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.