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.