FRIDAY 3/7/14; Chaori Solar Default; Monthly Jobs Report; Russia Controls Crimea

The dollar/yen maintains the 103 level and the weaker yen over the last few hours pumps the NIKK +0.9%. Asian markets are mixed with nearly all finishing either side of the flat line. China jitters increase as Chaori Solar defaults. The troubled solar company lost money last year and cannot make the $14.6 million interest payment due today. Chinese companies are postponing bond offerings as this first-ever onshore domestic bond default plays out. Many other defaults are likely. There are almost 300 Chinese companies that have debt to equity ratio’s in excess of 200% so further trouble will occur when these debt-laden companies try to refinance their debt. Chinese banks trade lower. A new property tax in China slaps the property stocks -2% across the board. India’s Sensex gains +1.4%.

The euro is up to 1.3870 printing a high for 2014. Traders that expect a weaker euro, since European companies desperately need the weaker currency to boost manufacturing and exports and help the economy to heal, had their heads handed to them as Draghi whistled past the graveyard. Draghi did not offer a further rate cut or other stimulus yesterday so the euro leaped higher fueled by short-covering. European indexes open flat but drift lower. The DAX dropped from 9700 to 9350 on Monday due to the Ukrainie unrest and has only recovered to 9570 so the negative affects linger. The US indexes recovered all their losses from the Monday sell off and are printing new highs.

Russia’s Micex Index is -1%. The dollar/ruble is 36.2544 down about -15% over the last year and down about -9% this year due to the Ukraine turmoil. Journalists track down the inventor of bitcoin physicist Dorian S Nakamoto. He denies bitcoin involvement and does not want the attention. The bitcoin virtual currency drama intensifies and receives international attention after the death of the First Meta CEO. Spotify is taking steps towards offering an IPO in the future. GS owns part of Spotify and is spearheading the effort.

The markets are constantly changing and evolving. Interestingly, the average holding period for a stock a decade ago was five years; the average holding period now is 5 months. This behavior hints that the majority of traders are likely to not stick around for the long haul (maintaining a long-term buy and hold philosophy) when the stock market finally decides to correct lower. If traders plan to indiscriminately throw stocks overboard once they stop performing, this action may exacerbate a market correction into something far more serious......

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

 Traders ignore the ever-increasing tensions in Crimea and Ukraine and instead focus on the happy jobs number, stronger financials and another new all-time high in the SPX. Traders are complacent happily partying into the weekend without any worry or fear. Ukraine, schmoocraine. Doctor Copper, a key market bellwether, is laying on a gurney in sick bay. Copper is in a mini-crash today, down over -4%, but traders do not care and are more concerned about making plans to grill steaks in the warmer weather this weekend.

Trades proclaim SPX 1900 is coming any day and a 3% yield on the 10-year is guaranteed. The bullish euphoria continues with long traders ready to don lamp shades during happy hour festivities. NYSE Floor Trader Warren Meyers says SPX 1850 is now firm support and SPX 1950 is likely on the way. MS’s David Darst says today’s action is only a small rest and more upside is ahead. There are no bears remaining in the market; everyone appears bullish. Traders are upbeat and happy today even thought the stock market is actually flat to weaker after the encouraging jobs report this morning. The optimism for a continuously higher stock market is engrained into the psyche of the majority of traders.

The Federal gas tax may increase. Currently, an 18.4 cents tax is imposed on regular gasoline to pay for road maintenance. A 24 cents tax is applied to diesel fuel since heavier trucks are harsher on the roadways. The tax has not increased since 1993. Roads are riddled with potholes especially in northern States such as Pennsylvania which are highly traveled by Americans. People are frustrated at the out-of-pocket car damage occurring from rough roads and potholes including broken shocks, flat tires and bent wheel rims and steering linkage.

The CRB Commodities Index is up from 272 to 308 in two month’s time, +10%, and now at levels not seen since October 2012. Folks will experience increased food inflation in the coming weeks and months as the ag commodities such as coffee, grains, wheat, corn and milk all move higher. The morning cereal will be more expensive as well as the milk to fill the bowl. Biotechs are slapped again today but finish up off the lows. Equities end the day mixed with the SPX and Dow finishing higher and Nasdaq and RUT finishing negative. The dollar/yen remains elevated all day above 103.25. The euro remains elevated at 1.3876. The 10-year yield is 2.79%. WTIC crude oil is up +1% to 102.58. Natty gas is down -1% to 4.618. Gold, silver and copper sell off. Doctor Copper pukes -4.2% today which is a dire indication for economic growth. Weak copper means the two key economic drivers, housing and auto’s, are sick.

GPS ‘falls into the gap’ dropping -3.1%. HRB is taxed -4%. FL runs higher +5.1%. BIG explodes +18% higher. SKUL jumps +24% on strong earnings. For the week, the SPX gains +1%, the Dow +0.8%, Nasdaq +0.7% and RUT +1.7%. Tech lagged but small caps clearly led. This is due to the small cap speculative biotech stocks that are pumped higher. After the bell, while no one is paying attention, BA announces an investigation into hairline cracks appearing on Dreamliner airplanes where the wings attach to the fuselage. BA drops -0.5% in AH trading. Cable news outlets report a BA 777 airplane has gone missing over Vietnam on a flight from Kuala Lumpur to Beijing. There are 239 passengers and crew aboard. There is no distress signal so a catastrophic failure and crash is feared. Search crews are deployed.

A US official says Russia is firmly entrenched in Crimea and has no intention to leave. Russia continues taking over all buildings on the Crimea peninsula and the region is now in essence a Russian territory. The Putin pays no attention to the sanctions or increased military presence from the West and simply continues invading and entrenching militarily in Crimea without concern. The Russian ‘unmarked’ troops, driving Russian military vehicles, now number 30K in Crimea. The Whitehouse is not commenting on the developments.

THURSDAY 3/6/14; ECB Rate Decision and Press Conference

Australia GDP and retail sales data are better than expected and the SPASX200 closes at 5446 a near 6-year high. AORD prints at the 5457 a near 6-year high. Asian markets are higher. The dollar/yen moves higher to 102.75. Banzai! The weaker yen sends the NIKK up +1.6% and provides a boost to European and US futures. S&P +4. The BOJ provides stock market fuel by printing and weakening the yen. Sony, Toyota, Fast Retailing and Softbank all run over +2% higher. SSEC and Hang Seng Index’s are higher. China coal mining stocks drop since the government announced the war on pollution. Violence in India is increasing after the announcement of upcoming elections starting 4/7/14.

EU leaders hold emergency talks today concerning the Ukraine crisis. Russia’s Lavrov refuses to meet with the Ukrainian ambassador since Russia does not recognize the new government. The West, Europe, US, Ukraine and Russia, however, all agree to pursue a diplomatic course and try to solve the problem through dialogue which continues to calm the situation. The United Nations envoy was chased out of Crimea. He was on a fact-finding mission but was escorted and forced off the peninsula by Russian soldiers. WTIC crude oil drops under 101 and Brent oil is under 108.

Fed’s Plosser says, “I’m worried about unintended consequences of policy action.” Hawk Plosser says “exiting stimulus will be challenging.” The Challenger Job Report shows layoffs decreasing by 7.3% month over month. Heavy job losses are occurring in the financial sector and 10K more cuts are planned in the near future due to a weak mortgage market. Companies in general are reducing physical branch and store locations to simplify operations like SPLS above. The building, store and office closures will continue and produce a steady flow of job losses.

Business supply outlet Staples closes 225 stores to lower expenses by one-half billion dollars. If the economy is doing so well why are stores that supply all the office needs for small businesses closing? SPLS is puking -11% pre-market. Costco misses on earnings reporting a 15% drop in profit. COST is beaten -3%. PLCE collapses -10% on weak earnings and an 18% drop in profits. The retail sector is hit with a triple whammy of losses; Staples, Costco and Childrens Place.

Euro 1.3723. Pound 1.6718. The BOE maintains the benchmark interest rate at 0.50% as expected. The ECB Rate Decision at 7:45 AM EST (12:45 PM local) results in no change maintaining the benchmark interest rate at 0.25%. The euro moves above 1.38. In the press conference at 8:30 AM EST (1:30 PM local), Draghi ignores the 900-pound elephant in the room, deflation, and stays the course with policy. The euro leaps higher to 1.3844. Dollar/yen moves above 103. The 10-year Treasury yield is 2.73%. Futures remain elevated. Traders are willing to ditch bonds and move money into riskier stocks....






[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Only 1 in 10 people that are uninsured in the US, and would qualify for Obamacare, have signed up. So 90% of these uninsured are simply not interested. These folks probably think that if they become ill they will simply go the emergency room like they always did. Why would they bother with all the Obamacare confusion? America is turned upside down by the ACA law with higher costs and hassles for many and the new law is not even accomplishing its main stated goal. The CDC warns about the increase in ‘superbugs’ which are viruses and illnesses that cannot be treated effectively with antibiotics. 23K folks died in the US last year from superbug infections. MRSA is an especially serious and deadly drug-resistant bacteria extracting a human toll. Ridiculously, big pharama benefits by producing drugs to treat the detrimental effects caused by other drugs.

The US freezes Ukraine assets and is limiting travel of Russian oligarchs. Presidents Obama and Putin talk on the telephone and attempt to find a diplomatic solution, although with Crimea succeeding from Ukraine, the situation is more likely to escalate negatively. The US and Europe unite on Russian sanctions. Putin must choose the path forward. The Crimea succession is adding fuel to the fire.

WEDNESDAY 3/5/14; China's NPC Sets 7.5% Growth Target; China Faces First Corporate Bond Default; ADP Jobs Report; Beige Book

Australia’s ASX 200 gains nearly +1% on better than expected GDP and encouraging economic data. China’s National People’s Congress convenes and targets a steady 7.5% growth rate for this year. China faces its first onshore corporate bond default. Solar company Chaori Solar is not able to make interest payments on bonds that are due this week. This is very ominous and may be a warning sign that the Chinese economy will experience a hard landing moving forward, however, traders remain complacent and do not blink an eye, fully expecting global equities to continue printing new highs.

China Services PMI is slightly better than expected but India’s Services PMI remains in contraction under 50. The Shanghai and Hang Seng Index’s finish lower selling off strongly into the closing bell. Dollar/yuan 6.1286. Indian Rupee 61.84. India sets elections for the period from 4/7/14 through 5/12/14. Turkish Lira 2.2084. The dollar/yen is 102.40 so NIKK jumps +1.2%. Fast Retailing, the darling of long traders lately, jumps +3%. TM trades flat to lower. Asia markets are higher except for China.

Putin maintains the legitimacy of his actions in Crimea despite global political outrage. Russian stocks drift about -1% lower. Dollar/ruble 36.1372. Secretary Kerry is meeting with Russian Foreign Minister Lavrov on neutral ground in Paris. Lavrov speaks in Spain and says the new Ukraine government is not legitimate. The US is threatening serious sanctions against Russia. Russia will not extend natural gas discount pricing to Ukraine after April. Ukraine owes energy giant Gazprom $2 billion. The Russian threats over gas supply are reminiscent of the 2006 and 2009 incidents in the region that created concern in Europe especially in the harsh winters back then. The gas supplies are more diversified now although the Ukraine pipelines continue to supply a majority of gas and oil to Europe.

European markets trade flat. Adidas stumbles -0.7% blaming currency differences for disappointing sales. Carrefour jumps +1.2% indicating the supermarket business in France is steady and profitable. Standard Chartered Bank jumps +3.6% after it reports weak earnings but says its exposure to China shadow banking is minimal. MS says the risk is 35% that Europe will slip into more serious deflation. German February Services PMI is 55.9 better than expected....



[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

The high-flying stocks outperforming to the upside this year up from +20% to +70% are AKAM, EA, NFLX, TSLA, BBRY and FB. The stock market idles sideways today after the wild down day Monday and up day yesterday. The SPX prints a new intraday all-time high at 1876.53 but cannot print a new closing high. The broad indexes finish the day slightly negative but the Nasdaq finishes positive. The RUT small caps lead lower. Financials lead higher with XLF +1.1%. BAC leaps +3.2%. MS +2.8%. GS +1.9%. The VIX falls below 14 in the final minutes of trading which will encourage the bulls tomorrow.

WTIC crude oil leaks below 101 dropping -2.4% today. Metals are flat all day. Copper remains weak and no one pays any attention to this key market indicator. Moody’s downgrades Chicago’s credit rating to a tick above junk status. Fed’s Williams says a rate hike may occur in mid-2015 as the economic growth increases and the unemployment rate falls.

TUESDAY 3/4/14; Putin Stands Down; Global Markets Rally

RBA leaves rates unchanged as expected so banks enjoy moderate upside. Japan companies are raising salaries for the first time in a couple years. The yen weakens sending the dollar/yen up to 101.70 and NIKK +0.5%. Asian markets are all marginally higher except for China and South Korea. Metals and gold stocks pull back as Russia begins to blink and pulls back troops from Ukraine borders restoring calm. The de-escalation by Putin sends global markets strongly higher with indexes and stocks recovering one-half and more of yesterday’s losses.

Putin speaks from his residence concerning the Crimea and Ukraine situation justifying his actions to date. He orders troops to return to bases concluding the war games that had mobilized 150K soldiers. Putin says “there is no need to use military force in Crimea, yet.” He says it remains a choice of last resort. His words immediately calm global markets. Putin pulls the troops back from the borders but the 16K soldiers remain in Crimea. He says Yanukovych remains the president and the takeover in Ukraine is an “unconstitutional military coup and seizure of power.”

Putin insists that Russia was asked to intervene in Crimea by Yanukovych. Russia will only send troops into Ukraine in an extreme case but the toehold on Crimea remains. The troops are returning to bases but they remain readily available. Putin says “markets reacted nervously to events due to the US policy.” He must be very concerned about his stock market tumbling lower and that likely created his move to de-escalate the situation. Russian oligarchs are likely pressuring Putin. Putin says “sanctions will hurt Russia and Europe equally.” He is probably concerned about the lasting negative effects of economic sanctions on his economy that is already weak. If the West blacklists Russia, the economy and market cannot bear the strain. Putin says he is not considering adding Crimea or Ukraine to Russia. The Micex Index pops +5%. The Russian Ruble strengthens to 36.276 after a weaker 36.49 and higher print yesterday. Gazprom recovers bouncing +6.2%.....

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

The RUT is up 32 points, +2.8%, printing a new all-time intraday high at 1212.82 and new all-time closing high at 1208.65. Small caps are on fire. The RUT runs higher fueled by speculative biotech and biopharma stocks. The biotech bubble is very ripe for popping soon. The bullish euphoria is rampant. Long traders high-five each other at the end of the day and will be enjoying an extended happy hour. Market participants are giddy. The dollar/yen is up to 102.25. The BOJ creates a weaker yen today to add market upside juice. The XLF jumps +2%. Trannies gain +2.2%. VIP, the TJ Max of China, catapults +32%. Tobacco stocks LO, MO and RAI are up from +2% to +6%.

VIX remains above 14 closing at 14.10. The CPCE drops to an uber low 0.48 verifying the rampant complacency and consistent for a market in a topping phase. The CBOE SKEW Index is at 130 printing another uber high at 140 only a few days ago. The high skew readings forecast a market top at hand just as it did ahead of the January sell off. After the bell, SWHC shoots +7.3% higher on great earnings. Flexcoins is the second bicoin exchange that shuts down. The Poloniex exchange says it is missing over 12% of its assets. The Mt Gox incident was not isolated so these developments are a black eye for bicoin.

40% of the cyber attacks against the US occur from Russia so the Ukraine turmoil may exacerbate cyber warfare. The space program also relies on Russia-US relations. The East and West jockey for positions in the Ukraine political dance that will likely be a very long tango. Merkel and Putin are dancing the tango this evening working towards a solution to de-escalate the Ukraine and Crimea situation but is Putin sincere, or, a cagey ex KGB man? 16K Russian troops remain in Crimea. Asian stocks are setting up to move higher.

MONDAY 3/3/14; PMI's; ISM Mfg Index; Ukraine Contagion

Ukraine contagion cascades around the world overnight. Ukraine vows to not give up Crimea, however, the Ukraine military budget is about $4 billion per year versus Russia’s military budget of nearly $80 billion per year. Ukraine is unable to resist Russia; Putin is in the driver’s seat. NIKK falls -1.2% down for the fourth straight day. The dollar/yen collapses to 101.32, dropping under 102, so the stronger yen sends Japan stocks and US futures lower. Fast Retailing is a lone highlight reporting robust winter clothing sales. Copper drops on the weaker China manufacturing data. The Shanghai Index finishes +1% higher avoiding the negativity that blankets Asia since traders believe better news will occur once the China National People’s Congress convenes on Wednesday. Aussie miners are sold off from -1% to -3%. The Indian Rupee drops the most in two weeks as the economy weakens.

At 3:20 AM, the Russian Ruble is 36.45 (36 spot 45). The Russian central bank delivers a shocking rate hike to 7% to prevent inflation and stop the slide in the ruble. Russian equities tumble -10%. The Russian Micex Index collapses -9%. There is capital flight out of Russia. Natty gas price sky rockets higher to 4.71 up over +2%. Europe relies on the natural gas and oil pipelines from Ukraine. Gazprom, the Russian natural gas and energy giant, collapses -11% after announcing the possibility of gas rate hikes to increase pressure on Ukraine. Putin is moving quickly placing the West back on its heels. WTIC crude oil jumps nearly +2% higher to 104.25. Ditto Brent crude oil at 111.13. Gold spikes +1.5% to 1347 receiving a safe haven bid. The dollar is 79.85. Dollar/yen 101.36.

FTSE loses -1.3%. European markets are red across the board due to the Ukraine contagion. CAC -1.9%. DAX -2.5%. Spain’s IBEX -2.1%. Italy’s FTSE MIB -1.6%. Euro 1.3786. Pound 1.6739. S&P futures -17. Dow -122. Banks such as SocGen and Unicredit sell off.........




[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Equities place an intraday bottom at noon time and recover in the afternoon with the Dow down about 150 points. President Obama says he wants Ukrainians to “determine their own destiny.” In other words, they are on their own. This will serve as a further green light for Putin. Russian television is feeding propaganda to the masses calling the anti-government protestors in the Ukraine hypocrites, terrorists, radicals and neo-Nazi’s. Obviously, Russian television and radio only provide one view point; the Putin view point. Wheat prices jump over +5%. Potash is also affected by the Ukraine turmoil. POT +0.6%. IPI +0.4%. AGU +1%.

The trading session ends with the SPX down 14 points, -0.7%, to 1846. The Dow loses 154 points, -0.9%, to 16168. The Nasdaq dumps 31 points, -0.7%, to 4277. The RUT drops 7 points, -0.6%, to 1176. The computer programs are in control moving the broad indexes uniformly down. Gold miners run higher. Commodities run strongly higher up 16 of the last 20 days. Integrated oils drop lower. XOM -0.8%. CVX -0.4%. AZN lose -1.3% on a downgrade. MGA jumps +5.1% after announcing positive results and raising the dividend. Patent company VHC swings wildly with price covering about 50% of its range and settling 7% higher. VirnetX receives favorable press over a patent and royalty dispute with AAPL. Tobacco mergers are heating up with RAI exploring a bid for LO.

Despite the negative down day, traders are buying the dip. Complacency remains entrenched in the stock market and the bullish momentum and euphoria continues. The VIX is up to 16 today bur remains far away from the 20’s and higher that would indicate fear developing. The CPC and CPCE put/call ratios remain muted verifying the complacency and lack of fear in markets. The CPCE actually drops today as traders rush to buy calls and the long side of the market viewing the Ukraine situation as a great buying opportunity. Traders are not worried or concerned and expect equities to continue moving higher.

Harry Dent, notable market technician and demographic expert, says the stock market is setting up for a major crash. He says the Dow should top out over the coming weeks at 17K and then drop to as low as 6K to levels not seen since the late 2008 market crash. Dent says “I think this will be the most dangerous period in people’s lives in investing.”

SUNDAY 3/2/14; China HSBC PMI; Ukraine Unrest

The Russian parliament approves use of military force. The Ukraine crisis escalates but the West, especially Americans, are war weary and uninterested in beginning another military conflict. Putin understands this attitude and ignores President Obama’s timid threats. Russia is in control of the Crimean peninsula. Ukraine places armed forces on combat alert and warns of war but the Ukraine troops are ill prepared to fight the Russian military. Ukraine is requesting help from the West to defend their sovereignty. Putin has the upper hand and will decide how far the incident escalates. EU foreign ministers are meeting in Brussels tomorrow to discuss the turmoil. NATO is meeting today....

[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]



A coordinated knife attack occurs at a Chinese railway station resulting in 33 dead and over 100 wounded. China calls the assailants terrorists. Unrest from the Xinjiang area of China is starting to spread across the country. North Korea fires two short-range missiles at 5 AM Hong Kong. North Korea typically performs these actions to piggy-back on other world trouble and uses it to leverage aid. The 10-year Treasury yield briefly drops under 2.60%.

NATO calls for a Russian withdrawal from Crimea. Secretary of State Kerry flies to Kiev. Russia has 6K troops in Crimea and is in full control of the peninsula. Ukraine military bases are surrounded. The military action takes a tactical pause but further escalation is expected. A peaceful solution remains possible since Russia has not fired any bullets. Merkel speaks with Putin condemning the action in Ukraine and draws one concession from Putin to permit human rights observers to enter into Crimea and Ukraine to determine if Russian citizens are being discriminated against. Russia’s basis for invading Crimea is to protect the Russian-speaking citizens.

SATURDAY 3/1/14; China PMI; Russia Controls Crimea

The California drought receives relief but the rain is torrential creating mud slides. Slow steady rains are desired to overcome drought conditions. Bitter cold weather continues across the US as the northeast braces for a one foot (30 cm) snowstorm tomorrow and Monday. March is coming in like a lion so perhaps it will go out like a lamb. The Secret Service, which is leading the government’s inquiry into the TGT security debacle, is investigating a security breach at SHLD. A majority of iPhone users have not updated their software to fix the AAPL security breach problem. The financial information of millions of iPhone users remain exposed to cyber attack. Warren Buffett’s Berkshire Hathaway provides a +18.2% return for investors in 2013, shy of the broad indexes’ robust year, but very attractive nonetheless.

China PMI is 50.2 on the positive side of 50 showing economic expansion rather than contraction, albeit by a hair.........


[Text is Redacted: Purchase March 2014-03 to Read the Complete Chronology]

Russia has taken over Crimea and does not pay any attention to the presidents hastily-prepared and terse speech yesterday afternoon which was followed by happy hour partying. The interim Ukraine President Turchynov tells Russia to leave Crimea immediately but the regional leader asks Russia to come in and help. Crimea is the only region of the Ukraine with a Russian-dominant population; about 70% are Russian and 30% Ukrainian. Putin appears in full control of Crimea so if the threat by the US last evening was for Russia to not enter and take over Crimea, well, Russia already has. Now what? Analysts are calling the situation a global chess match between East and West. Ukraine and Crimea are the pawns. Putin will likely keep pushing forward militarily into Ukraine since no one is pushing back. Putin asks the Russian parliament for permission to use military force in Ukraine. The Russian military has already taken over Crimea.

Venezuela violence continues as anti-government protestors block major highways halting transportation of goods. People are desperate due to the lack of food and are looting trucks with driver’s running for their lives. Other truck drivers join the protestors in solidarity. A tanker truck is set on fire. Lines are forming at grocery stores with residents hoping for food deliveries. Almost one-half of the products typically on shelves are now unavailable. The death count from the violence rises to 17 and it appears that President Maduro is losing control.