WEDNESDAY 5/21/14; TIF; TGT; Fed Speakers; FOMC Minutes

The BOJ maintains the current monetary policy and refrains from announcing additional stimulus at the conclusion of the two-day central banker meeting. Governor Kuroda surprises traders since inflation is nowhere near the 2% target. Kuroda says Japan can continue recovering despite the sales tax increase. The dollar/yen drops through the 101 level to 100.83 since the yen strengthens. Money printing weakens a country’s currency and pumps the stock market higher as the easy money is used to buy stocks. When the money printing levels off, decreases or stops, the currency gains strength which sends its stock market lower. The lack of additional stimulus from the BOJ sends the yen higher, dollar/yen lower down through 102, and the NIKK lower losing -0.2%.

The Fukishima nuclear disaster continues with Japan stifling any news flow. A fire occurs at the troubled triple-melt down facility but there is no way to verify the incident. Musician Paul McCartney cancels his Japan tour due to illness but maintains his schedule for Seoul, South Korea, on 5/28/14 as well as the US gigs. McCartney is very health conscious so perhaps he wanted to avoid any nuclear exposure? The California Coastal Commission says the threat to health from the Fukishima contamination in the Pacific Ocean waters is minimal. The commission is also quick to report, however, that the long term effects to health due to low doses of radiation over a long period are unknown. In other words, you can swim in it but the writers of the report will likely not.

Iron ore prices are at multi-year lows .....






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HRL hurls -1.4% on lackluster earnings and a weak outlook. INTU dumps -4% after reducing its guidance. Target earnings are 70 cents versus 71 cents expected. Top line is barely on the mark and the 2014 forecast is cut. TGT trades flat. GM recalls more automobiles; 220K Chevy Aveos due to potential fires. GM trades flat. EBAY experiences a cyber attack and directs all users to change passwords. Petsmart reports weak earnings. Times are bad if the pets cannot feel some love. PETM collapses -7%. Futures remain robust since the dollar/yen recovers to 101.35. S&P +7. Dow +65. Nasdaq +11.

The session begins with equities moving higher the Dow is up nearly triple digits. The SPX jumps to 1883 gaining over ten points. The 10-year yield is up to 2.55% five basis points higher over the last few hours. The VIX drops under 12 to 11.96 providing bull fuel. Copper remains weak. Financials jump strongly higher. XLF +0.8%. TGT gains +1% despite the disappointing results. LOW -0.2%. TSL is up a sunny +22%.

Markets remain elevated as Fed speakers Dudley, Yellen, George and Kocherlakota speak. Fed Chair Yellen provides a graduation address at New York University at Yankee Stadium which sounds like an infomercial to promote the Fed. Yellen defends former Fed Chair Bernanke’s decisions. What else is she going to do? She is a co-conspirator along with Bernanke and Dudley, the dovish triumphant at the Fed the last few years that have forced the ongoing Keynesian monetary policies down everyone’s throats.

The dollar/yen remains above 101.40 supplying bull juice for equities. Ditto the low volatility. A low TRIN under 0.70 also provides bull fuel for equities. WTIC oil moves above 104. The equity bulls are in party mode pushing stocks higher but on light volume.

President Obama speaks concerning the developing VA scandal and promises to get to the bottom of the trouble at the veteran’s hospitals and fix the problems. To become reelected in November 2012, the president promised that everyone could keep their health insurance and doctor under Obamacare but that was a lie. The president also promised to investigate the Benghazi and IRS scandals but instead the Whitehouse is stonewalling and delaying the investigations; these two promises qualify as hollow rhetoric. So no one is holding their breath about the president fixing the VA especially when he has been aware of all the problems the last few years. Veterans deserve to be treated with far more respect.

At 2 PM, the FOMC Minutes show that Fed members are debating the slack in the economy (low employment). The Fed discussed rate hike procedures but do not plan action any time soon. The Fed does not plan to raise the benchmark rate until spring or summer 2015 and some analysts believe summer or Fall 2015 is more likely. The comments are viewed dovishly at first blush with a highly accommodative Fed in play so stocks run higher and print at the highs of the day. The Dow is up over 150 points and SPX prints above 1887. The 10-year yield drifts lower towards 2.53%. Equities reverse course in quick order with the SPX dropping to 1881 at 2:15 PM, then rebounding again and the SPX runs back up to 1887 at 2:45 PM. The choppy sideways whipsaw market behavior continues.

12 more Russian oligarchs are targeted with new sanctions from Europe and the US. OIS pops +2.5% on an upgrade. PEGA bounces +5.5% on an upgrade. The US Dollar, USD, moves above 80 to 80.18. The dollar/yen remains elevated at 101.4 The VIX dips under 12 again at 3:10 PM so this provides another push higher for equities printing at the highs of the day again. TIF, SNDK and WMB print new highs and lead the broad market higher. Retail bounces back today. TGT recovers from this morning’s doldrums and prints +0.7% higher.

Markets remain buoyant into the closing bell due to the low volatility, weaker yen and low TRIN. At the closing bell the SPX gains 15 points, +0.8%, to 1888, recovering all of yesterday’s losses then some. The Dow leaps 159 points higher, +1%, to 16533. The Nasdaq gains 35 points, +0.9%, to 4132. The RUT gains 6 points, +0.5%, to 1104, and was actually negative for the first half of the day. Volume is anemic on the same order as Monday’s buying volume which was the second lowest day of the year. Yesterday’s selling volume outpaces both up day’s volume this week. TRAN +0.6%. XLF +0.6%.

TSN loses -2.2% as meat supplies remain tight. SHLD is smacked -3.7% citing difficult operating conditions for the Canada stores. Retailers are now blaming Canada as much as the weather for poor sales. CSCO gains +1.5% developing into a tech favorite after the positive earnings announcement. DAL gains +1.4% as the airline joy continues from last year.