WEDNESDAY 4/30/14; GSK; ADP Employment Report; GDP; FOMC Rate Decision; EOM; YELP

The BOJ refrains from adding additional stimulus and sees inflation above 2% in 2016. The dollar/yen is flat at 102.50 and the NIKK is flat. The SSEC is also flat but the Hang Seng drops -1.4%. The April monthly results show that Australia outperformed while Japan underperformed. Global economic data shows that China will overtake the US economy in one year's time. India is moving into the third spot pushing Japan lower. Japan was pushed out of the number two spot by China about one year ago.

The euro remains sticky exactly at 1.38. The ECB says European banks have boosted their cash reserves since last summer. European markets trade lower. CAC is leading lower at -0.4%. German unemployment drops for the fifth consecutive month. Daimler profits are higher but the stock drops -3.2%. Mercedes earnings are blow-out positive the recall announced last evening now a distant memory. Mercedes sales are growing in China especially SUV’s and new stores are planned. BNP Paribas profit is growing but may face a fine from the US due to bank dealings with unapproved nations and money laundering allegations. CS is under the same scrutiny by US regulators including providing advice to companies concerning tax avoidance strategies. Barclay’s is setting up a ‘bad bank’ to handle its bad paper.

Royal Dutch Shell beats on earnings and rises +4% but there is large exposure to Russia and Ukraine which may negatively impact results moving forward. Talks are in progress between GE and Alstom. GE promises to maintain employment levels for three years to sweeten the deal. Alstom resumes trading after the halt late last week and catapults +15% higher but settles in at about up +8% today. Alstom will make a decision on its sale by the end of May.

The global M&A orgy continues especially in healthcare and pharma sectors. M&A activity typically coincides with market tops. 




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

For the month, the SPX gains +0.6% and prints three consecutive up months and is up 7 of the last 8 months and also up 15 of the last 18 months. The power of the Fed and other central bankers is phenomenal with easy money fueling dividends, buybacks and the overall stock market. The Dow is up +0.8% on the month with the same monthly stats as the SPX. The COMPQ logs a down month losing -2%. There is always a fly in the ointment. The Nadsaq prints three down months out of the last four. The RUT loses -4% on the month placing another fly in the ointment. So tech and small caps want to lead the broad markets lower. Utilities and energy sectors are the winners in April. UTIL is up +4% this month and XLE gains +5.3%.

Health insurers are up strongly. WLP is up +5.6%. after raising forecasts CI +2.8%. SEE +5.3%. IP +1.6%. Higher paper and packaging companies (IP and SEE) is an encouraging sign for the economy. The hotel sector is from +2% to +5% higher today with strong moves in H, MAR, HLT and HOT. PBI +6.9%.  GRMN jumps +3.7% as its fitness monitor product gains popularity. GWW bounces +2.5% after announcing a dividend and buyback program. AVNR explodes higher +46% after receiving a favorable court decision on a patent dispute.

TWTR pukes -9%. EBAY collapses -5%. CHK drops -1.1% on news that its CEO is the highest paid in the US at an obscene $142 million. ESRX pukes -6.2% after lowering guidance. After the closing bell, YELP beats on earnings and pops +1% showing strength to the upside. WTW beats on earnings and leaps +19% in AH trading.

The minimum wage bill proposed by President Obama does not make it out of the democratically-controlled Congress. One-third of the people signing up for Obamacare have not paid their first premium far worse than expected.  The Whitehouse immediately disputes the data but continues to not provide actual numbers. The software contractor for the Obamacare web site says another $121 million is needed to fix the site. The web site remains unfinished and unable to handle transactions with the insurance companies. The work is being done manually and is very labor intensive which only serves to hurt the overall economy with such unproductive nonsense.

Departing HHS Secretary Sebelius says she will not testify before Congress so she rides off into the sunset like Lois Lerner involved with the IRS scandal. Nearly $800 million of taxpayer money is already lost with Obamacare so the total will move above one billion in short order. Silicon Valley tech companies chuckle at the Obamacare website and government incompetence since the site should already be fully functional with spending only one-fourth the cost. Instead, taxpayer money will continue to be wasted and Obamacare will likely require a bailout in a few years or sooner.

To create a trilogy of trouble for the president today, a CSX train hauling crude oil derails in Lynchburg, Virginia, USA, with as many as 14 tanker cars damaged and leaking. Three cars are in the James River leaking oil. President Obama refuses to approve the Keystone XL Pipeline project so more and more oil is transported by rail (to benefit his wealthy friend Warren Buffett) and accidents are occurring every couple months. Even though all environmental conditions are met and approved and democrats and republicans both call for the pipeline approval, the president will not permit the project since many of the wealthy donors to the Democratic Party are radical environmentalists. It is shameful since people desperately need jobs. Transporting oil via pipelines is obviously far safer than rail.