SATURDAY 6/7/14

VOD says it provides direct access to all their records and communications for six countries that are not identified. These nations have a direct link back door and can access Vodafone’s servers and data at any time without warrant. The NSA spying scandal has revealed that all communications by Americans on computers, cell phones and other electronic devices are monitored, archived and recorded.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

In horse racing, California Chrome fails to win the Belmont and the Triple Crown (the horse won the Kentucky Derby and Preakness) finishing fifth. Controversy develops since fresh horses win the Belmont while others, such as California Chrome, run all three races during the 5-week period placing them at a disadvantage and likely continuing the ongoing scenario where a Triple Crown winner may never occur again. KRFT raises coffee prices (Maxwell House) by 10% following the SJM move a few days earlier (Folger’s and Dunkin’ Donut-brand coffees).

FRIDAY 6/6/14; D-Day Anniversary; Monthly Jobs Report; SPX, INDU and TRAN New All-Time Highs

Asia markets try to run higher off the happy US rally but stall as traders begin worrying more about the US Monthly Jobs Report only a few hours away. NIKK is flat as the dollar/yen leaks lower over the last day to 102.30 (stronger yen). SoftBank dumps -1.5% after hyping the use of robots, with more human-like qualities, for customer service applications.

China markets drop -0.5% ....










[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The COMPQ is up 25 points, +0.6%, to 4321. The big percentage winner today is the RUT gaining 11 points, +1%, to 1165. Both the ECB Rate Decision and Monthly Jobs Report this week result in bull victory. For the week, the SPX gains +1.3%, INDU +1.2%, COMPQ +1.9% and RUT the big winner up +2.7%. TRAN gains +1.3% this week, XLK is up +1% and both XLI and XLF are up +2.3%. Biotech catches a bid up +2.7% over the last five days with UTIL up +1% and APPL gaining +2%.

The VIX closes under 11 at 10.78. There is no fear in the markets. Traders are very relaxed and complacent. Aunt Edna drives her 1995 Cavalier to the broker and invests her entire life savings into dividend stocks. After all, the stock market goes up forever without worry or concern because of the central banker money-printing. The CPCE put/call ratio remains under 0.50 for the last three days verifying the rampant complacency and lack of fear. An uber low put/call ratio, along with the low VIX, indicate that a significant market top is likely in place now or within a week or so ahead.

After the closing bell, a class action lawsuit is filed against 13 exchanges. Attorney Michael Lewis (no relation to the Flash Boys author Michael Lewis) files the paperwork in the New York court system on behalf of Harold Lanier. The lawsuit claims that the exchanges provide advance access trading data to certain clients (private feeds and co-location services) while discriminating against everyone else. The drama around HFT continues.

Activist investor Carl Icahn increases his stake in Family Dollar stores becoming the largest shareholder. FDO pops over +10%. Presidents Obama and Putin briefly talk for only a few minutes time at an impromptu meeting in France at the D-Day memorial event where Putin appears agitated.

THURSDAY 6/5/14; ECB Rate Decision and Press Conference; ECB Creates Negative Deposit Rate; JOY; Tepper Rally

The dollar/yen is 102.51 off the highs from yesterday afternoon when the US stock market was running higher. Therefore, the NIKK trades flat not receiving a boost from a weaker yen. China’s SSEC is up +.8% and HSI down -0.2%. KOSPI loses -0.7%. Asian markets are choppy sideways awaiting the ECB decision.

China questions the security of Windows 8. China clearly believes there are back doors built into the operating system to aid spying and they are likely correct. AAPL, GOOGL and other tech companies’ search and software programming continues to accommodate surveillance on US citizens.

At 4 AM, less than four hours ahead of the ECB Rate Decision and Press Conference, the euro is 1.3607. Dollar/yen 102.52. Pound 1.6758. Dollar/Swiss 0.8957. Aussie dollar 0.9279. US futures are flat. The 10-year Treasury yield is 2.58% after moving above 2.60% yesterday up a huge 20 basis points off the bottom at 2.40% last week. The 2-year yield is 0.39% and 30-year is 3.43%. UK gilt 2.69%. German bund 1.44%. Spanish 10-year yield is 3.00%. WTIC crude oil 102.20. Brent crude oil 108.

European indexes trade mixed on each side of the flat line. Global markets are idling sideways ahead of the ECB decision. Fashion retailer ASOS plummets -40% the largest one-day drop in the company’s history due to a profit warning. European retailers trade lower in sympathy. Utilities and healthcare are up but miners trade lower. SNN catapults over +6% higher on news that MDT is making a bid to take over the medical products company. Telecom stocks are higher on M&A talk.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

The SPX ends the session with a strong push higher gaining 13 points, +0.7%, printing a new all-time intraday high at 1941.74 and new all-time closing high at 1940.46. The Dow is up 99 points, +0.6%, printing a new all-time intraday high at 16845.81 and new all-time closing high at 16836.11. The COMPQ gains 45 points, +1.1%, to 4296, a 2-month high. The RUT is up 23 points, +2%, to 1154. Small caps are clearly the winner as traders seek risk.

TRAN sneaks out a new all-time intraday high at 8154.92 but is unable to print a new all-time closing high. Financials explode higher with XLF +1%. XLU +0.8%. IBB +0.7%. XLK +0.7%. The healthcare sector lags. MET drops -0.6% after its huge +10% 3-day rally. The bulls are in full control backed by the central bankers. The VIX remains low at 11.68. The put/call ratios remain low with CPCE printing under 0.50 for the last two days indicating uber complacency in markets and a significant market top at hand over the coming days.

Presidents Obama and Hollande (France) meet for dinner and discuss the ongoing BNP Paribas situation. BNP faces $10 billion in fines from US regulators. Concerns are growing that the fine is excessive and may even destabilize the French economy and European banking system. The fine will be reduced since the banks are always given preferential treatment ahead of the common citizen. The politicians are dancing now to find a more palatable level.

WEDNESDAY 6/4/14; PMI Services; ADP; ISM Non-Mfg; Beige Book; Eve Before ECB Announcement

The Aussie GDP is +3.5% beating the +3.3% expectation and the highest reading in almost two years. Aussie dollar 0.9263. The SPASX200 loses -0.6%. Aussie banks dump -1%. Copper is weak for the second day. The dollar/yen moves higher to 102.79 so the weaker yen creates gains in Japanese stocks. The NIKK is up +0.2% continuing an upside push above 15K. The SSEC and HSI are both down -0.6%. Global automakers are strong after robust sales numbers yesterday. South Korean markets are closed for elections.

Bitcoin continues on a breakout path running up towards 660. In two weeks, bitcoin has recovered from under 460 gaining over +40%. The re-embrace of bitcoin for Apple apps has provided strong street cred for bitcoin again.

Today is the 25-year anniversary of the Tinanmen Square uprising in Beijing, China, on 6/4/89. That brave young man standing in front of the tank creates the epic symbolic image of the pro-democracy movement. Sadly, that young man has disappeared and likely either has a bullet in his head or is rotting away in prison. The government quickly squashed the movement on 6/4/89 by declaring martial law and systematically killing a thousand or more protestors. Things have changed dramatically for China’s economy but not politically since the Chinese government muzzles any news reports concerning the uprising. Police and government troops create a strong presence at Tinanmen Square today and are prohibiting journalists from reporting from the square.

Euro is weakening today down to 1.3607 threatening a 1.35 handle again. The 200-day MA is 1.3636 and the euro came up to test this resistance yesterday resulting in a spank down. Draghi’s big announcement is now only about 28 hours away. European indexes begin the day red across the board. Italy’s and France’s growth numbers remain very weak.

The ECB signals that the rate cut tomorrow will not be the last one but there is only a tiny bit of space remaining to zero (the benchmark rate is 0.25 and deposit rate is zero). A cut of 10 or 15 basis points in the benchmark rate tomorrow and another 10 to 15 cut next month or later would bring rates to zero. The deposit rate will turn negative tomorrow with the initial rate cut. Global equities may idle sideways until Draghi brings the tablets down from on high to announce how world markets should trade tomorrow morning. The central bankers are the market.

Tesco sales drop with an executive saying the numbers are the worst he has seen in 40 years. Prices are being slashed which will aid consumers short term. Tesco gains +1.1% since even worse news was anticipated but price leaks lower and turns negative as the session continues. Retailer Dufry jumps +5.8% higher. Volkswagen drops -1.7% after a share sale announcement (dilution) to raise funds for the Scania takeover. Fiat loses -0.5% on weak sales.

[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

At 2 PM, the Beige Book shows moderate growth continuing in all 12 Fed districts. The Fed paints an optimistic picture. Two-thirds of the districts see loan demand increasing. Home prices continue rising. The Fed says a shortage of skilled workers remains and wages remain subdued. Wages are key since inflation will not occur without wage growth. Equities top out for the day and sell off into a bottom at 3 PM then recover into the closing bell.

The session ends positively as markets idle sideways ahead of the ECB decision in the morning. The SPX gains 4 points, +0.2%, printing a new all-time intraday high at 1928.63 and new all-time closing high at 1927.88. The INDU gains 15 points, +0.1%, to 16738. The COMPQ is up 18 points, +0.4%, to 4252. The RUT gains 5 points, +0.5%, to 1131, two points shy of the 50-day MA at 1133. The VIX ends above 12 at 12.08. Both equities and volatility is up so one of them is wrong. Markets are trading choppy sideways waiting on the ECB decision.

Fed Chair Yellen will attend the Jackson Hole, Wyoming, August meeting as is typically expected by the Fed head and members. Jackson Hole is a symposium of world central bankers meeting to discuss policy and ideas in a relaxed rural atmosphere. Yellen wil have to visit DKS and CAB to purchase a fishing rod.

Jim O’Neill, formerly of GS and a candidate for the BOE head job a couple years ago, credited for inventing the acronym BRIC (Brazil, Russia, India, China), says India is in a longer term bull market. 63% of young American adults between 18 and 34 years old say the American dream is unattainable. 

TUESDAY 6/3/14; European Deflation; Factory Orders

RBA maintains a steady rate policy at the record low rate of 2.5%. Aussie dollar 0.9283. The SPASX200 loses -0.7%. India maintains the current benchmark interest rate at 8%. The RBI plans to stimulate the economy as inflation eases. India’s BSE Index is up +17% this year continuing to print near the 25K highs. Japan jumps +0.7%. Asian banks are higher overnight. Consumer electronic makes such as Samsung, Casio and Hitachi all move from +1% to +3% higher.

China HSBC manufacturing gauge hits a four-month high at 49.4 above last month’s 48.1 but lighter than the consensus estimate. Traders want to see the magical 50-plus level to show economic expansion but the HSBC number, a measure of smaller Chinese companies, continues to show contraction. China appears to be stabilizing but the property sector remains troubled. China is intermittently blocking Google’s search servers as censorship continues. The SSEC trades flat with the Hang Seng up +0.9%.

12 die in Ukraine fighting with seven killed in a bomb blast. The civil war rages on in East Ukraine. The Russian Ruble is 34.9963 unaffected by sanctions. Yandex begins trading in Moscow as trading on the Russian exchange is encouraged by the government. Miner Rio Tinto says the Ukraine crisis has not impacted operations. Syria’s Asaad is reelected in a sham election as he tries to create legitimacy to the tragic 160K deaths in the ongoing bloody civil war. Brazil protests are increasing as the World Cup approaches.

The high Italy youth unemployment surprisingly moves higher to 43.3%. One in every two young people in Italy is without a job. The Italy 10-year yield is 2.95%. The Spanish jobless rate drops but there remains a long road back for the economy. Much of the job gains are due to seasonal factors as travel and tourism industries increase. Street protests continue in Spain. King Juan Carlos abdicates the throne passing the leadership duties to his son, Crown Prince Felipe, who will help guide the country forward. The Spanish 10-year yield is 2.82%.

UK construction activity is lower over the last month but remains at robust levels. UK housing data remains solid. Pound 1.6751. Wolseley, the world’s largest plumbing and heating products distributor, pops +1.4% after seeing strong growth in US markets. Mouse and computer peripheral maker Logitech jumps +3%. UK real estate agent Foxtons loses -2.3%. UK food retailers are slapped from -1% to -2% lower on weak Tesco earnings and guidance. The cheaper German store model is gaining share in the UK. Grocers Aldi’s and Trader Joe’s are winning share in the US as folks search for ways to lower expenses in this high structural unemployment economy.

President Obama lands in Warsaw, Poland, beginning a European trip. The euro zone April jobless rate is 11.7% down one tick from 11.8% in March. Euro zone inflation is +0.5% year over year under the +0.7% last month so the direction is deflation not inflation and the door is open for Draghi to act this week. Europe is likely slipping or already in a deflationary funk a la Japan’s lost two decades. European markets trade flat to lower.

The US continues to crack down on the cyber-hacking bot networks capturing and charging several computer hackers for stealing millions of passwords with the GameOver Zeus virus. The perpetrators behind the CryptoLocker virus are also arrested and charged. S&P places New Jersey on review for a possible downgrade. The city of Seattle, Washington, on the west coast, approves a $15 per hour minimum wage the highest in the US.

The 10-year yield is up to 2.55% well off the 2.40% print last week. At 5 AM, S&P -2. Dow -10. Nasdaq -4. AAPL approves the use of bitcoin for selective applications so bitcoin jumps higher. DG misses on earnings and is beaten -2.4% pre-market.

The auto loan subprime problem is growing in the US with defaults on the increase. 












[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

President Obama is receiving strong criticism from both democrats and republicans for his unilateral prisoner exchange decision and perhaps illegal monetary payment to secure the release. The alleged AWOL sergeant from Afghanistan may be an enemy sympathizer which places the president as odd man out spending his time and US treasure to save a deserter while honored veterans wait for months to receive medical attention at VA hospitals.

MONDAY 6/2/14; PMI's; ISM; SPX, INDU and TRAN New All-Time Highs

The last two years are the hottest on record for Australia. Aussie dollar is weaker to 0.9255 as house prices fall towards five-year lows. Copper bounces +0.8% on the China PMI. Miners are mixed. Iron ore prices continue to collapse to $91.80 per tonne despite the encouraging China data. China, Hong Kong and Taiwan markets are closed today for the Dragon Boat Festival. The dollar/yen moves higher to 102 so the weaker yen sends the NIKK strongly higher gaining over +2% at two-month highs. Japanese companies are increasing capital expenditures which set a happy tone. Korean Won is at six-year highs.

Ukraine and Russia meet in Brussels to continue natural gas price negotiations. The talks impact one-half of Ukraine’s gas supply and one-sixth of Europe’s supply. Russia has delayed the deadline for a resolution to the price war until next week. Egypt’s stock index has lost about -10% over the last week.

Euro 1.3609. European indexes open higher across the board except for Ireland. Miners move higher on the China PMI. Belgian authorities are investigating UBS bank practices. Pharma company Orion gains +14% on an encouraging prostrate drug and partnership with Bayer. AMZN fulfillment center workers in Germany go on strike walking off the job protesting low wages. Germany PMI is 52.3 missing the 52.9 estimate but showing growth above 50. Euro zone PMI is at a six-month low at 52.2 well under the prior month’s 53.4. The CAC turns negative. UK PMI is weaker than expected and mortgage approvals also drop.

Hurricane season is officially underway with June beginning. Today is the first day of trading for June. BlackRock and Vanguard are cutting ETF fees to compete for investor dollars. President Obama announces new power plant emission guidelines that continue his war against the coal industry. The new regulations would result in a $50 billion per year hit to the economy and a loss of 225,000 jobs annually. The coal States such as West Virginia, Ohio and Pennsylvania will be negatively impacted.

The dollar index is higher at 80.509 as the euro drifts lower to the 1.36 level. At 4:30 AM, US futures are slightly positive. S&P +1. Dow +19. Nasdaq +1. The 10-year yield is 2.48%. The dollar/yen is above 102 and moving higher which will maintain broad market buoyancy. Much of the move higher in the dollar/yen is more due to the stronger dollar rather than the weaker yen, however. TradersAudio’s Ben Lichtenstein, a floor trader in Chicago, comments on the ongoing uptrend in equities and bullish markets saying, “The only reason (you would not be long) is if you don’t like money.”

Ventas is to buy Arc Healthcare for $2.6 billion so merger Monday is off and running. VTR drops -2.4%. ARCP trades flat. The annual ASCO cancer conference and also a hospitality conference are occurring this week so the pharma, healthcare, biotech and hotel, travel and hospitality stocks may experience increased activity. IHG drops -0.8% pre-market.

The session begins with new all-time highs printing for the SPX and TRAN. The gains are marginal and quickly leak lower back to the flat line. The Dow Industrials print a new all-time intraday high that it missed by a hair on Friday. The Dow HOD is 16740.58 the highest number in history so new highs in trannies are confirmed by new highs in the industrials providing rally confirmation from a Dow Theory perspective. The China PMI creates a positive mood to begin the new week and month of June. Dollar/yen 102.27. Crude oil moves lower with the stronger dollar.

The US PMI is 56.4 up from 55.4 in the prior month. Material and energy stocks are leading and tech is lagging. XLB +0.2%. XLE +0.1%. XLK -0.2%. Apple kicks off the Worldwide Developers Conference (WWDC) where folks are expecting cutting-edge announcements. AAPL trades -0.7% lower. At 10 AM, the ISM Mfg Index misses at 53.2 down from last month’s 54.9 with prices paid increasing hinting at inflation. Construction Spending is in line. The SPX, Nasdaq, RUT and TRAN are negative with the Dow hanging on for a few extra minutes only to turn negative as well. Today’s party did not last long. The VIX  moves briefly above 12.

Shockingly, the ISM number is found to be flawed due to a software glitch that applied the incorrect seasonal data. The actual number is 56.0 a healthy beat. The stock market places a bottom and reverses to the upside. More shockingly, the confusion continues because the revised number is wrong. The actual ISM Mfg Index for today is 55.4 revised for the third time over the last hour. It is a fair statement to say that confidence in the ISM number is shaken. Equities take on a happier tone.

The 10-year yield is 2.50% and climbing. Dollar/yen 102.33. The SPX and Dow turn positive. The dollar/yen jumps strongly from under 102 this morning to over 102.30 but note that the positive expected effect on the stock market is muted. The stronger dollar, due to a weaker euro, is causing more of the move higher in the dollar/yen currency pair rather than a weaker euro so the move higher in equities is subdued. Euro is at 1.3595 very sticky at the 1.36 level as Draghi’s announcement occurs in two days.

Jean (denim) sales are down -5% year over year. 










[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]

Soldiers in Bergdahl’s outfit call him a coward and allege he actually went AWOL five years ago. The event becomes politically-charged and questions arise about the president potentially paying money to release the sergeant which is illegal. There is a new scandal occurring almost daily from the Whitehouse.

SUNDAY 6/1/14; China PMI

An army sergeant held by the Taliban in Afghanistan for five years is recovered after President Obama releases five terrorists from the prison at Guantanamo Bay Naval Base. America always had a rule to never negotiate with terrorists. The concern going forward is Americans will now be kidnapped in foreign nations and held for ransom or prisoner exchanges.

China PMI is 50.8 exceeding expectations at 50.6 as well as last month’s reading at 50.4. Robust new orders expand manufacturing activity ............









[Text is Redacted: Purchase June 2014-06 to Read the Complete Chronology]










One in six American men between 25 and 54 years old are not working the highest number in history. Government anti-business policies such as increased regulation are blamed for the weak employment numbers. Many people are discouraged and have given up looking for jobs since employers are simply not hiring except for selective niche areas such as the shale oil and gas fields.