WEDNESDAY 3/5/14; China's NPC Sets 7.5% Growth Target; China Faces First Corporate Bond Default; ADP Jobs Report; Beige Book

Australia’s ASX 200 gains nearly +1% on better than expected GDP and encouraging economic data. China’s National People’s Congress convenes and targets a steady 7.5% growth rate for this year. China faces its first onshore corporate bond default. Solar company Chaori Solar is not able to make interest payments on bonds that are due this week. This is very ominous and may be a warning sign that the Chinese economy will experience a hard landing moving forward, however, traders remain complacent and do not blink an eye, fully expecting global equities to continue printing new highs.

China Services PMI is slightly better than expected but India’s Services PMI remains in contraction under 50. The Shanghai and Hang Seng Index’s finish lower selling off strongly into the closing bell. Dollar/yuan 6.1286. Indian Rupee 61.84. India sets elections for the period from 4/7/14 through 5/12/14. Turkish Lira 2.2084. The dollar/yen is 102.40 so NIKK jumps +1.2%. Fast Retailing, the darling of long traders lately, jumps +3%. TM trades flat to lower. Asia markets are higher except for China.

Putin maintains the legitimacy of his actions in Crimea despite global political outrage. Russian stocks drift about -1% lower. Dollar/ruble 36.1372. Secretary Kerry is meeting with Russian Foreign Minister Lavrov on neutral ground in Paris. Lavrov speaks in Spain and says the new Ukraine government is not legitimate. The US is threatening serious sanctions against Russia. Russia will not extend natural gas discount pricing to Ukraine after April. Ukraine owes energy giant Gazprom $2 billion. The Russian threats over gas supply are reminiscent of the 2006 and 2009 incidents in the region that created concern in Europe especially in the harsh winters back then. The gas supplies are more diversified now although the Ukraine pipelines continue to supply a majority of gas and oil to Europe.

European markets trade flat. Adidas stumbles -0.7% blaming currency differences for disappointing sales. Carrefour jumps +1.2% indicating the supermarket business in France is steady and profitable. Standard Chartered Bank jumps +3.6% after it reports weak earnings but says its exposure to China shadow banking is minimal. MS says the risk is 35% that Europe will slip into more serious deflation. German February Services PMI is 55.9 better than expected....



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The high-flying stocks outperforming to the upside this year up from +20% to +70% are AKAM, EA, NFLX, TSLA, BBRY and FB. The stock market idles sideways today after the wild down day Monday and up day yesterday. The SPX prints a new intraday all-time high at 1876.53 but cannot print a new closing high. The broad indexes finish the day slightly negative but the Nasdaq finishes positive. The RUT small caps lead lower. Financials lead higher with XLF +1.1%. BAC leaps +3.2%. MS +2.8%. GS +1.9%. The VIX falls below 14 in the final minutes of trading which will encourage the bulls tomorrow.

WTIC crude oil leaks below 101 dropping -2.4% today. Metals are flat all day. Copper remains weak and no one pays any attention to this key market indicator. Moody’s downgrades Chicago’s credit rating to a tick above junk status. Fed’s Williams says a rate hike may occur in mid-2015 as the economic growth increases and the unemployment rate falls.