. Sadly, Malaysian authorities say that Flight 370 went down in the Indian Ocean beyond any reasonable doubt. The actual cause of the tragedy remains a mystery. The families of loved ones lost on the doomed flight are grief-stricken since they now must assume the passengers and crew have perished.

After the bell, SONC pops +6.4% on an earnings beat. Cloud storage company Box files S-1 documents to list as an IPO and raise $250 million under the ticker BOX. Box competitor Dropbox will likely file for an IPO moving forward as well. The tech IPO’s are hot these days just like the dotcom bubble days in 1999-2000.

SUNDAY 3/23/14; Russian Troops Assemble on Eastern Ukraine Border

Mud slides hit Washington State killing several people. A barge collision results in a large oil spill near the coast of Texas. As much as one million gallons of heavy bunker fuel oil may leak from the barge with 170K gallons already spilled. The spill occurs at a bad time since it is peak bird migration season and a few birds are already impacted by the oil spill. Shipping in the Gulf and Galveston Bay is affected. Cruise ships are delayed from leaving port. The Lundberg gasoline survey reports a 26 cent per gallon rise in gasoline at the pump in the last six weeks. Higher gasoline prices typically lead to lower retail sales.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Three Russian agents are arrested by Ukraine soldiers for instilling riots and instability in western Ukraine. NATO warns that Russia has built up a very formidable force along the entire eastern Ukraine border. Treasury Secretary Lew will undergo prostrate surgery on Tuesday but is expected to be back at work the following week. The Obamacare law, the ACA, experiencing over 30 rules changes by the president’s edicts, turns four years old today. President Obama flies to The Hague to meet with European and other world leaders. Turkey shoots down a Syrian jet that violated the Turkish airspace by only one-half mile. PM Erdogan is no doubt anxious to create a diversion from the Turkey corruption and make himself appear strong moving into the elections.

Saturday, March 22, 2014

SATURDAY 3/22/14

The Flight 370 saga moves into a third week today. Chinese satellites identify further debris floating in the ocean and ships and airplanes are dispatched to investigate. The airplane, crew and passengers remain missing. North Korea fires 30 short-range missiles stirring the pot in Asia.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Gunfire occurs at Belbek airbase, one of the last holdout Ukrainian military bases in Crimea, as Russian troops storm the base and take control. Two soldiers are shot. Russian troops beat up journalists. The Ukrainian commander is detained. A pro-Russian rally of about 5K people is held in Donetsk in eastern Ukraine.

Friday, March 21, 2014

FRIDAY 3/21/14; OpEx; Biotech Selloff

The Flight 370 missing airplane mystery is nearly two weeks olds and ships and airplanes explore the remote area southwest of Australia trying to find the debris spotted by satellites. Copper is on a wild ride with huge up and down days occurring this week. Copper trades +1% higher to 2.97.

Japan markets are closed for Vernal Equinox Day. The rest of Asia and Australia are up. Aussie’s fourth-largest iron ore producer, Roy Hill, secures billions in debt which creates optimism among the miners such as BHP Billiton and Rio Tinto. SSEC leaps +2.7%. HSI +1.2%. China property stocks are up and down like a roller coaster today catapulting from +6% to +10% higher. The yuan prints another low against the dollar.

Today is the eighth anniversary of Twitter when co-founder Jack Dorsey posted the first tweet, “just setting up my twttr.” Turkey’s PM Erdogan closes down Twitter as the elections approach. Ongoing tweets detail the corruption in Erdogan’s administration. Twitter provides a workaround so Turkey citizens can continue to post free speech. Erdogan threatens “I’ll dig up Twitter by the roots” and he may block Facebook next. Dictators and communists realize that technology will empower and educate the people so they try to crush the Internet otherwise they will lose their power.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Semiconductors reverse course from recent happiness. SOX loses -0.9%. IBB is bludgeoned -4.7% perhaps a large gaping hole is developing in the biotech bubble. 3-D printing stocks are thrown overboard. DDD loses -6.1%. AAPL recovers late day due to the rebalancing and finishes up +0.8%. IBM -0.7%. CSCO -0.9%.  TIF is up and down all day long finishing down -0.5%. JWN scales back the plans for expanding the Nordstom Rack stores in Canada. KO finishes flat but call buyers are chasing into Coke. FCX explodes +5% higher. SCCO +1%. POT and MON are both down -0.6%. BAC is slapped -2% due to the GS comments.

For the week, all 10 sectors of the SPX are higher. The SPX finishes +1.4% this week. The Dow +1.5%. The Nasdaq +0.7%. RUT +1.0%. Tech and small caps lag when they should be leading for a robust rally. Despite the strength in chips, the tech sector lags overall. The banks log huge gains this week from +3% to +8%. C +7%. JPM +6%. MS +5%. The dollar gains +1% with USD above 80 to 80.25. Gold loses -3.5% this week. Semiconductors erupt higher. SOX +3.6%. SYMC, the biggest PC security software provider, is a big loser down -10% this week losing -13% today. Biotech rolls over this week. CELG dumps -3.4% this week. IBB -3.1%. GILD -4%. BIIB loses -4.2% this week.

Internet company CEO’s including Reed Hastings of NFLX, Eric Schmidt of GOOG and Mark Zuckerberg of FB meet with President Obama at the Whitehouse to discuss privacy rules. The March Madness basketball tournament brackets are blown out due to shocking upset games. It is one of those years where even Harvard is advancing. The only people happy over the basketball betting and gambling are the bookies and sports bars.

The Obamacare sign-up deadline ends in nine days. The Whitehouse hints that they may extend the deadline at least for those that started an application. Obamacare will only pay the first 30 days of care for a person who’s insurance is not yet verifiable but the doctors will foot the bill for treatment after that until their coverage is verified or disqualified for lack of paying premiums. This confusion will lead to higher costs overall.

Concerns increase that Putin is not finished with aggression. Russian troops are increasing and assembling on the Ukrainian borders. Since Putin appears to have free reign without resistance, many fear that Russian tanks will roll into the Ukraine at any time, perhaps this weekend.

Thursday, March 20, 2014

THURSDAY 3/20/14; Yellen Aftermath; Existing Home Sales; Philly Fed; Bank Stress Tests

Asia trades lower following the US. Australia’s SPASX200 loses -1.2%. Aussie gold miners are slapped with Kingsgate Consolidated losing -20% and both Evolution Mining and Alacer Gold drop -9%. Myer, Australia’s largest retail department store, drops -5% on weak earnings. NIKK -1.7%. Dollar/yen is flat at 102.37. Japanese banks are hit about -2%. TM dumps -1.5%. Foreign ownership in Japanese stocks took a strong move lower over the last week. SSEC -1.4%. HSI -1.8%. GS decreases GDP projections for China expecting slower growth. CHL -3.6% on weak earnings. Chinese property developers rebound. Warren Buffett’s Chinese auto play Byd Company collapses -14%. KOSPI -1%. The dollar/yuan prints a new one-year low. Indian markets trade flat at new highs.

The global market negativity cascades to Europe. Machines take the major indexes uniformly lower -0.6%. Euro is flat at 1.3823. UK retailer NEXT reports strong profits +1.5%. EU Commissioner Olli Rehn says monetary aid to Ukraine is needed quickly. Ukraine warns that Russia may step up aggression on the eastern border. EU leaders meet in Brussels but the West is unable to provide a cohesive plan to counteract Russia’s aggression into Ukraine. European nations are cold to the idea of sanctions since their companies will be hurt just like the Russian companies. This places the West in a milk toast position and emboldens Putin. Russia aggression can continue without resistance. The Ukraine military is humiliated exiting the Crimea bases relinquishing control to Russia in essence surrendering. Russia’s Micex Index is trading slightly positive.

At 4:30 AM, US futures recover. S&P futures are moving between -3 and the flat line. Dollar/yen 102.38. Euro 1.3829. Dollar index is 79.98 teasing above and below the 80 level. The 10-year yield is 2.76% the same as the UK gilt. The German bund is 1.6% and Italy’s 10-year yield is 3.43%. The Flight 370 saga continues with floating debris spotted in the Indian Ocean southwest of Australia. Search crews are en route to identify the potential airplane wreckage.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

At 4 PM, bank stress tests results are released for 30 banks showing that 29 passed with one failure; ZION, which is slapped -4% in AH trading; it later settles at -1%. There was never any doubt the banks would pass. And the insiders made big money this week buying the long side since they were given the results ahead of time. Banks such as C and BAC are up +7% this week in only four days. As George Carlin the comedian would quip, “It’s a big club, and you ain’t in it.” If another financial crisis occurs a la five years ago, the three banks that stand to lose the most money are BAC, C and JPM. Since 1 of 30 banks failed, the ongoing ECB stress tests for European banks this year will likely paint the results with 3 to 5 failures; a couple more than the US but well under any level to cause panic. The central bankers massage the numbers.

After the bell, SYMC is halted from trading due to termination of the CEO Bennett. A replacement, Michael Brown, is named as interim CEO. SYMC reopens and collapses -10%. NKE beats comfortably on earnings and jumps +1.7%. In the conference call, Nike voices concern over foreign exchange headwinds and says China sales will be flat to lower. NKE starts puking and loses the gains dropping -1.5% with over a 3% turnaround in one-half hour. WTIC crudeoi8l drops under 99. S&P rating agency downgrades the outlook for Russia from stable to negative due to the increasing geopolitical risks.

Over 80% of the earnings reports have blamed ‘weather’ for lackluster sales and profit.  Pundits and television analysts wax worry about ‘frothy’ high stock valuations but with the next breath continue to tell folks to buy stocks. Bears remain scarce. Financial writer Jonathon Yates creates controversy telling folks to use a home equity line to buy stocks. This is something you hear at market tops. The IPO frenzy is another indicator of a market topping out. CBOE SKEW prints at 143 a couple days ago the same level that identified the market top to begin the year. Complacency rules the markets. VIX cannot gain traction higher and remains under 14 verifying the lack of fear. CPC and CPCE put/call ratios continue to print low numbers signaling complacency and a relaxed long trader that simply believes stocks will move higher without fear or worry; typically where a market top occurs. Geopolitical problems are not priced into stocks. The wine is flowing like water.

Shamefully, the president’s press secretary Jay Carney tells a CBS reporter that he typically receives the press briefing questions in advance from the ‘journalists’ asking the questions. As if this is not collusive enough, Carney will write answers down that help the reporters write their stories. In other words, the Whitehouse press briefings are choreographed theatre with phony reporters asking pre-rehearsed questions. This is the Ministry of Truth from George Orwell’s 1984. The reporters in Washington, DC, comingle with the politicians at parties and other drunken gala events. Their Caligula-style behavior rewards them interviews and access to the celebrity politicians; it is all very sick and a system that has lost its way. The so-called ‘journalists’ are actors that simply perform and write the way they are directed. Carney attempts to downplay the revelations and the reporter retracts the comments a few hours later but the truth is out and the damage is done.

Wednesday, March 19, 2014

WEDNESDAY 3/19/14; Fed Chair Yellen's First FOMC Meeting

The Flight 370 mystery continues. The pilot’s home flight simulator shows practice flights to landing strips on remote islands in the Indian Ocean while other data on the simulator was erased. Conspiracy theories are increasing daily and many believe the airplane has landed somewhere perhaps in Pakistan. No trace of the airplane is found as the entire ocean is searched from Australia to China.

Ukrainian soldiers are given the command to shoot in Crimea after a soldier is shot and killed. Putin says Crimea is an “inseparable part of Russia” and he will “never seek to spark a confrontation with the West.” Putin, however, routinely goes back on his statements. Russia has taken the Crimea jewel, which is a warm water base for the naval fleet, and is downplaying further aggression into Ukraine. The Russian Ruble recovers slightly to 36.105. The milk toast response with meek sanctions is mocked and laughed at by Russians and will only encourage Putin to kick more sand in the West’s face. Russia will not laugh if their currency collapses.

The dollar/yen moves above 101.60 and the NIKK is up +0.4%. The Japan trade deficit is wider than forecast. Japan plans to relax the work rules concerning women. They see the disastrous demographics challenge ahead with the smaller young population likely not able to support the aging nation in the years ahead. Japan’s Fast Retailing is no longer in talks to buy J Crew. TM agrees to a $1.2 billion settlement with the DOJ and attempts to restore its image. Toyota probably surmises that compared to General Motors, they look good. Porsche announces an automobile recall. The global auto recalls continue almost on a daily basis lately indicating that most manufacturers are performing shoddy mediocre work these days. Perhaps companies are under staffed so employees are over worked making mistakes. Unfortunately, business is not good enough to justify hiring additional workers.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Volatility is slowly creeping higher. VIX 14.44. At 3:00 PM, Yellen is responding to a question concerning the time frame of when rates will rise. Currently, the Fed is tapering QE at $10 billion per month and this will end in August or September, then a few months will go by and rates will take their first hike sometime in 2015 perhaps late 2015 as much as one year after QE ends. After all, the Fed pumped the ZIRP Forever policy moving forward when they announced the taper. Yellen says the period between when QE ends and the first rate hike would begin will be a “considerable period.”

When prodded on what considerable period means, Yellen stepped into a hornet’s nest by stumbling at first, appearing a bit unsure, and then saying a “considerable period is probably about six months.” She placed a time target on the answer a rookie mistake for her first press conference. Traders want to hear firm numbers and immediately do the math where QE ending in August leads to a rate hike in February 2015, one year or less away, sooner than virtually any trader had thought. Everyone was not expecting a rate hike until the middle or end of 2015. The VIX spikes to 14.85. Computer screens are lighting up red. Markets react violently.

The SPX is down 15 points. The Dow is down 150 and the Nasdaq loses 40 points. Gold loses 30 bucks. The 10-year yield is 2.78%. The VIX leaps higher above 15 to 15.43. The more Yellen is talking the more stocks are dropping. At 3:11 PM, stocks are in free fall. SPX down 19 points. Dow loses 185 points. Nasdaq is down 45 points. At 3:12 PM, markets are in collapse. SPX is down 22 handles. Dow is down 210 points. Nasdaq collapses 50 points. The VIX is at 16. The 10-year yield is 2.79%.

The Q&A continues until 3:30 PM when Yellen exits the stage. Equities moderate but remain weak. Front-end interest rates leap higher as the short maturities are sold off (lower price higher yield). The 5-year yield leaps to 1.72% and the yield curve actually flattens across the 5-10 spread. The main takeaway is that Yellen is now suggesting that a rate hike is coming sooner than anyone expected. Market consensus is for the first hike to occur in June 2015 so obviously traders were taken by surprise that a hike may occur in spring of next year instead of summer or later. Equities have rallied each time Yellen speaks. She knocked it out of the park pleasing market bulls during her Congressional testimonies. Today, however, Yellen shows up in a bear suit and lays an egg.

The wild session ends with the SPX down 11 points, -0.6%, to 1861. The Dow loses 114 points, -0.7%, to 16222. The Nasdaq is down 26 points, -0.6%, to 4308. The RUT loses 9 points, -0.8%, to 1196. The computer programs are moving stocks uniformly. The VIX is 15.12 and above the 200-day MA a bearish market signal. Healthcare is the big winner as traders salivate over the 5 million sign-ups for Obamacare. UNH +2.5%. WLP +1.4%. HUM +3.1%. AET +1.4%. IPO’s continue to pop higher and PCTY, Paylocity, is the flavor of the day catapulting +41% on its debut. FDX -0.1%. UPS -0.5%.

After the bell, GES collapses -7.2% on weaker guidance. Wall Street is abuzz over Fed Chair Yellen’s debut performance. In a nutshell, she continues the $10 billion per month QE taper and surprisingly shortens the time when a rate hike will occur now targeting spring 2015 about one year from now. The dollar index jumps +0.8% to 80.15. The dollar/yen leaps to 102.40 due mainly to the strong dollar. The euro drops to 1.3822 due to the strong dollar.

President Obama rules out military action in Ukraine. The president is pushing diplomacy and says even the Ukrainians will understand that engaging Russia in a war is not appropriate and will not help the Ukraine. Putin threatens to retaliate against sanctions by raising the stakes in the Iran nuclear talks. With all this world turmoil ongoing and perhaps escalating, President Obama fills out his March Madness basketball brackets putting on a show for reporters.

Tuesday, March 18, 2014

TUESDAY 3/18/14; Housing Starts; Putin Rally; FOMC Meeting Begins

The Flight 370 missing airplane mystery is over 10 days old and is the longest search in modern-day aviation history. Dollar/yen leaks lower from the 101.80 last evening to 101.41. Despite the stronger yen, the Nikkei gains +1% following the US gains. Asia is up across the board from +0.5% to +1%. The stronger yen sends the S&P futures lower overnight to -3. Dow -20. Sony announces layoffs from the movie studio divisions.

China house prices rise at a slower rate but remain at a phenomenal 9% annual rate. This rate doubles house prices every seven years; a rate and housing bubble that cannot be sustained. Property developers are weak. The Zhejiang Xingrun Real Estate company may have defaulted on $400 million in bank loans which paves the way for further defaults in the real estate sector. Foreign money is chasing into India. IFN is breaking up and out of a two-year sideways channel through 16-21 now printing at 21.50. The BSE prints another all-time record high above 22K.

Vice President Biden lands in Poland. Paris is experiencing nasty air pollution with the Eiffel Tower only visible through a smoky haze. Euro drops a touch under 1.39 but remains very sticky at this level. German ZEW sentiment is far weaker than expected dropping to 46.6 from 55.7 last month. Germany’s 10-year bond yield is 1.58% approaching one-year lows. Folks are pushing money into the perceived safety of bunds. European car sales are encouraging with registrations increasing over recent months. Truck manufacturer Scania, however, collapses -5%. Europe opens on the weak side but trades flat. Copper producer Antofagasta beats on lowered earnings and pops higher. Copper is trading flat to down. China accounts for 40% of global copper demand.

Putin speaks at 7 AM at an assembly in Moscow concerning the integration of Crimea into the Russian Federation. The 11 Russian individuals that are targeted with sanctions from the West sit in the front row of the audience. Russia laughs at the sanctions and says there will be no economic impact. The sanctions are so timid and weak, considering the bluster by President Obama and others that Putin actually becomes more emboldened in his aggressive strategies rather than backing away. Wealthy Russians joke to one another “you are not on the sanction list so you are obviously not doing enough for the country.” The assembly provides Putin a standing ovation as he enters the room.

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

The VIX drops under the 200-day MA below 14.72 creating additional bull fuel and the SPX punches up through 1868 resistance into the 1870’s. The Dow is up triple digits and up over 300 points in the last couple days. The machines uniformly move the indexes up from +0.6% to +0.8% today. The healthcare sector is on fire. ACT +2.8%. THC +2.3%. VRTX +1.8%. WLP +2.5%. The bulls own the day into lunch time.

Politicians and analysts say the sanctions announced against Russia make the US appear weak. The US calls the sanctions a serious response but Russians are laughing and mocking the US. Putin kicks sand in Uncle Sam’s face and there is no response. Russia takes Crimea without any resistance from the West. Europe ends the day higher. CAC +1.1%. DAX +0.8%. The Putin rally travels around the globe.

Equities remain buoyant all day long as traders anticipate easy money commentary from Fed Chair Yellen tomorrow afternoon. Old tech companies enjoy a day in the sun. MSFT gains +4%. HPQ +3.7%. CSCO +0.6%. The Putin rally ends the day with the SPX gaining 13 points, +0.72%, to 1872. Stocks rally big the first two days of the week. INDU gains 89 points, +0.6%. The Nasdaq gains +1.3%. RUT is up +1.4% so today tech and small caps lead higher. Small cap biotech stocks continue to fuel a lot of the gains. VIX is 14.52.

SNDK catapults +4.1% higher printing new highs week after week for the last year. FOSL gains +4.6% on news it is working with GOOG on wearable computer ideas. KORS and GES may be other companies that can provide a stylish edge to the clunky wrist and glasses. Wearables must overcome a major fashion hurdle. People do not want to look like a dork or appear creepy. Billions of dollars are already spent on wearable computers and none of the products have gained traction. After the bell, ORCL reports soft earnings and is beaten -4.6% in the AH’s. China is cracking down on multi-level marketing companies so NUS is slapped -3% and HLF falls -0.6% in sympathy. ADBE beats and trades flat. SCTY beats earnings estimates but trades lower -0.8%.

The Whitehouse spokesman advises America to not invest in the Russian market. However, Russian stocks have jumped higher the last couple days due to the meek sanctions and Putin enjoying a victory celebration after invading and taking over Crimea. BOE’s Carney announces changes to the central banks organization in light of the Libor and Forex currency scandals.

Monday, March 17, 2014

MONDAY 3/17/14; Empire State Mfg Survey; Industrial Production

Asian markets are weak to begin the week but the Shanghai and Kospi finish higher. NIKK -0.4%. SoftBank, affiliated with the Alibaba IPO, jumps +5% on news the listing may occur in the States. SSEC +1%. Construction stocks push the Shanghai above the 2K level. KOSPI +0.4%. Dollar/yuan 6.1785. Traders are viewing the yuan trading band increase calmly. Dollar/yen rises to 101.57 so US futures recover. S&P +3. Indian markets are closed for holiday.

Happy St Patrick’s Day. UK housing prices continue running higher. Asking prices on London homes are at all-time record highs. UK housing stocks jump from +3% to +6% as the housing bubble expands. Telecom consolidation continues with VOD agreeing to buy Spain’s Ono. Labelux plans to split off Jimmy Choo shoes, a very popular brand with ladies, into an IPO offering. European markets move higher in the early going. The euro drops under 1.39.

Ukraine parliament activates 40K reserve troops and mobilizes 15K volunteers to prepare for fighting Russia. Ukraine will need help from the West to defend its land. The West warns Russia to not annex Crimea but the jawboning has no effect on Russian aggression. Russia says it is receiving requests for help from Russian citizens in eastern Ukraine which would escalate the turmoil. EU foreign ministers meet and discuss sanctions against Russia. The bank accounts of Russian political leaders will be frozen and travel prohibited to Europe. The sanctions may not have any bite since no plans are made to place pressure on the Russian oligarchs. The Russian Micex Index is higher gaining +1.2% to 1252. The dollar/ruble continues to weaken to 36.6906. Crimea formally asks Russia for annexation.

The Flight 370 missing airplane mystery is over one week old. The search continues but appears futile. One or both pilots are suspected to be involved in the hijacking but without finding the plane there are many scenarios possible. A Libyan oil tanker is taken over and sailed out to sea by pirates. Libyan authorities request help from the US. Navy Seals storm the ship and retake control. The oil tanker is returning to Libya.

At 4:30 AM, S&P futures receive a strong bid moving from +3 to +8 then +11. Dow +100. Nasdaq +26. S&P futures cover a 16-point range from -5 to +11 overnight. Traders are very relaxed about the Ukraine situation and continue to look at the glass half full for any negative news. Complacency continues with social unrest and economic worries in Ukraine, South Africa, Turkey, Syria, Venezuela and China having very little negative impact. Higher volatility will create wilder and wilder points swings in equities.

The 10-year yield moves a couple ticks higher to 2.68%. The German 10-year yield is 1.56% a very wide 112 basis point spread against the US Treasury. The dollar/yen is moving higher to 102.75 so the weaker yen sends futures higher. At 5 AM, dollar/yen 101.82. Banzai! The BOJ is weakening the yen to pump the US stock market higher....

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Traders likely expect dove Chair Yellen to swoop in and sprinkle QE happy dust on markets this week so they want to get a head start on the rally. Putin is scheduled to speak tomorrow but traders already forgot about Crimea and Ukraine. Ukraine, schmoocraine. The BOJ bludgeoned the yen since last evening, sending the dollar/yen currency pair from 101.30 up to 101.80 creating the bull fuel for equities. VIX remains elevated from recent levels at 15.68 and above the 200-day MA which is a bearish market signal. Copper is flat at 2.95 remaining under 3. Traders refer to today as a ‘reluctant rally’. Equities are typically bullish moving through a full moon, which occurred yesterday, and this eclectic indicator is correct again.

After the bell, JASO pops 4%. HLF collapses -8%. QCOM jumps +3%. Sally Beauty is working with the FBI and other authorities concerning a computer security breach affecting 25K customers. 24 States team-up to apply pressure on WAG, WMT and others to stop selling cigarettes at their pharmacies.

The Whitehouse announces 5 million sign-ups for Obamacare with 13 days remaining before the 3/31/14 deadline. A penalty will be levied against individuals that do not sign up. The president’s goal, backed by the CBO, needs 7 million enrollees, mainly young healthy adults, to make the ACA program financially viable. The president moved the goal post to an easier 6 million target due to the ongoing problems with Obamacare and said this would satisfy goals. The sign-ups are about 70 to 80% of the goal, however, there are mainly older ill folks signing up rather than young healthy folks (that cannot find jobs and do not have the money to buy health insurance).

The previously uninsured that are signing up for the ACA may only be a few million far short of the 30 million uninsured that are targeted as the basis for Obamacare. Insuring a few million that were uninsured could have been accomplished in many far easier ways than disrupting the entire medial system with an ongoing debacle that mandates more bureaucracy, regulation and paperwork. The Whitehouse will not provide other data including how many new sign-ups actually paid the premium to become officially enrolled. California’s payment rate is about 85% so using this estimate, perhaps about 4 million are actually enrolled in Obamacare, far short of the 7 million. The taxpayers will bailout Obamacare in a few years.

Sunday, March 16, 2014

SUNDAY 3/16/14; Crimea Secession Vote

The homes of the pilots are searched as authorities look for clues concerning the ongoing missing Flight 370 airplane mystery. The world is enthralled by this Amelia Earhart-type aviation disaster. The famous and heroic female aviator Earhart mysteriously disappeared over the Pacific Ocean in 1937 and was never found. Authorities believe the troubled Flight 370 was in the air for seven hours and can be anywhere in Asia if it landed. Concern grows that the airplane may be used for terrorism in the future since no sign of wreckage is found.

The Crimea referendum vote begins but everyone knows the result will be for a secession from Ukraine and annexation to the Russian Federation. There are 1.5 million voters on Crimea and about 60% are ethnic Russian. Violence increases in eastern Ukraine as pro-Russian protestors take control of government buildings. Ukraine is splitting into pro-European  and pro-Russian sides; creating the seeds for civil war. Russia claims to have shot down a drone over Crimea. Defense Secretary Hagel, Secretary of State Kerry, President Obama and other members of the National Security Council converge on the Whitehouse to address the Ukraine turmoil. The stock market will be waiting for the sanctions announcement from the West and G7 tomorrow.

Honda recalls 900K 2005-2016 Odyssey minivans on concerns they may catch fire. Fuel pump parts to complete the fix are not available until summer time. Chrysler recalls 18K Fiats due to a faulty transmission shifter. Thousands, and now over one million vehicles, are recalled by major auto manufacturers in recent weeks.

At 2 PM EST, the Crimea polls close and thousands are waiting in the streets to hear word of the results. Russian troops move north from Crimea deeper into Ukraine by at least six miles. Putin is bussing pro-Russian demonstrators and agitators over to western Ukraine to create trouble and chaos. This provides an excuse for Putin to invade Ukraine under the guise of protecting the Russian people; the same feeble, Nazi-like, reason that he used to invade Crimea....

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

The Crimea referendum results in a 95% vote in favor of secession as expected. Crowds celebrate in the streets and fireworks light the sky.

Dollar/yuan 6.15. Indian Rupee spot 61.1744. Dollar/yen 101.31. S&P futures -5. Dow -50. Aussie dollar 0.9018. Euro 1.3904. Pound 1.6630. The lower dollar/yen causes the weakness in the US futures. The 10-year Treasury yield is 2.66%. Gold 1381. Silver 21.34. Copper is weak. Crude oil inventories continue rising so prices remain soft with WTIC at 98.92 and Brent oil at 107.86.

Saturday, March 15, 2014

SATURDAY 3/15/14; PBOC Increases Yuan Trading Band

Malaysian authorities say that missing Flight 370 was likely hijacked. Wirelessly-transmitted data indicates the plane made a dramatic and erratic altitude change higher then lower and then a sustainable path at low altitude eluding radar. The mystery continues and fear over terrorism remains until wreckage is found. The PBOC is increasing the yuan trading band from 1% to 2%. The move allows the yuan to trade 2% above or below the midpoint set by China on a daily basis. China wants to create more two-way currency volatility as a step towards a free-floating currency in the future. The wider band was expected....

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Russian troops are pushing north from Crimea into Ukraine and seize control of a gas distribution plant. The Crimea region is in lock down ahead of the vote. The Ukraine Army is confined to their bases with Russia in firm military control. The push into Ukraine can be considered a troubling escalation of the Ukraine turmoil. The West does not provide opposition to Putin, however, so he continues to take more of Ukraine without resistance.

Thursday, March 13, 2014

FRIDAY 3/14/14; PPI; Consumer Sentiment

Australia stocks move -1% lower in sympathy to the weak performance in the States. BHP Billiton loses -1.4%. Rio Tinto drops -1.7%. Japan’s NIKK drops -2% after the opening bell. Ukraine and China fears increase. Dollar/yen 101.80. TM -2.3%. Sony -3%. Toshiba -3.3%. Japan deals with a 6.3 magnitude earthquake at one of its southern islands. Asian stocks are red across the board but the selling appears orderly with the exception of Japan. The NIKK is down -2.4% mid-session. European and US traders remain alert overnight for a potential cascading global market event.

European futures are down from -0.6% to -1.1%. DAX -1.1%. Asian markets are beaten overnight. NIKK finishes down nearly 500 points, -3.3%, to 14328. This is the Nikkei’s second largest percentage drop this year. Australia dumps -1.5%. The Aussie dollar weakens to 0.9019 and GS predicts a move to 80 to 85 cents. The Shanghai Index loses 15 points, -0.7%, to 2004, hanging on to the 2K level by a thread. HIS loses 217 points, -1%, to 21539. India’s inflation is easing. Analysts cut 2014 China forecasts from the 7.5% and higher estimates. JPM lowers China’s growth rate projection to 7.2%, BAC lowers to 7.2% and UBS lowers to 7.5%. China banks are squeezed by lower growth and higher debt and are beaten lower in recent days.

UK is becoming more concerned about a housing bubble. Pound 1.6616. Draghi plans to use forward guidance to weaken the euro. Draghi is concerned over deflation even though he will not acknowledge it publicly. Euro 1.3863. FB CEO Zuckerberg calls President Obama to complain about the NSA using Facebook to spy on Americans. The president appears unsympathetic to Zuckerberg’s concerns and is not commenting on the conversation.

CSCO begins an investigation into potential Russian bribery allegations. At 4 AM, Russia’s Micex is down -5% and -10.5% lower for the week. A lower Russian stock market will serve as the ‘ultimate sanction’. Dollar/yen 101.68. BP gains +0.5%. NOK drops -0.8%. Europe is negative across the board. Hong Kong regulators identify potential misconduct by UBS concerning the Hibor rate. UBS drops -0.5%. US futures turn positive. S&P +3. Dow +9.

At 5 AM, Secretary Kerry meets with Foreign Minister Lavrov for an eleventh hour conversation to avert a serious escalation in the Ukraine crisis.....

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

For the week, the SPX loses -2%. The Dow loses -2.4%. The Nasdaq drops -2.1% and the RUT loses -1.8%. XLF -2.6%; financials slapped. XLY -2.3%; discretionary beaten. XLI -3.1%; industrials smacked. IBB -2.1%; biotech bubble may be popping. Copper -5%; now everyone realizes the doctor is sick. WTIC oil -3.7%. Gold +2.9%. TNX 2.65%. XLU +2.3%; utilities are the big winner this week. XLP -0.2%; staples flat. The flatness in consumer staples, higher utilities, higher gold and well-bid notes and bonds (lower yields) all indicate a ramping up of fear with traders seeking downside protection, safety and a desire to play defense moving forward.

The acronyms TINA (There Is No Alternative) and FOMO (Fear Of Missing Out) have ruled the stock market over the last year as the Fed’s easy money has nowhere else to go except into stocks pumping prices higher. This week, however, the pattern is reversed with money exiting stocks and chasing into boring Treasuries, utilities and consumer staples.

YELP is crushed -11% this week. TSLA drives lower losing -6.2%. PCLN dumped -6.6% well under the 1300 level. LNKD became unlinked dropping -5% this week. NFLX lives a horror movie as the stock drops -5.3%. China and Brazil lose -2% this week. Germany dumps -3.2%. DB, Deutsche Bank, collapses -8.2%. Japan is a big loser puking -6%. The drop in the dollar/yen (stronger yen) to 101.29 causes stock market weakness in the US and Japan.

After the bell, Target admits the security breach has hurt its business and image and may even be worse than expected. TGT drops -0.5%. SINA pops +4.2% on news it will take Weibo, the Twitter of China, public with an IPO in the US. GS and CS are the underwriters. GMCR bounces +1.4% on news it will be added to the S&P 500 taking the place of WPX. The bears create technical damage this week with the major indexes losing important 20-day and 50-day MA moving averages. The Dow lost the 20-week MA at 16090. Volatility is higher which will create more dramatic point swings in the stock market intraday and from day to day going forward.

The Russian stock market was slapped hard this week. The 10-year yield on Russia’s bonds jumps from 8.0% to 9.7% over the last two months. Confidence in Russia’s government and economy is slipping daily. The Russian Ruble prints at 36.7 reflecting a very weak ruble that continues to weaken. Money is leaving Russia but at the same time Russia is pulling money from investments in the West as both sides jockey positions ahead of the pending sanctions. The Crimea referendum vote occurs Sunday and it is a done deal with succession and a Russian Federation annexation on tap. The sanction announcement by the West and G7 against Russia on Monday will move markets. The world waits.