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.

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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.