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%......




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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.