TUESDAY 6/3/14; European Deflation; Factory Orders

RBA maintains a steady rate policy at the record low rate of 2.5%. Aussie dollar 0.9283. The SPASX200 loses -0.7%. India maintains the current benchmark interest rate at 8%. The RBI plans to stimulate the economy as inflation eases. India’s BSE Index is up +17% this year continuing to print near the 25K highs. Japan jumps +0.7%. Asian banks are higher overnight. Consumer electronic makes such as Samsung, Casio and Hitachi all move from +1% to +3% higher.

China HSBC manufacturing gauge hits a four-month high at 49.4 above last month’s 48.1 but lighter than the consensus estimate. Traders want to see the magical 50-plus level to show economic expansion but the HSBC number, a measure of smaller Chinese companies, continues to show contraction. China appears to be stabilizing but the property sector remains troubled. China is intermittently blocking Google’s search servers as censorship continues. The SSEC trades flat with the Hang Seng up +0.9%.

12 die in Ukraine fighting with seven killed in a bomb blast. The civil war rages on in East Ukraine. The Russian Ruble is 34.9963 unaffected by sanctions. Yandex begins trading in Moscow as trading on the Russian exchange is encouraged by the government. Miner Rio Tinto says the Ukraine crisis has not impacted operations. Syria’s Asaad is reelected in a sham election as he tries to create legitimacy to the tragic 160K deaths in the ongoing bloody civil war. Brazil protests are increasing as the World Cup approaches.

The high Italy youth unemployment surprisingly moves higher to 43.3%. One in every two young people in Italy is without a job. The Italy 10-year yield is 2.95%. The Spanish jobless rate drops but there remains a long road back for the economy. Much of the job gains are due to seasonal factors as travel and tourism industries increase. Street protests continue in Spain. King Juan Carlos abdicates the throne passing the leadership duties to his son, Crown Prince Felipe, who will help guide the country forward. The Spanish 10-year yield is 2.82%.

UK construction activity is lower over the last month but remains at robust levels. UK housing data remains solid. Pound 1.6751. Wolseley, the world’s largest plumbing and heating products distributor, pops +1.4% after seeing strong growth in US markets. Mouse and computer peripheral maker Logitech jumps +3%. UK real estate agent Foxtons loses -2.3%. UK food retailers are slapped from -1% to -2% lower on weak Tesco earnings and guidance. The cheaper German store model is gaining share in the UK. Grocers Aldi’s and Trader Joe’s are winning share in the US as folks search for ways to lower expenses in this high structural unemployment economy.

President Obama lands in Warsaw, Poland, beginning a European trip. The euro zone April jobless rate is 11.7% down one tick from 11.8% in March. Euro zone inflation is +0.5% year over year under the +0.7% last month so the direction is deflation not inflation and the door is open for Draghi to act this week. Europe is likely slipping or already in a deflationary funk a la Japan’s lost two decades. European markets trade flat to lower.

The US continues to crack down on the cyber-hacking bot networks capturing and charging several computer hackers for stealing millions of passwords with the GameOver Zeus virus. The perpetrators behind the CryptoLocker virus are also arrested and charged. S&P places New Jersey on review for a possible downgrade. The city of Seattle, Washington, on the west coast, approves a $15 per hour minimum wage the highest in the US.

The 10-year yield is up to 2.55% well off the 2.40% print last week. At 5 AM, S&P -2. Dow -10. Nasdaq -4. AAPL approves the use of bitcoin for selective applications so bitcoin jumps higher. DG misses on earnings and is beaten -2.4% pre-market.

The auto loan subprime problem is growing in the US with defaults on the increase. 












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

President Obama is receiving strong criticism from both democrats and republicans for his unilateral prisoner exchange decision and perhaps illegal monetary payment to secure the release. The alleged AWOL sergeant from Afghanistan may be an enemy sympathizer which places the president as odd man out spending his time and US treasure to save a deserter while honored veterans wait for months to receive medical attention at VA hospitals.