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.