WEDNESDAY 5/14/14; M; DE; PPI; CSCO; Tepper Selloff

WTIC crude oil is at 102 rising a couple bucks over the last couple days. Brent is 109.70 approaching 110. Gasoline prices at the pump in the US are rising towards four dollars per gallon and will remain elevated with the elevated oil price. Australia releases the federal budget and stocks trade flat. Future rate hikes by the RBA may not occur until late 2015 and beyond. The dollar/yen leaks lower to 102.08 so the stronger yen pushes the NIKK lower. The global M&A orgy continues with comic book and media publishers and distributors Kadokawa and Dwango gaining +10% after announcing a merger deal. SNE gains +1% ahead of earnings which show that a disappointingly large half-billion loss is on tap for this year.

The Bank of China jumps +1.7% after announcing that it will raise $16 billion by offering preferred shares. The SSEC is down -0.1% and HSI up +1%. Asia markets in general are mixed finishing on each side of the flat line. The KOSPI is the big winner gaining +1.7% and South Korea is the new favorite flavor for international traders. Car makers Hyundai and Kia jump +2% and +4%, respectively, as traders chase into South Korean stocks buying up the blue-chip names.

China’s 10-month investigation into GSK bribery charges ........





[Text is Redacted: Purchase May 2014-05 to Read the Complete Chronology]

David Tepper, Appaloosa Management, the top-producing hedge fund last year, speaks at the SkyBridge Capital’s SALT 2014 conference in Las Vegas, and says it is time to be nervous concerning the equity markets. Tepper says, “I’m not saying go short, I’m just saying don’t be too fricking long right now. I am nervous. I think it‘s nervous time.” Back in 2010, Tepper encouraged everyone to go long when there was rampant fear in the markets. He said the obscene money printing by the Fed will continue to send stock prices higher and he was correct. The stock market push higher from 2010 into 2011 was dubbed ‘The Tepper Rally’.

Tepper remained bullish last year but started to express caution. He clearly thinks markets are topping. Tepper says he is, “afraid of deflation.” His comments move the stock market lower in the afternoon; many of Tepper’s wealthy hedge fund friends likely knew what he was going to say and have been throwing stocks overboard since the opening bell. The Treasury yields are dropping like a stone today and the Tepper comments exacerbate the move lower.

Equities move sharply lower beginning at 2:30 PM EST and drop into the closing bell. The session ends with the SPX down 9 points, -0.5%, to 1889. The Dow loses 101 points, -0.6%, to 16614. The Nasdaq loses 30 points, -0.7%, to 4101 hanging on to the 4.1K level. The RUT drops 18 points, -1.6%, to 1103 hanging on to the 1.1K level. Tech and small caps lead lower. A weak retail sector and financials create market weakness. RTH -0.8%. XLF -0.7%. The 10-year yield is 2.54% collapsing from 2.65% only one day ago.

After the bell, SEAS misses on earnings and drowns -4% in AH trading. CSCO beats on earnings and leaps +7%. Rival JNPR shares also bounce. The upbeat Cisco news will help elevate the Nasdaq tomorrow. Agilent guides lower so A is smacked -2%. JACK sells off after missing on earnings. SHLD drops on news that suppliers for Sears are voicing concern over payments and the Canada stores are reporting very weak sales. SHLD lost -6% today.