On Friday, 10/18/13, China economic data is much better than expected with a strong 7.8%
growth rate. Recent stimulus packages (targeted QE-type easy money) are creating
the activity. Copper moves higher. GOOG is up +10% pre-market setting
a positive mood. MS earnings beat. Markets
leap higher at the opening bell with the SPX now above 1740. Leading
Indicators data is cancelled due to the shutdown. GOOG hits the 1000 price level
(PCLN punched through 1K one month ago). The broad indexes move flat in the
afternoon and start to leak lower but the bulls crush volatility in the last fifteen minutes of
trading to finish the week with an upward market thrust. The bulls are running. Fed’s
Evans says that the FOMC meeting in 11 days does not have enough data to
consider tapering QE so the bulls run higher off this happy news
that the Fed booze will flow forever. The SPX ends up 11 points, +0.7%, to a new all-time closing high
at 1744.50 and new all-time high at 1745.31. The Dow is up only
28 points, +0.2%, to 15400. The Nasdaq explodes higher due to GOOG (up +13%), up 51
points, +1.3%, to a 13-year closing high at 3914.28 and new 13-year high at
3914.93. Traders are abuzz as to when the Nasdaq 4K level will be achieved only 86 points away. The RUT is up 13
points, +1.1%, to a new all-time closing high at 1114.77 and new all-time high
at 1115.04. The 10-year
yield drops to 2.59%. Interestingly, money
is not moving from stocks to bonds but rather both stocks and bonds are moving
higher. In a pure risk-on
environment, and after the political clowns came to an agreement this week, the
expectation would be for the 10-year yield to creep higher (prices down yields
up). Instead, folks continue to seek the
perceived safety of notes and bonds (prices remain high yields drop). Gold
is 1317 well off the lows a couple days earlier. Utilities are breaking up and
out of a long-term sideways symmetrical triangle which will help the market bulls
moving forward, as long as it is not a false breakout. Health insurance companies are complaining
that the information they are receiving from the Obamacare websites are riddled
with mistakes. The U.S. debt moves up over $17 trillion but the politicians kick the can down the road and do nothing. This encourages the Fed to continue the reckless
QE program. The Washington, D.C. clown circus is whistling past the
graveyard. BART (Bay Area Transit System) union workers go on strike
crippling travel in San Francisco.
On Saturday,
10/19/13, a ruling
by a Milan court prevents Berlusconi from holding public office for 2 years but in Italy, decisions and appeals continue
indefinitely. A Senate vote on
Berlusconi’s fate takes place in November and may dramatically affect
Italy’s politics and government stability. More
and more detractors slap the Obamacare
websites holding it up as a shining example of government incompetence. The
fine print on the Affordable Healthcare
websites says the government can use your personal information however they see
fit. The Whitehouse is scrambling to
find a solution to the debacle deciding to either pull the Obamacare
websites off line to fix the problems, or, continue to try and fix the car
while it is moving. Two BART workers are killed in a train accident as
they inspect the tracks. The CPC and CPCE put/call ratio’s print multi-year lows
verifying the uber complacency and lack of fear in markets. Nearly all traders
expect stocks to go up into next year and are giddy with excitement. It is
likely that equities are printing a significant market top over the coming days
perhaps a la 2000 and 2007.
-----------------------------------------------------------
On Sunday, 10/20/13,
the Whitehouse
says 476K applications were filed on the Obamacare web sites but refuses to say
how many actually signed up. Independent estimates say that only a paltry 36K have signed up so far for this
$500 million debacle. The Whitehouse
needs 7 million people to sign up within the next 8 weeks. JPM racks up the legal fees nearing a $13
billion settlement on a civil action concerning mortgage-backed securities but
remains open to further criminal charges. Congress plans on holding hearings this week on the Obamacare
debacle but Health and Human Services Secretary Kathleen Sebelius,
spear-heading the roll-out of Obamacare, says she will not attend. Australia wild
fires continue to burn out of control.
On Monday, 10/21/13, Asia markets move higher to begin the week with the Shanghai Index up 1.6%. Japan’s export growth surprisingly slowed. Dollar/yen
is 98.05. EDF will build
the first nuclear plant in the U.K.
since 1995 with Areva receiving the contract. Anti-austerity protestors clash violently with police in Rome. ECB’s
Draghi warns about the trend with bank bail-ins (where bank deposits can
now be confiscated to cover the debt of a bad bank) since it will destroy confidence in the banking system. Merkel is
nearing completion of a coalition government after her successful election. The euro is well above 1.36. WTIC
oil briefly drops under 100. The 10-year
yield is 2.59%. GOOG and FB join forces to increase ad revenue. One-quarter
of the S&P 500 stocks report earnings this week. MCD misses on earnings. Fed’s Evans keeps promising QE indefinitely. The broad indexes are flat to begin the
day. Existing
Home Sales drop for the first time in 3 months. President Obama speaks about the Obamacare
web sites debacle but will not provide details on the problems or the number of
folks that have signed up. He provides a
toll-free telephone number to use instead of the web site but operators say
sensitive personal information cannot be transferred over the telephone and
others seeking healthcare are told to visit the web site, but comically, the
failed web site is why they are using the telephone. Markets are flat all day long in dull
trading. After the bell, NFLX quadruples its
earnings hitting a grand slam of earnings. Netflix is the best performing stock in the
market this year and increases +11% AH’s. HHS Secretary Sebelius, in
charge of implementing Obamacare, agrees to testify before the House next week.
On Tuesday, 10/22/13,
house prices in China continue to climb higher in
69 out of 70 cities surveyed. When the China housing bubble pops,
anytime, it will make the U.S. housing bubble look like child’s play.
The Monthly Jobs
Report is 148K jobs well under the 180K consensus. The unemployment rate drops a tick to 7.2% but this is
due to folks simply giving up at finding
a job. Average hourly earnings are
up a touch at +0.1% with average weekly hours flat. Thus, there is no pressure for employers to
add jobs; the current work force appears adequate. The labor participation rate is flat but remains at multi-year lows verifying
the ongoing structural unemployment
problem. There are over 6 million idle American youth between 16 and 24 years
of age, about 50% of this demographic. The U.S. is adopting European socialism moving forward so it is no surprise to see the same affects develop.
The bad job news
is great news for equities since traders assume the Fed will supply more easy
money QE as far as the eye can see. The S&P futures pop from flat to +6. The 10-year yield drops to 2.55%. NANEX reports unusual
trading action in the euro futures one-half second before the jobs report
release at 8:30 AM. The euro bounces with the dollar moving lower and
Treasury yields lower so it is easy to
make money via HFT (high-frequency trading) if you know the answer milliseconds
ahead of time. Nowadays, whoever has the
fastest algo wins. DD beats on EPS
earnings but top line is flat.
Chemicals and resins are a key indicator of economic health; DD hints at
lackluster activity. WHR earnings beat so the stock
pops +6% and is encouraging for the housing sector. UTX earnings beat by a penny on EPS but misses
on top line revenue and it drops one percent
pre-market. One-half of the companies reporting this morning missed on
top line revenue. The broad indexes jump higher at the opening bell fueled
by hopes of QE Infinity forever. The SPX pops to 1754 printing more new all-time
highs. Construction Spending numbers are better than expected.
Good news is good news and bad news is good news. NFLX drops -4%
as traders sell all the high-flyers like
FB, LNKD and AAPL after the opening bell.
The SPX
prints a new all-time high at 1759.33. Equities fall on their sword moving into lunch
time with the Dow dropping almost 100
points off the top. The SPX drops
from 1759 to 1748 and then moves sideways. UTIL
moves above 500 as utilities gain on the lower Treasury yields. COH pukes -7%.
Economist David Rosenberg, typically
known as a bearish-leaning strategist, throws in the towel and becomes bullish
and constructive on the markets. Banks and analysts say QE tapering will likely not occur
until March 2014 or later since the political drama is not over in Washington,
D.C. The easy money bull fuel for equity markets will continue.
AAPL
unveils a thinner iPad with retina display and faster processor, as expected,
but thinner, faster and lighter equates to Apple stock selling on the news. The
session ends with the SPX printing a new all-time closing high at 1754.67 and
new all-time high at 1759.33. The SPX gains +0.6%, Dow +0.5%, Nasdaq +0.2%
and RUT +0.3%. Tech and small
caps are not leading the broad market higher. The euro prints a 2-year high at 1.3782. The
talk of delaying the QE tapering slaps the dollar lower and sends the euro
higher. After the bell, AMGN blows the
cover off the ball with earnings. The biotech and pharma sectors are hot this year. AMGN was up over 2%
in today’s trading and another 1% AH’s. PNRA misses on
earnings and it is slapped -5% lower. Troubled SAC (Cohen) shuts down
its London unit.
On Wednesday,
10/23/13, bad loans are rising in China. China and
Japan markets are selling off. AAPL’s Asian suppliers trade lower overnight down from -0.5% to 6.0%. The dollar/yen drops to 97.30. ST Micro drops -7% on weaker Asia demand
for chips. Copper is weak. Spain grew at
+0.1%, a hair positive, technically ending the prolonged 2-year recession. Rabobank faces a $1 billion fine to settle the Libor rate
fixing scandal. Heineken drops -5% as sales forecasts are cut. ECB announces stress test guidelines for
128 banks that will shamefully take
one year to complete. European banks are trading lower. The stress tests
can be performed in a matter of 2 or 3 months so this is more gamesmanship to
keep stretching time out in the hope that the global economy recovers improving
the troubled banks’ positions. Peugeot misses on earnings which now jeopardizes
its GM alliance. The euro is at a lofty
1.3760 nearing 1.38. GS
joins the chorus of banks not expecting the Fed to taper until March 2014 or
later. The banks want to keep stock
prices elevated so they can distribute
stock to Joe Sucka now chasing the upside. Futures are weak overnight with S&P -11, Dow -80 and Nasdaq -22. The 10-year
yield is 2.49%. WTIC oil drops to 97.20. JPM nears a $6 billion dollar
settlement with other banks over the bad mortgage paper from the financial
crisis. JPM legal costs continue to
rise. The Detroit courts will
determine the legality of the Chapter 9 bankruptcy. This is important since
it will set precedent for all the other U.S. cities in financial trouble. HHS Secretary Sebelius says President Obama did not know
anything about the problems with Obamacare until the first day of the roll out.
She is running cover to help the
president avoid embarrassment on his signature legislation but it is
worrisome that he can be so detached from any negative news events that occur,
even events fully under his control. A television
ad runs that promotes Obamacare and says the web site is easy to use when the site
is actually becoming more of a joke as details surface. Insurance companies meet at the Whitehouse
to discuss the mess. LLY earnings beat.
CAT earning miss
and guidance is lowered for this key global bellwether. CAT dumps -4% pre-market. BA
beats and the stock jumps +5% higher. LL
beats and it moves +7% higher reinforcing WHR’s happy talk about the housing
sector yesterday. Retired
Chairman Greenspan says stock prices are ‘relatively low’ and heading upwards.
The broad indexes drop like a stone at the opening bell. Copper collapses. The semiconductors collapse with the SOX dropping -3.3%. Equities move flat in the
afternoon with the SPX closing at 1746 losing -0.5%. The Dow is down -0.4%, Nasdaq -0.6% and RUT -0.4%. The
weak semi’s and tech stocks lead
equities lower. After the bell T beats on EPS but misses
on top line revenue. AKAM beats but reduces
guidance and it is thwacked -7%. FIO pukes -11%. Merkel telephones Obama with suspicions
that the U.S. is spying on her telephone calls. The Whitehouse
says Merkel’s communications are not monitored now nor would be in the future
but would not deny spying on her telephone conversations in the past.
BSX cuts 1200 jobs.
On Thursday,
10/24/13, China PMI is better than expected.
Credit
Suisse reports weak earnings and guidance and
is hit -3%. Unilever reports the weakest
sales in 4 years highlighting softness
in North America and Europe. Daimler
sales are better than expected and gains +2%. Eurozone, Germany and France PMI’s are above 50 showing expansion but a
touch weaker than expected. The euro
pops above 1.38 overnight but drops to 1.3770 after the PMI data. Draghi says tough action will be taken
against any bank that fails the bank stress tests which are ongoing through
next year. BAC’s Countrywide
unit is found liable for mortgage fraud. The Obamacare web site disaster continues
and an easy fix is not readily apparent.
The Whitehouse is not providing
information or clarity which creates confusion and angst over the program.
F and MMM beat on earnings. S&P futures
are +10. The Whitehouse says the Obamacare penalty for not signing up for health
insurance may be delayed 6 weeks as democrats,
that once supported the program, begin speaking negatively. The House begins hearings on the Obamacare
debacle. Representative Ryan says he has requested testimony from HHS Secretary Sebelius for weeks but she will not
cooperate and the Whitehouse would
not provide any replacement for the hearings. The principal contractors that developed the Obamacare web sites and the
Obama administration are blaming each other for the debacle. Apparently, a last minute decision was made by the Obama
administration to not provide price data for the health plans on the web sites
until the user gives up extensive personal information and this change created
the problems. Chemical company DOW, a key
economic bellwether, misses on earnings. Futures
leak lower off the highs with the S&P’s +3
before the opening bell. Equities float
sideways to sideways higher as the session begins. The
House hearings on the Obmacare debacle
results in finger-pointing with each company representative blaming the other;
you can smell the lawsuits coming. XRX reduces
guidance and is crushed -9%. Snowden, the NSA whistleblower, released the information
concerning the U.S. spying on Brazil, Mexico and now Germany’s communications. Everything you do electronically on computers and cell
phones is monitored and archived forever. Merkel says “spying on friends is never
acceptable.” The SPX moves
higher all day long and closes at 1752. The broad
indexes finish up about 0.5% on the day. After the bell, four earnings
beats catapult the following stocks higher; AMZN +8%, MSFT +6%, OUTR +6% and ZNGA +11%. DD jumps higher after it
announces a plan to split several units into a stand-alone company. The American Association of Individual
Investors’ (AAII) Sentiment Survey reports continuing high market bullishness
now at 10-month highs while pessimism on the markets is at 21-month lows. Traders
do not expect markets to ever go down since the Fed and other central bankers keep printing money to keep stock prices elevated
and their rich friends wealthy. The broad
indexes are well elevated above their moving averages indicating that a
reversion to the mean is required. Tread carefully in the equity markets
since AAII serves as a contrarian indicator. Twitter IPO will price at $17 to $20 with a road show beginning and
perhaps a first day of trading in about 2 weeks. Elon Musk says TSLA stock is
probably overpriced—and the stock creeps higher, not lower, on his words of
caution. 49% of Americans are now on
some form of government assistance up strongly in recent years so the U.S.’s move towards European socialism continues.
On Friday, 10/25/13, the Nikkei dumps -3% and the Shangha Index loses -1.5%. Copper
is weak on worries that the China and Japan economies are slumping and China
may tighten credit. Samsung reports
record profits as consumers prefer the lower-cost electronics. German IFO
business confidence is 107.4 slightly below expectations. The euro
remains elevated at 1.3820 with a high today at 1.3833. The euro strength is hurting earnings for
European stocks. Renault misses earnings estimates and drops -4%. Volvo
misses and is punished -7%. Both are negatively affected by Indian, Russian and
Swiss currency exchange rates. BBVA
(Spanish bank) eliminates its dividend to help clean up the balance sheet and
lower the bad loan ratio. Gucci, a Kering brand, reports the worst sales in
4 years. High-end consumers now prefer
more subtle-looking bags and accessories rather than logo-riddled products.
The higher euro decreases Asian tourism
and takes a bite out of luxury sales. U.K. GDP is +0.8% as expected. Merkel says trust with the U.S. must be
rebuilt. France’s Hollande voices concern over the U.S. spying on friendly
governments. WTIC oil is 97.27 well off the recent
highs with Brent oil at 106.75. PG
earnings are on in line. Global shipping bellwether UPS earnings beat by a penny showing stronger domestic growth and expects another record holiday package-shipping season. AMZN is up +9% despite reporting
a 9 cent loss. In these bizarre markets, just think how far AMZN
would bounce if even more money was lost. The broad indexes move higher after the opening
bell with the SPX testing the recent all-time highs at 1758-1759. Durable Goods Orders are up on aircraft
orders but business spending on office equipment is weak. Consumer Sentiment is weaker than expected but
traders ignore any bad news. Representative Rand
Paul (son of the legendary libertarian Ron Paul), threatens to block the Yellen
nomination as a means to receive an audit of the Federal Reserve. Equities
soften for a few minutes but quickly recover since everyone knows the Federal Reserve
books will always be kept secret and hidden from the American people,
and Yellen
will be confirmed. The broad indexes stumble sideways during the
session and receive a late-day push
higher for the SPX to print a new all-time
intraday high at 1759.82 and new all-time closing high at 1759.77.
The Dow is at 15570 moving through a
sideways range of 14700-15700 for the last 6 months. The Dow Industrials,
representing 30 large blue-chip stocks, are lagging the other major indexes not
able to print new all-time highs. The RUT small
caps printed a new all-time intraday high by pennies but could not print
a new all-time closing high. For the
week, the SPX is up +0.9%, Dow up 1.1%, Nasdaq
+0.7% and RUT +0.3%. In strong bull markets, tech and small caps
should be leading not lagging. The S&P
500 is now trading over 16.5 times earnings which is above the historical
market average at 15.8. The high-flying momentum stocks such as NFLX and
TSLA were hit this week. The 10-year yield is 2.51%. Margin debt jumps 5% over the last month as traders take on
more and more leverage chasing the stock market higher just like the 2000 and
2007 market tops. Equity prices for the major indexes are extended above their
moving averages across monthly, weekly and daily charts, as well as tagging the
upper standard deviation boundaries, indicating that a reversion to the mean
(lower prices) is desperately needed. The low CPC and CPCE put/call ratio’s and low
volatility (VIX) verify the complacency and fearlessness of traders. Everyone
expects easy money QE to continue to March and later so why worry and instead,
everyone is ‘partying like its 1999’, as Prince
says. Snowden,
the NSA whistleblower, now exiled in
Russia, provided the documents that verify
the U.S. spying on 35 world leaders and how senior officials were told to share their cell phone contacts so foreign
politicians could be monitored by the NSA surveillance systems. U.S.
foreign relations are damaged. All
your communications and actions on computers
and cell phones are continuously monitored, recorded and archived a la 1984 (George Orwell).
----------------------------------------------------------
On Monday, 10/28/13,
Industrial Production.
On Tuesday, 10/29/13,
FOMC Meeting begins. PPI. Retail Sales. Business Inventories. Consumer Confidence. 5-Year Note Auction.
On Wednesday, 10/30/13,
ADP Employment Report. CPI. 7-Year Note Auction. FOMC Meeting Announcement.
On Thursday, 10/31/13,
EOM.
Jobless Claims. Chicago PMI. Farm
Prices.
On Friday, 11/1/13, Fed’s Bullard speaks. PMI’s. ISM Mfg Index. Fed’s Kocherlakota speaks.
----------------------------------------------------------
On Friday, 11/15/13,
Twitter IPO begins trading on the NYSE.
In Q4, European bank stress tests will begin and 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), Germany’s high court must decide if the ECB’s OMT program is
constitutional, and Europe must finalize all plans for the new banking union.
-----------------------------------------------------------
On Friday, 12/13/13,
Congress
provides a detailed road map to handle the U.S. budget crisis moving forward.
-----------------------------------------------------------
On Sunday, 12/15/13,
the sign-up
period for Obamacare ends; Whitehouse needs 7 million people, otherwise,
the program will start bleeding money and require a future bailout by the
taxpayers.
----------------------------- 2014 ----------------------
On Wednesday,
1/15/14, a Continuing Resolution (CR) is needed to fund and keep the
U.S. government open.
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,
Chairman
Bernanke’s term ends at the Fed. Yellen takes over.
On Friday, 2/7/14, the Debt
Ceiling Limit is hit where the U.S. may default on obligations. Treasury
Secretary Lew will use extraordinary measures to extend this time forward so
late February or early March is a likelier deadline. Winter Olympics
begin in Sochi, Russia, through 2/23/14.
On Wednesday, 3/19/14,
new Fed Chair Yellen talks at the conclusion of her
first FOMC meeting (3/18 and 3/19).
In February/March
2014, the Fed Chair Yellen testifies before
Congress.
In March 2014, 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.
---------------------------
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Speculator. All Rights Reserved. 2012. 2013.
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