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.