TUESDAY 4/1/14; PMI's; ISM

Aussie home prices jump 3.5% during Q1 but homebuilders trade about -1% lower across the board. The RBA maintains the benchmark interest rate at 2.5%. The Aussie dollar reacts wildly printing a 4-month high above 0.9310 then collapsing to 0.9260. Asian markets are trading lower ahead of the critical PMI data. It is odd to see the Asian markets not follow through with the US euphoria. Japan’s Tankan Survey is below estimates. The dollar/yen remains well above 103 at 103.29. Japan’s sales tax increase from 5% to 8% begins. Japanese retailers will likely experience weakness moving forward.

China’s March PMI is 50.3 remaining above 50 indicating expansion and above last month’s 50.2 but below January’s 50.5 and maintaining a downward trend for months. The lackluster PMI may prompt the PBOC to announce stimulus. Markets idle sideways for one-half hour waiting on the HSBC PMI which is more reflective of smaller manufacturers in China and a slightly more credible number than the official China PMI. The HSBC PMI is lower than expected at 48.0 below last month’s 48.1. China’s PMI’s indicate a continually slowing economy......

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The day ends with the bulls running strongly higher for the second day this week. The SPX gains 13 points, +0.7%, to 1886. The SPX is breaking up and out of the two-month sideways 1840-1880 range. The SPX prints a new all-time record high at 1885.84 and new all-time closing high at 1885.52. This is the seventh record high print this year. The Dow is up 75 points, +0.5%, to 16533. The Nasdaq is up a huge 69 points, +1.6%, to 4268. The RUT leaps 16 points, +1.3%, to 1189. CLF drops -2.1%. RAD +1.9%. KBH +3%.

GM’s Barra weathers the storm testifying before the House and is back on Capitol Hill tomorrow for day two in front of the Senate. Several politicians are frustrated with Barra’s lack of details. GM closes down -0.2% giving up all the earlier stronger gains but the vehicle sales data is much better than expected. Mediation specialist Ken Feinberg is hired by General Motors to handle future settlements concerning the growing litigation. Feinberg is famous for handling settlements for high priority disasters such as the 9-11 Victims Fund, the BP Gulf Oil Spill and Hurricane Katrina.

An 8.2 earthquake hits off the coast of Chile as the gravitational forces on the Earth due to the new moon and upcoming eclipses continue to wreak havoc. A tsunami wave is spotted in the ocean. Tens of thousands of people are evacuating along the west coast of South America and the west coast of the US is on a tsunami warning as well as Australia’s coast. Inspection teams prepare to investigate the radiation leaks from the Chihuahuan Desert nuclear waste disposal site in New Mexico. The facility is the US’s only permanent repository for nuclear waste and has been leaking radiation for weeks causing over 20 workers to become sick.

CNBC business television personality James Cramer says the markets are “not in a bubble.” Cramer tells the average Ma and Pa investor to not sit on the sidelines anymore. The bullish market euphoria increases greatly with the two-day rally. The CPCE put/call ratio collapses to 0.47 and VIX tumbles down to close near the low at 13.10 pennies from a 12 handle verifying the uber complacency in markets. The VIX is now at lows not seen since January. Traders are not worried about any market downside. Markets are moving higher fueled by the Russian aggression decreasing ever so slightly, Chinese stimulus expectations, the Yellen rally, end-of-quarter window dressing, the BOJ weakening the yen, the ECB perhaps providing stimulus Thursday morning and the continuing buyback programs.