Sunday, January 12, 2014
Keystone's Daily Chronology of Global Markets and World Economics and Path Forward 1/12/14
On Friday, 1/3/14, emerging markets and copper sell off strongly. The dollar/yen is 104.37 more than one point lower from 24 hours ago so the yen is strengthening. Turkish Lira weakens past 2.18 per the dollar. George Soros says the world faces major uncertainty due to potential economic trouble in China this year. UK car sales continue higher for 21 consecutive months. UK mortgage approvals surge higher. 3 of 4 people say UK house prices will continue higher. BOE’s Carney has his hands full since potentially higher rates will stifle the recovery. The pound is 1.647. NEXT jumps +9% on robust holiday sales in Europe. The results verify John Lewis results yesterday and the common thread is that these retailers told consumers that there would be no discounts during the holiday season. Other retailers slashed each other’s throats lowering prices day after day. Marks and Spencer gains +3.4%. Telecom Italia jumps +5.4% since the Brazilian unit may be sold off. 70% of Spaniards do not believe PM Rajoy concerning the strength of the economic recovery. The euro/dollar is 1.3634 and euro/yen 142.45. GIS is stopping the use of genetically modified organisms (GMO’s) in Cheerios. GE is downgraded which may identify trouble ahead for industrials. Mortgage rates are increasing in the US. GS raises executive salaries since the Fed, which hires and employs many ex-GS employees, makes the rich richer with their policies. A blizzard hits the northeast cancelling thousands of airline flights. The wind chill readings create sub zero temperatures. The 10-year yield is 2.98%. WTIC crude oil drops to 95.25 from over 100 only a few days ago. Motor Vehicle Sales disappoint for December with GM and TM sales negative and F and Chrysler sales up but below expectations. Auto sales are at 6-year highs but the negative news is cause for concern since it is a main driver of the economy. Interestingly, Mercedes announces record-breaking sales. Chairman Bernanke makes the rich richer so the wealthy are buying new cars with all their stock gains courtesy of the Fed. Equities bounce at the opening bell due to lower volatility. Natty Gas Inventories remain well stocked so price drops -2.5% to 4.216. RAD jumps +9%. FEYE catapults +28%. Utilities remain weak. Fed’s Plosser, a hawk, warns of the potential for rapidly rising rates and will become a voting member this year. Equities drift lower as the day proceeds. At 2:30 PM, Chairman Bernanke speaks at perhaps the last public speech of his tenure. He cheerleads and pumps the stock market as usual saying the Fed is no less committed to stimulus despite the cutback on bond-buying purchases. Bernanke says the Fed will remain accommodative. His token QE taper move in the Fall, but at the same time more importantly committing to ZIRP Forever, created the rally into the end of 2013. The taper move is meaningless since the Fed wants to maintain zero interest rates forever. The stock market catapults higher, the SPX jumping from 1830 to 1837 in one-half hour’s time. The market action is sickening since it shows that free markets do not exist. Price discovery is destroyed by the Fed over the last few years. The Fed is the markets. Perhaps the Fed’s cheer leading is losing luster since the sellers return and crush the SPX from 1837 back down to 1831 at the closing bell. The broad indexes finish flat on the day. The Nasdaq loses -0.3% due to weakness in AAPL and chips but the RUT small caps gain +0.5%. AAPL dumps -2.2%. FEYE +39%. For the week, the SPX loses -0.5% to 1831. The Dow is flat, losing -0.1% to 16470. The Nasdaq drops -0.6% to 4132. The RUT loses -0.4% to 1156. Tech and small caps lead the markets lower. WTIC crude oil drops to 93.96. Brent crude is 106.89. Gold recovers over the last two days from under 1200 to 1237. BA will build the 777X aircraft in Seattle since the machinists approve a new labor contract. Liberty Media is making SIRI a wholly owned unit which should bounce Sirius stock price on Monday. Kentucky Senator Rand Paul plans to file a class-action lawsuit against the Obama administration concerning the NSA spying and abuse of power. Anyone with a cell phone may join the legal action and 700K folks are already on board. The government is illegally spying on Americans violating the Constitution. Many true patriot Americans do not want to give up their liberty for some token promise of security that cannot be properly verified. The extreme bitter cold and ice and snow storms continue across the US resulting in 16 deaths. Police kill 4 people in Cambodia as garment workers protest for higher wages. Social unrest increases around the world as the classes separate with the rich becoming richer and the poor poorer due to global central banker money-printing.
On Saturday, 1/4/14, China reports that over 8 million acres of farmland is too polluted to farm. China is drowning in industrial filth that poisons their atmosphere and soil. The Obamacare drama continues. Anecdotal stories are increasing with folks worrying that they do not have health coverage since they have not received their insurance cards. The pay button on the Obamacare web site is not working properly. Doctor’s offices are spending hours on the phone trying to receive approvals for surgeries. Iraq violence is increasing dramatically as the country falls back into chaos. Al-Qaida raises a flag above the government offices in Fallujah declaring an independent Islamic state. This negative development makes the loss of American lives, as well as the wounded that must now live with physical and mental problems, a wasted effort. George “Jerry” Goodman, 83, passes. He was a respected business journalist and television host of Adam Smith’s Money World laying much of the groundwork decades ago for modern-day business reporting. AMZN’s Bezos suffers a kidney stone attack and is rescued from the Galapagos by the Ecuadorian navy. The Indonesia volcano Mt. Sinabung continues erupting with increasing frequency causing evacuations of over 20K people.
On Sunday, 1/5/14, President Obama returns from the fun and sun in Hawaii; the longest vacation of his presidency. The northern States and Canada is enveloped in a rare ‘polar vortex’ which brings bitter cold weather, the coldest in decades. The Midwest is -43 F (-42 C) with the wind chill. The frigid temperatures cascade across the US into Pennsylvania, New York and the northeastern States. 9,000 flights are cancelled over the last few days and travelers express frustration taking hours if not days to arrive at destinations.
On Monday 1/6/14, HSBC China PMI is weaker than expected the lowest in 2 years. China banks and railroads are bludgeoned from -2 to -5%. The yen strengthens sending the dollar/yen down to 104.50 and the NIKK dumps -2.4% to begin their trading year. All of Asia sells off except for the Kospi up +0.4%. Copper is weak. European services PMI’s are stronger than expected, especially Spain. UK is an exception with services PMI now down two consecutive months. Greece and Portugal are up +4% so far this year. Italian and Spanish banks bounce from +2% to +6%. Merkel is in the hospital and requires rest for three weeks time after a cross-country skiing hip injury sustained on 12/30/13. Her trip to Poland is cancelled as well as other duties. Euro 1.3603. Pound 1.6366. Today begins the first full week of trading in 2014. The 10-year yield drops to 2.97%. Gold 1238. The frigid cold winter weather moves into the northeast US. Winter wheat crops are negatively affected causing prices to move higher. Natty gas and electricity prices also move higher due to the cold weather. Economic activity typically decreases during adverse weather conditions. The pre-market trading is very active. MW pops +5% as another bid for JOSB is made continuing this give and take saga of each company wanting to take over the other. PETM drops -1.4% on a downgrade. SCTY pops +11% as GS places it on the ‘conviction buy’ list. FSLR drops -8%. SCSS -12% on lowered earnings estimates. TWTR loses -6% on MS downgrade. FDX jumps +2% as it announces increased buy backs. ZNGA will accept Bitcoin as payment which causes the virtual currency to pop above 1000. Equities open and pop wildly higher but then quickly fall back to flat and lower; a pop and drop. AAPL is down -1%. ISM Non-Mfg is weaker than expected but Factory Orders are stronger than expected. DIS prints a new all-time high near 77. Equities hug the flat line with tech weak. SIRI gains +4%. A bulk selling move occurs in gold futures where gold rises to 1247, then flushes to 1232 then recovers to 1240. GLD flash crashes from over 120 down to 117, -3%, then recovers back up over 119, in 60 seconds time. The proverbial ‘fat finger’ is blamed for the trade but the CME then says the behavior is a ‘velocity logic event’ and gold trading was actually suspended for 10 seconds. At 11 AM, equities deteriorate with the broad indexes dropping like a stone. The SPX is 1824. The Dow was up 100 points now down 60. VIX, however, remains under 14, and the banks are positive with regional banks RF, STI and KEY popping about +2%. GNW +3.5%. BBY is puking -4% and HGG -5% on weak electronics sales projections. Equities languish into the afternoon. AAPL recovers to +0.6%. Copper turns positive. JBLU dumps -4% after announcing a reduced operating schedule due the frigid cold weather. YHOO loses -0.7% on news that malicious software attacks are occurring against their systems. The dollar/yen collapses to 104.05 so the stronger yen creates much of the broad market selling today. Stocks are off to the worse start for a new year in 9 years. The day ends with the SPX and Dow losing -0.3%, Nasdaq -0.4% and RUT -0.8%, thus, tech and small caps continue to lead the broader markets lower in 2014. The trannies (TRAN) lose -1.3% and the retail sector (RTH) drops -1.0%. Financials are favored remaining flat to slightly up on the day. P pops 14%. After the bell, Janet Yellen is confirmed as the new Fed Chair, the first woman ever to lead the Fed, and will replace Bernanke on 2/1/14. The vote is 56-26 with 11 republicans voting in favor of Yellen. 18 senators do not vote with several using weather as an excuse even though they were aware of the conditions the last few days. About 75% of the senators, 3 or 4, are in favor of Yellen illustrating that both republicans and democrats are supportive of Keynesian monetary policies that dig a deeper debt hole for the US without providing any appreciable improvement in the economy. The Fed policies make the rich richer and the senators are part of this wealthy club so of course they vote in favor of making themselves wealthier at the expense of the average American. More and more tech start-ups are valued at billions of dollars; however, the behavior smells a lot like the dotcom bubble in late 1999 where most any silly idea is chased by venture capital. The legalization of marijuana in Colorado creates large crowds at pot distribution centers. The price of pot doubles as inventories disappear quickly due to robust demand.
On Tuesday, 1/7/14, Japan retail sales are weak but the luxury goods sector sales are better than expected. This is no surprise since the BOJ and Fed easy money makes the wealthy wealthier and they spend money on high-end goods. Dollar/yen 104.32. China cracks down on shadow banking. Samsung reports the first slowdown in profits in over 2 years. Hollywood director Michael Bay, hired by Samsung to promote the latest televisions at the Consumer Electronics show in Las Vegas, suffers a panic attack and walks off stage when the teleprompter malfunctions. The Fukishima nuclear disaster continues. US sailors stationed on the USS Ronald Reagan that came to Japan’s aid during the initial stages of the ongoing nuclear disaster are sick with cancer and approximately 50 seamen are now filing lawsuits. Navy personnel comment on how the snow that was falling, and touching their tongues, had a metallic flavor. Of the 50 Fukishima plant workers at ground zero, two are now dead from cancer and others sickened but Japan denies that the disaster is causing their illnesses. Physicians are not permitted to list ‘radiation sickness’ in patient notes. Japan continues to control the news flow and water down the negativity painting a rosier picture. The reason is obvious since the damage to Japan’s economy would be epic if global customers shun cars, food and other products due to the nuclear contamination. Whistleblowers will have to leave Japan to provide the true account of the disaster. The containment buildings for the three units that are currently in meltdown (Units 1, 2 and 3) are at an LD 50/50 lethal radiation level. This means that you have a 50% chance of dying within one hour’s time if you entered any of these buildings. Worries increase over a potential building collapse in Unit 4 which houses the storage pool for spent rods. The US government (HHS) has ordered 14 million potassium iodide tablets that provide a minimum amount of protection for the body during the initial stages of radiation poisoning. It is too late for the pills to help the Japanese so obviously preparations are made to prepare for another nuclear disaster in the world or a dirty bomb event. 31 reactors in the US are the same GE design as the Fukishima reactors. 72,000 gallons per day of contaminated radioactive water are entering the Pacific Ocean. The ongoing Fukishima disaster and meltdowns will negatively affect the entire globe for decades, and centuries, and the main stream media ignores the dire situation, probably due to Japan and the US colluding to diminish the danger since the damage to the Japanese economy would potentially collapse the country. The ongoing Fukishima nuclear nightmare is the worst ecological disaster ever in global history, surpassing the Chernobyl event, with no clear solutions yet provided. Pray for Japan and the world. Germany retail sales are better than expected and unemployment falls. EU inflation is 0.8% in line with estimates; very tame and disinflationary. Low inflation will prompt ECB’s Draghi to act with a new LTRO stimulus package this year to jump start the European economy. 24% of Greece mortgages are in default. Two GT workers in France hold bosses captive (locking them in their offices) in protest over a plant closure. Tires are set on fire at the Goodyear plant. This ‘boss-napping’ behavior occurred during the 2009 global financial crisis. Euro 1.3620. Secretary Lew travels to Europe to urge leaders in Spain, Germany and Portugal to boost growth. From 3 AM EST to 6 AM, S&P futures move from flat to +7. Today is the coldest day of the century in the States with power outages and travel problems continuing including thousands of additional flight cancellations. JPM will avoid penalties for their involvement in the Madoff Ponzi scandal. This is no surprise since the banksters are rarely if ever held accountable for any wrong doing. The Fed, SEC, and other government offices are comprised of ex too-big-to-fail bank employees. The trade deficit unexpectedly shrinks due to robust oil output from the States. This also hints that GDP will be higher than expected moving forward. NFLX is downgraded and sells off -3.1% pre-market. The markets bounce strongly higher at the open due to the positive effects of new money coming into the market to begin the year as well as a recovery rally after three days of selling. Most importantly, the Fed conducts its first POMO pump for the year and the money printing always sends equities higher. The bullish euphoria is back in play. UNH gains +3.1% and JNJ +2.1% on upgrades. Hospital and healthcare sector stocks, such as HCA, CYH, THC, UHS, STJ, MYL and WLP, all leap from +2% to +4% higher. KORS pukes -3.8% gapping lower. Natty gas continues higher on the cold winter weather. After lunch, US Attorney Preet Bharara conducts a press conference announcing the JPM deal concerning the Madoff Ponzi scandal. Bharara says JPM “failed, and failed miserably” for ignoring all the obvious warning signs that money laundering was taking place for years. JPM is fined a couple billion dollars, pocket change for this cash machine, and no individual will be charged or go to jail. Do you think you would receive the same courtesy if you were laundering money? The broad indexes log their first up day for 2014. The SPX gains +0.6%, Dow +0.6%, Nasdaq +1.0% and RUT +0.9%. Tech recovers from the three-day lull and leads higher along with small caps. The bulls tell folks to jump in and buy stocks with both hands. The party is in full swing again. PCYC jumps +20%. FLIR +10%. Gamestop dumps -8%. NFLX loses -6%. The CPC put/call prints another low at 0.7 verifying the ongoing market complacency and fearlessness signaling a significant market top in place. After the bell, MU catapults +6% on huge positive earnings. F CEO Mulally says he will stay at Ford through 2014. F jumps +1.3% and MSFT drops -1.8% (Mulally was rumored to take the helm at Microsoft for the last year). A housing auction in Atlanta draws big money hedge fund investors that are tripping over each other to buy any dilapidated shanty available pumping the real estate bubble higher. The 10-year yield drops to 2.94%.
On Wednesday, 1/8/14, NIKK jumps +2.0% feeding off the US up day and a weaker yen with the dollar/yen up to 105 again. The Fed and BOJ are the markets as evidenced by yesterday’s market bounce with the first POMO pump of the year and the BOJ beating the yen overnight. Nintendo gains +11% after China lifts the ban on video games. The SSEC is a touch negative to 2044. The European unemployment rate remains sick at 12.1%. Italy worsens to 12.7%. Retail sales in Europe are encouraging. The euro is sticky at 1.36. Mortgage Applications are up recovering from a 13-year low. Banks are facing a new probe by regulators over pricing of mortgage bonds after the 2008 financial crisis. The refi’s are up nearly 5%, however, loan requests actually drop. The rich, made richer by the Fed policies, are refinancing and buying homes with cash but the young family unit, that you want to actually be driving the numbers instead of speculation, continues to live in Mom and Dad’s basement. ADP Jobs Report is 238K, a robust, healthy number, the best in over one year. Analysts will likely raise the estimates for Friday’s job number to above 200K. S&P futures remain flat to lower all morning long. The frigid weather continues across the US with all 50 states logging freezing -32 F (0 C) temperatures resulting in 20 deaths thus far. 11K flights have been cancelled over the last few days continuing the travel headaches. FRX jumps +11% on news it will buy Aptalis. TWTR receives another downgrade and is beaten pre-market. JCP is pleased with the holiday sales results but traders whack the stock -5.5%. Maybe sales are strong but selling jeans for one dollar on the clearance rack results in weak margins. MU hits 24, +10.5%, following through with last evening’s party. Shoppertrak says shoppers made less trips to stores during the holidays but the in store sales are higher. So consumers visited the physical stores with intent on a mission to purchase a specific item or items. Overall, store foot traffic is down double digits this year since more folks are shopping on line. TCS is beaten -11%; apparently folks do not need containers since they have nothing to place inside. Bloomberg television commentators and guests pound the table telling folks that cash is a stupid position and the money should be put to use buying stocks. Data shows that folks are moving out of bonds and cash into stocks and are now weighted 68% in stocks. This number is well above the typical average weighting of about 70% invested in stocks. The elevated preference towards stocks, like now, occurred at the 2000 and 2007 market tops. The bullish euphoria continues. Equities open for trading and float along sideways in a holding pattern ahead of the FOMC Minutes today with the SPX and Dow slightly lower and Nasdaq slightly higher. The TRIN drops to an uber low of 0.56 which allows the bulls to keep the broad indexes elevated. Financial and healthcare sectors are the big winners so far this year. MYL bounces +4% on news that it will provide generic drugs. TASR is up +14%. RVBD gains +10% and SNDK +6% which helps lift the Nasdaq higher. Folks must like the new method of receiving their carbonated beverages with SODA up +6%. STZ leaps +9% as folks drink their cares away. MCK +5%. FLIR pops +4% on news it will provide a thermal imaging product for smartphones. DF pukes -3.6%. Kids must not be eating peanut butter and jelly like they used to with SJM losing -2.8%. MON gains +4% but leaks lower as the day proceeds. The 10-Year Note Auction receives an average reception with the yield sitting flat at 3.00%. Copper was positive this morning but turns negative and leaks lower. The FOMC Minutes at 2 PM will create a market pivot point. The FOMC Minutes provide a mixed bag of opinions with some members wanting a faster QE taper but others not wanting to taper. The markets do not react in any meaningful way. The SPX and Dow remain negative and the Nasdaq positive. The 10-year yield is flat at 3.00%. There is something for everyone in the minutes. The timid $10 billion taper was a compromise of all the diverse opinions. Several Fed members grow uneasy about the waning affects of QE. The minutes are a non-event but as time moves along the broad indexes drift lower and the 10-year yield prints 3.01%, hinting that traders are thinking a stronger taper move may be on tap going forward. Gold is flat at its 20-day MA at 1222. Equities sell off but in the last one-half hour of trading explode higher. The SPX and RUT finish the day flat. The Nasdaq is +0.3% higher and the Dow is -0.4% lower. The bulls fail to finish the first five days of the year positive so the January Barometer seasonality indicator is not in play for 2014. The barometer forecasts a positive year ahead if the first week is positive. If the first week is negative, like this year, the markets are a toss-up for 2014. MCD and IBM drop -1%. APOL leaps +14% higher. WTIC crude oil is under 93. After the bell, M pops +5.5% after reporting robust holiday sales, increasing forward guidance and canning 2500 workers. 42% of Americans identify themselves as independents and no longer want to be affiliated with democrats or republicans. New York Attorney General Schneiderman reaches an agreement with BlackRock to end its survey program. BLK will pay the $400K cost of the investigation but no fine or other penalty. BLK conducts analyst surveys and data mines the information to use if for trading, however, they are trading with non-public information. The conduct violates New York’s securities fraud statute and the Martin Act, however, individuals are rarely if ever held accountable in the financial industry. Japan blames food tainted with pesticides for causing near 1000 sick people flocking to hospitals. Considering the ongoing meltdowns at Fukishima and Japan muzzling the news concerning the nuclear contamination, are the pesticides are a convenient excuse to hide radiation sickness?
On Thursday, 1/9/14, NIKK loses -1.8% and SSEC -0.8%. China inflation is at a 7-month low. China oil stocks leap from +4% to +8% higher. Copper is weak. S&P futures are +6 early morning on the East Coast. The dollar/yen is sticky at 105 and euro at 1.36. British retailers are smacked hard with grocers reporting the weakest numbers in decades. BOE holds the key interest rate at 0.5% as expected. ECB holds the rate at 0.25% as expected. At the press conference, Draghi says rates will remain at current levels or lower for an extended period forward. COST holiday sales are better than expected but it drops -2% pre-market. BBBY is whacked -9% after missing estimates and guiding lower. ZUMZ dumps -6% on weaker sales than expected. M gains +5% continuing last evenings happiness. FDO drops -7.3% as earnings miss and guidance is lowered. Ditto LB -5%. Consulting firm HIS Automotive says global auto sales climb above 80 million vehicles for the first time in history. F increases the dividend and pops +1%. Challenger Job-Cut data shows a dramatic drop in layoffs; the lowest job-cut number since June 2000. The 2-year yield is 0.43% and 10-year yield is 2.98%. Jobless Claims drop so the job picture continues to show improvement. AA agrees to pay $384 million to settle foreign bribery charges; interesting timing since Alcoa kicks off Q4 earnings season after the closing bell today. The broad indexes move higher at the opening bell. The Nasdaq prints a new 13-year high and is positive on the year but this happiness is short-lived as price falls on its sword and stumbles lower. The Dow slips negative. Small cap biotech ICPT catapults +263% higher on positive liver test results. SGMO leaps +26% after announcing a partnership with BIIB. M is a big winner up +8%. The broad indexes end flat on the day. After the bell, AA kicks off earnings season by laying an egg. Aloca misses on EPS but beats on the top line. AA drops -3%. SHLD plummets -13% on atrocious sales numbers and is now in trouble. Sears will likely go the way of Montgomery Wards years ago, often affectionately and comically called Monkey Wards, where parts of the company were split off and sold, a restructuring occurs, and some stores disappear while others linger on in a lackluster limbo state, with tumbleweeds rolling by and crickets sounding in the background, until the doors are finally closed, and no one notices. CVX reduces earnings guidance. Many companies are lowering the bar going into earnings. The bar is so low it is now laying on the floor and even Aunt Edna, in her white orthopedic shoes, can easily step over. FIVE is bludgeoned -15% on weak holiday sales. GPS pops +2% reaffirming guidance and earnings targets. Fed’s Kocherlakota speaks in the evening and says more easing is needed not less. Future Fed Chair Yellen appears on the cover of Time magazine with the title “The Sixteen Trillion Dollar Woman.” Yellen is looking for increasing growth in 2014 and for inflation to move towards the Fed’s 2% target. She says it is not true that the Fed’s polices are just helping rich people. The Foster Farms poultry facility in Livingston, CA, is shut down due to a live cockroach infestation. The Department of Agriculture is cracking down on poultry farms due to the salmonella outbreaks over the last couple years. Intel removes the McAfee name from its security products. The flamboyant and outspoken John McAfee said he is glad the change is taking place and took the opportunity to bash Intel saying he was happy his name would no longer be associated with the “worst software on the planet.” An X1.2-class solar flare reaches earth and causes minor communication and navigation problems. The CME (coronal mass ejection) is barely an X class and can be considered more closely related to the less severe M-class releases. An X-class in the 15 or 30 area will cause more significant disruptions. The solar event enhances the Aurora Borealis.
On Friday, 1/10/14, NIKK is flat. Kospi loses -0.4% sinking to a 4-month low. SSEC loses -0.7%. Chinese brokers are sold off due to the obscene amounts of IPO stock continuing to hit the markets. China imports increase the most in five months, which is encouraging for the domestic demand story, however, export growth drops showing less interest for Chinese goods. GS becomes entangled in a potential breach of contract lawsuit from selling a Singapore position that created a collapse in prices. Copper is strong overnight. Ukraine protests continue but the number of protestors is trailing lower in recent days. UK industrial production, manufacturing and construction spending data are all weak indicating that the recovery was likely stalling in Q4. European markets are +0.5% to 1.0% higher. France’s Hollande may file a lawsuit against a magazine that printed photos of actress Julie Gayet and Hollande alleging an affair. Hollande, however, did not deny the magazine’s allegations. France faces huge economic problems and does not need a scandal. AA is -5% in Frankfurt trading. Gold 1233. The big banks could pay $50 billion to settle mortgage lawsuits so they had better set aside a bit more dough for a rainy legal day. SPLS front runs the negative effects of Obamacare by dictating 25-hour work weeks or less for part-time staff without exceptions to avoid the higher health insurance costs and fees. Despite the negativity over the last few hours with AA, CVX, SHLD, China and the UK, the S&P futures are +5. The Google X secret group meets with the FDA concerning a potential contact lens, eyewear or heart device product. The wheels are coming off Brazil’s growth model which trails lower with consumption falling. Brazil’s growth rate will probably drop to 3% for the next five years. Brazil faces these challenges as the World Cup and Olympics approach. The 10-year yield is 2.97% and 2-year is 0.43% for a 254 basis point 2-10 spread. PC sales drop by 10% in 2013 which is not surprising considering the increased use of smartphones and notebooks. A study shows that over one-half of the members of Congress are millionaires. Why do politicians arrive at Washington, DC, as men of modest means but leave years later very wealthy? Congress is permitted to trade off insider information, unlike the rest of society. It is very easy to place trades ahead of political news releases that you know will send markets in one direction or the other. Voila. Instant millionaire. It is easy to bet on the football game when you know the winner ahead of time. The consensus for the Monthly Jobs Report is 200K jobs with an unemployment rate unchanged at 7%. Bombshell news occurs at 8:30 M EST when the report announces a paltry 74K jobs and the unemployment rate drops to 6.7%. The labor participation rate drops to a shameful 36-year low at 62.8%. This is the lowest amount of people participating in the work force since the late 1970’s. The unemployment rate drops because 350K people left the work force and are no longer counted. The 74K is the lowest job growth since 2011. Construction and healthcare jobs decreased. Average weekly hours are down with wages a tiny hair higher. Employers will not hire any new workers if they cannot keep the current employees busy. The 74K number leaves analysts, pundits, economists and traders with egg on their face. The group-think consensus was over 200K jobs with several eggheads forecasting 250K jobs. Equities are very jumpy after the release with S&P’s dropping to -3 but then recovering to +4 ahead of the opening bell. The 10-year yield collapses under 2.90%. Euro 1.3632. Dollar/yen 104.68. The broad indexes move flat to lower as the session begins. Economists and analysts proclaim the paltry 74K number an outlier and say it should be ignored since next month it will be revised strongly higher. JPM Strategist Thomas Lee says buy the dips in the market. Analysts are out in force today telling traders to ignore the low jobs number. The underlying market bullish sentiment remains. Interest rate sensitive stocks, such as REIT’s and utilities, run higher due to the drop in Treasury yields. Homebuilders gain from +2% to +4%. Wholesale Inventories and Sales data are both higher than expected adding to the overall market confusion. For now, the channels are stuffed with goods, and folks are buying, especially for the holiday season, but will the consumer continue to spend to keep the inventories in check? At 11:42 AM, Nasdaq options trading for symbols A through M fails. The Nasdaq says the OMX experiences an issue processing the OPRA data. After about 18 minutes the options are back on line at 12 noon. Target lowers guidance and says the credit and debit card security breach may now affect 70 million people. TGT drops to -4% but recovers to -2%. Biotech ICPT pops +65% today on takeover speculation and is now up from 70 to over 440 in only two days; a ridiculous +563%. TGT revises the earlier statement and says the security breach may affect 100 million people. The problem keeps growing. TGT is trading -1%. TSLA is dealing with an issue of wall adapters overheating so it dumps -3%. Equities stumble along flat all day long as traders absorb all the mixed market signals. The dollar/yen loses the 104 level briefly. The day ends with the SPX up +0.2%, Dow -0.1%, Nasdaq +0.4% and RUT +0.5%. Volatility is low all day providing market lift. The retail sector stocks are weak across the board with Retail Sales data on tap for Tuesday. AA loses -5.4%. MSFT is upgraded and it pops +1.4%. TWTR is down five consecutive days to 57 as a new downgrade occurs each day. Twitter valuations are in doubt with earnings approaching 2/5/14. For the week, the SPX gains +0.6%, Dow loses -0.2%, Nasdaq +1.0% and RUT +0.7%. Fed’s Bullard says the poor jobs number should not weigh heavily. The lower unemployment rate is a greater focus. Ridiculously, the Target computer hacking and security breach problem may now affect 110 million folks (one-third of the country). If you get up for a cup of coffee, by the time you come back it will likely be 120. TGT drops -1.1%. Target says the security breach affects everyone that has ever shopped at a store not just the holiday shoppers. The White House throws the main IT contractor for Obamacare, CGI Federal (the web site builder), under the bus, and will replace the firm with Accenture. Neiman Marcus, the popular luxury store chain, says that hackers may have stolen debit and credit card information from their computers a la the Target debacle. Oy vey. The computer hackers appear to have free run over the Internet. Beef prices climb due to tight supplies.
On Saturday, 1/11/14, the disappointing 74K jobs number is a hot topic in the media over the weekend. Over 1000 folks wait in the blistering cold in Queens, NY, to file an application for union bridge and steel structure jobs. 300K folks are without useable water as a devastating chemical spill nightmare continues along the Elk River in Charleston, WV. Approximately 5,000 gallons of an industrial chemical called Crude MCHM spilled into the river making water unfit for drinking, bathing or any use. Bottled water has disappeared from store shelves but authorities, such as FEMA, and companies such as PEP and KO, are trucking water in to aid residents. China’s annual trade in goods overtakes the US hitting the $4 trillion mark for the first time in history. Beijing heralds the data as “a landmark milestone.” China remains the world’s largest exporter of goods for the last five years. The Chinese data is always questionable but taken on face value an increase in imports helps bolster the case that China is making a smooth transition to a domestic-led economy from an export-led economy. Former Israel Prime Minister Ariel Sharon, 85, dies, ending his long 8-year comatose struggle. Sharon was considered a strong military strategist and leader and was called the “bulldozer” during his political career due to his forceful style. His policies yielded mixed results never solving the ongoing problems in and around Israel. The Middle East region may destabilize since many believe his death will dictate bible prophecy moving forward. GM recalls over 300K Silverado and Sierra full-size pickup trucks due to vehicle fires.
On Sunday, 1/12/14, computer hackers and retail insiders say that other retailers have sustained cyber attacks like the TGT and Neiman Marcus credit and debit card security breaches. Just when Internet retail sales are gaining huge popularity, consumers must worry about the security of the Internet. The flu spreads across the US, now in 35 states, affecting more people between 18 and 64 years old than in previous years. Japan continues to muzzle news concerning the ongoing triple meltdown nuclear disaster at Fukishima but a well-known activist, Masami Yoshizawa, is encouraging citizens to speak up and protest against the government and demand answers. Yoshizawa, poisoned with cesium from the nuclear accident, is protecting cattle (showing signs of radiation sickness) from government slaughter to call attention to the ongoing nuclear disaster that is the worst ecological disaster in world history. If global consumers refuse to buy Japan’s auto’s, manufactured products and food due to fears of radioactive contamination, the country, the third largest economy in the world, could collapse. About one-half of Spaniards between 18 and 24 years old are desperate for employment, willing to accept any job no matter what the wage, but 75% of the young people expect ongoing unemployment. The deflationary scenario continues to take hold in Europe.
On Monday, 1/13/14, Treasury Budget.
On Tuesday, 1/14/14, Egypt referendum occurs for new constitution today and tomorrow. NFIB Small Business Optimism. Retail Sales. Import and Export Prices. Business Inventories. Fed’s Plosser speaks.
On Wednesday, 1/15/14, Mortgage Applications. PPI. Empire State Mfg Survey. Beige Book at 2 PM will create a market pivot point.
On Thursday, 1/16/14, CPI. Jobless Claims. TIC data. Philly Fed. Housing Market Index. Natty Gas Inventories. A full moon occurs. Markets are typically bullish moving through the full moon. Markets are also typically bullish moving into a 3-day holiday weekend.
On Friday, 1/17/14, Housing Starts. Industrial Production. Consumer Sentiment will create a market pivot point at 9:55 AM. JOLTS Job Opening Report.
On Saturday, 1/18/14, …
On Sunday, 1/19/14, ..
On Monday, 1/20/14, Markets are closed in observance of Martin Luther King Jr. Day.
On Tuesday, 1/21/14, Markets reopen for trading.
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. Mortgage Applications.
On Thursday, 1/23/14, Jobless Claims. Existing Home Sales. FHFA House Price Index. Leading Indicators. Natty Gas Inventories. Oil Inventories. 10-Year TIPS Auction.
On Friday, 1/24/14, Asia and Europe Flash PMI’s.
On Saturday, 1/25/14, …
On Sunday, 1/26/14, the cost of a US postage stamp is raised from 46 cent to 49 cents.
On Monday, 1/27/14, New Home Sales. Dallas Fed Mfg Survey.
On Tuesday, 1/28/14, FOMC meeting begins. Durable Goods Orders. S&P Case-Shiller House Price Index. Consumer Confidence will create a market pivot point at 10 AM. Richmond Fed Mfg Index. 2-Year Note Auction. President Obama provides the State of the Union speech in the evening.
On Wednesday, 1/29/14, Mortgage Applications. Markets are typically bullish after the State of the Union since promises to spend money are typically provided by the president. Oil Inventories. Chairman Bernanke conducts his last official two-day meeting as Chair of the FOMC. The FOMC meeting announcement will create a market pivot point at 2 PM.
On Thursday, 1/30/14, GDP. Jobless Claims. Pending Home Sales. Natty Gas Inventories. Kansas City Fed Mfg Index. 5-Year Note Auction. 7-Year Note Auction. A new moon occurs. Markets are typically weak moving through the new moon.
On Friday, 1/31/14, Japan PMI. China’s New Year begins with the Year of the Horse. Will the horse win the race this year, or, end up at the glue factory? Chairman Bernanke’s term ends at the Fed. Personal Income and Outlays. Employment Cost index. Chicago PMI. Consumer Sentiment will create a market pivot point at 9:55 AM. Farm Prices 3 PM.
On Saturday, 2/1/14, New Fed Chair Yellen’s term begins. China PMI.
On Monday, 2/3/14, Europe PMI’s. New money typically enters the markets to begin the new month. Motor Vehicle Sales. ISM Mfg Index. Construction Spending.
On Friday, 2/7/14, Monthly Jobs Report—watch for any odd affects to the rate due to the elimination of extended unemployment benefits. 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, running 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 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?
On Monday, 3/31/14, 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.
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, Europe must finalize all plans for the new banking union and 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 before the elections. Premiums will rise since too few healthy young people are signing up to support the program.
On Wednesday, 12/31/14, the grandfathered health care plans expire affecting approximately 20 million people that will now have to become involved in Obamacare.
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