TUESDAY 10/7/14; BOJ Decision; Weak German Industiral Production Data; IMF Cuts Global Growth Forecasts; DOJ Plans Bank Litigation; US Stocks Collapse; YUM

The BOJ maintains the current monetary policy as expected at the conclusion of the two-day meeting; however, industrial output estimates are revised lower. Japan PM Abe says smaller companies are hurt by the weaker yen. The weaker yen (reflected by the dollar/yen currency pair moving higher and hitting 110 a few da



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mashed due to the Ebola fears. The XLF drops -1.7% and financials are a major drag on markets. BAC -2.4%. C -1.9%. MS -2.8%. GS -2%. KRE is down -1.7% so the regional banks are beaten along with the large banks. BKX -1.8%.

Industrials are smacked with XLI losing -2.7%. Machinery stocks are hit in sympathy after AGCO plummets -11%. DE, TXT and CAT collapse -3.4% each. CMI tumbles -4.8% since diesel engines are not needed if heavy machinery sales are trailing off. Gold 1209.

After the bell, global and China economic bellwether YUM reports earnings that miss estimates which does not surprise traders. Yum Brands are operators of the Taco Bell, Pizza Hut and Kentucky Fried Chicken stores. A new KFC store opens in China each day. US sales are encouraging but YUM cuts the overall outlook and reports China sales down -14%. YUM drops -1% in AH trading. The YUM results indicate that China’s economy is contracting as folks go out to dinner less. KRFT raises its dividend and trades higher. YHOO fires over 400 employees in India to cut costs.

Television personality James Cramer advises investors to not run for the exit door touting the often-repeated line about ‘investing for the long term’. Cramer joins the ranks of Jack Bogle and Warren Buffett that repeat the ‘long-term investing mantra’ non-stop, almost robot-like, however, as the old Wall Street adage says, “in the long run you’re dead.” Comically, when a short-term trade goes the wrong way, which all traders experience time to time, “a short term trade turns into a long term investment.” Sounds like Cramer’s short term trades just turned into long term investments.