SUNDAY 5/4/14; Ukraine Civil War; Portugal Exits Bailout

Ukraine turmoil escalates into a civil war and there is no turning back. 7 die in Donetsk and the death count runs towards 50 and more from the end of last week. Ukraine is losing control in regions of East Ukraine so the upcoming elections are in jeopardy and may become a moot point as civil war erupts. The US says Russia must stop supporting the rebels that are creating war in East Ukraine and threatens more sanctions. Russia says that citizens from East Ukraine are calling the Kremlin asking for help from Russia which plays into Putin’s hands.

[Text is Redacted: Purchase May 2014-05 to Read the Complete Chronology]

Samsung is to pay AAPL for patent infringements but Apple must pay Samsung for patent violations. The tit for tat war continues making the attorney’s rich. Steve Jobs vowed to fight Samsung to the end for what he thought was stealing the smartphone concept. Is CEO Cook carrying this legacy to completion out of respect for Jobs or is it best to cut bait and drop the legal issues to focus on much-needed new products instead? One of Jobs’ greatest attributes was a willingness to change his mind and the company’s direction if circumstances, or his views, changed over time.

SATURDAY 5/3/14; Ukraine Violence; Benghazi Scandal

The Ukraine violence continues. 31 of the people that died yesterday perished in a building fire in port city Odessa as Ukraine forces step up efforts to retake positions taken over by pro-Russian forces. Yesterday was the bloodiest day thus far for the ongoing Ukraine turmoil. The pro-Russian forces release the remaining observers that they abducted one week ago. Russia blames the US for creating the Ukraine unrest and violence. Ukraine is spinning out of control into civil war.


[Text is Redacted: Purchase May 2014-05 to Read the Complete Chronology]

The Benghazi scandal continues with Representative Trey Gowdy stating that he has evidence that the Whitehouse is systematically and intentionally hiding and withholding documents. CNX lays off 180 workers due to another coal mine closure in Pennsylvania near Pittsburgh. The Whitehouse’s war on coal continues. GM announces another recall this time for 52K vehicles with faulty fuel gauges. The bleeding does not stop for General Motors. Comically, if you own a GM car, simply drive it to the shop since it likely needs repaired.

FRIDAY 5/2/14; Ukraine Launches Offensive; CVX; EL; Monthly Jobs Report; Factory Orders; BRK/A

Dollar/yen is buoyant at 102.47 so US futures are flat to higher. Global markets are idling ahead of the US Monthly Jobs Report. Asia markets are uninspired trading mixed and sideways. Japan household spending numbers are encouraging but the numbers may be boosted due to buying ahead of the higher sales tax implementation. China markets remains closed until Monday. UK markets are closed on Monday for May Day. Japan and South Korea markets are closed Monday and Tuesday for holidays.

UK April Construction PMI is rebounding but weaker than expected. RBS leaps 11% on earnings far stronger than expected. Restructuring charges were expected but not reported so these and other one-off litigation charges will impact future results. European markets trade flat. Currency markets are flat. Euro zone manufacturing PMI is better than expected but the euro zone unemployment rate remains elevated at 11.8%. Fitch maintains Slovenia’s BBB+ debt rating but raises the outlook to stable.

Ukraine forces launch a large-scale offensive to retake Slovyansk, a city with a 120K population. PM Yatseniuk says Ukraine is entering a dangerous 10-day period. Two Ukraine helicopters are reported to be shot down with one pilot dead but the details are sketchy. Obviously, if the pro-Russian forces have the firepower to shoot down a helicopter they are a military force and not simple protestors as Putin says. Casualties are occurring from the Ukraine offensive. People are dying. Putin says the action by Kiev kills the hopes for peace through the Geneva talks.

The consensus for the Monthly Jobs Report is 215K jobs with a range of 200K-225K jobs and 6.6% unemployment rate. Whisper numbers are 250K with some optimistic analysts looking for a huge 275K-300K blow-out jobs number. So traders expect a number above 200K at a minimum. Last month was 192K jobs which was a disappointment since well over 200K jobs were expected. The unemployment rate is currently 6.7%. Wages remain very important since the Fed will continue to be unable to increase inflation unless wages rise. The excitement and bullishness for the jobs number increases as the East Coast rises. Many analysts say that jobs will increase steadily from here forward. S&P futures are +2.

The pharma M&A frenzy continues. PFE raises the bid for AZN to 107 billion but AstraZeneca throws it back in Pfizer’s face in quick order. Bayer continues exclusive talks with MRK to buy the consumer business unit. Merger and takeover announcements are occurring almost daily. At 8:27 AM, S&P +2. Dow +&. Nasdaq +2. Dollar/yen 102.48. Euro 1.3862. Gold 1286. WTIC oil 99.71. Brent 108.39. Copper is about +0.5% higher. The 2-year yield is 0.41%. 5-year 1.66%. 10-year 2.63%. 30-year 3.42%.

At 8:30 AM, the Monthly Jobs Report is 288K jobs, a big jump higher and the highest number in two years. The unemployment rate drops .......................








[Text is Redacted: Purchase May 2014-05 to Read the Complete Chronology]

After the bell, JPM pukes -1.1% as news hits that the bank has $4.7 billion in funds exposed to Russian investments. JPM lowers guidance for Q2 citing less client activity and a challenging economic environment ahead. BRK/A earnings miss estimates dropping nearly -7%. This will dampen the mood at the yearly Berkshire Hathaway meeting in Omaha this weekend. Meyer Shields, an analyst at Keefe, Bruyette & Woods, is excluded from asking questions at Buffett’s Q&A session tomorrow since he may be critical of the company.  Buffett is constantly fostering the ‘aw-shucks’ personality despite events ongoing behind the scenes such as his benign approval for excessive executive pay despite his words otherwise. The bank sector trading will be important on Monday. CMG raises prices at restaurants to combat food inflation.

The Benghazi scandal continues to gain legs with heated exchanges occurring between Jay Carney, the Whitehouse press spokesman, and reporters asking questions. House Leader Boehner announces that a special committee will now look into the scandal. In addition, current Secretary of State Kerry receives a subpoena to testify on 5/21/14 about his knowledge of the Benghazi terrorist incident. The Whitehouse may have been placing the concerns of winning the 2012 presidential election and protecting the president’s reelection campaign over the decision to send help to the four Americans dying in Benghazi. The military was ready to act and help on 9-11-12 but the order never came for them to proceed.

The first MERS case appears in the US brought here via an airline flight that landed at Chicago’s O’Hare International Airport a few days ago. A doctor treating patients in the Middle East carried the virus and became ill over the last couple days. This virus has a high mortality rate of about 50%. There are currently over 400 infected MERS patients in 12 countries with over 300 in Saudi Arabia. The doctor that brought the MERS virus to America flew from Saudi Arabia to London to Chicago then took a bus to his home in the State of Indiana. All riders on that bus are being tracked down to receive medical attention.

THURSDAY 5/1/14; China PMI; XOM; COP; MA; K; CLX; Fed Chair Yellen Speaks; ISM; KRFT; LNKD

China, South Korea and Hong Kong are closed for May Day holiday. Sony cuts earnings forecasts. China April PMI disappoints at 50.4 versus 50.5 expected. Interestingly, the China data lately has all ticked ever-so-slightly lower across the board so the PBOC and Chinese officials are likely massaging and walking the data down slowly to create the illusion of a slower growth but stable economy. Australia loses -0.8% with commodities, iron ore and mining companies dropping due to the weaker China data.

Asian markets are mixed in the thinner trading. NIKK is up +1.3%. Brokerage firm Nomura jumps +6.3% after announcing a buyback. Japan is now implementing the buyback strategy to pump stock prices higher learning from the US buyback play book last year and early this year. Shamefully, companies are not taking central banker easy money to invest in capital equipment or jobs but instead using the free dough to fund buybacks to pump stock prices higher so the wealthy, that own stocks, become wealthier.

UK manufacturing data is stronger than expected. UK house prices are at a 4-year high. The pound is 1.6910 at levels from 2009. The FTSE is higher in thin trading. Much of Europe is closed from trading today for May Day. Germany and France are closed. Lloyd’s Bank gains +4.4%. BSkyB gains +3.2%. A suspicious package is found at 1 Churchhill Place in the UK, where Barclay’s Bank is headquartered, near where a bomb exploded years ago. Italy’s FM Padoan says the euro will likely not weaken anytime soon. European officials continue to play down the deflationary threat.

The IMF approves $17 billion in funds for Ukraine. Talk develops about a potential split of East Ukraine from Ukraine since all control is lost in the region. Russia continues aggressively moving west and the G7 sanctions do not have an impact. The US says that any Russia aggression against a NATO nation will be an act of war. The rhetoric is increasing as Putin takes over East Ukraine just like he took over Crimea. Violence and unrest continues in Turkey as police use water cannons and tear gas against May Day protestors during a May Day rally that tries to march to Taksim Square.

[Text is Redacted: Purchase May 2014-05 to Read the Complete Chronology]

MWW misses with earnings and is beaten -18%. Funds may have to start dumping Monster Worldwide if the price falls under the important five dollar level. TMUS gains +8.1% on the Sprint takeover talk. WLT is slapped -4% as coal cannot receive any love. Walters Energy has a 50% short interest and will likely receive a strong upside short-covering rally soon. INVN collapses -18% after lowering forward guidance.

At the closing bell, the SPX, Dow and RUT are flat with the Nasdaq gaining +0.3%. YELP created good will in tech and high-flying stocks today boosting the Nasdaq. The Dow and SPX did not print any new all-time highs. The SPX remains stalled at the 1884 resistance. TRAN gains +0.6% as the trannies are near creating another new all-time record high which will firmly verify the stock market rally from a Dow Theory perspective. The Treasury yields drop to multi-month lows. The 10-year yield is 2.62%.

After the bell, EXPE beats by a penny with a slight revenue beat and bounces +1.8% in AH trading. KRFT beats on EPS but misses on the top line. LinkedIn beats on earnings but guides flat to lower. LNKD is smacked -2.6% but drops like a stone to -4.2% as the conference call occurs. AKAM beats. OPEN drops -6.1% on disappointing earnings. Wynn Resorts beats strongly and the gambling business remains robust with WYNN popping +3.6%. OUTR gains +2.4% after beating on earnings and maintaining forward guidance. WU drops -0.4% beating on EPS but missing on the top line.

Barclay’s says the US economy is shrinking. Clients of brokerage firms such as Fidelity are requesting that data feeds be routed through the new IEX Exchange to negate the effects of HFT. The brokerage firms push back refusing to make the changes. High-frequency trading firms are at an advantage receiving the data feeds before other traders and investors.

Documents are released concerning the Benghazi terrorism incident on 9-11-12 and show that the Whitehouse may be involved in a cover-up in order to not lose the 2012 presidential election. The Whitehouse knew immediately that the Benghazi incident was terrorism but instead made up a story about an anti-Muslim video. Secretary of State Clinton repeated this story to the grieving families, in front of the four American coffins, vowing to bring the video perpetrator to justice. It may have all been a ruse, however, and if so, Clinton’s presidential aspirations in 2016 would be in jeopardy. The allegations are serious and bring back memories of Watergate and the Clinton-Lewinsky affair as these scandals slowly unraveled. To this day, no one knows where the president was on the evening of the terrorist attack, 9-11, of 2012.

WEDNESDAY 4/30/14; GSK; ADP Employment Report; GDP; FOMC Rate Decision; EOM; YELP

The BOJ refrains from adding additional stimulus and sees inflation above 2% in 2016. The dollar/yen is flat at 102.50 and the NIKK is flat. The SSEC is also flat but the Hang Seng drops -1.4%. The April monthly results show that Australia outperformed while Japan underperformed. Global economic data shows that China will overtake the US economy in one year's time. India is moving into the third spot pushing Japan lower. Japan was pushed out of the number two spot by China about one year ago.

The euro remains sticky exactly at 1.38. The ECB says European banks have boosted their cash reserves since last summer. European markets trade lower. CAC is leading lower at -0.4%. German unemployment drops for the fifth consecutive month. Daimler profits are higher but the stock drops -3.2%. Mercedes earnings are blow-out positive the recall announced last evening now a distant memory. Mercedes sales are growing in China especially SUV’s and new stores are planned. BNP Paribas profit is growing but may face a fine from the US due to bank dealings with unapproved nations and money laundering allegations. CS is under the same scrutiny by US regulators including providing advice to companies concerning tax avoidance strategies. Barclay’s is setting up a ‘bad bank’ to handle its bad paper.

Royal Dutch Shell beats on earnings and rises +4% but there is large exposure to Russia and Ukraine which may negatively impact results moving forward. Talks are in progress between GE and Alstom. GE promises to maintain employment levels for three years to sweeten the deal. Alstom resumes trading after the halt late last week and catapults +15% higher but settles in at about up +8% today. Alstom will make a decision on its sale by the end of May.

The global M&A orgy continues especially in healthcare and pharma sectors. M&A activity typically coincides with market tops. 




[Text is Redacted: Purchase April 2014-04 to Read the Complete Chronology]

For the month, the SPX gains +0.6% and prints three consecutive up months and is up 7 of the last 8 months and also up 15 of the last 18 months. The power of the Fed and other central bankers is phenomenal with easy money fueling dividends, buybacks and the overall stock market. The Dow is up +0.8% on the month with the same monthly stats as the SPX. The COMPQ logs a down month losing -2%. There is always a fly in the ointment. The Nadsaq prints three down months out of the last four. The RUT loses -4% on the month placing another fly in the ointment. So tech and small caps want to lead the broad markets lower. Utilities and energy sectors are the winners in April. UTIL is up +4% this month and XLE gains +5.3%.

Health insurers are up strongly. WLP is up +5.6%. after raising forecasts CI +2.8%. SEE +5.3%. IP +1.6%. Higher paper and packaging companies (IP and SEE) is an encouraging sign for the economy. The hotel sector is from +2% to +5% higher today with strong moves in H, MAR, HLT and HOT. PBI +6.9%.  GRMN jumps +3.7% as its fitness monitor product gains popularity. GWW bounces +2.5% after announcing a dividend and buyback program. AVNR explodes higher +46% after receiving a favorable court decision on a patent dispute.

TWTR pukes -9%. EBAY collapses -5%. CHK drops -1.1% on news that its CEO is the highest paid in the US at an obscene $142 million. ESRX pukes -6.2% after lowering guidance. After the closing bell, YELP beats on earnings and pops +1% showing strength to the upside. WTW beats on earnings and leaps +19% in AH trading.

The minimum wage bill proposed by President Obama does not make it out of the democratically-controlled Congress. One-third of the people signing up for Obamacare have not paid their first premium far worse than expected.  The Whitehouse immediately disputes the data but continues to not provide actual numbers. The software contractor for the Obamacare web site says another $121 million is needed to fix the site. The web site remains unfinished and unable to handle transactions with the insurance companies. The work is being done manually and is very labor intensive which only serves to hurt the overall economy with such unproductive nonsense.

Departing HHS Secretary Sebelius says she will not testify before Congress so she rides off into the sunset like Lois Lerner involved with the IRS scandal. Nearly $800 million of taxpayer money is already lost with Obamacare so the total will move above one billion in short order. Silicon Valley tech companies chuckle at the Obamacare website and government incompetence since the site should already be fully functional with spending only one-fourth the cost. Instead, taxpayer money will continue to be wasted and Obamacare will likely require a bailout in a few years or sooner.

To create a trilogy of trouble for the president today, a CSX train hauling crude oil derails in Lynchburg, Virginia, USA, with as many as 14 tanker cars damaged and leaking. Three cars are in the James River leaking oil. President Obama refuses to approve the Keystone XL Pipeline project so more and more oil is transported by rail (to benefit his wealthy friend Warren Buffett) and accidents are occurring every couple months. Even though all environmental conditions are met and approved and democrats and republicans both call for the pipeline approval, the president will not permit the project since many of the wealthy donors to the Democratic Party are radical environmentalists. It is shameful since people desperately need jobs. Transporting oil via pipelines is obviously far safer than rail.

TUESDAY 4/29/14; DB; MRK; FOMC Meeting Begins; Consumer Confidence; EBAY; TWTR

Japan markets are closed for Showa Day. Markets are mixed in Aisa. China strongly rebounds. SSEC +0..8%. HSI +1.4%. Iron ore prices are at multi-year lows dragging the SPASX200 down -0.9%. The PBOC says they will establish a deposit insurance system and other banking reforms. China will allow some wealth management products to fail in an orderly way. PBOC wants to introduce private banks into the financial system.

Putin denounces the new sanctions as “cold war” tactics. Oil and gas company Gazprom says the sanctions will hurt over time. The Russia Foreign Ministry says the EU is under Washington’s thumb. Pro-Russian troops seize another police building in East Ukraine as the sanctions do not appear to have any bite. The Russian Ruble is 35.6470. This currency pair was 36 yesterday so the ruble is strengthening showing that the sanctions have no initial effect.

[Text is Redacted: Purchase April 2014-04 to Read the Complete Chronology]

After the closing bell, Twitter beats on earnings but the number of users disappoints analysts. Full year revenue guidance is lowered. TWTR is bludgeoned -9%. DVA reports a loss and is whacked -4% creating an unhappy ending to this movie. VPRT pukes -15% after reporting weak results. The GE-Alstom deal is approved and may be announced tomorrow. GE closes slightly down in AH’s. Panera beats on earnings but burns the bread by lowering guidance. PNRA drops -4.4%. Trulia misses big on EPS but slightly beats on the top line. TRLA -2%. STX beats on EPX but misses on top line and trades flat to negative. The IPO darling NDLS misses on top and bottom lines so it is beaten -6.5%.

EBAY beats on earnings 70 cents versus the 67 cents estimate and beats on the top line but guides lower. eBay also repatriated $9 billion in funds taking a tax hit of $3 billion which hints that management likely made a weak decision. Any amateur tax student could have provided better advice. Apple is a case in point that offered the bond sale today as a means to unlock the power of their cash hoard overseas. Right now, accountants and tax attorneys are knocking on eBay’s door handing out business cards professing they can provide better tax advice. EBAY pukes -4%. The stocks reporting earnings this evening are down across the board. TWTR is plummeting -10.5% so they can call the event hashtag collapse (#collapse).

VLO beats on earnings and pops to a new multi-year high. The integrated oils such as XOM and CVX, as well as the oil refiners such as VLO and TSO, are feeling love these days. XOM gains +0.3% printing new highs for the year today. Biopharma darling of long traders BMY beats on EPS but misses on the top line. Bristol-Myers Squibb’s cancer treatment nivolumab will proceed through the approval process more slowly than expected. BMY is beaten -3.6%.

North Korea is firing weaponry along the South Korean border. The construction and preparations for the Rio Olympics is badly behind schedule. Mercedes recalls 253K vehicles due to faulty lights. A poll shows that young Americans, disillusioned and disappointed with President Obama, are the least enthusiastic about voting in 14 years. Coldwater Creek receives court approval to proceed with a liquidation sale and continue closing stores.

MONDAY 4/28/14; Russia Sanctions

The New Zealand stock exchange is delayed from opening to begin the new week of trading due to a “system issue.” Trading is halted at 10 AM local time and trading resumes fifteen minutes later. The operator of the exchange, NZX Ltd, provides no further comment. The computer glitches, so-called fat finger trades, system issues and mini flash crashes continue plaguing global markets. Aussie dollar 0.9270.

The dollar/yen remains steady at 102.20. NIKK -1%. Japan March retail sales are very robust mainly due to increased spending ahead of the tax hike. 





[Text is Redacted: Purchase April 2014-04 to Read the Complete Chronology]

BA and GS are laggards today losing -1.3% and -1.1%, respectively. The utilities close at 6-1/2 year highs breaking out to new all-time highs. UTIL gains +0.5% to 555. Traders and investors flock to utilities for safety and a dividend creating a parabolic move and mini-bubble in utes. AAPL rallies nearly 4% as traders embrace a $17 billion bond sale strategy. GOOGL drops under its 200-day MA for the first time since November but recovers to close above at 523 flat on the day. TWTR loses -2.1% with earnings on tap tomorrow. BBY is a big winner +4.8%. POM +5.7%. ROP +6.5%. NEM -4%. ABX -3%.

After the closing bell, BWLD bounces +5.3% after beating on earnings. Container company TCS drops -5.7% after posting weaker results. HLF bounces +3% with a strong EPS beat and slight beat on top line sales. Guidance is lowered but the overall guidance for the year is better. Herbalife terminates the dividend to increase the buyback which pumps the stock price higher. GOGO drops -25% on news that T and HON are teaming-up to provide an in-flight Internet service. Travelers say that GOGO is too slow and welcome the competition.

The recovery rally emboldens the bulls who remain optimistic continuing to expect the SPX above 1900 and 2000 later this year. The VIX finishes under 14 after spiking to 15.28 today verifying the ongoing trader complacency. April began at SPX 1872.34 so price is playing around this level as the month ends on Wednesday. A pro-Ukraine peaceful demonstration occurs in Donetsk, Ukraine. Citizens simply want a united country in peace. They have emotional ties to Russia but at the same time do not want to be under dictatorial control.