On Friday, 2/15/13, a meteor, the size of a bus, lands in Russia injuring over 1000 people. Another meteor the size of a twelve-story building thankfully sails by Earth without incident. The planet remains in a period of increased meteor and solar activity for 2013. CCL’s floating toilet docks and passengers that were stranded at sea for day’s dash for the showers. CCL is down over 5% in the last three days. Weidmann, Germany’s central banker (Bundesbank), and also ECB council member, says the “ECB will not cut rates.” Remember, however, that Germany’s perspective will always be towards a strong euro currency not a weak one. The euro jumps higher towards 1.34. A short time later Draghi says the ECB will remain accommodative providing a counter balance to Weidmann’s words, so the euro tumbles lower. The comments only serve to create mixed messages and confusion. Currency wars are becoming a larger worry as the G20 leaders meeting in Moscow struggle to develop a communiqué. The nations that are devaluing their currency are experiencing huge stock market jumps such as the U.S., Japan and Brazil at the expense of other nations. Of great interest are the disinflationary and deflationary winds blowing in Australia with their dollar falling as commodities languish. Soros, Julian Robertson and other big shots cut their gold positions as gold struggles at 1620. JPM announces 2K job cuts adding to the tens of thousands of job losses in financial and insurance industries globally over the last couple months. Empire State Mfg Survey is better than expected so futures return to the flat line. Copper weakens. The markets open flat. Consumer Sentiment is better than expected but markets sell off. At 10:30 AM, gold falls under 1600. Markets appear tired and leak lower all day long. At 2:00 PM, a WMT executive memo is leaked to the news outlets that says “February retail sales are a disaster.” WMT falls 3%. Other retailers such as TGT are thrown overboard. The RTH tumbles lower and the broad indexes weaken. Keystone’s SPX 30-minute chart 8 and 34 MA cross indicator shows the 8 stabbing down through the 34 MA to signal bearish markets for the hours and days ahead. The markets settle and move higher into the close on the pre-holiday lift. The SPX finishes at 1520, up a tiny two points for the week but that is enough to log seven winning weeks in a row without any down weeks in 2013. The Dow Industrials are down a smidge on the week. Ditto the Nasdaq which ends its six-week winning streak. The RUT is the winner on the week up one percent continuing a seven-week winning streak like the SPX. Small caps leading the broad market is encouraging for bulls, however, much of the push is money-pumping short squeezes in the speculative stocks, created to a large part by the Fed’s easy money intervention. Casino-like action. After the close, the SEC announces an investigation into unusual trading around Buffett’s HNZ trade this week. Three traders cleaned up on the announcement since they purchased HNZ calls ahead of time—they are either extremely lucky, or psychic, or insider trading with information available to no one else. FB is hacked with a sophisticated cyber attack but say that information was not compromised.
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On Sunday, 2/17/13, G20 avoids conflict over currency wars and chooses to not censure Japan over the yen weakening. Therefore, the yen weakens. Cyprus elections will require a run-off. The Barron’s cover shows a photograph of President Obama with the title; “Follow Me We Can Be Like Greece.” The magazine says that the U.S. will be in worse shape than Greece in 25 years. It will likely occur far sooner.
On Monday, 2/18/13, Saxo Bank says “euro is doomed.” Draghi continues to urge calm trying to deflate the growing currency wars. U.S. markets are closed in Observance of President’s Day. The Sequestration hits in ten days but Congress is on vacation and President Obama is vacationing in Florida playing golf with Tiger Woods. The global cyber attacks are traced to a building in China which is occupied by the Chinese Army. The copper market, which leads the broad indexes, is showing weakness. AAPL says it was hacked as well, like FB. The cyber attack stories are increasing each day.
On Tuesday, 2/19/13, German sentiment is far better than expected despite the hard line data showing conditions deteriorating. Perhaps ignorance is bliss? Video of the striking Iberia protestors in Madrid is shown on television with police beating protestors and citizens. The strike should continue for 15 days creating more troubles for Spain. U.S. markets open for trading after the holiday. GOOG hits 800 but the charts show nasty negative divergence. The broad indexes move higher out of the gate. At 10 AM, Keystone’s SPX 30-minute chart 8 and 34 MA cross indicator shows the 8 piercing up through the 34 MA to signal bullish markets for the hours and days ahead. The SPX punches out another new intraday high for 2013 to 1531. The Dow Industrials close above 14K and are only about one hundred points from an all-time high. The Nasdaq closes at a 12-year high.
On Wednesday, 2/20/13, the Nikkei is teasing 11.5K at a 4 ½-year high. Hollande visits Greece and says austerity alone will not solve their problems. Video of Greece continues to show rampant social unrest and a strike is planned for the days ahead as the Troika is set to meet on Monday. Merkel says a 1.30-1.40 range for the euro is ‘normal’. Office Max and Office Depot officially announce a deal so the M&A action continues which encourages the bulls. Housing Starts are under 900K which disappoints the bulls. TOL (home builder) and OC (insulation) earnings and guidance are disappointing. The housing sector recovery may be stalling. The markets leak lower as the session begins. At 2 PM, the FOMC Minutes show that many members are concerned over the easy money policies and how they are creating an excessive risk-taking in markets. The FOMC also may vary the purchases ongoing which means less QE. The markets sell off and deteriorate into the close creating the largest sell day of the year. After two months, the bears finally flex their muscles. The 10-year yield drops to 1.96%. The SPX closes at 1512, a hair above the 20-day MA, down 19 points today, -1.2%. The Dow Industrials are down 108 points to 13927, -0.8% today. The Nasdaq drops to 3164, losing its 20-day MA, down -1.5%. The RUT, representing small caps, was bludgeoned today, down 2%, 19 points, to 913. Weak tech and small caps is a bearish indication since they lead the broad markets. Gold was pummeled today dropping 41 dollars to 1564.
On Thursday, 2/21/13, the euro loses the 1.32 level. Oil loses the 94 level. The dollar moves up to 81.4. The 10-year yield is back under 2%. Thus, lower euro = higher dollar = lower copper, commodities, oil, and equities = lower yields. The CPI data is in line but the Jobless Claims increase. This keeps the futures red. Analysts place 1000 price targets on GOOG (now at 800-ish), probably the kiss of death, just like the 1000 AAPL targets wee last year. WMT earnings are in line negating the affects of the negative memo released about the February sales ‘disaster’. The markets open and leak lower. Philly Fed data is far weaker than expected so markets drop at 10 AM. Semiconductors are punished today. Keybot the Quant trading algorithm flips to the short side at 2 PM at SPX 1498. Keybot had been long for the last two months. The VIX jumps above 16 but drops into the closing bell. The SPX loses ten more points today, -0.6%, to close at 1502 after breaking through the psychological 1500 level. The Dow Industrials are -0.3% today, Nasdaq -1.0% and RUT -0.9%. Tech and small caps lead lower, a bearish indication. JWM earnings are a miss indicating the upper end spending may be waning. HPQ strongly beats estimates and the stock leaps higher. A large amount of call buying occurred the couple hours before the release which smacks of potential insider trading. HPQ will help the tech sector and encourage a market bounce tomorrow. A GS trader is associated with the HNZ suspicious trading from days earlier but GS says they have no ‘direct access’ to the HNZ account. AIG earnings are a blowout to the upside, especially interesting since the call buying over the last couple days has been excessive and hedgies have added stock. Do you think these ‘lucky’ traders in these stocks are privy to things the average person is not?
On Friday, 2/22/13, China home prices continue to rise which may require further curbs to prevent the growing property inflation. The European Union says the Euro area economy will continue to shrink in 2013 with lower GDP numbers expected. Spain will miss their budget targets which occur over and over again. The euro moves sideways at the 1.32 level. Germany’s business confidence rises. The markets choose to latch onto the good news. The U.S. Midwest is pummeled with severe snowstorms that will create business weakness for several days. Missouri declares a State of Emergency. President Obama and Prime Minister Abe meet and agree that generating growth in the U.S. and Japan economies is the key priority. Futures are on the plus side as the Fed’s Bullard appears on business cable television. Bullard, typically a hawkish member, flaps dovish wings instead and says the Fed’s easy money will continue as far as the eye can see. The futures jump higher. Isn’t it obvious that the markets are simply a casino machine that jumps higher on easy money? As long as the Fed supplies the crack cocaine, markets move higher. Keystone’s 8/34 MA Cross Indicator shows the 8 MA moving back above the 34 MA at 2 PM indicating bullish markets for the hours and days ahead. A late day upward thrust occurs for the broad indexes with the SPX closing at 1516, back above the 20-day MA. The 10-year yield is 1.97%. Gold is 1580. Crude oil wrestles at 93 all day. The euro is 1.3192. For the week, the SPX finishes down a smidge ending the seven-week rally, the Dow Industrials close at exactly 14000 up only pennies for the week, the Nasdaq is down 1% and the RUT is down -0.8%. Tech and small caps are leading the broad indexes lower. Well after trading hours end, Moody’s rating agency cuts the U.K.’s triple A rating citing weak growth and mounting debt.
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On Sunday, 2/24/13, Italy’s two-day national election begins. Congress returns from vacation to address the Sequester only five days away. China Flash PMI 8:45 PM EST.
On Monday, 2/25/13, Chicago Fed and Dallas Fed Mfg data. The results of the Italy election are expected but the better part of March will be needed to form a coalition government anyways. If two or three candidates receive the same amount of votes, that will spell trouble. Troika meets on Greece. Full moon. LOW and HTZ earnings.
On Tuesday, 2/26/13, New Home Sales. Consumer Confidence. Chairman Bernanke speaks. 5-Year Note Auction. HD and SKS earnings.
On Wednesday, 2/27/13, Durable Goods. Chairman Bernanke speaks. 7-Year Note Auction. GRPN and JOY earnings.
On Thursday, 2/28/13, GDP. Chicago PMI. EOM. KSS, DECK, BBY earnings.
On Friday, 3/1/13, PMI. Personal Income and Outlays. Consumer Sentiment. ISM. Construction Spending. The Sequestration hits with one trillion in automatic spending cuts for government. An 85 billion hit occurs immediately which should cut 0.07% off the GDP. An estimated 400K to 750K job losses should result moving forward. The sequester is likely since democrats are happy with Obamacare and social security going untouched, and republicans are happy finally receiving some spending cuts. A can-kicking solution will likely occur in March with all these political deadlines becoming wrapped up into one big budget discussion that will occur in late spring and through the summer, when the politico’s typically negotiate during the year.
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Moving into March, the National People’s Congress convenes. China President Xi Jinping and Premier Li Keqiang take over complete control and the ten-year transition of power is finished. China now sets inflation and budget targets moving forward. China will push to a domestic-led economy, private consumption, rather than an export-led economy, but a domestic economy will grow at a slower pace. The GDP projections are of particular interest, 2012 grew at an average 7.8% rate.
On Wednesday, 3/27/13, the Continuing Resolution (CR) is required to fund the government.
In March and April, the BOJ head’s will be replaced so stronger QE will continue. Perhaps a pull-back and low in the Nikkei in February and March may provide an attractive entry for a long trade once the money-printing begins (weaker yen) in earnest.
On Sunday, 5/19/13, the 16.4 trillion Debt Ceiling hits.
In September, Merkel (Germany) seeks re-election and will not want to see Greece exit the euro before the election but will not care afterwards. Perhaps Greece and Germany will both exit the euro in the future.
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