TUESDAY 6/10/14; European Yields Drop; Wholesale Trade; Dow New All-Time Closing High

Asia markets follow along from the US and move higher except for Japan. The dollar/yen drops to 102.36 so the stronger yen sends the NIKK -0.9% lower under 15K. India’s BESE takes a rest dropping -0.4%. The KOSPI jumps +1.1%. The Korean Won is at six-year highs against the dollar. Indonesia’s Jakarta Composite jumps +1% as presidential election debates are underway.

China inflation rises. The PBOC provides more easy money stimulus cutting the triple R’s for rural banks to support regional lending so the SSEC and HSI indexes bounce about +1% higher. Traders are addicted to central banker easy money. Equities go up on stimulus and money-printing announcements and then when stocks begin drifting lower threatening a correction, the central bankers step in to pump stocks higher once again. The five-year global saga continues. The PBOC plans further targeted stimulus for the Chinese economy. China is also reopening the IPO door allowing 50 companies to come to market. Said cynically, the central banker easy money can be used to buy these fledgling start-up companies that do not generate any profit.

In Harpsund, Sweden, leaders Merkel (Germany), Reinfeldt (Sweden), Rutte (Netherlands) and Cameron (UK) speak concerning the selection of the new head of the EU. Merkel backs Jean-Claude Juncker but Cameron is opposed. The speakers stress that the discussions are on policies and approach rather than directly addressing the sticky situation of approving Juncker as the new EU President, or not. Merkel says that European growth is fragile.

Euro is leaking lower to 1.3556 providing credibility to Draghi’s desire to weaken the euro and stimulate Europe’s economy. Italy bond yields collapse to multi-decade unprecedented lows. The Italy 10-year yield is 2.69%. Spain is 2.59% below the US representing lower borrowing costs for Spain versus the US. The 10-year Treasury yield is 2.62%. Germany 1.38%. Japan’s 10-year yield is under 0.60%.

UK industrial output gains +3% a robust number the greatest rise since 2011 but...........





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The SPX ends the session a hair lower at 1951 unable to print new all-time highs; however, the SPX has printed new record highs seven of the last nine days. The Dow gains a hair printing a new all-time closing high at 16945.92 but unable to print a new intraday all-time high. TRAN is unable to print a new all-time intraday or closing high. COMPQ is on the hair positive side closing at 4338. RUT is down -0.3% the only major index moving any substantive amount so traders are taking profits on the recent small cap bounce.

Underage immigrants are flooding into the US border at Mexico. President Obama should be enforcing the immigration laws but instead encourages illegal immigrants to enter the US. The president’s policies allow young immigrants to enter and stay in the US. In addition, the families of these young immigrants are then permitted to come to the US to care for the younger person. The Border States are overwhelmed and local economies disrupted. Tens of thousands of immigrants are entering the US to take advantage of the lax immigration policy. President Obama requests $1.6 billion in spending to handle the latest debacle. The president’s popularity hits a new low.

In a stunning shock to the Republican Party, House Majority Leader Eric Cantor is defeated in the Virginia primary election. Cantor loses to the Tea Party economics professor Dave Brat. Cantor was seen as the successor for House Speaker John Boehner’s job. The traditional wing of the Republican Party professing the death of the Tea Party a couple weeks ago was far too premature.

The Tea Party republicans will now strengthen the battle against President Obama on future legislation rather than roll over and follow Keynesian policies like the traditional republicans. The American people are finally realizing there is no difference between democrats and republicans since they both believe in out-of-control government spending; demopublicans and repbublocrats. Perhaps electing people to office that can actually work together and develop and follow a budget, like an economics professor, is the desired path forward for America.