MONDAY 6/2/14; PMI's; ISM; SPX, INDU and TRAN New All-Time Highs

The last two years are the hottest on record for Australia. Aussie dollar is weaker to 0.9255 as house prices fall towards five-year lows. Copper bounces +0.8% on the China PMI. Miners are mixed. Iron ore prices continue to collapse to $91.80 per tonne despite the encouraging China data. China, Hong Kong and Taiwan markets are closed today for the Dragon Boat Festival. The dollar/yen moves higher to 102 so the weaker yen sends the NIKK strongly higher gaining over +2% at two-month highs. Japanese companies are increasing capital expenditures which set a happy tone. Korean Won is at six-year highs.

Ukraine and Russia meet in Brussels to continue natural gas price negotiations. The talks impact one-half of Ukraine’s gas supply and one-sixth of Europe’s supply. Russia has delayed the deadline for a resolution to the price war until next week. Egypt’s stock index has lost about -10% over the last week.

Euro 1.3609. European indexes open higher across the board except for Ireland. Miners move higher on the China PMI. Belgian authorities are investigating UBS bank practices. Pharma company Orion gains +14% on an encouraging prostrate drug and partnership with Bayer. AMZN fulfillment center workers in Germany go on strike walking off the job protesting low wages. Germany PMI is 52.3 missing the 52.9 estimate but showing growth above 50. Euro zone PMI is at a six-month low at 52.2 well under the prior month’s 53.4. The CAC turns negative. UK PMI is weaker than expected and mortgage approvals also drop.

Hurricane season is officially underway with June beginning. Today is the first day of trading for June. BlackRock and Vanguard are cutting ETF fees to compete for investor dollars. President Obama announces new power plant emission guidelines that continue his war against the coal industry. The new regulations would result in a $50 billion per year hit to the economy and a loss of 225,000 jobs annually. The coal States such as West Virginia, Ohio and Pennsylvania will be negatively impacted.

The dollar index is higher at 80.509 as the euro drifts lower to the 1.36 level. At 4:30 AM, US futures are slightly positive. S&P +1. Dow +19. Nasdaq +1. The 10-year yield is 2.48%. The dollar/yen is above 102 and moving higher which will maintain broad market buoyancy. Much of the move higher in the dollar/yen is more due to the stronger dollar rather than the weaker yen, however. TradersAudio’s Ben Lichtenstein, a floor trader in Chicago, comments on the ongoing uptrend in equities and bullish markets saying, “The only reason (you would not be long) is if you don’t like money.”

Ventas is to buy Arc Healthcare for $2.6 billion so merger Monday is off and running. VTR drops -2.4%. ARCP trades flat. The annual ASCO cancer conference and also a hospitality conference are occurring this week so the pharma, healthcare, biotech and hotel, travel and hospitality stocks may experience increased activity. IHG drops -0.8% pre-market.

The session begins with new all-time highs printing for the SPX and TRAN. The gains are marginal and quickly leak lower back to the flat line. The Dow Industrials print a new all-time intraday high that it missed by a hair on Friday. The Dow HOD is 16740.58 the highest number in history so new highs in trannies are confirmed by new highs in the industrials providing rally confirmation from a Dow Theory perspective. The China PMI creates a positive mood to begin the new week and month of June. Dollar/yen 102.27. Crude oil moves lower with the stronger dollar.

The US PMI is 56.4 up from 55.4 in the prior month. Material and energy stocks are leading and tech is lagging. XLB +0.2%. XLE +0.1%. XLK -0.2%. Apple kicks off the Worldwide Developers Conference (WWDC) where folks are expecting cutting-edge announcements. AAPL trades -0.7% lower. At 10 AM, the ISM Mfg Index misses at 53.2 down from last month’s 54.9 with prices paid increasing hinting at inflation. Construction Spending is in line. The SPX, Nasdaq, RUT and TRAN are negative with the Dow hanging on for a few extra minutes only to turn negative as well. Today’s party did not last long. The VIX  moves briefly above 12.

Shockingly, the ISM number is found to be flawed due to a software glitch that applied the incorrect seasonal data. The actual number is 56.0 a healthy beat. The stock market places a bottom and reverses to the upside. More shockingly, the confusion continues because the revised number is wrong. The actual ISM Mfg Index for today is 55.4 revised for the third time over the last hour. It is a fair statement to say that confidence in the ISM number is shaken. Equities take on a happier tone.

The 10-year yield is 2.50% and climbing. Dollar/yen 102.33. The SPX and Dow turn positive. The dollar/yen jumps strongly from under 102 this morning to over 102.30 but note that the positive expected effect on the stock market is muted. The stronger dollar, due to a weaker euro, is causing more of the move higher in the dollar/yen currency pair rather than a weaker euro so the move higher in equities is subdued. Euro is at 1.3595 very sticky at the 1.36 level as Draghi’s announcement occurs in two days.

Jean (denim) sales are down -5% year over year. 










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

Soldiers in Bergdahl’s outfit call him a coward and allege he actually went AWOL five years ago. The event becomes politically-charged and questions arise about the president potentially paying money to release the sergeant which is illegal. There is a new scandal occurring almost daily from the Whitehouse.