On Friday, 4/12/13, VW reports weak automobile sales in Europe. European Finance Ministers meet for a
two-day meeting to discuss the Eurozone problems. New problems surface in
Cyprus where more money, above the 10 billion bailout, is already needed.
Cyprus sends
a letter to the EU, EC and ECB requesting more help. The bailout
numbers for Cyprus now exceed their GDP. Germany’s Meister says they will not
back more aid for Cyprus. European
Finance Minister Rehn says Cyprus may have to find the money from bank reorganizations
and more pain from bank depositors. World leaders simply dig deeper
holes of debt since no one wants to face the deleveraging music. IMF cuts the U.S.
growth forecast. JPM earnings beat by twenty cents on the EPS but come in light on top line revenue. The ongoing
theme of light top line revenues continues across all sectors. JPM trades
lower in the pre-market. WFC follows the same path as JPM, beating on EPS but with less than expected top line revenue. WFC trades lower. Wells Fargo is an important
barometer for the housing sector. Retail Sales
decline by the most in nine months. The bad news sends
bonds higher, the yields lower; the 10-year
Treasury yield drops to 1.72%. The broad
indexes drop at the opening bell with the SPX losing about 7 points in the
first few minutes. Consumer
Sentiment takes a sharp drop lower to 72.3 far below estimates showing an
unenthusiastic consumer likely concerned over high gasoline prices and the ongoing
lackluster economy. The stock
market collapses on the sentiment numbers with the SPX dropping from 1591 to 1580 in one hour’s time. Keystone’s SPX 30-minute chart shows the 8 MA moving below
the 34 MA signaling bearish markets ahead. The Fed
and BOJ money-printing, however, floods
into the market as the morning proceeds, like any other day, and the markets
recover into the closing bell. Traders
ignore bad economic news and disappointing bank earnings. Copper and
commodities collapse today, the building blocks of a global economy, but traders
do not care. Traders are fully hooked on central banker easy money crack cocaine
and bad news is actually great news
since the money printing will continue indefinitely and stocks will be pumped
higher forever. The asset relationships between copper and the
markets, commodities and the markets, Treasury yields and the markets, and many
others, have broken down due to the central banker’s intervention. Traders
continue to pump the housing, retail and
healthcare stocks today shrugging off the bad news. The utilities are actually up on this down
day, with the utility and dividend
bubbles growing ever larger. UTIL closed above 523. The dollar/yen
dropped under 99 today after almost touching 100 yesterday. A stronger yen (lower dollar/yen) creates
downward pressure on equities while the weaker yen, due to BOJ easing, creates
the recent thrust higher in the U.S. equity markets. The Dow finishes flat today showing how money continues
to chase into the perceived safe haven and dividend stocks. The SPX and Nasdaq are down -0.2% and the RUT down -0.4%. Small
caps and tech are not leading which is what would be expected for a strong
market. Nonetheless, the bulls ran relentlessly higher this week with the broad indexes all
gaining over 2% this week and the SPX printing new all-time highs.
On Saturday, 4/13/13,
Secretary Kerry warns North Korea to stop the
aggression. The U.S. Treasury warns Japan to not actively weaken the yen.
Obviously, the Fed realizes that the
drastic drop in yen is causing the latest upside thrust in U.S. equity markets
and is becoming concerned over market asset relationships breaking down. Traders are ignoring fundamentals since the
Fed and BOJ are pumping the markets higher telling everyone to buy stocks and
enjoy the party.
--------------------------------------------------------------
On Sunday, 4/14/13,
China GDP misses
estimates sending shock waves through global markets. Copper and commodities sectors are immediately bludgeoned
due to decreased China demand. A negative
tone is cast across global markets.
On Monday, 4/15/13,
the IRS deadline for tax returns is today. This
is North Korea’s key anniversary date so a missile
launch is anticipated at anytime. The dollar/yen falls through 98 which means stronger yen which creates equity weakness.
The Spanish
Finance Minister says markets are much more confident currently so a request
for a bailout over the near term is unlikely. Venezuela elects the Chavez-backed Maduro for president but the
challenger wants a recount; the vote was a very close 50.7 to 49.1. The election creates unrest in this important oil-producing
nation. Copper and commodities are tumbling lower. The miners
and PM’s (precious metals) are beaten as well with gold cascading lower. Gold
falls through 1500 and is gathering steam lower, 1480, 1450, 1420, there goes 1400. Gold takes the worst drop in 30 years falling over $210 (from 1560 to
1350) in only two days. Asian and
European equity markets are selling off.
Global screens are red. The S&P futures are down nine. C earnings
beat on top and bottom lines and trades up about one percent pre-market. Empire State Mfg Index is far weaker than
expected. The markets sell off at the opening bell but volatility remains low. At
10 AM, the Homebuilders Sentiment is weaker
than expected so the housing sector stocks weaken. The markets
drift lower as the day moves along and at 12:30 PM, the semiconductors
collapse, and volatility spikes, with the VIX jumping far above 14.
The broad
indexes sell off in force. The SPX
drops under 1560. The Dow is down
over -200 points. Small caps and
tech are leading the way lower. Keystone’s
60-minute chart signal shows the SPX dropping under the 200 EMA indicating
bearish markets for the hours and days ahead. Keybot the Quant flips short at
SPX 1566. At 3 PM, terrorism hits the finish line area of the Boston Marathon,
an international event. The SPX drops to 1557 and VIX spikes to 15.90. At 3:45
PM, video from
the Boston terrorism is playing across television screens so traders accelerate
the market selling. At 4 PM, a fire is now
spotted at the JFK Library a few miles away. The Boston terrorism pre-empts all programming with news reports
continuing in real-time. Two are reported dead and 22 injured but the tally
will likely grow much worse. At
the closing bell, the SPX is down -36 to 1552, -2.3%, losing almost 50 handles from
the high only two days ago. The Dow loses -266 to 14599, -1.8%. Ignoring
today’s selling, traders continue to buy
dividend stocks for perceived safety. The Nasdaq loses -2.4% and the RUT is down -3.8% so tech and small caps are leading
the markets lower. President Obama speaks at 6:30 PM stating that the perpetrator/s
will “feel the full weight of justice.”
The terrorism news coverage continues all evening. The drop in semiconductors and spike in volatility is very negative for
markets moving forward. In the evening, Brent oil falls under 100. The CME
raises margin requirements for gold which may create additional selling
pressure in the morning for the yellow metal. Gold closed at 1352. In Asia,
mining, materials and metals companies all open lower. The dollar/yen is
96.77.
On Tuesday, 4/16/13, North Korea issues more threats saying an attack
on South Korea may occur at anytime. Gold is recovering in early trading to 1364.
About one-third of the gold miners will lose money if the gold price drops
under $1300. C says the “death bells are ringing for commodities.” WTIC crude oil 87.38. Brent oil 99.15. The 10-year
yield 1.71%. Euro 1.3041. Dollar/yen 97.51
(dollar/yen pair higher means the yen is weakening which means equity markets
will move higher). Copper
3.2545. Luxury spending in Europe is
falling off. German investor confidence drops.
The Boston terrorism incident news
coverage continues; three are now dead, including a little 8-year old boy, and
140 injured. GS earnings beat on the
bottom and top lines but guidance is tentative. TGT lowers Q1 estimates. Housing Starts are over one
million for the first time since June 2008. The joy is tempered, however, considering
that it is springtime and the Permits are actually very weak (permits lead to
starts). Equity markets stage a big
comeback bounce today. Keystone’s 60-minute chart shows the SPX moving back
above the 200 EMA signaling bullish markets ahead. The
SPX gaining 22 points about two-thirds of
yesterday’s drop, +1.4%, to 1575. The Dow gains 158 points, +1.2%, to 14757. The Nasdaq
is up 1.5% and RUT up +1.8% so tech
and small caps recover. In the evening, news is released that a letter, laced with ricin, a poison, was
received by Mississippi Senator Wicker. People wonder if this act is
connected to the Boston terrorism.
On Wednesday,
4/17/13, China data shows a further weakening
economy so copper, commodities and materials are sold off. U.K.
unemployment rises hinting at a triple-dip recession. At 4 AM EST, the European
markets turn south led by the DAX, now dropping under 7600 on volume. European auto sales continue to slump,
now down eight months in a row. BK and
BAC banks miss earnings sending the futures
lower; the S&P’s now at -12. The DAX, CAC (France) and FTSE (U.K.) all experience a quick
mini flash crash on rumors of debt downgrades on tap for several nations. Egan-Jones agency downgrades
Germany. The Italy election drama remains unresolved. At 10 AM, Keystone’s 60-minute chart shows the SPX falling though the
200 EMA signaling bearish markets for the hours and days ahead. The
markets sell off all day long with the major indexes ending down well over one
percent. Tech and small caps lead lower. Volume
is heavy on the sell side this week and light on the buy side. Volatility is
higher so the intraday and day to day point swings become more violent. The Beige Book is a
non-event with all the other market drama in play. The SPX is at 1575 and Dow at 14757.
AAPL falls under the 400 level today but recovers.
On Thursday, 4/18/13,
Jobless Claims are a touch weak. Philly
Fed and Leading Indicators are weak. AAPL falls under 390. The Boston Marathon terrorism situation
escalates as pictures are released of two suspects. The markets move sideways all day long
ending lower awaiting tech earnings reports after the bell. The weakness in semiconductors and financials
drives the broad markets lower. The SPX falls
through the 50-day MA at 1543. IBM
earnings are a big disappointment. GOOG and MSFT are in line. In the evening, the Boston terrorism suspects surface and are involved in a gun fight where
one suspect is killed.
On Friday, 4/19/13,
OpEx. All eyes in the States are riveted to the news coverage of the Boston
Marathon terrorism manhunt. One suspect is shot dead and the other is on the
run. The BOJ increases the money pumping talk ahead
of the G20 meetings so the yen weakens, dollar/yen rises to over 99, and the
equity futures markets move higher. The
dollar/yen was under 98 yesterday afternoon and now over 99. GE earnings are weak and the stock sells
off pre-market. After the opening bell, the markets are mixed with the Dow weak
but the SPX is up. This is due to weakness in the IBM, GE and MCD components
today. The financial sector recovers and
helps elevate markets. Copper is now down 20% off its top and in a bear market.
The SPX moves back above the 50-day MA.
Crude oil lingers at 88 and gold at 1400. The markets move higher into the closing bell and print a strong up day.
Higher financials and lower volatility help create the upside as well as the
BOJ easing. Keystone’s 30-minute chart shows the 8 MA moving above the 34 MA signaling bullish markets for the hours and days ahead. The SPX gains 14 points, +0.9%, to 1555, but is down -2.1% for the week.
The Dow is flat today and down -2.1% on
the week. The Nasdaq is down -2.7%
this week and the RUT is off -3.2%, clearly tech and small caps leading lower the opposite of what should occur
for a strong economic recovery. IBM drops over -8% today. The utilities sector continues an obscene
parabolic move higher with UTIL now above 528 as investors chase dividend
stocks and perceived safety stocks creating new asset bubbles. At about 9 PM,
the second Boston Marathon terrorist suspect
is cornered in a back yard and taken into custody. Fitch
downgrades the U.K.
On Saturday, 4/20/13,
the G-20
appears unconcerned about the BOJ yen devaluation so the equity markets will
rally on a weaker yen as they did on Friday (weaker yen creates a higher
dollar/yen pair and higher equity markets).
----------------------------------------------------------------
On Monday, 4/22/13,
Existing Home Sales.
On Tuesday, 4/23/13,
PMI Manufacturing Index. New Home Sales. 2-Year Note Auction.
On Wednesday,
4/24/13, Durable Goods Orders. 5-Year Note Auction.
On Thursday, 4/25/13,
Jobless Claims. 7-Year Note Auction. Full moon.
On Friday, 4/26/13, GDP. Consumer Sentiment.
---------------------------------------------------------------
On Monday, 4/29/13,
Personal Income and Outlays.
On Tuesday, 4/30/13,
EOM. Chicago PMI. Consumer Sentiment. FOMC two-day
meeting begins.
On Wednesday, 5/1/13,
ADP Jobs Report. PMI Mfg Index. ISM Mfg Index.
Construction Spending. FOMC Meeting Announcement.
On Thursday, 5/2/13, ECB Rate Decision and Press Conference. Jobless
Claims. International Trade. Productivity and Costs.
On Friday, 5/3/13, Monthly Jobs Report. Factory Orders. ISM
Non-Mfg Index.
--------------------------------------------------------------
On Tuesday, 5/7/13,
3-Year Note Auction.
On Wednesday, 5/8/13,
10-Year Note Auction.
On Thursday, 5/9/13,
Jobless Claims. Wholesale Trade. 30-Year Bond Auction.
On Friday, 5/10/13,
Treasury Budget.
--------------------------------------------------------------
On Monday, 5/13/13, Retail Sales. Business Inventories.
On Wednesday,
5/15/13, PPI. Industrial Production.
On Thursday, 5/16/13,
Jobless Claims, CPI and Housing Starts.
Philly Fed.
On Friday, 5/17/13, Consumer Sentiment. Leading Indicators.
---------------------------------------------------------------
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.
In Q4 2013, European bank stress tests will occur.
On Friday, 1/31/14,
Chairman
Bernanke’s term ends at the Fed, unless there is news during Q4 2013
that he will stay on.
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