TUESDAY 7/15/14; JPM; GS; JNJ; Retail Sales; Empire State Mfg Survey; Business Inventories; Fed Chair Yellen Tesitifies; INDU New All-Time Intraday High; TRAN New All-Time Highs; INTC; YHOO

Asia stock markets continue a strong start to the week with the major indexes flat or higher across the board. The BOJ concludes the two-day policy meeting without making any changes as expected. The BOJ lowers its growth forecast from 1.1% to 1.0% for this year. NIKK +0.6% moving higher the same amount as US markets. Dollar/yen 101.57. The KOSPI gains +0.9% as auto makers jump sharply higher. The RBA Minutes state that rates will remain low moving forward. Gold miners are weak. Chinese bank loans surge higher month on month as the government intended.

Russia shoots down a Ukraine military plane. The airplane was over 21000 feet in altitude (6500 m) when struck and the pro-Russian separatists in East Ukraine simply do not have the fire power to produce that strike. News reports are sketchy as the conflict in East Ukraine intensifies. Russia is increasing aggression and moves troops nearer the Ukraine border.

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As the Q&A session occurs with Yellen, stocks continue moving lower with the Dow turning negative. The day is taking on a decidedly more sour tone. The Fed Chair says social and biotech stocks are overvalued and this comment stabs the stock market in the gut. FB, SOCL and IBB are down -2% or more. The VIX moves above 12. Long traders are in a quandary here forward since the head of the Federal Reserve is ridiculously calling a top in social media and biotech stocks. The trannies buck the negative trend trading higher. TRAN is up +0.1% due to the drop in oil (lower fuel costs for trucks, rails and airplanes).

The markets stagger sideways during the session with Yellen’s comments on social mecia and biotech stocks dominating the discussion on trading floors. The day ends with the SPX down 4 points, -0.2%, to 1973. The INDU gains 5 points to 17061 maintaining the 17K level and printing a new all-time intraday high at 17120.34. TRAN prints a new all-time intraday high at 8364.15 and new all-time closing high at 8345.08.

The COMPQ drops 24 points, -0.5%, to 4416, weighed down by the social media and biotech stocks that Fed Chair Yellen says are overvalued. The RUT collapses 12 points, -1%, 1154. SOCL -1.1%. IBB -2.2%. Financials win big today on the JPM and GS earnings and favorable comments by Yellen concerning the banking sector. XLF +0.7%. JPM +3.5%. GS +1.3%. C +1.8%. BAC +1.5%. Bank of America reports earnings in the morning.

After the closing bell, Intel reports a 40% rise in profits and beats on both the top and bottom lines. EPS is 55 cents above the 52 cent estimate and sales are $13.83 billion above the $13.69 billion. INTC ships a record number of chips in Q2 and raises forward guidance. INTC catapults +3% higher in AH trading and should create happiness in the tech sector and Nasdaq tomorrow.

Yahoo earnings are not as rosy missing on both the top and bottom lines. EPS is 37 cents versus the 38 cents estimate and top line sales are $1.04 billion versus $1.08 billion expected. YHOO reports a decline in ad revenue. Instead of selling 40% of its Alibaba stake as the BABA IPO approaches, Yahoo negotiated a sweeter deal to only divest about 27%. This keeps the YHOO stock price elevated.

AAPL and IBM announce a partnership to provide business service software for the iPhone and iPad. The move will threaten BBRY that maintains a healthy business software market. AAPL and IBM trade higher on the news and BBRY drops like a stone losing -3%.

Treasury Secretary Jack Lew wants a crack down to occur on the tax inversion strategies now in vogue. Companies are buying out other companies located in lower tax rate countries such as the UK and Ireland and then re-domiciling the new combined company in the lower tax nation. Obviously, the US will lose jobs in the process further depressing the 25 million people that are unemployed or underemployed.