TUESDAY 4/8/14; Ukraine Turmoil Escalates; Q1 Earnings Season Begins

The Aussie dollar is up to 0.9327. Australia and Japan agree on a trade pact that will affect beef and automobile industries. Tariffs on Aussie beef are reduced so cattle producers and other ag companies jump higher. BOJ votes unanimously to maintain current monetary policy. Traders and analysts, however, expect the BOJ to increase stimulus by July. Once traders are junkies addicted to the easy money they rely on the fuel to live. 








[Text is Redacted: Purchase April 2014-04 to Read the Complete Chronology]

Twitter unveils a new web site layout that looks more like Facebook’s layout; analysts jokingly refer to the changes as the Facebookafication of Twitter. TWTR -2%. FB +2%. Equities remain elevated into 2 PM EST even though the dollar/yen collapses through 102. Federal regulators are approving stricter capital requirements on the banks. The banks were hoping for more lenient guidelines instead. The news takes the wind out of the market sails as the broad indexes all drift lower after peaking between 1:30 PM and at 2 PM.

At 1:51 PM EST (12:51 CST), only 25 minutes before the close for commodity trading, CME’s Globex global electronic trading system experiences a technical glitch and stops trading in several agricultural and grain commodities. Traders experience a mini-panic since about 90% of the commodity trading volume is handled by the electronic system. Contracts impacted will settle via open out-cry in the pits today.  The CME is targeting a resolution to the situation in the coming hours and expect to be fully functional for tomorrow’s trading. The timing of the outage is fishy since the USDA’s World Agricultural Supply and Demand Estimates are released tomorrow. WTIC crude oil jumps over two bucks today above 102. Brent crude oil approaches 108 as traders become increasingly worried over Ukraine. Copper turns positive.

The dollar/yen is in collapse down to 101.62 but interestingly the US equity markets do not follow the currency pair lower. The SPX and Dow are bouncing between positive and negative with the Nasdaq up +0.7% and RUT +0.6%. Dip-buyers are purchasing beaten down tech and small cap stocks. The 10-year yield drops to 2.68%. VIX sits at 15. The stricter bank capital requirement news takes about 5 points away from the SPX now at 1850 continuing to fight at this strong 1848-1852 support and resistance level. A fist-fight breaks out among politicians at the Ukraine parliament meeting. Ukraine is slipping into chaos and civil war.

Financials remain weak. XLF remains negative. JPM -0.6%. C -0.3%. GS is puking -1.5%. WFC is a hair positive as analysts tout Wells Fargo, a favorite son of Warren Buffett, as the best financial to play in the space. JPM and WFC report earnings on Friday morning. Traders appear willing to provide equities the benefit of the doubt today and are anxious to dip their long toes in the water considering the strong two-day selloff Friday and Monday. In upward-trending bullish markets, Monday’s and Friday’s print positively the majority of the time. In downward-trending bearish markets, the Monday’s and Friday’s tend to print negatively.

Equities recover from the negative banking news and the CME outage about 90 minutes ago. Markets float higher towards the closing bell. XLF turns a couple pennies positive so financials stage a comeback late day helping to buoy the broad indexes. The SPX marches towards the highs again above 1853. CAT and DE both jump +1.4% so traders obviously believe in a global recovery story and are ignoring any slowdown in China’s growth as well as the lower IMF growth estimates this morning. VIX is 14.86 remaining above the 200-day MA at 14.51 which signals bearish markets ahead.

The session ends with the SPX up 7 points, +0.4%, to 1852. Price bounced off the 50-day  MA at 1841. The Dow gains 10 points, +0.1%, a smidge, to 16256. The Nasdaq gains 33 points, +0.8%, to 4113.  The RUT jumps +0.7% to 1144. Equities print an up day after three down days. The dollar/yen bounces off the lows to 101.71 receiving a pounding today dropping -1.3% from over 103 down to under 102.

The big winners are NKE up +3%, INTC +1.6%, MCD +1.1%, VZ +1.3% and CAT +1.3%. The losers are GS down -1.3%, BA -1.2%, IBM -0.6%, V -0.4% and TRV -0.3%. SEAS bounces nearly +6% despite activists promoting legislation that prohibits the captivity and exploitation of orca ‘killer’ whales. SeaWorld says animals are not mistreated and the expectation is that the parks will operate unaffected. SeaWorld receives bad press these days after the release of the movie “Blackfish” that paints the parks in a bad light.

After the closing bell, Q1 earnings season begins with AA reporting a four-cent beat on earnings but the top line comes up short. Alcoa jumps +1% in AH trading and says airline and automobile sectors remain robust. The weak top line, however, indicates lackluster global growth. WDFC slips on spilled WD-40 as EPS misses but the top line revenue beats. The Q1 earnings season is officially underway with two stocks reporting mixed results serving as a microcosm for the mixed picture in the broad markets these days.

ISRG plummets -8% AH’s after guiding lower. LQ, the LaQuinta IPO, prices at 17, below the expected 18-21 range, and begins trading tomorrow. The interest in IPO’s may be waning.

Lawmakers are pushing for the DOJ to bring criminal action against shamed ex-IRS head Lois Lerner that refuses to answer questions without pleading the Fifth Amendment. The investigation into the IRS scandal concerning the unfair treatment of conservative and Tea Party groups is important since it hints that election-fixing was occurring that negatively impacted Mitt Romney’s chances in the November 2012 presidential election.