Thursday, July 31, 2014

FRIDAY 8/1/14; PMI's; Global Markets Cascade Lower on Contagion; CLX; CVX; PG; WY; Monthly Jobs Report; MBLY; Consumer Sentiment; ISM Mfg Index

Asia takes the ball and fumbles with all major indexes trading lower. Contagion continues. Dollar/yen 102.85. Even the KOSPI, the latest favorite flavor for long traders, is down. China PMI is 51.7 better than the 51.4 expected and above last month’s 51.0. The happy d

[Text is Redacted: Purchase August 2014-08 to Read the Complete Chronology]

THURSDAY 7/31/14; EOM; Argentina Default; Russia Sanctions; New Cold War Escalates; XOM; COP; K; MA; BZH; RYL; MOS; Stock Market Collapses; TSLA; LNKD; GPRO

The Argentina default creates a pall over global markets. The NIKK prints a six-month high but then finishes down -0.2%. The dollar/yen peaks at 103.15 (weaker yen creates the high in the Nikkei) and then drops back under 1043 to 102.80 (stronger yen weakens Japan markets and US futures). Nintendo collapses -6.5% on higher operating losses announced yesterday. Sony trades lower in sympathy. Mitsubishi Motors is a bright spot bouncing +2.6% after posting strong profits.

KOSPI drops -0.3%. Samsung is beaten -4% lower. China moves higher with the SSEC gaining +0.9% and HSI up +0.1% (seven-year highs), however, the IMF is urging China to lower its growth targets to levels more reflective of their economy. The IMF is concerned over risks to China’s economy due to the property market. The SPASX200 gains +0.2% printing six-year highs ignoring the weak building approval data and export price data. The land down under is partying like the rest of the world. Traders use the central banker easy money to buy stocks; trained like Pavlov’s dog.

The EU places additional sanctions against Russian oligarchs. European courts rule against the former Russian giant Yukos in a second settlement awarding $2.5 billion to prior shareholders. The new cold war between East and West escalates. Russia says the ruling is unfair as the West continues stacking up measures against the Ruskies. Shell reports robust profits and trades +3% higher but the news is not rosy. The Shell CEO says the MH17 airplane crash in Ukraine is a “game changer” and their exposure to Russia will greatly impact earnings moving forward. Russian telecom company Megafon moves assets out of US dollars and into Hong Kong dollars to avoid sanction risks. The rats are leaving a sinking ship. The Russian sanctions are beginning to take a bite after all.

Argentina acts defiantly saying they are not in a technical default. S&P rating agency says Argentina is in a default. Obviously, Argentina is in a default and is simply playing baby games. Argentina’s economy will be negatively impacted and GDP growth will immediately drop at least -1%. Concern grows over the ripple effects, contagion, that may occur throughout Latin America and perhaps the world. Argentina inflation will move strongly higher. The banking sector will be greatly affected stifling business development. Argentina’s shale gas and oil development will suffer since global companies will limit their involvement in a country that cannot pay its bills or manage its economy properly.

Argentina is a serial defaulter (defaulting seven times since 1816) and has destroyed their attractiveness as an investment. The Argentina people will suffer and cry as they listen to the famous song Don’t Cry for Me Argentina. Argentina tickers EDN, YPF, GGAL, TEO, BMA and BFR all trade lower.

Recapping history, Argentina defaulted on $100 billion of debt in 2001 which begins the country’s 13-year troubles. In 2005, Argentina agrees to exchange $62 billion in bond debt with $35 billion of new debt. About 93% of bond holders in Argentina settle for about 30 cents on the dollar to exit failed bond investments. About 7% of the bond holders are holdouts and begin court procedures to receive 100 cents on the dollar. Argentina reaches agreement with the Paris Club in May 2014 to pay $9.7 billion in debt. In June, the courts rule in favor of the holdout creditors and Argentina must honor the bonds. Argentina enters emergency talks with the holdout creditors during July, this month, but fail to reach an agreement by yesterday’s deadline. Argentina is now in default for the second time in 13 years and calls the holdout creditors “vultures.”

WTIC drops under 100 plummeting to 99.20 at lows not seen in three months under the 200-day MA support at 99.86. The disinflationary and deflationary forces due to a weakening global economy are overpowering the fear premium in the oil price due to turmoil and war in Ukraine, the Middle East (Syria, Iraq, Iran, Israel, Gaza, Egypt, Turkey) and northern Africa (Libya).

European indexes begin trading on the down side. Euro 1.338. The pound is 1.6876 under the 1.69 level. The DAX is down -1% on sanction angst while Spain’s IBEX collapses nearly -2% on the banking crisis concerns. Banco Espirito Santo shares are suspended from trading. The bank needs to raise capital after taking the $3.6 billion loss. BES resumes trading and plummets -48% down -65% over the last 30 days. Portugal tries to sweep the banking crisis under the rug but a lump appears in the carpet. Lloyds Bank suspends two traders that were involved in the Libor scandal. By definition, a suspension is a slap on the wrist so these nefarious individuals will continue to work there in the future. Banksters always protect their own and receive more lenient treatment than the common Joe.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

JWN acquires a personalized clothing service for men called Trunk Club. Nordstrum’s is keeping pace with technology providing an online service with a personal touch. JWN trades down -1%. The blood is flowing from the front door of the homebuilders. XHB -2%. Utilities collapse with UTIL down -1.9%. XLP pukes -1.7% showing how homebuilders, utes and consumer staples drift lower when Treasury yields are elevated.

Industrials are shown no mercy. XLI -2%. The Internet stocks are killed. YELP -11%. LNKD -4%. TWTR -2.4%. The 3D stocks collapse. DDD -11%. SSYS -4%. VJET -9%. XONE -12%. One of these four hotshots had better print up a solution. The TNX drops from the 2.61% peak down to 2.54%, losing seven basis points, into lunch time. The 10-year yield is stumbling sideways at 2.55%-2.56%. A delayed flight to safety occurs today after the yield spiked and topped out at 2.61%.

The theme of companies lowering guidance and earnings estimates and blaming Russia sanctions continues with Anheuser-Busch projecting weaker beer sales in Ukraine and Russia. BUD drops -1.6% as traders drink away their problems. XOM is beaten -4.2% and COP is down -2.5% after this morning’s earnings releases.

WTIC oil is collapsing -1.8% under 98 to 97.65. Russia President Putin will not be happy since the country’s economy is based on oil and gas revenue, like the Saudi’s. Gold is down 11 bucks to 1284. Silver and copper are flat so the metals move sideways today through the turmoil.

Farm Prices remain low for corn as a bumper crop is expected. Corn, soy and wheat prices all post losses on the month (this is disinflationary not inflationary). Corn yields will likely break records this year. The lower corn prices will help reduce the food inflation that consumers see at the grocery store. Lower grain costs are good news to beef and poultry producers. Beef herds remain at lows not seen since 1952 but lower feed costs will bring the herds up quickly (over a few months time). The California drought conditions worsen.

AAPL drops -2.6% with a 95 handle not yet touching the 100 handle ever since the stock split. Traders are selling Apple in sympathy to the weak Samsung numbers out of Asia overnight. TMUS bounces +6.5% and is halted from trading on news of a takeover offer by Iliad for 33 per share. T-Mobile begins trading again and hugs the 33 price level. S drops -5.3% because T-Mobile and Sprint were supposed to mate. The long darling MU collapses over -6% after announcing weaker product pricing.

The carnage continues into the last hour of trading. The screens are blood red. The Dow is down over 300 points. VIX 16.77. Famous investor Warren Buffett says, “down days always make me feel good.” There are winners. Oil companies MPC, APA and refiners TSO and VLO post gains. LOCO continues crazy higher gaining +12% in a down tape.

The session ends with the SPX collapsing 39 points, -2%, to 1931, losing the 50-day MA at 1953. The INDU plummets 317 points, -1.9%, to 16563. The COMPQ loses 93 points, -2.1%, to 4370, using the 50-day MA at 4359 as support. The RUT drops 27 points, a huge -2.3%, to 1120. The RUT 150-day MA prints three consecutive days with a negative slope each day proving more and more that small caps have rolled over and a cyclical bear pattern is now in place (lower stock market for months potentially one or two years ahead). TRAN collapses from above 8500 to 8141 in six days, about 360 points, -4.2%.

For the month, the SPX drops -1.5% printing a negative month for July ending the long five-month rally. The INDU is down -1.6% for the month ending its five-month winning streak. The Nasdaq is -0.9% lower in July and now down four of the last seven months. The RUT is crushed -6.1% this month also logging four down months out of the last seven. The RUT prints an outside key reversal month with July’s monthly candlestick printing a higher high than June and then ending the month with a lower low than June; a bearish market signal.

After the closing bell, TSLA earnings are a beat with EPS at 11 cents versus 6 cents expected. The giga-battery factory talk continues with Tesla looking at building sites in Reno, Nevada, and other locations. Tesla’s stock price is very jumpy in AH’s trading; down -3%, up +1%, down -2%. GPRO collapses -10% despite beating on EPS with 8 cents versus 6 cents expected and $245 million versus $238 million expected. GPRO is up +97% since its debut of trading in June. Perhaps the GoPro CEO can post the video taken by his ‘camera on a stick’ showing his reaction to the collapse in stock price.

LNKD gains +9% after beating on top and bottom lines and raising guidance. EXPE beats earnings estimates and bounces +5.3%. Solar panel stock SPWR drops -4.7% on weaker guidance. OUTR drops -3.7% on weak earnings and outlook.

The CIA admits to spying on Congress. Lawmakers are irate that the top spy agency is monitoring their communications. How ironic that the same lawmakers that approve of ongoing spying on all Americans are now offended that they are spied on? Emory Hospital in Atlanta, Georgia, USA, has set up a special isolation unit to treat an ebola patient due to arrive within days. The deadly ebola virus is now on American shores.

Israel and Palestinians agree to an unconditional 72-hour cease-fire in Gaza to begin Friday at 8 AM local time (1 AM EST). All cease-fires have failed so far. Traders are on edge worrying about global contagion which could lead to a cascading market event.

Tuesday, July 29, 2014

WEDNESDAY 7/30/14; Russia Sanctions; Argentina Deadline; D; S; LO; ADP Jobs Report; GDP; FOMC Announcement; KRFT; WFM; YELP

Japan’s June Industrial Output drops -3.3% missing -1.2% expectations and worse than last month’s -0.7%. Overnight, the dollar/yen climbs higher above 102.20. The US Dollar basket is higher to 81.293. The euro drops under 1.34 to 1.3396. The dollar and euro are moving in a perfect inverse relationship as is expected so the weaker euro sends the dollar higher which ripples through the other currency pairs. The pound remains under 1.70 at 1.6933. The stronger dollar is an interesting development as the Fed announcement on QE tapering and plans forward for a potential rate hike next year are on tap for 2 PM EST. Gold 1298.

The NIKK gains +0.2%. The SSEC finishes a smidge lower today breaking the multi-day winning streak. The HSI gains +0.4% printing seven-month highs. Traders continue to chase the latest shiny object, Korea, with the KOSPI bouncing +1% printing at highs not seen since 2011 and 2012. The KOSPI bounced off the 200-day MA support at 1985 thirteen days ago now printing 2083; a 95 point gain, +5%. The KOSPI is running nearly one-half percent higher each day on average.

HMC drives +3% higher on strong earnings. Japan Airlines nosedives -3.5% after reporting weaker profits. China property stocks are smacked -5% across the board. Australia’s Genworth Mortgage catapults +10% higher after announcing strong profits. The KOSPI is driven higher by Hyundai Motor gaining +3%. Shipbuilding giant Hyundai Heavy sinks -9.5% after reporting record operating losses for Q2. Nintendo continues to lose its share of the gaming industry as users flock to smartphone gaming apps instead.

The Russia sanctions are perceived as all bark and no bite creating a recurring theme. 300 civilians plummet to earth in the MH17 plane crash in Ukraine but no one cares. Many of the victim’s bodies continue rotting in the summer sun disgracing all of humanity. Are we animals or are we humans? Europe remains resistant to sanctions since the economy is in such dire condition. The France-Russia warship contract is unaffected by sanctions and France plans to deliver the first of two warships to Russia this November. The sanctions are the toughest since the end of the US-Russia cold war decades ago but the West needs to go back to the drawing board; the dog has no bite.

Russia’s Micex Index is up +2.1% and climbing higher. The Russian Ruble is steady at 35.6643 showing a slight strengthening rather than weakening. A weaker ruble would be expected if the sanctions actually had bite. Germany’s DAX trades flat and is not plummeting lower. US futures are higher. The West keeps puffing its chest and waving its finger in the air in a threatening manner at Russia but it is all bluster. Global traders view the sanctions as another slap on the wrist as evidenced by the price action. Interestingly, President Putin will likely retaliate so the West may end up being hurt more by the milquetoast diplomacy than Russia.

Argentina remains on the verge of going into default. The country paid prior bond holders 30 cents on the dollar to settle the bad paper but the holdouts, that are successful through the court rulings, want to be paid in full. If Argentina agrees to pay the holdouts in full, clauses in the other contracts will require the prior bond holders to be paid in full as well and Argentina simply does not have the money. There are only a few hours remaining before a decision is required and both sides are reported to be screaming at each other behind closed doors. Argentina must decide its fate today.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

At 2 PM, the FOMC announces a $10 billion per month QE taper as expected which will reduce the monthly asset purchases to $25 billion per month. Another $10 billion reduction will occur for September and then the final $15 will end QE Infinity in October. $25 billion per month of QE easy money continues to flow into markets pumping stocks and other asset classes higher. Traders want to hear about the Fed’s exit plan but are disappointed.

The Fed touts the same rhetoric saying the economy is getting better but provides no insight into when rates will rise. The Fed says there will be considerable time before a rate hike occurs after QE ends in three months in October; magic words for bullish traders. If the economy is doing so well why does the Fed continue to pump QE into the economy each month making the rich richer? New language in the statement says “a range of market labor indicators suggest an underutilization of labor resources.” This is a fancy way of the Fed saying that slack remains in the labor market and the Fed will remain accommodative. Stocks jump higher.

There is one dissenting vote, Charles Plosser, which is a surprise since Richard Fisher would be expected to be the dissenter. Thus, the Fed likely has two dissenting votes working against the dovish Chair Yellen. The Fed says inflation may be moving closer to target which is hawkish. The over five-year stock market rally due to the Fed and other central banker money printing occurs since investors trust and believe in the central banks. That confidence is tested after the Fed message today that provides more of the same indicating an institution that is simply figuring it out as they go. If confidence is lost in central bankers, global markets will recoil and remove the Keynesian fluff created underneath all asset classes.

After all the circus-style erratic price action today, the major indexes end mixed and the SPX ends dead flat at 1970. The INDU drops 32 points, -0.2%, to 16880, hanging on to the 50-day MA support at 16874 by a fingernail. The COMPQ gains 20 points, +0.5%, to 4463. Traders love tech stocks and continue to pump prices higher with the Fed’s easy money. The RUT gains 5 points, +0.4%, to 1147 continuing to wrestle with the 200-day MA support at 1144.06. The RUT 150-day MA drops to 1153.98 printing a negative slope for two consecutive days indicating that small caps have now fallen into a cyclical bear pattern ending the multi-year rally.

After the closing bell, Kraft Foods earnings beat on EPS but top line sales are weak and guidance is lowered. KRFT drops -2.2% in AH trading. WFM beats on the bottom line but misses on the top line. WFM drops -7% which is very odd considering it announced a juicy one billion buyback. Perhaps the luster is fading from the buyback rose?

HOLX bounces +4% on popular sales with its 3D mammography technology. VPRT prints an earnings beat and trades higher. AKAM beats on earnings but is bludgeoned -8%. YELP beats on earnings and adds to the +9% gain during the session. An EPS loss was expected instead of a few pennies of profit. After several minutes, however, traders change their minds and start selling YELP in force. Weight Watchers is the one to watch late day surprising with strong earnings and guidance. WTW gains +6%.

Yum! Brands says sales at their flagship stores such as Kentucky Fried Chicken and Pizza Hut, especially in China, will be greatly affected by the latest food scandal. A video shows the mishandling of meat in dirty conditions which crushes the company. YUM stock collapses -10% in a knee-jerk reaction. Courts rule that MCD can be sued over the mistakes and violations made by franchise-owners. The ruling will negatively impact the entire franchise industry.

At 4:30 PM, the S&P says Argentina is in selective default. The negotiations fail and Argentina goes into default for the second time in 13 years. Argentina stocks trading in global markets begin selling off. 

The House of Representatives votes to sue President Obama over his independent executive actions that ignore the legislations process. Americans are fed up with all politicians including the president since they only look out for their own interests and ignore what is best for the country.

Monday, July 28, 2014

TUESDAY 7/29/14; European Bond Yields at Multi-Century Lows; AMGN; AXP; MRK; PFE; UPS; Consumer Confidence at 7-Year High; REIT Conversion Strategy; Russian Sanctions; TWTR; X; YNDX

Asian markets are positive across the board. The dollar/yen rises to 101.87 so the weaker yen sends Japanese stocks higher. NIKK gains +0.6%. Japan data is mixed with weaker than expected retail sales but household spending beats expectations. Australia trades lower continuing a three-day selloff to begin the day but finishes up +0.2%. QBE Insurance collapses -11% after lowering profit forecasts. Indian markets are closed due to a holiday.

The SSEC is up +0.2% and HSI leads Asia gaining +0.9%. Both the Shanghai Index and the Hang Seng Index, respectively, print six consecutive up days. Bank of Communications is up over +13% the last two days on a plan for the state-controlled bank to sell stakes to private investors. This action creates a new style of ownership structure for Chinese banks if successful. The KOSPI bounces +0.6% to 2062 the highest print since 2011. Korea is a favorite flavor of traders lately so the central banker easy money pumps the stock market higher. Samsung is delaying the New Tizen phone release but the stock bounces +2%. MSFT is targeted by Chinese regulators in an anti-trust probe that may require a settlement of one billion dollars or more.

President Obama sends a letter to President Putin accusing Russia of violating the 1987 Missile Treaty signed by President Reagan and Soviet leader Mikhail Gorbachev. President Obama calls the treaty breach a serious matter that must be addressed. The letter escalates cold war tensions between the US and Russia. The Micex is up +0.5% showing a wait and see attitude over the pending sanctions expected today from the EU. The Russian Ruble currency pair moves higher to 35.69 indicating that the ruble is weakening and there is worry and angst over the sanctions.

The Israel-Hamas conflict enters day 22 and day 12 of the Gaza incursion with the most violent fighting so far. Hamas militants enter Israel through a tunnel and kill several Israeli troops. Gaza’s second largest power plant is bombed so the Palestinian’s go from a few hours of electricity per day to none. Over 1100 are killed over the last three weeks with 60 Israeli’s, mainly soldiers, dead.

Israel PM Netanyahu prepares the country for a long conflict ahead. The fighting continues as a cease-fire fails and confidence in Secretary Kerry is lost. Detractors accuse Kerry of favoring Hamas and treating Israel like second class citizens when the US and Israel are supposed to be great allies. Anti-Semitism is on the rise around the globe which creates a new wrinkle in the fight over the Holy Land. Turkish PM Erdogan tells the Jewish community to denounce the Israeli government creating greater instability in Turkey.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

Volatility leaps higher above 13. The SPX collapses from 1981 to below 1975 in ten minutes time. The Dow collapses from above 17K to 16955. The sanction affect was a delayed reaction. Traders expect the Fed’s easy money to paper over all problems as it has for over five years running. When you always have rich Uncle Ben, now Aunt Janet, patting your behind each day, you get used to that and there is no reason to look at fundamentals or technicals anymore.

The day ends with the SPX down 9 points, -0.5%, 1970, under the 20-day MA at 1975. The INDU drops 70 points reversing the 70 point gain earlier in the day. The Dow is down -0.4% to 16912 with the 50-day MA at 16866 serving as support. The COMPQ drops for four consecutive days the first time this occurs in four months; the Nasdaq loses 2 points, call it flat, to 4443, using the 20-day MA at 4436 as support.

The RUT drops 2 points, -0.2%, to 1142, remaining under the 200-day MA at 1142. The Russell 2000 Small caps Index triggers an important cyclical bear market signal. The slope of the 150-day MA turns negative for the first time in over two years. The RUT has been in a cyclical bull market from when the 150-day MA sloped positive in March 2012 at 800-ish. The cyclical bull rules the roost until today. The expectation would be that the RUT will roll over further now and the broader markets will follow suit for a long and sustained cyclical bear market ahead that may last months or a couple years. The 150-day MA sloping negative today is the exact inception of the cyclical bear market now beginning. Bulls must push the RUT higher in the days and couple weeks forward to slope the 150-day MA positive and maintain the rally party.

The IYZ telecom sector ETF gains +3.2% on the new REIT conversion strategy orgy party today. The market bulls have a new tool to pump stock markets higher. No one cares about earnings; they are so passé and old school. In this modern era of ZIRP Forever, all that matters is the central banker easy money that fuels dividend increases, buybacks and REIT conversions to pump the stock price higher in the short term. If you have money you are making a killing by raping the stock market daily courtesy of the Fed. If you are middle class or poor, you are the sucker paying the way.

Utilities are smacked. XLU -0.9%. Financials are weak. XLF -0.5%. BAC -1%. C -0.6%. Airlines go into a nosedive. XAL -1%. Biotech is the winner today. IBB +1.1%. GLW is picking up the pieces of broken glass after collapsing -9.3%. HLF pukes -13.1%. WYNN bounces +3.1% on strong Las Vegas revenue. COST gains +1.5%.

After the closing bell, much-awaited Twitter reports strong earnings and user growth and TWTR catapults over +30% higher in AH trading. Ad revenue including mobile advertising is robust. The Internet stocks, tech sector and the Nasdaq should all feel some love tomorrow. LNKD, FB, YELP and others trade higher. Chinese social media WB leaps +7%.

Buffalo Wild Wings beats on earnings but guides lower. BWLD slips on the cooking grease stumbling -10% lower. Steel-maker X reports strong earnings and forges a +9.1% gain. Traders are happy that US Steel only lost 12 cents on EPS instead of the 29 cents expected. X beat on the top line with $4.4 billion versus $4.2 billion expected. Movie-maker DWA misses on earnings with a larger EPS loss than expected and top line revenue at $122 million versus $138 million expectations.

Dow component and credit card company American Express beats on EPS but only matches top line sales. AXP trades slightly negative. Biotech Amgen beats on earnings and plans to cut 12% to 15% of its workforce. AMGN bounces +3.5%. VRTX results disappoint traders and the stock drops -1.6%. Panera Bread earnings are not impressive but the dough rises with PNRA gaining +1%. Hotelier Marriott beats on EPS but misses on top line sales. MAR gains +0.5%. RGR shoots itself in the foot down -5.5% after reporting disappointing earnings. SWHC falls -2.3% lower in sympathy so keep the guns away from the long traders in these stocks for a day or two. Russia’s YNDX reports an earnings beat and guides higher gaining +2.1% in late trading. Sanctions, schmanctions.

President Obama says the new Russian sanctions announced today will take a “bigger bite.” The US sanctions are boosted to include four Russian companies; United Shipbuilding, VTB, Bank of Moscow and the Russian Agriculture Bank. WTIC crude oil leaks under 101 printing a 100 handle briefly. Brent remains sticky at 107.50 as there is no let up in the Middle East, northern Africa or Ukraine turmoil. Overnight and tomorrow the equity and currency markets and especially Russian stocks and the Russian Ruble will price-in the new sanctions. Will the sanctions bite?

MONDAY 7/28/14; TSN; CMI; Spain 10-Year Yield Drops Under 2.50%; Global Protectionism on the Rise; EMN; HLF

Asia trades higher with Australia flat. China’s Industrial Production data is up +17.9% way up from last month’s +8.9%. If the Chinese economy is doing so well (according to the government-supplied and manipulated data) why are companies not hiring workers? Global traders run with the headline news sending the SSEC +2.4% higher. The SSEC is up from 2050 to 2180, 130 points, +6.3%, in only four days. The Hang Seng Index is up +0.9% printing above 24.5K for the first time since 2010 and on the verge of equaling levels from 2008. The PBOC is pumping the stock market higher with easy money just like the Fed in the US and BOJ in Japan. The central bankers are the market.

Japan is up +0.5% with the dollar/yen at 101.86. Japanese banks run over +1% higher. Nissan travels flat after recalling over 200K vehicles due to faulty air bags. The KOSPI gains +0.7%. KB Financial gains +5%. Chinese authorities identify substandard conditions at OSI, the US meat supplier at the center of the food scandal in China, stopping meat production. US companies MCD, YUM, BKW and SBUX sever ties with the troubled meat supply company. Healthscope begins trading in Australia the largest IPO in four years.

Day 21 of the Israel-Hamas conflict and day 11 of the Gaza invasion begins. President Obama calls PM Netanyahu requesting an end to the conflict. Over 1000 Palestinians are dead including a few hundred children with over 40 Israeli soldiers killed. Hamas uses the Palestinians as pawns since weaponry and rocket launchers are stored in or near schools, hospitals and religious buildings. One-half of Palestinians are fed-up with the violence and want solutions while the other one-half continue to support Hamas. Secretary of State Kerry returns to the US. An unofficial cease-fire is in place in Gaza. Israel says it will only respond to Hamas rocket fire. Hamas fires several rockets, and Israel responds, but the tentative humanitarian cease-fire remains and an uneasy calm exists in Israel and Gaza, for now.

An international court in The Hague rules that Russia must pay $50 billion to ex-Yukos shareholders. 

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

European markets close on the weak side with the DAX down -0.5%. France’s CAC gains +0.3%. The auto makers such as Daimler, Porsche and BMW are slapped -3% lower. In Libya, oil and gasoline fuel tanks are burning out of control as a result of tribal fighting at the Tripoli Airport. The smoke is visible from space and fear grows that the spreading blaze will threaten nearby natural gas storage tanks which would create an explosion of epic proportions.

Equities recover off the lows but weaken at lunch time. The retail sector trades lower with consumer staples hit relatively harder. XLP -0.5%. Industrials lag on the disappointing CMI earnings. XLI -0.9%. Volatility remains elevated above 13. TRIN is 1.28 representing steady-eddy selling. Traders are chasing into the utility dividend stocks. XLU +1.1%. UTIL +0.9%.

The 2-Year Note Auction at 1 PM receives average participation going off at 0.54% yield the highest since May 2011. The stock market bulls stage a comeback with the major indexes back to the flat line fueled by lower volatility. VIX drops to 12.56. Equities recover as the Fed’s easy money floods into the markets.

Protectionism increases around the world. The US announces new impact duties on solar panels manufactured in China and Taiwan. This creates a dark cloud over the Asian solar manufacturers. ENPH melts -7.6%. Governments choose stock market winners and losers these days. YGE -2.9%. GTAT drops -5.6% but also provides glass for the iPhone and other smartphones so it may be able to redeem itself. The US solar stocks that are now “protected” by the new policies are FSLR and SPWR up +2.3% and +2.6%, respectively. Protectionism begins a global race and spiral to the bottom; how long before the Asian manufacturers retaliate? The TAN ETF trades up slightly today and may stagger sideways moving forward receiving positive and negative influences as mentioned.

The day ends mixed with the broad indexes recovering strongly off the bottom around 10 AM. The central banker asset purchases between 10 AM and 11 AM each day always save the day. The SPX gains less than one point at 1979 using the 20-day MA at 1975 as support. The Dow finishes up 22 points, +0.1%, to 16983, but remains under the 20-day MA at 17011 as well as the coveted 17K level.

On the down side, the COMPQ loses 5 points, -0.1%, to 4445, using the 20-day MA at 4434 as support. The RUT small caps lose 5 points, -0.5%, to 1140 under its 20, 50 and 200-day MA’s leading the broad indexes lower along with technology stocks. CMI drops -3.2%. Homebuilders are whacked. XHB -1.6%. LEN -2.1%. BlackBerry is given a raspberry with BBRY dropping -3.1%. FDO launches +25% on the takeover deal with DLTR gaining +1.2%. DG is left at the dollar store altar trading flat.

The retail sector is weak early in the day but recovers. XRT is at 84.24 exactly at the 200-day MA support at 84.27. Whichever way the retail stocks pivot, so goes the broad market. The dollar/yen is flat at 101.84. Ditto euro at 1.3437. The US Dollar basket, USD, is dead flat at 81.12. Copper is dead flat at 3.24. Ditto gold at 1304. Oil trading is uneventful. WTIC 101.43. Brent 107.50.

After the closing bell, HLF reports earnings that miss by a penny at 1.55 on EPS. The top line sales miss at $1.31 billion versus the $1.36 billion expected. Herbalife reports its first earnings miss in six years. HLF is beaten mercilessly losing -10% in AH trading. Software-provider ADVS gains +0.9% on an earnings beat. Machine-vision products maker CGNX rocket launches +16% on better than expected earnings. Companies would rather employ robots than humans since robots do not sleep, eat or complain like humans. DRI pops +4% after CEO and Chairman Clarence Otis steps down.

NCLH hits an iceberg and capsizes -4%, figuratively only, after missing on top and bottom lines. The lumber darling PCL is cut -2.8% lower after beating on earnings but forecasting softness ahead due to a lackluster housing market. Important chemical company EMN is the last to report earnings this evening with a healthy eight-cent beat on EPS but a miss on top line revenue. Eastman Chemical reaffirms guidance for 2014. EMN shares knee-jerk to the downside but then settle in sideways. Chemicals are an important bellwether for the economy and the sector should be far more robust with growing sales if the global economy was running on all cylinders as the economists, traders, strategists and analysts tout daily.

Dr Marc Faber of the Gloom, Boom and Doom Report repeats his call for a -20% to -30% drop in stocks but now says equities may print new highs first over the next couple months before the selloff occurs. Even one of the very few market bears is now hedging the downside call with more upside first. Dennis Gartman of the Gartman Letter mocks Faber saying “this is a bull market and do not even think of going short.” Gartman cheer leads the bull case for the stock market with authority and then in one fell swoop destroys credibility by ridiculously saying, “I may be wrong.” He would make a great two-handed economist; on one hand stocks will go up but on the other hand they may go down.

The liberal and democratic-leaning CNN announces poll results where 53% of the country would rather have Mitt Romney as president with 44% for President Obama. Buyer’s remorse has set in for President Obama as a result of all the ongoing scandals and lack of leadership. Many Americans probably believe the November 2012 presidential election was rigged since the Benghazi 911 terrorism incident was swept under the rug at the time and the IRS scandal prevented Tea Party and conservative groups from forming to rally the republican vote. Both sides are guilty of dirty politics throughout history.

Americans will always rally behind the winner of a presidential election regardless of political affiliation but respect is lost if the contest appears rigged and cheating was involved. In fairness to President Obama, recent Presidents Clinton and Bush watched approval ratings fall in their respective 6th through 8th years (a US presidential term is four years and a two-term president serves eight years). Folks have a shorter attention span these days and tire of the same face in the Whitehouse for eight long years. The world falling apart is not helping the president’s approval rating.

SUNDAY 7/27/14

Israel Prime Minister Benjamin Netanyahu appears on the Sunday morning US political talk shows defending Israel’s move into Gaza. The UN Security Council calls for an immediate and unconditional cease-fire for humanitarian purposes. Over 900 are dead in Gaza in day 20 of the conflict and day 10 of the Gaza incursion. Over 165K people are displaced in Gaza; three times the number that were displaced in the war eight years ago.

ISIS radicals continue to purge Christians from Iraq. ISIS is searching for American and European Christians in Iraq holding them and demanding ransoms. Iraq is in chaos.

Merkel is trying to unify the 28 EU countries on sanctions but the task is like herding kittens. The only common ground between nearly all nations is targeting defense contracts that supply Russian military weaponry, ships and equipment, however, France is not agreeable to these sanctions since they are delivering a large war ship to Russia this Fall and another next year accounting for nearly two billion dollars. Evidence is mounting that Russia is firing directly into Ukraine. Russia imposes travel bans on 15 US and European officials continuing the tit-for-tat sanction war. About 200 bodies are recovered from the MH 17 airplane crash site in Ukraine but recovery efforts are hampered by the ongoing civil war. Disgracefully, dozens of crash victim bodies remain rotting in the sun.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

The largest fires in Washington State’s history continue. Hundreds of animals perish and thousands of people are without electricity. Fires rip through sections of California displacing hundreds of people. In the Midwest and eastern US, severe rain, hail and wind storms affect about 90 million people; over one-fourth of the US population.

The WSJ editorial page throws support around the legalization of marijuana. Most Americans realize pot is far less dangerous and detrimental than alcohol. As the interest in golf decreases, DICK fires 560 PGA golf pro professionals from the Dick’s Sporting Goods store chain. The talented now jobless golfers had better find a way to enter and win golf tournaments; otherwise, they will be selling used cars to earn a living. Despite the ivory tower economists and strategists professing a robust economy, the common middle class and poor folks do not have the money to spend on a round of golf anymore. The expense, long play times and the deteriorating reign of Tiger Woods are blamed for the decreased interest in golf.

The ebola virus outbreak in West Africa spreads far away to eastern Africa to Lagos, Nigeria. Authorities and health workers try desperately to contain the virus but are losing the battle. An American doctor is now infected with ebola and under quarantine; he has a 50% survival chance. The ebola virus in Liberia, Guinea and Sierra Leone has claimed 660 deaths thus far and is no longer contained. Complicating the outbreak, the local people are distrustful of the government and health care providers believing that the ebola virus is better treated at home. The locals are resisting testing and treatment and thousands of protestors are marching on hospitals demanding that patients be released.

Deaths rise in Libya as the regional factions fight for warlord-style control of land and infrastructure. North Korea fires a missile into the sea near South Korea in an effort to gain attention. The US southern border debacle continues with gangs now actively recruiting teenage boys. There are an estimated over 70K gang members in Central America mainly dealing in drugs heading north to the US. With all this world conflict, turmoil, war and chaos, President Obama goes golfing. Detractors wanting to see leadership instead of detachment mock the president as the Celebrity-In-Chief.

Saturday, July 26, 2014

SATURDAY 7/26/14

A Chinese river that runs through the Zhejiang province turns blood red. Local paper, clothing and food-coloring companies are under investigation for potential illegal dumping. Residents say the bloody red waterway smells foul. China continues to lay in a bed of pollution. Many Chinese, foreign nationals and contractors have fled Beijing due to the worries of lasting negative health effects due to the detrimental air pollution.

Norwegian Air deals with a PR nightmare as 200 passengers are held over for two days since a part for the Boeing 787 airplane was not available. BA stock crumbles from 130 to 121 over the last three days, -7%, and should see active trading come Monday. The Boeing 787 Dreamliner is experiencing a nightmare.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

The US embassy in Libya is evacuated and closed since no one wants a repeat of the Benghazi terrorist attack. Regional militias and tribes are battling for control across Libya ever since Muammar Gaddafi was killed three years ago. Rebels are fighting over the Tripoli Airport and the smoke is visible for miles. Brent crude oil price dropped recently as the Libya ports reopened for oil exports but Brent runs quickly above 108 as violence increases in this lawless nation.

A new moon occurs today; the darkest time of the month. Israel says it plans to expand its operation into Gaza which makes sense under the new moon. The military with the superior infrared and night vision technology (Israel) prefers to operate at the darkest time of the month and this is noted by the increased fighting in Gaza once the sun goes down. Since the new moon is now waning, Israel will likely be more open to bringing the Gaza incursion to an end since an advantage in the fighting would be lost, at least until the next new moon 8/25/14. Perhaps the Israeli offensive is reaching a crescendo this weekend and early in the new week as day 19 of the conflict occurs and day nine of the incursion into Gaza. The temporary cease fire ends at 8 PM local time (1 PM EST).

COST, WMT and Trader Joe’s recall fruit from Wawona Packing Company in California due to potential listeria contamination. Consumers must destroy the nectarines, peaches and plums or return them to the store for a refund.

Daily Chronology of Global Markets and World Economics May 2014-05 and June 2014-06 Publications Available Via Amazon

Keystone the Scribe publishes the latest issues of the Daily Chronology of Global Markets and World Economics May 2014-05 and June 2014-06 available on Amazon Kindle. A handy link to these issues as well as prior issues are provided in the left and right margins.

If you are a seasoned professional trader or a novice wanting to learn how and why markets move in real-time, the daily chronology series are the books for you. The eBooks detail market reactions to the Monthly Jobs Reports, Fed meetings, economic data, earnings releases and geopolitical events. Business and economic teachers and students enjoy the chronologies since textbook theory comes to life. Read about how the IPO frenzy and global M&A and tax inversion orgies are affecting markets. Become educated on how Ukraine/Russia and Israel/Hamas turmoil affects global markets and currencies.

As always, special thanks to the international support for the K E Stone Blog Series of Web Sites especially the strong following from major money centers in New York, Chicago, London, Frankfurt, Paris, Singapore, Hong Kong, Tokyo and Sydney and the loyal following from the US, Canada, Mexico, Australia, UK, Germany, France, Israel, Russia, China (yes, Russia and China) and Malaysia.

The blog sites only continue with the ongoing support of the entire readership, all followers large and small, professional and novice. Keystone the Scribe is the respected world leader in providing historical context for global markets and world economics. Read the Daily Chronology of Global Markets and World Economics publications and real-time daily blog to gain a significant market edge. The Daily Chronology of Global Markets and World Economics July 2014-07 publication is slated for release on 8/3/14.

Friday, July 25, 2014

FRIDAY 7/25/14; SWK; XRX; LOCO; Durable Goods

Asian indexes move higher with Australia finishing a touch lower. Gold miners are weak. Steel stocks are strong. The IMF lowers the global growth forecast to 3.4% from 3.7%. Japan’s PM Abe begins an 11-day trip to Latin America. La cucaracha, la cucaracha. The dollar/yen moves higher to 101.88. NIKK +1.1%. China’s SSEC gains +1%. HSI +0.3%. KOSPI +0.4%. The Thai Baht continues to strengthen to 31.84 maintaining a five-week winning streak. Foreign money, central banker easy money, is flooding into Thailand bonds and other investments. Investors are banking on government infrastructure investments making Thailand the latest shiny object for the Keynesian money to chase.

The death count is 800 people in day 8 of the Israeli invasion into Gaza and day 18 of the overall Israel-Hamas conflict. Both sides refuse to compromise to create a cease-fire.

Russia is firing across the border at Ukraine military positions, and the Ukraine civil war turns into a multi-nation Ukraine-Russia war but global traders could not care less. Global stock markets are resilient in the face of geopolitics. The Russian central bank raises the benchmark interest rate 50 basis points to 8% to fight inflation; the third hike in five months. The Russian Ruble is weakening at 35.0600. The Russian Micex Index is down -1%. The DAX trades -0.5% lower after the IFO business sentiment for Germany is 108 continuing a weak three-month trend. Long traders are less interested in Germany since Russian sanctions will bite Europe’s powerhouse nation.

European indexes are trading flat to lower. The CAC leads lower -0.8%. The euro drops under 1.35 to 1.3446. The IMF says the UK will be a strong economy moving forward. The UK GDP is +0.8% exactly in line as expected remaining flat for several years and at the same level pre financial crisis in 2007. The UK IFO sentiment disappoints. Pound 1.6976. Britain’s state-owned bank RBS catapults +14% higher after reporting surprisingly strong profits. Luxury goods and spirits provider LVMH plummets -6%. BskyB drops -4% after buying television assets across Europe to form a pay-television goliath analysts are calling “Sky Europe.” Rupert Murdoch’s FOXA owns almost 40% of BskyB as well as significant portions of the other merged companies. Murdoch is likely raising money to make a second bid for TWX. VOD gains +1.7% despite reporting lower growth numbers.

The Air France CEO says this week is a “Black Week” for airlines. France’s Hollande says there are no survivors from the downed Algerie airliner crash in northern Africa. The Boko Haram terrorist group is active in the Mali region where the plane went down. The cause of the crash is not yet known. Airline angst continues. At 6 AM, Hamas says three rockets were fired at the Tel Aviv Airport. Obviously, terrorists note the fear generated after the MH17 airplane takedown and other airplane crashes this week and are capitalizing on this fear. Terrorist attacks on airports and commercial airliners around the world are guaranteed to increase. Maybe traveling by train or bus is smarter although the range is limited by oceans. Travelers must now choose between safety and convenience.

S&P futures are -4. Dow -30. Nasdaq -12. The dollar/yen is up to 101.90. Markets are typically bearish moving through the new moon each month which is tomorrow. The 10-year yield is 2.50% and 2-year yield 0.50% which makes the 2-10 spread math very easy; 200 basis points. This low 2-10 spread reflects an ever-flattening yield curve which is not beneficial for banks that need a steeper yield curve. In early trading, AMZN is puking -10% and SBUX spills the latte dropping -2.5%.

Bloomberg’s business television personality Tom Keene pokes fun at the traders that were fearful last week due to geopolitics since stocks continue to print new all-time highs. Keene becomes animated waving arms wildly proclaiming, “Go to cash! Go to cash!” He is mocking investors that are short the market or in cash concerned about a market selling event. Keene is very representative of the uber complacency ongoing in markets. Smart investors and traders are raping the market upside daily with the central banker’s easy money. Traders are programmed to buy all dips without hesitation or thought. Markets are not climbing a wall of worry but instead climbing a wall off Fed. The FOMC’s money-printing Keynesianism is the life blood of equities.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

President Obama meets with three Central American leaders at the Whitehouse to discuss the ongoing US southern border crisis. Honduras President Juan Orlando Hermandez says President Obama is sending mixed signals concerning immigration laws that the human smugglers take advantage of causing the problem. President Obama preaches the catchphrase “shared responsibility” and asks the leaders including Guatemala President Otto Perez Molina and El Salvador President Salvador Sanchez Ceren to help slow the human immigration wave northward.

The four presidents do not provide any specific ideas or path forward only a general statement agreeing to jointly address crime and economic growth in Central America and the southern US. Before the toner ink dries on the after-meeting photo-op picture, Hernandez blames the US drug culture for the violence in Central America causing the immigrants to flee to the north. President Obama is uninterested in the border crisis and will simply let it run its course since the majority of the new immigrants will become democrat voters.

Israel kills a Hamas leader in the ongoing Gaza invasion. The two sides cannot reach a compromise on stopping the fire fight but are agreeing to a temporary 12-hour humanitarian cease-fire for tomorrow. The temporary cease-fire will run from 8 AM to 8 PM local time (1 AM EST to 1 PM EST) providing Palestinians time to bury th e dead, seek medical attention and restock shelves with food and supplies. The violence takes 850 lives thus far mainly civilians and children. 37 Israeli soldiers have perished. Turmoil and unrest spills into the West Bank with five killed in demonstrations. Several pro-Palestinian protestors are arrested in New York at the Israel Discount Bank after vandalizing the windows and building with red syrup.

Thursday, July 24, 2014

THURSDAY 7/24/14; Global PMI's; CAT; F; GM; MMM; LLY; DNKN; New Home Sales; SPX New All-Time Highs; AMZN; BIDU; P; SBUX; V

China HSBC Flash PMI is 52 at an 18-month high blowing out the 51 expectations and the prior month’s 50.7. The PBOC stimulus measures are creating the economic boost. The central bankers keep goosing economies and markets with easy money. Copper leaps +1.4% higher. Chinese real estate companies power higher. SSEC +1.3%. The HSI is up +0.7% printing a seven-year high at 24142. Japan exports are down for two months in a row sending the NIKK down -0.3%. Dollar/yen 101.51. The KOSPI trades lower after South Korea is expected to report a weaker than expected Q2 GDP. India’s Nifty Index trades sideways remaining at all-time highs above 7800. The US ends its 40-year ban on exporting oil with the first shipments en route to Japan and South Korea.

700 are dead in day 17 of the Israel-Hamas conflict with no signs of a cease-fire. The Gaza invasion is in day seven. Secretary Kerry says there is progress on ending the fighting but that is not apparent from the ongoing violence. Israeli troops continue to destroy Hamas tunnels. Israel’s business and economic activity is suffering. Non-stop air raid sirens require folks to make continuous trips back and forth to bomb shelters decreasing productivity. The UN alleges war crimes against Israel for the killing of civilians in Gaza which increases the intensity of the conflict. Hamas is storing missiles and weaponry in schools, hospitals and churches using citizens as human shields. The FAA lifts the ban on flying into Tel Aviv but many airlines continue to avoid the airspace.

The Ukraine civil war continues. A Ukraine rebel leader admits that the pro-Russian separatists possess BUK missiles. Germany is agreeable to sectoral sanctions but only for a limited time frame. These Level Three more serious and stronger sanctions can be in place before August. The sanctions will negatively impact Russia as well as Europe. Russia’s Micex Index began the day higher but prints negative down -0.2% after the news from Germany.

Air Algerie loses contact with Flight 5017, operated by Swiftair, en route from Ouagadougou, Burkina Faso (Africa), to Algers, Algeria. The airplane carries 110 passengers and six flight crew. Concern grows over the safety of air line travel. Low-fare airliner EasyJet forecasts better profits ahead but trades down -3.9%. Norway receives a threat that a terrorism event will occur in Europe or Norway at any time before Christmas.

The ECB reports a security breach where computer hackers steal email information and contact details. Europe indexes begin trading on the plus side. The CAC is outperforming up +0.8%. The euro moves higher to 1.3479 on encouraging PMI numbers. European manufacturing numbers are at or near three-month highs. Euro zone PMI is 54.0 well above the prior month’s 52.8. UK retail sales remain robust but are below consensus. The former CEO of Portugal’s troubled Banco Espirito Santo is arrested and charged with tax evasion and money laundering.

The consumer goods behemoth UL drops -1.7% after reporting weak sales in emerging markets and a drop in overall revenue. Swiss drug-maker Roche reports a drop in profits but confirms the outlook and trades higher. NOK gains +8% on strong earnings. Alstom trades lower after hit with charges by the UK Serious Fraud Office. The SFO alleges that Alstom was involved in corruption in Poland, Tunisia and India between 2000 and 20006. In Frankfurt trading, QCOM is down -5.8%. GM and F are each down -0.9% ahead of earnings results today. FB is up +3% and climbing as interest in owning Facebook increases overnight.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

Deckers Outdoor reports less of a loss than expected and beats on the top line. DECK jumps +6%. Samsung and Apple supplier Maxim misses on both the top and bottom lines. Softness in Samsun device sales is blamed. MXIM collapses -13%. Several of the high-flying chip and semiconductor stocks announce disappointing news over the last couple weeks. Chip-maker KLAC reports disappointing earnings ALTR, however, trades higher after reporting earnings and guidance in line and raising the dividend. ALGN beats on top and bottom lines but guides lower on EPS with steady revenue going forward.

Turkey PM Erdogan says that Israel’s invasion into Gaza is worse than Hitler. International outrage is growing since a UN-run school in Gaza is hit with a rocket killing civilians including children. The Palestinians and Hamas say an Israeli missile caused the damage, as one would suspect, however, the UN, who is no friend to Israel, says the investigation continues and the school may have been hit with an errant Hamas rocket.

The US State Department provides video and other proof that the Russian army is firing at Ukraine military targets. The Ukraine civil war between the western Ukraine pro-European and West citizenry versus the eastern Ukraine pro-Russian and East citizenry escalates into a multi-nation war with Russia now fighting Ukraine. Tragically, like a Shakespearian play, global traders ignore geopolitics and buy stocks since the Fed, BOJ and other bankers plan to keep equity markets moving higher forever.

Television personality James Cramer touts the latest favorite flavors in the tech industry; AAPL, GOOG and FB recommending them as long plays. However, caution is likely a better recommendation for folks since a stock market moving up on the backs of a limited number of selective companies is typically an indication of a significant market top. MS agrees to pay $275 million to settle mortgage bond litigation. The big banks continue to receive slaps on the wrist; that paltry loose change can be found under the couch cushions in Morgan Stanley’s lobby.

The popularity of fast-casual and Mexican restaurants continues with El Pollo Loco restaurant planning to go public under the ticker symbol LOCO. Hot-shot restaurant IPO’s such as PBPB and NDLS have collapsed since their debut in trading this year. The new Chinese meat and poultry scandal is slapping restaurateurs MCD, YUM and BKW lower in recent days. MCD collapses -3.7% this week. The dividend stock bubble is prime for popping and the yearly divvy gain for a stock can quickly become irrelevant if the capital value of the stock plummets.

Wednesday, July 23, 2014

WEDNESDAY 7/23/14; DOW; BA; GSK; SPX and TRAN New All-Time Highs; FB; GILD; T; QCOM

The dollar/yen drifts lower to 101.37 so the stronger yen sends the NIKK lower. Asian indexes trade mixed. Japan and Mongolia reach a trade agreement removing tariffs on each other’s products. Typhoon Matmo wreaks havoc killing 56  in mainland China and hitting Taiwan next. Korean chip makers are weak with LG Display down -3%. Cracks continue to form in the high-flying semiconductor sector. In Indonesia, Joko Widodo, the reformer candidate, is declared the victor in the presidential race and the Jakarta Composite rises +0.5%. Data feeds for Indonesian stocks are interrupted. Widodo’s opponent vows to fight the election results in the constitutional court claiming wide spread fraud.

China’s Huatong Road and Bridge must make a debt payment today to avoid default but there is no news on whether or not this occurred. Haitong Securities trades +2% higher so perhaps the situation was swept under the rug. China indexes trade higher on stronger moves in financial companies. The Aussie market continues higher with SPASX200 printing another six-year high. Aussie Dollar 0.9443.

Russia’s Micex Index trades +0.5% higher and was up +1% earlier. Sanctions, schmanctions. The weak response by the West concerning further sanctions sends global stock markets into rally mode.

The suspension of flights into Israel creates temporary airport chaos. Terrorists will likely target commercial airlines moving forward noting the fear generated by the MH17 crash and the suspension of flights to Israel. Fear is a terrorist’s currency. The TWA Flight 800 crash in New York in 1996 was likely shot down by a missile but this was swept under the rug after an investigation. Numerous eye witnesses saw the missile run from the ground up into the night sky exploding the airplane but the authorities blame a faulty fuel tank and electrical wiring. If you plan to fly, make sure your life insurance is paid up. A LUV jet makes an emergency landing in Austin, Texas, this morning due to smoke in the cockpit. There are no injuries.

Europe trades higher. Italy’s MIB is negative. Euro 1.3466. The BOE Minutes show a unanimous 9-0 vote for no rate action at the last meeting. The members indicate that activity in the UK housing market is slowing. The BOE is concerned over the lack of rising wages. This is the identical situation as the States. Wages are not rising. Inflation cannot exist without wages increasing. A lack of inflation indicates that the Fed and other central banker multi-year obscene Keynesian policies are failing; an outcome very few expect, or want to face. Pound 1.7076.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

The trading day begins with mixed signals and equities stumbling sideways. VIX collapses to 11.49 creating market lift. R, DOW, GD and NSC all beat on earnings which creates a positive mood. BA reverses earlier happiness descending -1.9% creating a drag on the Dow. Boeing says their backlog may drop and the forward cash flow guidance is not raised hurting the stock. New regulations are imposed on the railroads due to the recent train accidents and chemical and oil spills. Rail stocks such as CP, NSC, CSX, CNI trade lower across the board.

MCD is downgraded and drops -0.5%. WHR collapses -5% after missing on earnings and lowering full-year guidance. Whirlpool says China and global sales are weak but US sales are steady. WHR is an important indicator for the housing sector and the results are not encouraging. People do not buy appliances if they are not buying homes. Equities stumble sideways during the session and end mixed.

The SPX is up 3 points, +0.2%, printing a new all-time intraday high at 1989.23 and new all-time closing high at 1987.01; the 26th record high this year. TRAN prints new all-time highs above 8468. The INDU loses -27 points, -0.2%, to 17087. BA loses -2.3% dragging the Dow lower accounting for about 25 negative Dow points today. The COMPQ gains 18 points, +0.4%, to 4474, continuing to print at 14-year highs. The RUT gains 2 points, +0.2%, to 1158 using support of the 50-day MA at 1155 and 150-day MA at 1153. Traders do not care that 100 people are dying per day in Israel and Gaza as well as other geopolitical turmoil since the Fed will keep pumping the stock market higher with easy money. Party on.

The biotech sector is strong with IBB gaining +2.2%. PBYI blasts off up +270% on encouraging breast cancer drug results. Traders are chasing into tech stocks with the tech sector now accounting for about 19% of the weighting in the S&P 500. XLK rallies from 35 to 40 in three month’s time; +14%. AAPL and MSFT drive much of the upside up +33% and +15%, respectively, over the last three months. Markets typically top when a smaller and smaller selective group of stocks continue to push indexes higher.

After the closing bell, Facebook earnings show a doubling of profit with the mobile ad business running on all cylinders. EPS beats handily but top line sales are only in line. FB explodes +5% higher printing new record highs. GILD reports strong results boosted by its Hep C drug Sovaldi but trades flat. ANGI misses earnings estimates and is beaten -24%. TRIP loses -11% after reporting higher sales and marketing costs.

The US wireless provider T drops -1.1% after missing on both top and bottom lines. AT & T reports a -7% drop in profits. QCOM beats earnings estimates but lowers profit forecasts. China anti-trust regulators label Qualcomm as a monopoly creating significant challenges ahead. QCOM collapses -5%. SKX kicks higher on robust footwear earnings.

A Wells Notice is issued to MHFI (S&P ratings agency division) concerning six CMBS deals that were graded in 2011. The financial crisis in 2008 was exacerbated by the rating agencies labeling commercial-mortgage backed securities as triple A paper when in fact the instruments contained high-risk loans. Investors buy based on ratings so these investments were exposed to far more risk than expected. McGraw Hill Financial is fully cooperating with the SEC to resolve the matter.

Tuesday, July 22, 2014

TUESDAY 7/22/14; LMT; CPI; Existing Home Sales; SPX New All-Time High; TRAN New All-Time Highs; AAPL; MSFT; LMT

Japan reopens for trading after the holiday with the government lowering the GDP forecast from +1.4% down to +1.2%. Export activity is sluggish. The dollar/yen rises to 101.51 so the weaker yen sends the Japan stock market and US futures higher. NIKK +0.8%. China markets run higher with strong property and auto stocks. SSEC +1%. HSI jumps +1.7% to a seven-month high. SBUX and BKW are dragged into the developing Chinese food scandal joining YUM and MCD. All four stocks trade lower until the situation is sorted out.

The talk of harsh Russian sanction subsides so the US stock market recovers yesterday and Asia is green across the board. The Aussie SPASX200 is at six-year highs. Indonesia presidential election results show the reformist Widodo the winner but the former military man Prabowo may contest the results. Prabowo complains that the election is flawed with fraud. The Jakarta Composite tumbles -2% but recovers to -0.9% at the close due to the uncertainty.

In Ukraine, the pro-Russian separatists turn over the downed airplane black boxes to Malaysian authorities. Global stock markets trade higher on the thought of tensions easing in Ukraine. Russia’s Micex Index bounces +1.7% so obviously traders expect any sanction announcements against Russia today to be weak-kneed. The Russian Ruble currency pair drops under 35 to 34.9118 verifying a stronger ruble and less fear and worry over pending sanctions.

Day 15 brings further bloodshed and an increasing body count in the Israel-Hamas conflict. The deaths are nearing 600 with 2000 injured. 29 Israeli soldiers are dead. Israel says a soldier is missing and feared dead but Hamas claims to hold the soldier. Israel and Hamas are not agreeable to a cease-fire as yet and appear to be drifting further apart. Traders ignore global events since the Fed and other central banker easy money will paper over any problems and guarantee an ever-higher stock market.

[Text is Redacted: Purchase June 2014-07 to Read the Complete Chronology]

At 12:45 PM, the FAA closes the air route from the US to Israel for the next 24 hours. The US Dollar continues higher to 80.77 due to the weaker euro. The US provides proof that pro-Russian separatists took down the Malaysian Flight MH17 with a BUK missile.

Comically, Ackman’s day-long presentation berating Herbalife turns into folly. He promised bombshell news that would take down Herbalife roaring like a lion but today he is talking like a mouse. HLF is rocketing higher today up +25% giving Ackman a wedgie with his shorts. Ackman tears up on stage during his presentation waxing concern over Herbalife but perhaps he saw the stock price dropping and he was crying over that instead.

Equities stumble sideways at the elevated prices ahead of the Apple earnings. VIX moves above 12 which maintains a lid on the market upside. The Harley is sputtering and spewing black smoke with HOG down -6.5%. Polaris off road vehicles and Indian motorcycles take the positive fork in the road with PII up +9.3% on robust earnings.

At the closing bell, the SPX is up 10 points, +0.5%, to 1984, printing a new all-time intraday record high at 1986.24. TRAN is up +1.1% printing new all-time highs above 8455. The Dow gains 62 points, +0.4%, to 17114. The COMPQ is up 31 points, +0.7%, to 4456. The RUT is up 9 points, +0.8%, to 1156. Europe and the US threatened harsh sanctions against Russia after Flight MH17 was shot down but this evolved into weak-kneed retreating over the last day. Therefore, global traders are sending equities higher since there will be no adverse economic affects.

AAPL is up +0.8% ahead of imminent earnings. Bill Ackman’s posterior is sore as he takes it in the shorts with HLF catapulting over +25%. XLNX is crushed -9.1% on weak revenue and guidance. After the close, MSFT loses -0.9% in the AH’s in a knee-jerk reaction after reporting a confusing EPS number due to the Nokia acquisition. EPS appears to be at about 60 cents in line but analysts and traders need a few minutes to sort things out. Microsoft beats on the top line with $23.38 billion versus $23.00 billion expected. EA beats on top and bottom lines and jumps +5.2% so many folks are sitting at home on the sofa, not working, playing video games.

AAPL reports EPS earnings at $1.28 versus $1.23 expected. The top line misses with $37.43 billion compared to $38 billion expected. iPhone sales in China are up strongly. Less iPads sold than expected especially in the US. India and China iPad sales are strong. Mac sales are a little bit better than expected. AAPL stock trades down -1% in a jumpy tape as analysts pour over the results. Q4 revenues are estimated at $37 billion to $40 billion versus the current $40 billion forecast which creates negativity in AAPL stock. Once the smoke clears, both AAPL and MSFT trade on the positive side.

Chrysler recalls nearly 800K Jeeps and other models due to a faulty ignition switch problem similar to the General Motors debacle. President Obama continues to hobnob from fundraiser party to fundraiser party. Several democrats are now asking him to take more charge and show leadership in a world and America that appears to be falling apart.

Sunday, July 20, 2014


Japan markets are closed for a public holiday. Dollar/yen 101.35. Concern grows over another Chinese bond default this time by Huatong Road and Bridge company. Huatong must come up with $65 million by Wednesday or face default. China Coal Energy drops -1.5% on lower guidance. China stock indexes lose -0.3%. Malaysian Airlines tumbles -2.5%. Korean banks move higher. South Korea steel-maker Posco jumps +2% after receiving a contract to supply steel for Australia’s railroad infrastructure projects. Other material and resource stocks such as Paladin and Alumina are over +2% higher.

Israeli PM Netanyahu vows to expand the military offensive deeper into Gaza as day 14 of the conflict begins and day four of the Gaza offensive. The death count is over 500 with over 3600 injured and 120 children injured or killed. Deaths from the Gaza offensive are running at over 100 per day. The Israel-Gaza fighting is the worse since Israeli troops clashed with Hezbollah in 2006. The new moon is Saturday, the darkest day of the month, so the superior night vision technology is an advantage for the Israeli troops over the next ten-day window. Israel will likely take advantage of the cover of darkness over the coming days and then pull back from the offensive as July ends the following week. Israel has destroyed 14 tunnels and 46 tunnel entrances the majority of the Hamas tunnel structure. Secretary Kerry travels to Cairo and Jerusalem tomorrow to broker a cease-fire agreement with the help of Egypt.

[Text is Redacted: Purchase July 2014-07 to Read the Complete Chronology]

European markets end with a sea of red across the board. The EU is to announce new Russian sanctions tomorrow and the worry is that Russia will retaliate by cutting off gas supplies to Germany. The DAX loses -1% to 9624 almost 400 points under the coveted 10K level. CAC -0.7%. IBEX -0.5%.

JNPR pops +2.4% on an analyst note that the company is undervalued. BIDU, GPRO, NFLX and FB are all trading higher bucking the negative tape. Netflix reports earnings in a few hours. GE is underperforming the market today and this year puking -2% to begin the new week. Over 50% of the earnings for US companies come from outside the US and with GE this portion is far larger, hence the multi-national companies are trading lower as Russian sanctions hang overhead.

Mexico’s billionaire Carlos Slim says a three-day workweek is better since folks are living longer and must work longer and stay healthier longer. The image of ‘lazy Mexicans’ has been entirely erased from the lexicon in recent decades but Slim, in one fell swoop, immediately resurrects this erroneous stereotype and offensive negative connotation. Comedians will have a field day with siesta and lazy jokes. Slim is a major holder in American Movil, AMOV and AMX, both of which have catapulted over +25% in the last three weeks on news the companies may be split-up to unlock value.

Equities continue moving higher through the afternoon. Volatility drops with the VIX under 13 providing bull fuel. WTIC crude oil jumps +1.7% to 104.81 and Brent oil is up +0.4% to 107.68 catching bids on the geopolitical angst. BBT pukes -4% today on the weak earnings. Ditto STI -1.1%. Banks trade lower. XLF -0.4%.

AGN, the target of the VRX and activist investor Bill Ackman takeover, plans to lay off 1500 employees about 13% of the workforce. Allergan is performing a move that the takeover would have done as if the company is saying we do not need you. This is a hostile takeover situation and Allergan is resisting forcefully. AGN reports blowout earnings as expected and trades +2.2% higher today.

The Israel-Hamas conflict claims 550 dead with 24 Israeli soldiers killed. 85K Palestinians are taking refuge in shelters at schools and hospitals. Northern Gaza is in chaos with food, water and hygiene products needed for the refugees fleeing homes. The EU announcement tomorrow concerning additional sanctions against Russia may be weak-kneed so equities continue marching higher into the closing bell.

The session ends with the SPX down 5 points, -0.2%, to 1974. The SPX bounced off the 20-day MA at 1968 intraday. The Dow drops 48 points, -0.3%, to 17052 also bouncing off its 20-day MA at 16965 today. The COMPQ loses 7 points, -0.2%, to 4425 sitting near its 20-day MA support at 4413. The RUT small caps lead lower losing 5 points, -0.4%, to 1147, maintaining the 200-day MA support at 1141.

After the closing bell, Netflix misses by a penny with 1.15 EPS and beats by a tiny hair on top line revenue with $1.34 billion versus $1.33 billion estimated. Traders push NFLX +2% higher on the knee-jerk reaction blessing the in-line results. As time ticks by, NFLX loses steam up +0.8%. Chipotle is a hot tamale reporting 3.50 EPS trouncing the 3.06 estimate. Top line revenue is $1.05 billion versus the $990 million estimate. Sales are increasing with increasing traffic and increasing ticket prices. Interestingly, folks are ordering more chicken rather than beef to save money. The popular restaurant is running on all cylinders. CMG gains +10%. Burrito’s are big business. La cucaracha, la cucaracha.

Texas Instruments beats on earnings EPS with 62 cents versus 59 cents estimated with $3.29 billion revenue versus the $3.27 expected. The old school tech trade just hit a speed bump. TXN trades -0.6% lower. CBSO jumps +4% on news it is being acquired. BIDU jumps +3.4% higher ahead of its earnings release on Thursday. BBT is crushed today losing -4%.