THURSDAY 6/5/14; ECB Rate Decision and Press Conference; ECB Creates Negative Deposit Rate; JOY; Tepper Rally

The dollar/yen is 102.51 off the highs from yesterday afternoon when the US stock market was running higher. Therefore, the NIKK trades flat not receiving a boost from a weaker yen. China’s SSEC is up +.8% and HSI down -0.2%. KOSPI loses -0.7%. Asian markets are choppy sideways awaiting the ECB decision.

China questions the security of Windows 8. China clearly believes there are back doors built into the operating system to aid spying and they are likely correct. AAPL, GOOGL and other tech companies’ search and software programming continues to accommodate surveillance on US citizens.

At 4 AM, less than four hours ahead of the ECB Rate Decision and Press Conference, the euro is 1.3607. Dollar/yen 102.52. Pound 1.6758. Dollar/Swiss 0.8957. Aussie dollar 0.9279. US futures are flat. The 10-year Treasury yield is 2.58% after moving above 2.60% yesterday up a huge 20 basis points off the bottom at 2.40% last week. The 2-year yield is 0.39% and 30-year is 3.43%. UK gilt 2.69%. German bund 1.44%. Spanish 10-year yield is 3.00%. WTIC crude oil 102.20. Brent crude oil 108.

European indexes trade mixed on each side of the flat line. Global markets are idling sideways ahead of the ECB decision. Fashion retailer ASOS plummets -40% the largest one-day drop in the company’s history due to a profit warning. European retailers trade lower in sympathy. Utilities and healthcare are up but miners trade lower. SNN catapults over +6% higher on news that MDT is making a bid to take over the medical products company. Telecom stocks are higher on M&A talk.

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The SPX ends the session with a strong push higher gaining 13 points, +0.7%, printing a new all-time intraday high at 1941.74 and new all-time closing high at 1940.46. The Dow is up 99 points, +0.6%, printing a new all-time intraday high at 16845.81 and new all-time closing high at 16836.11. The COMPQ gains 45 points, +1.1%, to 4296, a 2-month high. The RUT is up 23 points, +2%, to 1154. Small caps are clearly the winner as traders seek risk.

TRAN sneaks out a new all-time intraday high at 8154.92 but is unable to print a new all-time closing high. Financials explode higher with XLF +1%. XLU +0.8%. IBB +0.7%. XLK +0.7%. The healthcare sector lags. MET drops -0.6% after its huge +10% 3-day rally. The bulls are in full control backed by the central bankers. The VIX remains low at 11.68. The put/call ratios remain low with CPCE printing under 0.50 for the last two days indicating uber complacency in markets and a significant market top at hand over the coming days.

Presidents Obama and Hollande (France) meet for dinner and discuss the ongoing BNP Paribas situation. BNP faces $10 billion in fines from US regulators. Concerns are growing that the fine is excessive and may even destabilize the French economy and European banking system. The fine will be reduced since the banks are always given preferential treatment ahead of the common citizen. The politicians are dancing now to find a more palatable level.