Saturday, December 21, 2013
Keystone's Daily Chronology of Global Markets and World Economics with Key Events Ahead 12/21/12
On Friday, 12/13/13, the dollar/yen moves higher to 103.60 printing near 5-year highs so the Nikkei finishes higher and S&P futures are +6. GM plans on selling its entire stake in Peugeot creating a -9% selloff today for this European auto maker. Ireland is the first euro zone country to exit the bailout program but remains mired in debt. Ireland’s 10-year yield has dropped from over 15% at the height of the crisis to under 4%. Irish Finance Minister Michael Noonan says Ireland is the “weakest of the strong (countries).” Euro zone banking authorities warn about virtual currencies (bitcoin) which means regulations are likely coming in the future. Moody’s downgrades Puerto Rico’s debt rating to junk review. Pension obligations and high debt and deficits are sending Puerto Rico into a dire 2014. UTX lowers its 2014 forecast. BAC is bullish on 2014 calling for SPX 2000. PPI is in line with estimates showing the disinflationary and deflationary scenario remaining on the table. Dollar/yen drops to 103.05 (stronger yen) so the S&P future drop to +3 before the opening bell. The central bankers are the market; as the BOJ weakens the yen they send stocks higher and when the yen strengthens the markets weaken. Markets are flat to slightly higher as the Friday the 13th trading session begins. APC is slaughtered -12% due to a court ruling. CSCO drops -0.5% now near 7-month lows. TWTR continues the launch higher up +3% to 57. Twitter appears to be the new momo favorite. Utilities are weak creating a dark cloud over the broad indexes. TWTR nears 58. Schaeble will retain the finance minister position under the new German coalition government. GOOG announces plans to manufacture its own chips which would cut INTC out of the pie. AMZN is planning a new business called ‘Pantry’ that will compete with the big box consumer goods giants like COST and WMT (Sam’s Club). HON announces a $5 billion buyback so it pops over 1% but then fades as the day moves along. It is absolutely shameful to see the Fed’s easy money flipped into stock buybacks day after day to artificially pump stock prices higher making the wealthy wealthier while providing no help for the structurally unemployed. Equities move sideways all day long and end the day flat. The SPX sits on 1775 support. The Nasdaq ends at 4000.98. The RUT ends at 1107.05, a touch above the 50-day MA at 1106.07, setting up a bounce, or die, scenario for Monday morning. The VIX is 15.76 ending near the highs, and the CPCE put/call is climbing, so traders are seeking protection. The VIX is above the 200-day MA at 14.34 which is a very negative market signal. For the week, the SPX loses 30 points, -1.7%. The Dow dumps 265 points, -1.7%. The Nasdaq loses 62 points, -1.5%. The RUT drops 24 points, -2.2%. The broad indexes print the second consecutive down week. The SOX, semiconductors, lose -2.0% and the trannies, TRAN, are down -1.6%. The consumer staples, XLP, are smacked -1.9% this week with CLX -2.7%, PG -2.5% and KO -3.0%. Traders typically buy staples since they tend to be less affected during a broad market downturn so the selling indicates a continued lack of fear or worry in the markets. Instead, traders run to the high-flyers boosting FB +11%, TSLA +8% and TWTR +31% this week. If the markets continue lower all sectors will likely be hit indiscriminately. The broad indexes are weak this week in part due to the large amount of IPO’s that hit the market. More supply means lower prices (the stock must be absorbed by the market). After the bell, TMUS jumps +7% and S shares +10% on a takeover bid from Sprint. The combination would create a competitive third player in the telecom space. GE boosts the dividend 16%; 22 cents. GS says the dollar will decline in 2014. Jerusalem receives several inches of snow (10 cm and more) which is a once in multi-decade event. News hits the wires concerning a potential collision between U.S. and China warships that occurred one week ago in the disputed Japan island zone in the South China Sea. The incident increases the tensions in the Asia theatre. A Wichita, Kansas, airport employee turned terrorist is arrested for plotting a suicide car bombing. A school shooting occurs in Colorado by another person with mental issues. GOOG completes the Boston Dynamics acquisition which is a company that designs and supplies robots (famous for the Big Dog, Wild Cat and Cheetah animal-like robots viral on YouTube) for the Pentagon. This is Google’s eighth robotics company acquisition in the last 6 months.
On Saturday, 12/14/13, China joins the ranks of the U.S. and Russia landing a spacecraft on the moon. The unmanned craft will release a solar-powered robot which will conduct geological testing. In recent days, ‘pitchfork protests’ are increasing in Italy and now ongoing across the entire country including Rome. Hundreds of protestors, mostly students, battled police and set off firecrackers near a meeting of the government ministers. Italians are fed up with high unemployment, falling incomes and political scandals. The pitchfork symbolism, now a call to battle for Italian farmers, truckers, business owners and citizens, started with the Sicilian farmers that are protesting rising taxes and cuts to the agricultural funds. The Ukraine top political circle unravels as officials are blamed for inciting violence against Kiev protestors. The social unrest around the world increases daily. Uganda’s largest copper smelter is damaged after a power outage. The Obamacare enrollment is approaching 400K but over 6 million have had their policies cancelled because of the new law and need to find insurance within the next 2 weeks. A poll shows that 3 out of every 4 young people will either not sign up for Obamacare or only rate it at a 50/50 chance that they would eventually sign-up. Obamacare confusion continues with the Whitehouse saying the errors from the web site are minimal but the insurers are saying the 834 enrollment transaction files are riddled with mistakes and errors.
On Sunday, 12/15/13, winter storms hit the northeast U.S. which negatively impact holiday sales. Nelson Mandela is buried at his final resting place. The Obamacare web site goes down and this outage leads into the scheduled maintenance period. Over 15K enrollment applications are lost and no one knows where the information is located. The Whitehouse says that every person enrolling will be personally contacted to make sure they pay the premium and contact their insurer. Confusion continues over the actual sign-up deadline date; is it 12/23/13 or 12/31/13? What a mess. The spirit of Congressional bipartisanship ends at the Sunday talk shows when republican Representative Ryan, that helped develop the budget deal, says a fight on the debt ceiling limit in February and March is not off the table. Japan’s Tankan Survey is better than expected although the capital spending by companies takes a sharp drop. China PMI Flash Manufacturing drops to a 3-month low when a rise was expected. The dollar/yen drops from 103.20 down to 102.80 so the stronger yen weakens Asia markets. The S&P futures drop to -9. A man is murdered at a New Jersey shopping mall during a carjacking creating more concern about holiday sales.
On Monday, 12/16/13, the Nikkei and Shanghai Indexes lose -1.6%. Euro zone Flash PMI’s are up better than expected with Germany strongly higher over 50.0, however, France is the fly in the ointment reporting weak results at 47.0 and continued economic contraction. Copper and oil move higher but gold, silver and other commodities move lower. At 6 AM EST, the S&P futures are +7 staging an over 20-handle turnaround off the overnight lows. European markets are up about one percent. Ski fashion manufacturer Moncler IPO jumps +41% in its Milan trading debut. The euro is 1.3777. AMZN workers protest in Germany. The dollar/yen is using the 103 level as a pivot point. The NSA is considering amnesty for Snowden, the whistleblower that exposed the government spying on all U.S. citizens, to minimize any further damage from future revelations. Kiev protests are in a third week and growing in intensity. The harsh winter weather across the U.S. dampens consumer spending. The Hobbit movie sequel, “Desolation of Smaug,” is number one at the box office this weekend taking in $74 million. The 2-year yield is 0.32% and 10-year 2.85% for a 253 basis point 2-10 spread. FDX and UPS experience the busiest shipping day of the year today dubbed Green Monday. With the strong improvements in delivery, folks now place their final holiday orders on the Monday closer to Christmas when a couple years ago the first and second Monday’s in December were the busiest shipping days. The futures point to a gain of +10 for the S&P and +100 for the Dow. AVGO buys LSI; both stocks jump higher, +11% and +39%, respectively, which will help the chip sector today. AER plans to buy AIG’s leasing unit and it pops +34% . Empire State Mfg data is weaker than expected. TIC data and Industrial Production are stronger than expected. GS upgrades XOM. C and VZ are upgraded. The markets leap higher at the opening bell. VZ jumps +2.5% and XOM leaps +2.8% due to the upgrades, however, C is up only +0.5%, a more tepid response on the banking side. The dip-buyers are running into the market to begin the new week. The 10-year yield leaks to 2.84% so stocks and bonds are both moving higher. Shamefully, nearly 500 companies have instituted buyback programs this year (using the Fed’s easy money) which pumps the stock market higher but does little else to help the overall economy. At 10 AM, equities are strongly higher with the major indexes up a uniform 1.0% indicating that the robots and trading algo’s are in charge today. News reports say explosives are found at Harvard University, potentially four bombs in four separate buildings, and students are evacuated, but it may be a bomb threat. Traders do not care keeping equity markets buoyant with the Dow up 170 points. IBM gains +2.7%. European markets close strongly higher with telecom stocks leading the way. ADM pops +2.5% after it announces a buyback. This phony Fed-induced stock pumping is nauseating day after day since it does nothing to create a job for Joe Sixpack; the Fed makes the rich richer. Noted market technicians and strategist Tom DeMark comments on the similarity of current market behavior to the 1920’s and the charts hint at a potential significant market top occurring mid-January. Tom is best known for his 13’s strategy which identifies tradable market tops and bottoms. The technique has identified the market tops this year but the market pull backs are very shallow due to the constant Fed intervention. The 13’s technique continues to work for emerging and other markets that are experiencing less central banker intervention. TWTR receives 2 downgrades and drops -4%. OMED jumps +21% on news it will be added to the biotech index. HBL leaps +9% after completing an updated audit. At the closing bell, the SPX is up 11 points, +0.6%, to 1787 back testing the 20-day MA at 1794 today. The Dow is up 129 points, +0.8%, to 15885. The Nasdaq is up +0.7% and RUT +1.2%. Semiconductors jump strongly higher. Financials are up but lag the overall market. IBM is up over +2% and creating about one-fourth of the move higher in the Dow. Dip-buyers trip over themselves to buy the long side with most traders looking for the Santa Claus rally. After the bell, BA increases the dividend by 50% and announces a $10 billion buyback so it pops AH’s. A court rules that the NSA spying program is unconstitutional which is a blow to the Whitehouse and those trying to justify the ongoing spying on all Americans.
On Tuesday, 12/17/13, the NIKK gains +0.8% with the dollar/yen at 102.95. The Ukraine demonstrations continue with protestors wanting to join the EU. Germany’s new coalition government is sworn in and now fully functioning. European car sales surge higher for 3 consecutive months, however, car registrations are actually lower in Germany and France. Germany’s ZEW Sentiment exceeds expectations, a blowout number in the 60’s. Draghi warns that a banking union must be finalized. He voices concern over the growing sovereign debt in Spain and Italy and how this may complicate matters moving forward. Europe is trading flat to weak. The FOMC 2-day meeting begins. Tech company executives meet at the Whitehouse to provide input into the Obamacare and NSA spying situations. CPI is tame with inflation remaining a non-issue. The broad indexes trade flat in quiet trading to begin the day. A Housing Market Index shows very bullish home builders but they are always bullish. News from Moscow says Ukraine accepts a $15 billion aid package from Russia. Thus, the Ukraine leadership joins hands with Putin and the East and turns its back on the protestors, the EU and the West. The Ukraine 10-year yield calms from 9.9% to 8.8%. The SPX drifts sideways all day long. GOOG and HPQ recall the Chromebook 11 power chargers since they are overheating and melting, not exactly a fine selling point during this holiday spending season. The MSFT surface tablet is out of stock on the web but much of this is likely due to a low inventory rather than overwhelming demand. MMM boosts its dividend and increases the buyback. MMM leaps +3%, up 4 points which contributes about 32 positive Dow points. Senate agrees to the budget bill since they want to begin their holiday vacations. Flash drive companies WDC and STX are up over +3%. BA is +1.1%. The dollar/yen is 102.64 so the stronger yen creates a flat to negative bias with stocks. FB starts to run video advertisements on the news feed and receives an upgrade so it pops +2%. IRBT is upgraded and it leaps +17% higher. Equities end flat on the day. Colorful strategist Marc Faber of The Gloom, Boom and Doom Report says the Fed will never end QE. Faber says the Fed is sitting on a pile of dynamite, pouring gasoline onto everything, then ready to light a cigar and toss the match without any fear or worry. PAY announces lackluster results and drops -4%.
On Wednesday, 12/18/13, RBI surprises and holds benchmark rate at 7.75% trying to combat inflation. The Indian bond and stock markets rally. China clamps down on bitcoin which drops to $555. Traders are sniffing out more stimuls from the BOJ Friday morning so the yen weakens and the dollar/yen climbs to 103, sending the NIKK +2% higher and U.S. futures are higher. S&P +6. AMZN strikes continue in Germany; about 5% of the workforce is protesting. Merkel provides her first speech for the new government and says the banking union is the top priority as well as unifying the EU. U.K. jobless claims fall the most since early 2009. The U.K. unemployment rate falls to 7.4%. Interestingly, U.K. wages are flat and there is a lack of productivity growth just like the U.S. Inflation will not exist if wages are flat to lower. The pound moves higher to 1.6351. Sweden’s finance minister says the banking union is a complex matter which is not the news Draghi wants to hear. Mortgage Applications are down for 6 out of the last 7 weeks and now at decade lows. LEN beats and guides higher bouncing +4% pre-market taking all the home builders higher. Global shipping bellwether FDX misses earnings and drops -1.5%. Perhaps not as many packages are moving as thought. F guidance is weak so it dumps -3%. A short time later F is down more than -4% after saying operating margins will fall from 2014 forward. Ford, that could do no wrong for the last couple years, deposits an egg in everyone’s Cheerio’s this morning. The Housing Starts launch higher to 1.091 million the most since early 2008 five years ago. The mixed news keeps S&P futures at +4 moving towards the opening bell. The dollar/yen is 103.10. Markets are flat to higher with homebuilders LEN, DHI and PHM up over +2%. JBL is down -21% which takes AAPL and CSCO lower in sympathy. MU, a long play darling for traders, is hit -7%. Markets are flat all day into the Fed decision. The FOMC announces a $10 billion tapering. Chairman Bernanke says the “Fed will remain accommodative” and “well past the time that the unemployment rate reaches 6.5%.” Markets fluctuate wildly, dropping strongly on the taper news, but then recovering even more strongly since rates will remain zero for 2 or 3 more years. The Dow catapults up over 200 points. The tapering is a non issue as traders buy stocks since rates may stay zero, well, forever. This is the last press conference meeting for Bernanke. The 10-year yield drifts lower to 2.86%; certainly not a big spike higher in yield that many expected when tapering would be announced. The dollar bounces. The dollar/yen jumps to 103.36. As Chairman Bernanke takes questions in the Q and A, the SPX is up over 1800 and the Dow is over 16K. The Dow’s range is nearly 300 points off the bottom in about one-half hour’s time. Markets remain buoyant as Bernanke fields softball questions. Bernanke continues to say there are no asset bubbles in the markets. Gold is flat to positive. The dollar/yen climbs to 103.57. Volatility drops like a stone with the VIX dropping from over 16 down to 14. A huge short-covering rally occurs in the broad indexes. The SPX is up 30 points, +1.7%, to 1810.65, a new all-time closing high but not a new all-time intraday high. The Dow is up 293 points, +1.8%, to 16168, a new all-time closing high but not new all-time intraday high. Tech and small caps are up big but do not lead; the Nadsaq is up +1.2% and RUT +1.3%. Financials, XLF, gain a huge +2.3%. After the bell, ORCL beats on earnings but the stock is flat to lower due to slipping profits. The 10-year yield is 2.89%. VIX ends at 13.80. Crude oil is higher. Gold ends modestly lower at 1219. The dollar/yen leaps to a high at 104.36. Banzai!! The euro is 1.3703. The media is all abuzz crediting Bernanke for hitting a home run with his tenure at the Fed. Everyone is drunk on the Fed’s wine and does not care that the ZIRP, zero interest rate policy, will run for about 8 years before it ends, if it ever ends. A zero rate indefinitely is now viewed as normal for markets. At the end of the excitement, the Fed oddly appears as if it is more dovish than ever even though it is tapering the purchases $10 billion per month. This pace targets 7-½ months more to taper to zero and end QE which would be the August-September time frame. When the taper news hit, stocks collapsed and the yields bumped slightly higher, and then when the clarity came with all the sugar-coating, and dovishness, and low rates forever, stocks catapulted higher, just like always. Sugar-Daddy Ben continues dishing out the candy. The Senate approves the budget bill so it is a done deal and will go to the president for signing. The bill hurts the future pension funds of veterans. A Manhattan court finds Michael Steinberg, an associate of SAC’s Cohen, guilty of insider trading. TGT says there is a theft of customers’ credit card information that occurred on the Black Friday weekend. Bitcoin drops to a low of $455 but recovers back above $500; China sends the virtual currency into a tizzy today. Several Obamacare exchange executives are either quitting or going on leave as enrollment numbers struggle. The Whitehouse launches an Obamacare ad program which is met with tweets poking fun at the ads. Italy’s figurehead President Napolitano warns of widespread social tension and unrest in 2014. The pitchfork protests continue with the unrest becoming more serious and no one offers solutions.
On Thursday, 12/19/13, China’s central bank injects liquidity into the banking system. The Shanghai drops -1%. BOJ 2-day meeting begins. The Nikkei jumps +1.7% overnight. European Summit begins. FaceBook is raising cash with an offering and Zuckerberg plans on selling shares. FB drops -3% pre-market. BA loses a Brazilian airplane contract due to the NSA spying scandal. C says bonuses will be flat or down this year. DRI plans to split the Red Lobster chain from the company. DRI dumps -6.pre-market. Jobless Claims rise. The 10-year yield moves higher to 2.94%. Gold briefly drops under 1200. TGT drops -2% on further news of the security breach with 40 million customer accounts. The broad indexes are slightly negative to begin the day. ACN +4%. ORCL is the top gainer on the Nasdaq at +4%. Housing stocks and utilities are weak on the higher yields. Philly Fed, Leading Indicators and Existing Home Sales data are flat to weak. Housing sales are stalling; a large miss, the weakest in over 2 years, conflicting with yesterday’s housing sector joy. Equities continue to favor the sell side but the Fed plans a double POMO pump first at 10 AM, then at 2 PM. WGO reports strong earnings but it drives into a ditch losing -12%. CAG grows earnings and gains +6.3%. Gold is under 1200 at 6-month lows. VIX drops under 13 verifying trader complacency. F -2.4%. A fourth Tesla fire occurs but the cause is the electrical outlet and not the car; TSLA dumps -6%. The dollar/yen remains above 104 allowing the stock market to remain buoyant. The broad indexes finish flat to lower with the Dow printing a new all-time intraday high at 16194.72 and new all-time closing high at 16179.08. The Nasdaq lost -0.3% and RUT lost -0.8%. After the bell, NKE earnings are in line but traders expect more and the stock stumbles lower. RHAT beats on earnings and guides higher popping +11%. Yellen’s confirmation will not occur until 1/6/14 since the Senate would have to stay in Washington until the weekend and of course they will not allow their holiday plans to be disrupted. Both democrats and republicans join sides to develop more sanctions against Iran which flies in the face of President Obama’s preferred direction. Weak leadership is filled by other means. Crude oil remains elevated with WTIC at 99 and Brent at 111. In a further knock to the president, the courts are ruling that the NSA spying operations are unconstitutional. The Fed’s file criminal and civil charges against Brian Jorgenson, a former senior MSFT manager. Jorgenson allegedly fed insider trading information to a partner in crime which resulted in $400K trading profits. TGT troubles continue with the security breach. One customer had funds taken from a bank account because she used a debit card at Target a couple weeks ago. TGT’s holiday sales will likely take a hit. OSTK decides to accept bitcoin for transactions. New York City prohibits the use of E-cigarettes just like regular cigarettes. The SEC says they considered taking action last year against the large banks such as GS, JPM, and others, but decided otherwise. Of course they didn’t, it is all one big incestuous relationship. Secretary Lew says he can take extraordinary measures, that have actually now become ordinary measures in recent years due to Washington’s dysfunction, to pay the nations bills beyond the 2/7/13 debt ceiling limit, but Congress must reach an agreement before March. The table is now set for the debt ceiling limit fight over the next 10 weeks.
On Friday, 12/20/13, the BOJ concludes a 2-day meeting and continues to remain accommodative. The dollar/yen moves higher to 104.42. NIKK is flat so traders expected the easy money news for several days already sending the dollar/yen and Japan and U.S. stocks higher. China’s central bank injects liquidity into the banking system. China’s banking operations are occurring under the radar lately since they do not want to call attention to the troubling situation. The SSEC dumps -2% overnight on top of the -1% the day before. The Shanghai Index is down 9 out of the last 11 days from 2260 to 2125, -6%, losing -0.5% per day. The wealthy Chinese money is chasing investments in the U.S., Australia and other places rather than their own country. Why? S&P reduces EU’s AAA rating due to the ongoing weakness in Europe. Sweden is concerned over a housing bubble caused by the global easy money. European and U.S. futures markets are flat to slightly higher. BBRY releases horrible earnings but announces a 5-year partnership with Foxconn (the major manufacturing arm for AAPL products). The new CEO is likely cleaning house so his numbers can appear much better next year. BBRY is halted from trading for the news and then drops to 5.75, -8%, pre-market, when opened, but recovers above 6 quickly. The 2-year yield is at 0.40% and 10-year yield at 2.95% moving higher. The 5-year yield moves towards 1.70% so the Fed is likely becoming worried that they are losing control of the short end (2’s and 10’s). Third-quarter (Q3) final GDP is 4.1%, a 4-handle, printing above the preliminary 3.6% estimate. Q2 GDP was 2.5%. The dollar/yen is pumped higher to 104.60 so a weaker yen sends the S&P futures to +4. The GDP is happy news but most economists continue to call for a 2% or lower number for Q4. Much of the GDP increase is due to inventory stocking so moving forward the consumers must purchase the goods produced to keep the party going. Crude oil moves higher on the higher GDP news. HAL +2%. Today is OpEx Quadruple Witching and both the S&P and Nasdaq are rebalancing. This will create a huge volume day especially at the open and close. Equities float higher after the opening bell. BBRY +4% despite the dire news. NKE -1%. The SPX and Dow print new all-time highs. Senate Leader Harry Reid is hospitalized. The Whitehouse changes the Obamacare law rules again instituting ‘hardship exemptions’ allowing folks to miss the deadline but keep their insurance creating more confusion with insurers and consumers. The Obamacare web site goes down for 3 hours embarrassing the president before he speaks at 2 PM ahead of his Hawaiian vacation. A poll shows nearly 80% of the uninsured folks do not want Obamacare. Shockingly, 50% of the uninsured have not even looked at the Obmacare web site or information concerning the new AHA program and nearly 60% say they probably cannot afford health insurance anyway. The Obamacare debacle continues. The president says 2014 will be a breakthrough year for the economy. BBRY +11%. BA pops +1.3% on a $7 billion plane order. Europe indexes print a stellar week gaining +3.5%. The SPX tags 1820 at 11:30 AM EST, however, the dollar/yen, drops to 104. NAV drops -4% after reporting weak sales. AMZN launches over 400 at new all-time highs and appears unstoppable. Amazon’s market cap hits $185 billion only exceeded in the retail sector by WMT’s cap at $250 billion. The financial newsletter writers are the most bullish and least bearish in years. The market rally creates a festive, care-free and party atmosphere. Traders high-five one another and expect equities to stay lofty forever. TXT +8%. ZUMZ +8% on an upgrade. The Dow takes out the inflation-adjusted high from 2007 above 16200. Markets move strongly higher all day long. The Nasdaq is above 4100 lifted by strong Apple sales. AAPL +1%. Interestingly, the VIX recovers off the lows and actually floats higher as the day progresses. Financials lag as the short-end yields climb and the long end yields leak lower flattening the yield curve. FAST, a great bellwether for the manufacturing industries, drops -5%. Money is chasing into the high-flying and biotech stocks. TSLA +2%. GOOG is up +1.3% now above 1100. Volume is large today as expected. At the closing bell, the SPX is up 9 points, +0.5%, to a new all-time closing high at 1818.32 and new all-time intraday high at 1823.75. The Dow is up 42 points, well off the highs, +0.3%, to a new all-time closing high at 16221.14 and new all-time intraday high at 16287.84. The Nasdaq is up 47 points, +1.2%, to 4105, a new 13-year high. The RUT gains 21 points, +1.9%, to 1146, to a new all-time closing high at 1146.47 and new all-time intraday high at 1147.12, only 12 pennies above the all-time high printed on 11/29/13. For the week, the SPX gains +2.4%, Dow +3.0%, Nasdaq +2.6% and the RUT is up a huge +3.6%. SOX, semiconductors, jump +3.3%, and TRAN, trannies, leap +2.8%. TMUS is up a huge +12% this week. Interestingly, the short-end Treasury yields are climbing with the 2-year yield towards 0.40% and 5-year towards 1.70% while the 10-year and 30-year yields are flat to lower, flattening, not steepening, the yield curve. Watch the yield on the 2's and 5's since if they continue to climb higher and higher, that signals that the Fed is losing control of the markets. The first lawsuit is filed against TGT concerning the security breach debacle and may develop into a class action. Customers are complaining that they cannot contact Target by Internet or telephone and swear they will never shop there again. With only a few days remaining in the holiday retail season, and the biggest shopping weekend of the year on tap, TGT panics and advertises 10% off everything to regain customer trust. The retailers continue to cut each other’s throats to move merchandise which will hurt company margins. Business television personality James Cramer says the current bull market may be an epic bull like the 1990’s. Cramer says several ongoing catalysts, such as increasing company profits and an encouraging job market, will drive the markets higher and higher. Pundits and analysts continue to preach uber optimism and bullishness encouraging folks to buy stocks while berating anyone bearish or negative on the markets. The VIX recovers today and ends at 13.79. The volatility remains low overall signaling traders completely relaxed and without worry about the elevated stock market. Further, the uber low CPC and CPCE put/call ratio’s continue to signal rampant complacency and lack of fear which always occurs at market tops.
On Saturday, 12/21/13, Federal housing regulators reach a $1.9 billion agreement with DB to settle mortgage-backed securities litigation against the bank involving Fannie Mae and Freddie Mac. The Detroit bankruptcy reorganization is ruled to continue without expediting the appeals process which is a blow to the employee unions and pension funds. Today is typically the busiest shopping day of the year; the last Saturday before Christmas. ANN, M, ARO, JCP and PLCE are slashing prices from 50% to 80%. The retailers are starting to give the stuff away. Internet shopping is a bright spot this year; however, the malls are not busy. Mall traffic will recover strongly today with Christmas only 4 days away. The Chinese wealthy continue to buy art, collectibles, real estate, vineyards, etc..., trying to hide their money from any chance of confiscation by the China government. Unfortunately, one unlucky Chinese billionaire dies in a helicopter crash as he viewed his new France vineyard from the air.
On Sunday, 12/22/13, ….
On Monday, 12/23/13, Personal Income and Outlays. Chicago Fed National Activity Index. Consumer Sentiment 9:55 AM will create a market pivot point.
On Tuesday, 12/24/13, Durable Goods Orders. FHFA House Price Index. New Home Sales. Richmond Fed Mfg Index. Markets Close Early for Christmas Eve.
On Wednesday, 12/25/13, Markets are Closed in Observance of Christmas holiday.
On Thursday, 12/26/13, Markets Reopen for Trading. Mortgage Applications. Jobless Claims. Oil Inventories.
On Friday, 12/27/13, Natty Gas Inventories.
On Saturday, 12/28/13, extended unemployment benefits in the U.S. end. Many of these folks will go on Welfare or disability. The loss of benefits should hurt retail sales and food sales since those checks immediately flow into the economy. Interestingly, the unemployment rate will probably tick lower, under 7% and towards the Fed’s 6.5% target, since these folks will no longer be counted as seeking employment.
On Sunday, 12/29/13, Japan PMI.
On Monday, 12/30/13, Pending Home Sales Index. Dallas Fed Mfg Survey. Farm Prices.
On Tuesday, 12/31/13, China PMI. EOM. EOQ4. EOY2013. S&P Case-Shiller. Chicago PMI 9:45 AM will create a market pivot. Consumer Confidence 10 AM will create a market pivot point. Gold is down on the year for the first time this century. The initial sign-up period for Obamacare ends (extended from 12/15/13 and then from 12/23/13) for those beginning insurance on 1/1/14. The Whitehouse is dumping the Obamacare problem onto the health insurance companies and doctors since they will be providing care in January to folks that either do not have insurance or may have only paid a partial payment for insurance. Serves them right since many supported the new law and helped create the debacle.
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On Wednesday, 1/1/14, Markets are Closed in Observance of New Years holiday. A major Bradley turn date occurs where a major market directional move is expected in the 12/23/13 through 1/8/14 time frame. The Bradley turn does not predict direction, only that a strong move will occur one way of the other. Another Bradley turns in quick order so the beginning of the year may be a wild ride for the stock market. A new moon occurs. Markets are typically bearish moving through the new moon.
On Thursday, 1/2/14, Europe PMI’s. Markets Reopen for Trading. Motor Vehicle Sales. Mortgage Applications. Jobless Claims. Natty Gas Inventories. Oil Inventories (one-day delayed).
On Friday, 1/3/14, …Europe must finalize all plans for the new banking union by March.
On Saturday, 1/4/14, Asia and Europe Services PMI.
On Sunday, 1/5/14, …
On Monday 1/6/14, Yellen is confirmed as the new Fed Chair and will replace Bernanke on 1/31/14.
On Thursday, 1/9/14, a Bradley turn date occurs where a market directional move is expected in the 1/2/14 through 1/16/14 time frame. The Bradley turn does not predict direction, only that a strong move will occur one way of the other.
On Wednesday, 1/15/14, ….
On Thursday, 1/16/14, a full moon occurs. Markets are typically bullish moving through the full moon.
On Wednesday, 1/22/14, does BOJ decide to implement additional stimulus? If so, the yen will weaken with the dollar/yen currency pair running strongly higher to 105 and higher and the NIKK, DXJ and U.S. equity markets all running higher. If not, the dollar/yen will drop as well as Japan and U.S. stocks.
On Friday, 1/24/14, Asia and Europe Flash PMI’s.
On Tuesday, 1/28/14, President Obama provides the State of the Union speech in the evening.
On Wednesday, 1/29/14, Chairman Bernanke conducts his last official two-day meeting (1/28 and 1/29) as Chair of the FOMC.
On Friday, 1/31/14, Japan PMI. Chairman Bernanke’s term ends at the Fed. New Chair Yellen takes over.
On Saturday, 2/1/14, China PMI.
On Friday, 2/7/14, the initial Debt Ceiling Limit date is hit but Secretary Lew will take extraordinary measures to extend the deadline until the end of the month. Congress must agree to a solution quickly. Winter Olympics begin in Sochi, Russia, through 2/23/14.
On Friday, 2/28/13, the Final Debt Ceiling Limit Deadline is hit where the U.S. will default on obligations unless Congress reaches a solution today.
On Saturday, 3/15/14, the deadline for the Obamacare sign up period ends. The Whitehouse needs 7 million people (mainly healthy young people) to sign-up by today or the program will be bleeding money profusely and require a taxpayer bailout.
On Wednesday, 3/19/14, new Fed Chair Yellen talks at the conclusion of her first FOMC meeting (3/18 and 3/19). Perhaps Yellen will conduct press conferences and Q&A sessions for each Fed meeting forward instead of only the quarterly meetings?
In February/March, Fed Chair Yellen testifies before Congress.
In February/March, Congress discusses and develops a privacy code agreement since face recognition software is quickly gaining use across all levels of society, as is other privacy-stripping technologies.
In February/March, the German High Court must rule on the constitutionality of the OMT program. The decision is delayed from the Fall 2013. Many German citizens believe the OMT is simply a backdoor mechanism to fund other countries.
In February/March and forward, European bank stress tests are ongoing and will take one year to complete (there are likely 10% of the 128 banks undercapitalized with no clear way on how to recapitalize these troubled institutions). The one-year timeline is chosen to keep stretching things out in the hope that the European economy recovers before further bad news occurs.
In March, the ESM is officially “fully operational.” The Euro banking union is in place after delays from January 2013 to January 2014 and now to March 2014.
In April, MSFT no longer supports Windows XP.
In June, employer mandate provisions begin for Obamacare with many workers likely forced into part-time 30 hours per week or less employment.
On Tuesday, 11/4/14, mid-term elections. The 2-year presidential race for 2016 begins.
On Saturday, 11/15/14, the enrollment period for Obamacare in 2015 begins pushed forward from 10/15/14 by the Whitehouse and democrats so voters will not experience the sticker shock of higher insurance premiums. Premiums will rise since too few healthy young people are signing up to support the program.
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