WEDNESDAY 4/9/14; 10-Year Note Auction; FOMC Minutes Ignite Strong Rally

The dollar/yen recovers to 102 but the weaker yen does not aid the Nikkei. The NIKK loses -2.1% down four consecutive sessions. Yesterday afternoon the big drop in the dollar/yen pair, from over 103 to sub 102, did not result in the weakness that would be expected in US markets. The BOJ is not increasing stimulus so the dollar/yen is dropping. The euro moves above 1.38. The dollar is 79.77 unable to stay above the 80 level. The weaker dollar boosts the euro higher and helps send the dollar/yen lower. So the action over the last day is a weak dollar story. The dollar/yen drops from 103 weakening the Nikkei while at the same time a weak dollar buoys the commodity sector that provides lift to US equities.

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The Caligula-style orgy is in full swing as traders cheer a weak economy. This means the Fed will keep printing money and make those owning stocks wealthier. Unfortunately, if you are the other one-half of the country that does not own stocks and is mired in structural unemployment and underemployment, well, you are screwed. Fed Chair Yellen lives up to her dovish reputation and the Fed will continue supplying the heroin for market junkies making the rich richer. The Fed and both democrat and republican politicians do the bidding of the wealthy. Traders turn giddy and care-free drunk on the Fed wine.

WTIC crude oil jumps to 103.50. Markets are on fire after the FOMC Minutes. The weaker dollar sends oil and other commodities higher. Brent oil hits 108. Gold is 1311. Copper recovers but remains a touch under the flat line so Doctor Copper is not convinced of the euphoric rally. VIX drops to 13.80 providing upside fuel. The 10-year yield drops to 2.68%. The lower dollar sends the euro higher. ECB’s Draghi is restless and sleepless as he watches the euro climb higher. The higher euro will continue to crush European manufacturers and exporters and prevent the continent from recovering from the ongoing recession and depression.

FB runs ever higher now up +6%. The happy market mood continues into the last hour of trading. The SPX moves above the 20-day MA at 1863.41. The Dow is above its 20-day MA at 16329. The Nasdaq is up a big +1.4%, RUT +1% and Dow and SPX both up +0.9%. Tech and biotech stocks the clear winners. Interestingly, the TRIN is 1.22 on the bear side today despite the robust rally. VIX recovers off the 13.79 low and tries to move back above 14.

At the closing bell, traders high-five each other and make plans to celebrate at happy hour. The dovish Fed throws a big party today. The SPX gains 20 points, +1.1%, to 1872. The Dow leaps 181 points, +1.1%, to 16437. The COMPQ gaps up catapulting 71 points, +1.7%, to 4184. The RUT gains 16 points, +1.4%, to 1160. VIX is 13.82 ending sub 14 and under the 200-day MA which is a feather in the bull’s cap. Dollar/yen 102.00. Euro 1.3852. The 10-year yield is 2.69%. Silver loses -0.9% with gold finishing higher at 1313. Copper ends down -0.3%. XLF is +0.9% but the banks lag the major indexes.

FB leaps +7.3%. Sandberg says she does not plan to leave Facebook. The brokers have been beaten lately but ETFC jumps +6%. Biotechs jump higher. IBB +4%. VRTX bounces +7%. REGN +7%. CELG +6.6%. P gains +5.3%. The momo high-flyer names all jump strongly higher today while the old school tech stocks and broader market finished up from +-.2% to +1.7%. YELP +6%. CZR +9.5%. LNKD +4.2%. PCLN +4%. The LQ IPO ends as a winner on its debut day of trading up +0.7%. HSY melts away losing -2.8% in the strong up tape.

After the bell, the steaks are sizzling at Ruby Tuesday’s as RT jumps +12% after beating handily on earnings. Bed Bath and Beyond misses on EPS and reports lackluster sales. BBBY drops -4%. The ALLY IPO prices at 25 at the low end of the 25-28 range. IMPV issues an earnings warning and collapses -35%. The bullish vibe returned in a heartbeat today. Traders remain complacent and lack any fear or worry that markets will sell off especially after the Fed dishing out more candy today. The VIX is under 14 and put/call ratios are uber low verifying the ongoing market complacency. The CPCE and CPC print 0.45 and 0.61, respectively, signaling a significant market top is at hand at any time within the coming days or a week or two.

Data on the Obamacare sign-ups show folks that are sicker than expected and many are taking or require prescription drugs. If more ill people sign up than anticipated, with less healthy folks signing up, higher premiums are on the way for everyone. The upheaval of the US health system continues. Medicare pay-out data shows that a small number of providers receive obscenely high Medicare payments for treating patients. $77 billion payments are made to 800K doctors. Only 100 doctors receive a combined $610 million. The controversial figures create further media discussions on the US healthcare mess.