MONDAY 7/21/14; HAL; HAS; CMG; NFLX

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%.