Sunday, June 29, 2014

MONDAY 6/30/14; Bulgaria Bank Runs; Argentina Pending Default; EOM; EOQ2; EOH1; Chicago PMI; Nasdaq New 14-Year High

Asian markets begin the week mixed ahead of PMI data to be released this evening. The dollar/yen is 101.36 remaining flat in this 101.40-ish area. The NIKK gains +0.4% and KOSPI gains +0.7%. Japan’s factory orders rise but the data is disappointing. The Korean Won remains at six-year highs against the dollar. Australia is the big loser with the SPASX200 losing -1% as mining and metal stocks are beaten.

China’s SSEC is up +0.6% but the HSI is down marginally. The GSK ongoing bribery scandal investigation continues in China with a new twist. A sex video...........

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The number of large casinos in Atlantic City drops from 12 down to 9 over the last few years. One casino closing sends 2100 workers into the street. The competition in the gambling arena is far too great nowadays. Many States have passed lenient laws allowing local casinos to open. Atlantic City is more of a working class gambling town and not as attractive to the high-rollers so it is squeezed from two directions; the wealthy are gambling elsewhere and the working class are experiencing hard times with very little discretionary income available to gamble. Gambling revenue is cut in half for the Atlantic City area which greatly impacts the economy and wages are already being frozen by many companies in the region.

The murdered bodies of the three missing Israeli youths turn up in a field in the West Bank. Israel asks what animals do such acts and vows revenge. Bombs explode near the Egypt presidential palace killing two top police officers and injuring another one dozen people. President al-Sisi is not injured and vows strong retribution against the perpetrators. The Middle East is a powder keg.

SUNDAY 6/29/14

WHO says the ebola outbreak in West Africa is the most deadly on record. Nearly 640 people have been infected in Guinea, Liberia, Sierra and Leone. Approximately 400 have died; a fatality rate of 63%. A meeting of WHO experts and leaders from 11 surrounding countries will convene in Ghana to strategize on preventing any further spread of the ebola virus. Unfortunately, foreign doctors are not trusted and are being prevented from entering towns by machete-wielding tribal leaders. The outbreak could easily spin out of control.

Iraq is in chaos. The Iraq forces push to retake Tikrit but are pushed back by the ISIS radicals. Jordan, one of the few US allies in the neighborhood, is buckling under the influx of refugees from Syria and Iraq. Over 500K refugees are fleeing Iraq in the last few weeks. The Iraq conflict is worsening and can easily last for years or decades. The ISIS extremists are beheading children. Another troubling development is fighting now occurring south of Baghdad instigated by a regional pocket of Sunni siding with ISIS to fight back against PM al-Maliki’s Shiite favoritism. The news on the fighting south of Baghdad is being muzzled since the consequences for Iraq are extremely serious. Baghdad is being surrounded by pro-Sunni forces. The country is lost into a Sunni-Shiite civil war.

The US lost thousands of troops to death and disability and spent billions of dollars in Iraq all for nothing. President Bush is to blame for going in creating the mess and President Obama is to blame for pulling out exacerbating the mess. The president may receive a legacy of ending the wars in Iraq and Afghanistan but at the same time he may receive the dubious distinction of creating world war across the Middle East and northern Africa (Syria, Iraq, Iran, Egypt and Libya) due to the US’s inaction, lack of global leadership and haphazard figure-it-out-as-you-go foreign policy. Traders, however, do not care about geopolitical events since the Fed and other central banker money papers over any problems pumping the stock market higher.

The flood of immigrants across the southern US border is not abating. ...........

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

A CCL cruise ship in the Holland America line catches fire and must return to port at Seattle. There are no reported injuries. LUV co-founder Rollin King dies at 83. 

SATURDAY 6/28/14

At midnight Monday, the contract between the West Coast US port unions and the shipping companies expires. 40% of the imports hitting US shores arrive via the West Coast ports. A shutdown is the last thing the retailers need in an already soft consumer sales period with rising gasoline prices. The back-to-school products are crossing the Pacific Ocean on container ships en route to stores but a dock strike will create havoc in the supply chain. Holiday products are following close behind so the timing cannot be worse. Almost 13% of the US GDP moves through the West Coast ports so a strike will greatly impact the US economy. Union workers are already slowing the loading of containers onto tractor trailers sending a signal that they control the docks and plan on digging-in for a long fight.

Detroit’s problems continue with water service cut off from nearly 5K citizens due to non-payment (those with bills exceeding $150). About 60% of the bills are paid the next day so many simply needed to receive encouragement to do the right thing. Others are very poor and with lack of any job opportunities in Detroit the trouble continues. Detroit’s degradation serves as a warning and guide as to what will happen with other cities and local, state and Federal government moving forward. The paltry incoming funds from underemployed young people cannot support the excessive pension plans and obscene expenditures approved by politicians over the last few decades but very few care and there is no sense of urgency.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

Private video service company Aereo suspends operations three days after the Supreme Court rules in favor of the television broadcasters against Aereo. Rebroadcasting video content pulled from the air waves is considered to be copyright infringement which destroys Aereo’s business model.

Friday, June 27, 2014

FRIDAY 6/27/14; Ukraine Signs EU Trade Deal; KBH; Consumer Confidence; Russell Indexes Rebalancing

Asian indexes reverse the universal happy bullish day yesterday with a sad bearish day across the board today. NIKK drops -1.4%. The dollar/yen currency pair drops to 101.30 so the yen is at the strongest level in over one month beating down stocks. Japan’s May consumer prices increase month over month. Feeding off of TM’s fuel cell hype this week, Mitsubishi Kakoki Kaisha, a hydrogen station manufacturer, drives +21% higher. Traders chase the latest shiny object with central banker easy money.

Other indexes including Australia are down or flat. Korea’s industrial output data is disappointing far weaker than expected. Iron ore prices are stabilizing at $95 per ton. The RBA says there are no signs of a housing bubble. In the States, the Fed has never been able to forecast one single asset bubble in its entire 100-year history. Not one single bubble. Currently, Fed Chair Yellen cheers the stock market and says there are no asset bubbles as senior citizens invest their entire social security checks into dividend stocks.

Ukraine signs a trade deal with the EU that will open up trade between Moldova, Georgia, Ukraine and Europe. This is what precipitated the unrest in Ukraine many months ago. Russia is not happy and says the agreement will result in "grave consequences." Russia is feeling unintended consequences as refugees migrate across the eastern Ukraine border into Russia to avoid the violence; 110K people so far this year with about 10K seeking asylum.The cease-fire expires in a few hours but the violence in East Ukraine has continued through the cease-fire. The key today is if the Ukraine government and the pro-Russian separatists (Russia) extend the cease-fire agreement. Russia’s Micex Index is soft the last couple days dropping -0.6% the day before, -2.6% yesterday and is down -1% today. The next round of sanctions proposed by Europe and the US may finally bite Russia.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The MIK IPO ends at 17.02 after a disappointing first day of trading. The chemical sector is hit today precipitated by the negative Dupont news this morning which hints that the economic environment is weaker than everyone thinks. The chemical sector should be going like gangbusters if the economy was strong. DD finishes down -3.3%. DOW loses -1% in sympathy. FFIV gains +3.6% on favorable analyst comments. AMED jumps +30% after raising forward guidance. The homebuilders, XHB, gain +0.5%.

The long darling trade DG is axed -7.3% after CEO Rick Dreiling announces retirement. The FDA approves the Afrezza inhaled insulin drug manufactured by MannKind but traders remain unconvinced over the viability sending MNKD -5.5% lower. Struggling retailer BEBE is up +0.6% after announcing job cuts and plans to ditch the 2b affordable clothing line which is not performing well. WUBA,, the Craigslist of China, pops +5.2% after Hong Kong-listed Tencent buys a 20% stake.

For the week, the SPX is down a smidge -0.1%. The INDU also logs a down week losing -0.6%. The Nasdaq gains +0.7% this week and the RUT small caps are a smidge higher +0.1%. Traders are chasing tech, healthcare and utility stocks. XLK +0.7%. XLV +0.6%. XLU +1.0%. The dividend stock bubble grows larger. Integrated oil companies take a breather this week dropping for the last few days. XOM ends the week down -2.5% and CVX is off -1.5% but this is after a strong two-year rally.

Traders and analysts continue the debate over whether the stock market is pumped higher due to a better economy and rising earnings, or, due to Fed and other central banker money printing. The answer is obvious; of course it is the central banker pumping and has been since 2009. Shockingly, nearly 60% of the global financial environment is operating under a ZIRP or near-zero interest rate policy currently. This obscene central banker behavior creates the uber low volatility and rampant complacency in markets. The easy money is used to buy stocks and bonds and to fund an orgy of buybacks, dividend hikes, IPO’s and M&A activity all artificially pumping the stock market higher and creating new bubbles across all asset classes. The Fed says there are no asset bubbles in markets currently.

Under the cover of darkness on Friday night, when no one is paying attention, GM recalls another 428K vehicles for air bag, shock absorber and software issues for the Chevy Silverado, Corvette, Cruze and other models. The recalls are a bottomless pit for General Motors. GM is soft in AH trading moving slightly negative. The SEC issues a Wells Notice to BLK as an investigation expands into potential illegalities involving a former employee that left the asset management company two years ago.

The IRS chief tells Congress and the media to expect Lois Lerner email documents by the end of next week. The same promises were made in the past but result in baby games. The sincerity of the IRS is in question since the Independence Day July 4th holiday is Friday so nothing will come of the so-called new emails until the following week. The IRS is simply stalling and delaying another two weeks.

A poll shows that three-fourths of the country believes the IRS deliberately destroyed the Lois Lerner emails. Surprisingly, President Obama continues to refer to the IRS and other scandals, such as the VA debacle and Benghazi terrorist attack before the 2012 presidential election, as “phony scandals.” People are refusing to testify invoking the Fifth Amendment before Congress, others are prohibited from testifying by the Whitehouse and evidence is being destroyed, none of which conger up the word “phony.” 75% of the country agrees which means many democrats want answers as well as republicans especially concerning the IRS scandal.

The World Cup football (soccer) matches continue with ESPN, owned by DIS, setting record viewership numbers. 3.2 million viewers logged on to ESPN with viewership peaking during the US-Germany match (the US lost 1-0 but does proceed in the tournament). Remarkably, 1 in every 100 people in the US tuned into ESPN. Although many are quick to say that soccer has finally hit the main stream and will be a well-viewed sport here forward, do not get too excited since the interest in soccer is more likely due to the games occurring in the reasonable hours of the eastern time zone rather than very late or very early, where viewership would likely be far lower like in past years. Companies such as DIS, NKE and FINL are benefiting from the soccer love all gaining over +1% today.  

Thursday, June 26, 2014

THURSDAY 6/26/14; New York Regulators Sue Barclays; ACN; LEN; Warsh Says Fed is "Reverse Robin Hood"; GPRO; NKE

Asia trades higher despite the weak US growth number; the shocking -2.9% Final Q1 GDP. Dollar/yen 101.93 flat all night long. The NIKK gains +0.3%. TM is up +0.8% after debuting a fuel cell electric car that will be available for sale within the year. The SSEC and KOSPI are both up +0.7%. The big winners are the HSI up +1.5% and the SPASX200 up +1.2%. Aussie dollar remains above 0.94 at 0.9407. Miners and steel makers trade higher.

ISIS extremists take control of the Basad airbase in Iraq and the Ajeel oil region. The death count is 57 from the Syrian attacks on western Iraq over the last few days with 120 injured. The cross border conflicts are growing in the Middle East and should create concern around the globe. Syria is bombing western Iraq, ISIS radicals are creating a caliphate (region of strict Sharia law) across Syria and Iraq. Kurdistan wants to split from Iraq. Iran is flying drones in Iraq. Al-Qaeda is in Syria passing on bomb-making technology to ISIS and other radicals. Pakistan is selling nuclear technology to North Korea. The Middle East is descending into tribal and sectarian regions and the maps will likely be redrawn in coming years.

At the same time, the Middle East makes for strange bedfellows. The Sunni ISIS extremists are an enemy of the US in Iraq but in Syria, ISIS is aligned in the same direction as the US in opposition against Syria’s leader Asaad. The Middle East is a Hellish labyrinth of chaos, violence, horror, death, pain and misery. US intelligence agencies warned the Whitehouse and Congress about the ISIS extremist’s months ago and a window of opportunity was in place to snuff the group out at its core, but the president and Congress did not act. Oddly, the Whitehouse is saying they were surprised by how fast ISIS overtook Iraq. WTIC crude oil remains sticky at 106-107 and Brent is 114.

Secretary Kerry says it is critical for Russia to start disarming within hours. The West likely wants Russia to prove they are not supplying weapons to the pro-Russian separatists in East Ukraine. Kerry says the US and the West are preparing further sanctions but do not want to operate in a sanctions mode indefinitely. The key to peace is Russia pulling troops away from the Ukraine eastern border but Putin shows no intention of standing down.

Today is a bad day for British banks. 

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

At 10:50 AM, the GPRO IPO begins trading at 28.65 well above the 24 starting price a +22% bounce. Within minutes, GPRO is above 30 and near +30% higher. The traders are giddy and the media is in frenzy over a miniature camera you stick on a helmet. GoPro is pumping their web site that receives uploaded action videos from sports enthusiasts and is also trying to attract the middle-class couch potato market to use GoPro for family movies. They see the writing on the wall and are looking for more revenue streams. Placing sports enthusiasts aside, how many people are going to buy a $400 camera with another few hundred required for accessories when your cell phone or digital camera is good enough? How about when the economy softens further and money is tight with discretionary spending dropping? Nonetheless, the Fed wine is flowing like water and traders are tripping over each other to buy GPRO which tags a 33 handle.

The Alibaba IPO selects the NYSE as the listing exchange and will trade under the symbol BABA. ‘Baba’ rhymes with the Chinese word ‘prosperity’ and also equates to the lucky number 8. Alibaba targets 8/8/14 for the first day of trading again using 8’s for superstitious good luck but may not meet the deadline. The exchanges sell their souls for these high profile listings. Look at the Nasdaq kneeling and kissing Facebook’s shoes to the point of CEO Bob Greifeld donning a tee shirt, as FB CEO Zuckerburg demanded, at the remote opening from Facebook headquarters that went down in flames; a shameful IPO debut debacle. So it is the NYSE’s turn to sell its soul to the Alibaba genie. The 8/8/14 debut date for BABA is likely cast in concrete. They will make it happen.

Equities march higher all day long after the low prints after the opening bell. Financials remain weak. XLF -0.4%. C pukes -1.2%. Banks that run dark pools, such as BCS, CS, DB and UBS are bludgeoned from -2.4% to -7.4% lower. Energy is positive. XLE +0.1%. LEN is down -0.5% and the homebuilders do not feel the love today. XHB -0.3%.  The 10-year note yield drops under 2.53% then briefly prints a 2.51% handle. Traders are buying Treasuries. The 2-10 spread drops to 205 basis points representing a flattening yield curve.

The day ends with the SPX down 2 points, -0.1%, to 1957, bouncing off the 20-day MA at 1944 intraday. Equities produce a strong recovery off the initial lows. The Dow loses 21 points, -0.1%, to 16846, sitting at its 20-day MA support. The COMPQ recovers from its deficit today to finish flat. The RUT drops -0.2%. The computers control the trade today as evidenced by the relatively uniform move lower by the major indexes. The 10-year yield drops to 2.52%. The Fed and other central banker money is sloshing around daily and used to buy both stocks and bonds pumping all asset classes higher.

After the bell, NKE earnings beat with a +12% rise in orders. Nike is running to the bank as folks trip over each other, in their overpriced and oversized shoes, to buy another pair. The check mark logo is interchangeable with the dollar sign. NKE jumps +3% in AH trading.

Wednesday, June 25, 2014

WEDNESDAY 6/25/14; GIS; MON; Final Q1 GDP -2.9%; Durable Goods

Asia sells off overnight following the US weakness. The dollar/yen remains under the 102 pivot at 101.92 so the stronger yen favors selling in Japan and US stocks. Japan PM Abe’s third arrow misses the target. NIKK-0.7%. KOSI -0.6%. SSEC -0.4%. SPASX200 -0.6%. Australia revises the iron ore price forecast lower from $100.80 per ton down to $94.60. Rio Tinto and BHP Billiton trade lower.

Secretary Kerry says Iraq’s future will be determined in the coming days. The Iraq military reclaims control over the Baiji refinery. A deadline of 7/1/14 is set for the Iraq government to finalize a plan to unify the country. WTIC crude oil is 106.18. Brent oil is 113.82 slipping under 114.

The pro-Russian separatists shoot down a military helicopter killing nine Ukraine soldiers. Putin asks Russia parliament to revoke the ruling that permits him to wage war against Ukraine and the voting approves the Putin request, as the puppet parliament always does. Russia likely does not want to become involved in a prolonged war effort in East Ukraine. The pro-Russian separatists continue to access arms and equipment from Russia. Ukraine President Poroshenko said he will not rule out cancelling the cease-fire if the pro-Russian forces create further violence. The cease-fire ends on Friday, 6/27/14, and it is unclear if Poroshenko will extend the deadline, or not. Germany’s Merkel says the progress in Ukraine is too slow and Europe remains fragile.

Europe begins trading and is down -0.5% across the board following along from the weak US and Asia trading. Italy’s MIB is flat. Euro 1.3613. Pound 1.6958. BMPS Bank is down -20%. GDF Suez falls -2.5% as the stock is sold by the French government to help fund the Alstom and GE deal. Aker Solutions loses -6.3% on contract cancellations. Portuguese bank Millennium CP moves higher, recovering from an initial drop, after announcing a $3 billion capital hike.

Germany’s 10-year yield is 1.31%. The US 10-year is 2.58%. UK 2.70%. Italy 2.77%. The UK is approving more fracking permits to increase future oil and natural gas production. Europe needs to increase oil and gas production to move away from Russian energy dependence.

At 4:30 AM EST, US futures are flat. Metals trade lower. Copper is a smidge negative. Global investors are increasingly withdrawing money from hedge funds in June. Fed’s Dudley warns about Puerto Rico’s rising debt despite rosy media news lately saying the worst is over. The central banker money has medicated the financially-challenged areas in the world such as Puerto Rico and Portugal but the problems remain.

The SEC is planning to test the trading of several stocks using nickel rather than penny increments.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The SPX ends the day up 10 points, +0.5%, to 1960. Equities recover over one-half of the prior day’s loss. The 1960 is strong resistance so price will bounce or die tomorrow. The Dow gains 49 points, +0.3%, to 16868, bouncing off the 20-day MA support at 16830. The Nasdaq jumps 29 points, +0.7%, to 4380. The RUT is up 9 points, +0.8%, to 1183.

Stocks rally in the face of the disastrous -2.9% GDP. Good news is bad news (encouraging housing data does not rally equities) while bad news is good news (shockingly weak Final Q1 GDP -2.9% creates an equity rally). The central bankers are the market and have been the market for over five years. Stocks go higher because of Fed and other central banker easy money. The easy money spigots will continue flowing if the economy weakens. Stocks will go down if the perception is that the easy money will end (encouraging economic data) counter intuitive to what would be expected under normal economic conditions. The Fed intervention has destroyed price discovery, twisted markets into a knot, created asset bubbles in dividend and high-yield plays as well as other areas, made the wealthy wealthier and most tragically screwed the middle class and poor. This is nothing to be proud of and the pitchforks and torches may be raised by the masses once it all unravels.

GIS ends the day holding an empty cereal box down -3.6%. MON finishes over +5% higher. PXD gains +5.2% and EPD is up +1.4% on the news last evening about oil exports beginning. EPB jumps +2.1%. NKE jumps +2% ahead of its earnings release tomorrow.

The GoPro IPO prices at $24 at the top end of the $21-$24 range and is set to begin trading under the GPRO ticker symbol. The company is valued at $3 billion. This is the largest consumer electronics offering in over two decades.

General Motors tells all dealers to stop selling the popular Chevy Cruze model due to a defective part in the air bag assembly. The recalls and problems continue but traders and hedge funds continue to sing from the same hymn sheet saying GM is a great long play. GM drops -0.7% in AH trading and F gains +0.2%. Chevy’s loss is Ford’s gain.

The VA scandal grows on news that as many as 1000 veterans may have died while waiting for an appointment for medical treatment. The Whitehouse keeps trying to sweep the Veterans Administration scandal under the rug like the other ongoing scandals. The Supreme Court rules unanimously that a search warrant is required before looking at cell phone data and information. Finally the civil libertarians, concerned about constitutional rights, the last patriots remaining in America, receive good news.

Tuesday, June 24, 2014

TUESDAY 6/24/14; New Home Sales; Consumer Confidence; WAG

The NIKK trades flat overnight. The dollar/yen remains at the 102 pivot point. US and Japan stock markets will move higher if the dollar/yen pivots higher (weaker yen) above 102 and lower if the dollar/yen pivots lower (stronger yen) below 102. After the market close, Japan’s PM Shinzo Abe speaks firing the third arrow of his multi-year financial plan which includes labor plans and tax cuts for businesses. Abe plans to cut the corporate tax rate from 36% to 30% over the next several years. Abe wants to bring more women and foreigners into the workforce and is likely very concerned over Japan’s aging demographics.

China’s SSEC and HSI both gain +0.5%. Local Chinese governments are relaxing restrictions on the alcoholic beverage sector so booze-making stocks celebrate higher. The KOSPI jumps +1% as traders adopt a buy-the-dip philosophy for South Korea. A tee shirt manufacturer and screen printer in Indonesia is selling shirts that are anti-Israel and promote global terrorism groups such as ISIS, Mujai-Iideen, Taliban and Hamas.

Australia’s SPASX200 loses -0.4%. Iron ore prices continue lower and miners are weak after the short-term joy with the China PMI data. The Dollar/Rand is 10.5779 as strikes come to an end in South Africa. Platinum is catching a bid while palladium moves flat at 1462 and 824, respectively. Gold, silver and copper all trade slightly lower.

Many Dubai, United Arab Emirates, stocks are limit down as the benchmark Dubai index plummets -8%. Dubai’s main construction company Arabtec is collapsing -10% triggering the downside limits for three consecutive days. Last week, Arabtec chief executive Hasan Ismarik resigned as company layoffs were announced. The rats are leaving a sinking ship. Property stocks are slapped hard triggering downside limits. The socioeconomic skyscraper indicator signals a stock market top when a country builds an obscenely tall building since it typically indicates an overheated housing market. In less than ten years, Dubai has developed a world class skyline with the largest skyscraper boom in history occurring. The spectacular Burj Khalifa tower is the tallest building in the world (2722 feet (830 m)) as of 2009 and the Princess Tower, completed in 2012, is the tallest residential building in the world. The skyscraper indicator is now extracting its pound of flesh from Dubai.

Ukraine is calm as the cease-fire, in effect until 6/27/14, is honored by both the government forces and pro-Russian separatists. In Iraq, Secretary of State Kerry flies to northern Iraq to consult with Kurdish leaders. US involvement will increase if the Iraq government can unite all three factions with a plan going forward. ISIS targets are currently being identified and tracked for potential air strikes. After a two-week battle, the Iraq forces crumble again losing control of the Baiji oil refinery; the largest refinery in Iraq. Oil prices stabilize with WTIC at 106 and Brent at 114 since ISIS has not pushed further south to the oil fields.

Europe floats higher after the opening bell. Euro 1.3611. Swiss-company Syngenta leaps +6.5% after turning down a takeover bid by MON. Companies will continue pursuing Syngenta. Shire jumps +1% on news it is teaming with and receiving advice from GS as more offers occur for the company. The global M&A orgy continues as US companies pursue ways to use cash held overseas as well as reduce taxes.

German IFO business sentiment index is light at 109.7 versus the 110.3 expectations. The sentiment continues a trend lower for three months. The worries over energy supplies due to the Ukraine turmoil and European deflation create much of the concern. The euro drops briefly under 1.36 to 1.3597. UBS upgrades BMW (Bayerische Motoren Werke AG) that drives +2.1% higher. Pharma stocks are well bid. Airbus gains +1%. BNP Paribas gains +0.6% since the pending fines from US regulators may be priced-in to the stock.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The bullish euphoria and market joyousness continues. The global M&A party is in full swing and 18 IPO’s are slated for trading this week including GoPro; the helmet and body-mounted action camera maker. Pundits say China will not have a hard landing. Other talking heads say low volatility is not a signal of worry but instead forecasts a higher stock market all summer long. Strategists, analysts and traders continue to remain strongly bullish especially after Fed Chair Yellen cheer leaded the markets last week saying there are no asset bubbles and stocks are undervalued.

Traders waxing concern and worry about a market correction are instead buying stocks and call options ten minutes after their television interview ends and remaining net long. The stock market is not climbing a wall of worry but instead climbing a wall of Fed. Caution is warranted since the robust M&A and IPO action is typically indicative of a stock market top as well as the complacency signaled by the VIX, CPC and CPCE.

At 4:30 AM, the FTSE and Italy’s MIB turn negative. US futures remain flat overnight slipping ever so slightly lower as the dollar/yen moves down to 101.89. The 10-year yield remains flat as a pancake at 2.61%. Copper recovers to the flat line. Japan’s PM Abe’s comments do not impact the dollar/yen or markets. The Feds subpoena DF concerning the ongoing insider-trading investigation into activist investor Carl Icahn, pro golfer Phil Mickelson and sports gambler Billy Walters.

More euphoric bullishness and complacency occurs. On Bloomberg, Conaccord’s strategist Tony Dwyer is very bullish forecasting higher stock prices. He hedges saying a -5% drop should occur over the coming weeks or months but this will be a key buying opportunity. Dwyer exhibits robust confidence for higher stock markets proclaiming that, “There will be no recession over the next four years.” Dwyer says there is no stock or housing bubbles. Wells Capital Management’s permabull James Paulsen instructs investors to “not abort the run prematurely,” and “several more years of run (higher stocks) are left.” A picture of a bear is placed on a milk carton since there are none in sight. Bears may have gone extinct.

At 6:30 AM, a Syrian air strike kills several people along the Syria-Iraq border. Perhaps Asaad is content in seeing the Middle East explode into world war and is doing his part to stir the pot. Futures deteriorate over the last couple hours. S&P -5. Dow -30. Nasdaq -8. The 10-year yield is 2.60%. Metals reverse overnight softness and trade higher across the board. Ag commodities trade lower.

Former News of the World editor Rebekah Brooks is found not guilty of conspiracy charges concerning the politician and celebrity hacking scandal in the UK. Brooks was vilified and held out as the scape goat for the Murdoch News Corp scandal but now walks free. Andy Coulson, Brooks’ deputy, is found guilty of conspiracy to intercept phone messages and other court cases continue. The scandal accuses several individuals of spying and intrusive hacking of communications for the purpose of scooping news stories.

Four executives at the US Import-Export Bank (Ex-Im Bank) have been removed from their positions in recent weeks. An investigation is underway concerning gifts and kickbacks that banking officials are receiving in exchange for offering and approving favorable loans. MU trades up +1.2% pre-market on the happy earnings news last evening. VRTX catapults +52% on positive results with its cystic fibrosis drug. The biotech and pharma sectors should feel love today.

Walgreen earnings miss on both the top and bottom lines so WAG is beaten -2.5%. C downgrades DPS so Dr Pepper and Snapple may go flat today. AVP plans to cut 600 workers so less people will have to fill the same number of perfume bottles. LORL collapses -6% after talks with investors over the sale of the company end. Fed’s Plosser says rates may rise sooner than expected due to an improving economy; however, he is a hawk and is always touting the same message.

The S&P Case-Shiller House Price Index shows the pace of house price gains are slowing but house prices remain about +10% higher overall. The 10-city average house price metric is up +10.8%. Economist Robert Shiller says the modest pace of ever higher home prices appears healthy. On the stock market, Shiller’s CAPE ratio is over 26. This PE ratio uses multi-year data to provide a better picture of stock valuation. The only other times the CAPE ratio has been this high or higher is in 1929, 2000 and 2007; all significant multi-year tops. Shiller continues to caution, however, that you never know where the top is actually at and the lofty conditions can continue for weeks or months.

The session begins mixed with the SPX and Dow lower and the Nasdaq and RUT higher. The 10-year yield briefly dips under 2.60% but recovers. CCL drops -2.3% after missing on earnings. At 10 AM, the New Home Sales are 504K up a huge +18.6% when only a paltry +0.5% was expected. Sales are at the highest level since May 2008. Last month was 425K. New home sales are a far smaller market than existing home sales and the numbers are skewed towards the high-end since the wealthy, made wealthier by the Fed’s Keynesian policies, are cashing out and spending profits on real estate. The starter family and middle class house market remains challenged.

Consumer Confidence is 85.2 at a six-year high blowing out the prior months 83.5 which is a higher revision. Confidence is now trending higher for four months in a row. The Richmond Fed Mfg data is weaker than expected at 3 dropping from last month’s 7 number. Traders run higher on the stronger housing and Con Con data ignoring the Richmond Fed data. The broad indexes are positive across the board as the dollar/yen moves above 102 to 102.14. Banzai! The weaker yen sends stocks higher.

The BOJ, Fed and other central bankers are the market. Long traders are drunk off the Fed’s wine and ecstatic over Fed Chair Yellen’s stock market cheer leading and commitment to sending stocks higher. Bullish traders sing, “for she’s a jolly-good fellow” honoring Yellen; the QE Keynesian Queen.

INTC is up +1.7% at a 10-year high. AMAT gains +1.3%. SOX gains +0.3%. The weakness in semiconductors yesterday was a mirage since chips are back on their upward trek. Biotech stocks are also outperforming. IBB +2.1%. The joyous day peaks at 11 AM.

Equities top out and move lower for the remainder of the session. The 2-Year Note Auction is less than stellar with below average demand. Energy stocks reverse course with XLE whacked -2.1%. Financials sell off with XLF -0.7%. The semiconductor jump reverses and SOX moves -0.7% lower. EOG pukes -4%. WTIC oil drops under 106. It is not a healthy sign to see markets rally off of stronger housing and other data but to then reverse course and weaken; equities are not rising on stronger data. Perhaps the reality that the Fed punch bowl may actually disappear over time is causing the stock market weakness (good economic news is bad news for stocks since the Fed will continue to decrease the rate of easy money).

Ag commodities are selling off today. Corn and wheat are down about -2% over the last couple sessions. The food prices ebb and flow with weather so the drop in corn prices should ease the current food inflation. Cattle, pigs and chickens grow fat off of grains so over time meat and poultry prices should decrease to more reasonable levels.

AMBA pops +6% then pulls back to +2.7% since it makes the chips that go into GoPro cameras. The GPRO IPO is to begin trading this week. Ambarella also produces chips for the Google Nest products. GRPN jumps +5% higher trying to recover from this year’s -40% deficit. FB is up +2.1 on news that teenagers may not be dissing Facebook as much as thought. In reality, the young are using Instagram so by default they are using FB. The tweens, teenagers and young adults regularly use the word “insta” nowadays referring to sending and receiving messages and pics via Instagram.

Despite the markets selling off with the Dow down triple digits, the bullish parade of analysts and traders continue. Wunderlich’s Art Hogan  praises the energy and financial sectors looking for higher markets. LPL Financial strategist Jeff Kleintop repeats the bull mantra saying there is “lots more upside ahead.”

HAS drops -0.5% despite a Piper Jaffray upgrade. HCLP leaps +4% higher. EBAY loses -1.1%. RSH crumbles down to 0.81 to begin the day the lowest print since the 1970’s. RadioShack may go belly-up and needs a white knight to ride in to save the day. Dip buyers and speculators step in and buy RSH sending the stock up +2.3% by the closing bell.

The day ends with the SPX losing 13 points, -0.6%, to 1950. The SPX has now gone 47 days maintaining a tight 1% or less daily price range the longest streak since 1995 almost twenty years ago. The Dow loses 119 points, -0.7%, to 16818, exactly at the 20-day MA support. The pivot above, or below, this support is important for tomorrow. Bounce or die. The Dow logs the biggest loss in one month. The Nasdaq produces a sharp intraday reversal topping pennies from 4400 then dropping to 4342 and closing at 4350, -0.4%. The RUT drops 12 points, -1%, to 1173.

The VIX leaps higher above 12 from under 11 this morning so volatility shows slight signs of life. INTC finishes up +0.9%. MU gains +4% bucking the market negativity. VRTX gains +40% on its happy drug news this morning. Laggards are XOM, VZ, KMX and JPM losing from -1% to -4%.

The US is allowing two oil companies to begin selling unrefined oil to global markets; Pioneer Natural Resources and Enterprise Products Partners. PXD and EPD will be well bid tomorrow. The ultra-light oil is plentiful due to the fracking process. The new action reverses a four-decade ban on oil exports. CNBC business television reports that Georgia is the most attractive State for business.

The wealthy, made wealthier by the Fed’s Keynesian policies, continue to cash-out and spend money on high-priced real estate, art and collectibles pumping these asset bubbles. Bob Dylan’s hand-written lyrics for Like a Rolling Stone sell for over $2 million at auction. Other memorabilia such as Michael Jackson’s coat are chased after by rich bidders celebrating these bread and circus days of central banker easy money. A poll shows that 60% of Americans disapprove of President Obama’s foreign policy.

Monday, June 23, 2014

MONDAY 6/23/14; PMI's; Existing Home Sales; XLE New All-Time Record Highs; MU

Japan trades manufacturing data is better than expected and the NIKK squeezes out a six-month high at 15369. The dollar/yen is 101.95 a touch under the 102 pivot point. Honda, Mazda and Nissan recall two million vehicles due to the ongoing airbag issue across the auto industry (supplier defects). China HSBC PMI is 50.8 beating the 49.7 expectations. A PMI above the 50 level indicates an economy that is expanding rather than contracting. Last month’s reading was 49.4. Despite the upbeat PMI data and the joyous Wall Street rally, the SSEC trades lower and the HSI loses -1.3%. Manufacturing company Hon Hai catapults higher on rumors that hundreds of personnel are being hired to manufacture AAPL’s iPhone 6.

The Aussie dollar is 0.9439 nearing this year’s 0.9461 peak. The commodity currencies are moving higher. The Canadian Dollar is at five-month highs at 1.0725. The miners also move higher on the China PMI. Copper reverses a negative start and trades higher up +0.8%. Higher copper, along with energy and oil, are key market upside drivers currently. India’s BSE drops -0.6% on worries that their elevated inflation will worsen with rising oil prices placing a drag on their economy.

The ISIS militants continue to take firm control of middle Iraq and consolidate power in the Anbar province. ISIS controls the main checkpoint at the Jordan border. Jordan is a US ally and is already in turmoil from the millions of refugees fleeing south from the Syria civil war. The goal of the ISIS radicals may be to begin a Sunni-Shiite conflict across the Middle East and drag the US in by creating instability in Jordan. ISIS takes control of a dam on the Euphrates River in Iraq with the militants following this ancient river southward. The Iraq army appears incapable of resisting the relatively small 10K fighting force of ISIS extremists.

Crude oil runs higher with WTIC up +0.4% at 107.25 and Brent up +0.6% at 115.44. Any increase in the spread between WTIC and Brent, as is occurring with the percentages, will send oil refiner stocks higher and keep the oil and energy sector elevated. WTIC is breaking up and out of its 106-107 sticky range and Brent is breaking up and out from its 114-115 pivot. US futures are following oil with the S&P’s up +4. Dow +30. Nasdaq +6.

France PMI is 47.8 very weak well under the 49.5 expected. The euro drops under 1.36. France is the weak link in the perceived European recovery (ECB and central banker-induced recovery). The data creates a sour tone for markets. German PMI is 52.4 missing the expectation at 52.5 by a single hair but rising month on month. The pound remains above 1.70 and currency analysts expect sterling to remain elevated. Online retailer Asos drops -2.3%, adding to a -40% drop this year, after its warehouse catches fire, but the stock returns to the flat line. Bouygues drops -0.5%. GE wins the bid for Alstom ending the long soap opera saga. Alstom trades lower. Siemens, the losing bidder for Alstom, drops -1.5%. Pharma company Shire loses -1.5%.

European indexes begin trading on the downside after upbeat futures for the last few hours. The CAC and DAX are down -0.7%. The Euro area Services PMI drops to 52.8 less than the 53.3 forecast. The euro is 1.3590 continuing to weaken. The soft European data confirms that Draghi will keep the money spigots on a long time. The China PMI data is better than expected but the European PMI data is softer than expected.

At 4 AM, US futures give up all the overnight gains and drop to the flat line with the Dow and Nasdaq slightly negative. The dollar/yen drifts lower to 101.83 so the stronger yen creates equity softness. The 10-year yield drops from 2.62% to 2.60% over the last hour. Gold and silver trade flat. Copper remains strongly higher up +0.8%. At 4:30 AM, the DAX is down more than -1% and the CAC -0.9%. The Wimbledon Championship tennis matches begin today at the All England Club in southwest London.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The day ends with the SPX down fractionally at 1963. The tight trading range is the narrowest range in about 20 years. If you combine today’s and Friday’s tight price range action, it is the narrowest two-day range in 50 years. The odd market behavior continues. The INDU loses 10 points, -0.1%, to 16937. Market participants are focused on Dow 17K. The COMPQ gains fractionally to 4369. The RUT drops 3 points, -0.3%, to 1185, so the small caps lead lower.

TRAN is down during the entire section losing -0.5% despite oil pulling back. Utilities are weak taking a rest after last week’s rocket ride higher. Energy remains the outperformer with XLE up +0.3% printing a new all-time high at 101.52 and new all-time closing high at 101.29. Financials also lead with XLF up +0.2%.

After the closing bell, MU, the darling of long traders over the last year, beats on earnings with 79 cents EPS versus the 70 cents estimate on $3.98 billion revenue versus 3.89 billion expectations. Drive-in restaurant operator Sonic reports stronger than expected earnings and SONC trades higher AH’s. TAP trades higher after an upgrade by MS. Fitch raises NBR’s outlook from negative to stable. Electronic instruments provider GIGA drops on weak sales.

The bullish market sentiment continues. Notable technical analyst Ralph Acampora says, “You can’t fight the tape.” Acampora was negative on markets a couple months ago but reverses course shunning the bear side completely and clearly stating that up is the direction for stocks going forward. Federated’s strategist Phil Orlando chimes in with the bull perspective as well. There are no bears remaining in the stock market. Pundit after pundit is bullish one more so than the next. Fed Chair Yellen told everyone to buy stocks last week so the upside equity party continues with today’s down day only marginal and the Nasdaq is up.

Sunday, June 22, 2014

SUNDAY 6/22/14; ISIS Radicals Capture Four Cities

The wave of humanity through the US-Mexico border continues. 162K people have entered the US on the southern border over the last eight months. 50K are children many unsupervised so the crisis is festering for several months. Over the last few weeks, 50K immigrants have been detained at the Mexican border and 10K are children without parental supervision. The numbers are growing. Vice President Biden is in Central America to stem the flood of immigrants northward by reversing the word-of-mouth campaign across Central America that America is relaxing the immigration laws.

Many are fleeing El Salvador, Guatemala, Nicaragua and Honduras for their safety since gangs are forcing the young to join-up or die. The gangs are active in murder, rape, corruption and extortion. The situation is a humanitarian nightmare and will take millions, if not billions, of US dollars to handle all the unsupervised children. President Obama already has his hands full with the ongoing IRS, VA, Benghazi and other scandals, and now has created a new mess due to his non-enforcement of immigration laws. Ongoing polls show Americans are continuing to lose confidence in the president. Consumer staples companies such as PG and KMB that provide soap, toilet paper and personal hygiene products will benefit from the influx of children into the US.

Secretary of State Kerry lands in Cairo to discuss the deteriorating Iraq situation then plans to travel to Iraq. The Sunni ISIS extremists capture four additional towns in western Iraq. The Kurds in northern Iraq continue to break away towards independence and now Turkey is accepting of this outcome when previously they did not. The Kurdish fighters, the Pershmerga, are well organized and a formidable force that are holding the ISIS radicals at bay. The Iraqi army, trained by the US, is trying to show force and rebuild their image and confidence after deserting and retreating from the fight against ISIS.

The developing civil war in Iraq is a Sunni-Shiite conflict that may create world war across the Middle East. Iran (Shiite) offers help to stop the Sunni radicals before they near their border. The Saudi’s and Kuwait (Sunni) are backing the ISIS radicals. The situation is spinning out of control. ISIS wants to establish an Islamic caliphate which is a fancy word that means taking control of a region (eastern Syria and Iraq) and placing it under strict Islamic law; which ISIS is successful in accomplishing currently.

WTIC oil begins the week at 106.83 sticky at the 106-107 level so the pivot from here........

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

ECB President Mario Draghi says the European recovery is weak and unevenly distributed. Draghi says interest rates will remain low over a long period and unlimited liquidity will be in place into 2016. The central bankers have gone mad, as well as traders and investors. The world is drunk on central banker wine. Global stock markets simply move higher due to obscene central banker money printing. Traders are enjoying and raping the market upside while the party lasts since a multi-year hangover is very likely once confidence is lost in the central banker market-makers.

Friday, June 20, 2014

SATURDAY 6/21/14; Summer Begins; Iraq in Chaos

Summer begins in the northern hemisphere with the summer solstice occurring at 6:51 AM EST. Today is the longest day of sunlight of the year. Conversely, folks in the southern hemisphere enter the winter season. The Social Security Administration reports the number of disabled people in the US topping 11 million for the first time ever (about 3 out of every 100 people in America are disabled).

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

ISIS militants kill 30 Iraqi soldiers and take control of a check point at the Syria border at Qaim (western side of Iraq). ISIS has Iraqi troops surrounded at the Baiji oil refinery. The battle is ongoing for five days and the smoke from the burning refinery is visible from space satellite. The Sunni ISIS extremists are also battling pro-government forces at the Tal Afar Airport. Iraq is in chaos.

An oil storage tank and pipe failure, operated by NBL, spills 7.5K gallons of crude oil into The Poudre River at Windsor, Colorado. Clean-up is underway.

FRIDAY 6/20/14; OpEx Quadruple Witching; SPX, Dow, UTIL, XLU and XLE New All-Time Highs; COMPQ New 14-Year Closing High

Asia trades mixed with the NIKK marginally lower. The Japan 10-year yield drops like a stone to 0.58%. Australia and Korea take it on the chin with the SPASX200 and KOSPI dropping -0.9% and -1.2%, respectively. The electronics and auto stocks perform poorly in Korean trading. Dollar/yen 101.99.

Russia continues to move equipment and supplies across the eastern Ukraine border to aid pro-Russian separatists.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The weekend newspapers will pump the stock market new all-time highs in the headlines. Pundits, analysts and traders are chanting for Dow 17000 which is only 50 points away. A bullish frenzy is occurring after Fed Chair Yellen proclaims a higher stock market forever.

Amazon’s new smartphone offering is receiving an unenthusiastic welcome. A survey by SuveyMonkey shows that about 75% of the participants would not consider the new Fire phone. Folks are content with the smartphone they own, be it an iPhone or droid, and at the same time think the Amazon Fire phone is overpriced. Others do not like the exclusive deal with T as the provider. AMZN drops -0.9% in today’s trading. Perhaps the Jeff Bezos luster is fading.

The influx of illegal immigrants through the southern Mexico border continues unabated. The States are overwhelmed and cannot handle the tens of thousands of unsupervised children flooding into America. President Obama says that children entering the US will not be turned away and later on their families may be allowed to enter to care for the children. This guideline has whipped Central and South America into a frenzy sending their children north to the US in droves. The Whitehouse is now frantically trying to stop the influx and reverse the problem created by compassionate zeal.

Thursday, June 19, 2014

THURSDAY 6/19/14; BBRY; Philly Fed; ORCL; SPX, UTIL and XLU New All-Time Highs

Asian markets trade higher following the US joy. Dollar/yen 101.81. NIKK is up a big +1.6% to 15361 at highs not seen since January. SSEC is the fly in the ointment down -1.6%.

Fighting continues at the Baiji oil refinery in Iraq. ISIS is targeting Iraqi infrastructure which will complicate the developing civil war. XOM, BP and Royal Dutch Shell are pulling personnel out of Iraq. Oil prices remain stable since three-quarters of the oil production is in southern Iraq and so far relatively unaffected. WTIC 106.46. Brent 114.68. US F-16 fighter jets are running surveillance routes above Iraq. President Obama says al-Maliki must include Sunni more in government and policy discussions and unite the country. Al-Maliki, 64 years old, is in his third term first elected in May 2006 and favors the Shiite population while beating down the minority Sunni.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The ‘Yo’ app goes viral adding over 200K users in the last 24 hours. The app allows users to send a ‘yo’ message to others to stay in constant touch without spending a lot of time typing a message. A Gallup poll says that the approval rating for Congress is at an all-time low. Americans have lost confidence in politicians. The wealthy are made wealthier by the Fed policies supported by the president and the politicians while the middle class and poor suffer.

Up through 2008, income in America was growing faster than debt. Not anymore. Due to the growing student loan problem, excessive subprime auto loan bubble mimicking the subprime housing bubble only with cars this time, and obscene government debt, income in America is no longer keeping up with the debt burden.

Tuesday, June 17, 2014

WEDNESDAY 6/18/14; FDX; FOMC Rate Decision, Forecasts and Fed Chair Yellen Press Conference; RHT; Yellen Rally; SPX, UTIL and XLU All-Time Record Highs

Brent crude oil is back above 113 to 113.24 as the Iraq turmoil continues. WTIC crude oil is 106.67. Dollar/yen 102.12. Japan’s trade data is disappointing showing drops in both exports and imports but the NIKK moves higher. The dollar/yen jumps to 102.25 so the weaker yen fuels a happy Nikkei party overnight with the NIKK gaining +0.9%. The remainder of Asia is not so lucky.

China’s House Price Index is a 5.6% rise but slowing from the prior month’s pace higher.  China, Aussie, Korea and India markets all trade lower. The Bank of Thailand maintains a 2% benchmark rate. The new military government has its hands full trying to restore confidence and reignite the flailing tourism industry.

Copper trades flat. The platinum strikes in Johannesburg, South Africa, continue for 21 weeks as workers increase demands. US futures are flat as global markets await the FOMC circus this afternoon.

The BOE Minutes show universal agreement of 9-0 for recent decisions and hints that a rate hike may be coming sooner than expected. The pound is at 1.6977 trading erratically between 1.69 and 1.70. Governor Carney’s credibility is under fire since one month ago he hints that the projection for a rate hike is likely too soon but now is hinting that the markets may not be pricing the rate hike in soon enough. Current market projections are that the BOE raises rates in September to 0.75%, then up to 1.00% in December and then 1.15% in March 2015. The central bankers have a five-year party going where the stock market goes straight up due to the obscene money printing. Now that the printing presses are winding down and rate hike talk is increasing, the waters are becoming choppier.

European indexes trade higher. Swedish retailer H&M reports robust sales and profits and trades +0.5% higher. The French government continues to play Siemens against General Electric wanting to see higher bids for Alstom.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

After the close, RHT, the Linux software distributor, beats on earnings and jumps +5%. MRKT, the Markit economic data IPO, prices at $24 which makes the new offering worth over $4 billion.

Television personality James Cramer says that market skepticism is not profitable despite the stock market at record highs. Cramer cites positive news events including the Fed as reasons that the skeptics, market bears, are losing money. Cramer says that the skeptics must switch sides and scramble to get back in the market at a higher price point than where they left. He says the traders that remain optimistic on the stock market are not getting shaken from their positions and are laughing at the skeptics all the way to the bank.

The rampant complacency and bullishness continues. The VIX prints at 10.61 the lowest number in 7-1/2 years. The CPCE put/call is at an astonishing 0.38 indicating off the charts euphoric bullishness. There are no bears remaining in the markets. Everyone is long. As Cramer’s comments indicate, television analysts and pundits continue to tell folks to buy, buy, buy, with reckless abandon. The low put/call ratios indicate that a significant top is in place or finishing right now and many folks are going to be very seriously hurt. Aunt Edna and Uncle Johnny just placed their entire life savings into dividend stocks in the utility sector like the man on television told them. A major black swan market event and/or flash crash is definitely on the table moving forward and over 95% of the folks in the market will laugh at this notion calling it complete ridiculousness.

Canada approves the Keystone XL pipeline project and remains disappointed that President Obama continues to prevent the approval for the project in the States that would bring much-needed higher-paying jobs to the Midwest including a broad range of support jobs such as restaurants and housing.

AAPL is spoofed on Twitter and other hip media sources after CEO Tim Cook tweets a photo of the Texas production line for Mac Pro’s clearly showing MSFT’s Windows operating system running on the computer that helps manufacture the Mac. The incident is particularly embarrassing since Cook was berating Microsoft’s software in a recent presentation. Apple proponents fight back and say a Mac computer can run any operating system.

TUESDAY 6/17/14; ISIS Nears Baghdad; CPI; Housing Starts; FOMC Two-Day Meeting Begins

Mount Etna, on the east coast of Sicily, erupts in a fiery display of smoke, ash and molten lava. The active volcano closes the Catania Airport in Sicily. Mount Etna was active in springtime and then again in the Fall of last year with the last full-fledged serious eruption occurring in 1992. The ash in the atmosphere will require monitoring. The World Cup matches continue with Germany and Netherlands looking strong and the US surprisingly beating Ghana. Violence surrounding the World Cup continues as protestors, unhappy that Brazil spends money on sports stadiums instead of hospitals and schools, paint anti-FIFA graffiti on buildings.

Asian markets are mixed which is becoming a regular theme. Japan and Korea stocks are higher but Aussie and China stocks trade lower. Dollar/yen is flat at 101.95. China stocks drop the most in one month as foreign investment is decreasing; the lowest in almost one and one-half years. Chinese banks are weak. China’s Premier Li visits the UK discussing business opportunities with PM Cameron. BP and Shell are looking for lucrative contracts. SNE’s Playstation sales continue to top MSFT’s Xbox. The RBA minutes indicate an accommodative stance going forward so the Aussie dollar eases to 0.9358.

Fighting occurs only 34 miles from Baghdad. The US sends 275 troops to Iraq to provide support especially for the US embassy in Baghdad. President Obama continues weighing options in Iraq as the mess festers and the turmoil shows no signs of abating. Iran sends 2K troops to Iraq to help fight the ISIS extremists. The US is open to constructive talks with Iran which makes for strange bedfellows since the US is imposing sanctions on Iran. Crude oil is stable with WTIC at 106.53 and Brent 112.80. The IEA warns about the potential loss of Iraq oil production.

The Middle East is a confusing mess of tribal, sectarian and religious groups wanting to redraw map boundary lines. The Kurds are slicing off Kurdistan (northern Iraq) as an independent state. The ISIS extremists want to create a homeland that stretches from eastern Syria through Iraq to the border with Iran. The Shiite majority and Sunni minority in southern Iraq control the oil fields. The Syria Civil war continues with Asaad remaining in power. Worries increase over Jordan that becomes shakier by the day since refugees from Syria and Iraq are creating a major strain on neighboring nations. Saudi Arabia (Sunni) is likely content seeing Iran (Shiite) under pressure by ISIS since Saudi Arabia does not want to see Iran’s influence grow in the Middle East.

Russia’s Gazprom says the natural gas moving through pipelines in Ukraine is uninterrupted and the gas supplies to Europe are stable. Russia shut off the gas supply to Ukraine yesterday. Ukraine is seeking new gas supplies from neighbors such as Poland.

European indexes trade higher. Euro 1.356. European auto sales are up for nine consecutive months. The big winners are VW, Renault and Peugeot that bounce from +0.4% to 1.0% higher. Pharma company Shire Jumps nearly +4% higher on news it is exploring options to sell the company. The pharma and biotech M&A party continues. EasyJet pops +2% after increasing forward guidance. The high-flying airline stocks have received a smack down over the last couple weeks so easyJet may provide relief for the sector today.

UK inflation data is -0.1% month on month and 1.5% year on year. Analysts expected +1.7% so recent inflation concerns are overblown with inflation remaining well under the BOE’s target. The pound drops to 1.6947. German ZEW sentiment is a mixed bag with current conditions remaining positive but expectations remain subdued. The ZEW president says further increases in the German economy may prove difficult.

The FOMC two-day meeting begins. The rate decision, forecasts and Fed Chair Yellen’s quarterly press conference with Q&A occur tomorrow afternoon. The Fed is expected to continue the $10 billion per month QE taper but may lower their growth forecasts. The QE asset-purchase program would drop from the current $45 billion per month to $35 billion per month less than on-half the original QE amount and on target to end September-October. Stocks may idle sideways until Yellen brings the tablets down from on high and directs global markets on how to trade.

General Motors continues to shame itself announcing a 3.4 million vehicle recall ...

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The 10-year yield is at 2.65% threatening a breakout of the six-week sideways 2.55%-2.65% channel. The 2-year yield runs to 0.51% the highest level since last Labor Day 10 months ago. Solar stocks soar into a sunny sky on the SCTY news. SPWR jumps +4.3%. TAN gains +3.6%.  FSLR +3.4%.

After the closing bell, GWPH announces a secondary offering and is hit -5%, erasing a portion of the +16% gain today, due to the dilution. ECYT pukes -18% on news that Merck will not further support the development of the lung cancer drug vintafolide. ACT and FRX both sneak about one-half percent higher in AH trading on news the merger will be finalized. Adobe beats on EPS but misses on the top line. ADBE bounces +8%. LZB misses on earnings and collapses -11% into the reclining chair.

US Special Forces capture one of the key terror suspects involved in the 9/11/12 Benghazi, Libya, attack. Abu Khattala is en route to the US but may be held on the ocean for interrogation for up to 30 days before docking. Khattala is the terrorist that has been in free sight and accessible taunting the US ever since the Benghazi attack occurred. After nearly two years of freedom his luck just ran out and perhaps progress will occur to finally find out what happened.

Another poll shows President Obama’s approval rating dropping. Only 41% of Americans approve of the way the president is handling his duties (only 2 of every 5 people). The world’s rarest stamp brings $9.5 million at auction. The global wealthy, made wealthier by the central bankers, continue to buy art, high-priced real estate and other collectables pumping these bubbles larger.

David Tice, noted permabear associated with The Prudent Bear website and funds for many years until 2008, is now involved with inspirational films and education. Tice is currently not short the stock market but is heavily invested in gold. He remains a supporter of Austrian economics and says the intervention by central bankers is going to end very badly but no one knows when.