FRIDAY 3/7/14; Chaori Solar Default; Monthly Jobs Report; Russia Controls Crimea

The dollar/yen maintains the 103 level and the weaker yen over the last few hours pumps the NIKK +0.9%. Asian markets are mixed with nearly all finishing either side of the flat line. China jitters increase as Chaori Solar defaults. The troubled solar company lost money last year and cannot make the $14.6 million interest payment due today. Chinese companies are postponing bond offerings as this first-ever onshore domestic bond default plays out. Many other defaults are likely. There are almost 300 Chinese companies that have debt to equity ratio’s in excess of 200% so further trouble will occur when these debt-laden companies try to refinance their debt. Chinese banks trade lower. A new property tax in China slaps the property stocks -2% across the board. India’s Sensex gains +1.4%.

The euro is up to 1.3870 printing a high for 2014. Traders that expect a weaker euro, since European companies desperately need the weaker currency to boost manufacturing and exports and help the economy to heal, had their heads handed to them as Draghi whistled past the graveyard. Draghi did not offer a further rate cut or other stimulus yesterday so the euro leaped higher fueled by short-covering. European indexes open flat but drift lower. The DAX dropped from 9700 to 9350 on Monday due to the Ukrainie unrest and has only recovered to 9570 so the negative affects linger. The US indexes recovered all their losses from the Monday sell off and are printing new highs.

Russia’s Micex Index is -1%. The dollar/ruble is 36.2544 down about -15% over the last year and down about -9% this year due to the Ukraine turmoil. Journalists track down the inventor of bitcoin physicist Dorian S Nakamoto. He denies bitcoin involvement and does not want the attention. The bitcoin virtual currency drama intensifies and receives international attention after the death of the First Meta CEO. Spotify is taking steps towards offering an IPO in the future. GS owns part of Spotify and is spearheading the effort.

The markets are constantly changing and evolving. Interestingly, the average holding period for a stock a decade ago was five years; the average holding period now is 5 months. This behavior hints that the majority of traders are likely to not stick around for the long haul (maintaining a long-term buy and hold philosophy) when the stock market finally decides to correct lower. If traders plan to indiscriminately throw stocks overboard once they stop performing, this action may exacerbate a market correction into something far more serious......

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

 Traders ignore the ever-increasing tensions in Crimea and Ukraine and instead focus on the happy jobs number, stronger financials and another new all-time high in the SPX. Traders are complacent happily partying into the weekend without any worry or fear. Ukraine, schmoocraine. Doctor Copper, a key market bellwether, is laying on a gurney in sick bay. Copper is in a mini-crash today, down over -4%, but traders do not care and are more concerned about making plans to grill steaks in the warmer weather this weekend.

Trades proclaim SPX 1900 is coming any day and a 3% yield on the 10-year is guaranteed. The bullish euphoria continues with long traders ready to don lamp shades during happy hour festivities. NYSE Floor Trader Warren Meyers says SPX 1850 is now firm support and SPX 1950 is likely on the way. MS’s David Darst says today’s action is only a small rest and more upside is ahead. There are no bears remaining in the market; everyone appears bullish. Traders are upbeat and happy today even thought the stock market is actually flat to weaker after the encouraging jobs report this morning. The optimism for a continuously higher stock market is engrained into the psyche of the majority of traders.

The Federal gas tax may increase. Currently, an 18.4 cents tax is imposed on regular gasoline to pay for road maintenance. A 24 cents tax is applied to diesel fuel since heavier trucks are harsher on the roadways. The tax has not increased since 1993. Roads are riddled with potholes especially in northern States such as Pennsylvania which are highly traveled by Americans. People are frustrated at the out-of-pocket car damage occurring from rough roads and potholes including broken shocks, flat tires and bent wheel rims and steering linkage.

The CRB Commodities Index is up from 272 to 308 in two month’s time, +10%, and now at levels not seen since October 2012. Folks will experience increased food inflation in the coming weeks and months as the ag commodities such as coffee, grains, wheat, corn and milk all move higher. The morning cereal will be more expensive as well as the milk to fill the bowl. Biotechs are slapped again today but finish up off the lows. Equities end the day mixed with the SPX and Dow finishing higher and Nasdaq and RUT finishing negative. The dollar/yen remains elevated all day above 103.25. The euro remains elevated at 1.3876. The 10-year yield is 2.79%. WTIC crude oil is up +1% to 102.58. Natty gas is down -1% to 4.618. Gold, silver and copper sell off. Doctor Copper pukes -4.2% today which is a dire indication for economic growth. Weak copper means the two key economic drivers, housing and auto’s, are sick.

GPS ‘falls into the gap’ dropping -3.1%. HRB is taxed -4%. FL runs higher +5.1%. BIG explodes +18% higher. SKUL jumps +24% on strong earnings. For the week, the SPX gains +1%, the Dow +0.8%, Nasdaq +0.7% and RUT +1.7%. Tech lagged but small caps clearly led. This is due to the small cap speculative biotech stocks that are pumped higher. After the bell, while no one is paying attention, BA announces an investigation into hairline cracks appearing on Dreamliner airplanes where the wings attach to the fuselage. BA drops -0.5% in AH trading. Cable news outlets report a BA 777 airplane has gone missing over Vietnam on a flight from Kuala Lumpur to Beijing. There are 239 passengers and crew aboard. There is no distress signal so a catastrophic failure and crash is feared. Search crews are deployed.

A US official says Russia is firmly entrenched in Crimea and has no intention to leave. Russia continues taking over all buildings on the Crimea peninsula and the region is now in essence a Russian territory. The Putin pays no attention to the sanctions or increased military presence from the West and simply continues invading and entrenching militarily in Crimea without concern. The Russian ‘unmarked’ troops, driving Russian military vehicles, now number 30K in Crimea. The Whitehouse is not commenting on the developments.