What We're Reading

Reasons the market looks ready to pull back May-July:

1. Treasuries have a relentless bid recently, and as I have discussed recently there was major accumulation of 80,000 Treasury (TLT) July $113 calls. Although this is just one large position, action in the TLT has tended to be right, and can see my call from 2013 to short the TLT in the 120's before it crashed to below 105.
2. Sector flows showing a flight to safety. The consumer staple names and large caps are starting to outperform, a risk-off market, and options action dictating the same with most of the sizable call buying occurring in boring large cap names like McDonald's, Wal-Mart, Pepsi, along with Energy.
3. Seasonality - The market tends to struggle in the May-July period, and although I do not have the numbers on me, @RyanDetrick is always posting great data, and also aligns with the Presidential cycle.
4. Price-Action in Momentum - I am watching a premiere growth name like Under Armour (UA) post a fantastic quarter and trade down 1

With recent market weakness, I'm amazed that supposedly factual, informative and unbiased (cough cough) news television isn't pondering the markets recent weakness being at all tied to FACTA. 

The Foreign Account Tax Compliance Act ("FATCA"), enacted in 2010, imposes a variety of requirements on foreign banks however foreign banks that do not report such information may be subject to a 30% withholding tax on payments they receive from U.S. sources. In order to avoid this withholding, beginning July 1, 2014, certain foreign banks will be required to report information to the IRS about U.S. account holders with accounts of $50,000 or more.

Let that sink in a moment.  That's HUUUGE money we're talking about.

Beginning July 1st, there will be penalties for non-reporting so if you were big business with large corporate cash storage, or even a gas pipeline worker located in Saudi Arabia, would you shift your investments?  Why not?  The market's at all time new highs.  Better to do it now.

Amazing the shift since oil rigs were shifted from gas to more of the black gold AND with Bakken coming on line yet sadly, gasoline at the pump has tripled........smh

In the span of a mere four years, U.S. production of crude oil has surged by 67%, according to the Dept. of Energy, reaching levels not seen since the late 1980s. Crude production is up 14% in just the past year. This is the fruit of new fracking technology and it is nothing short of astonishing. Natural gas production is up almost 40% over this same period, and—since natural gas is not easily exportable—this has resulted in a two-thirds decline in the price of natural gas, which in turn gives our energy-intensive industries a big competitive advantage. All of this adds up to a huge boost for the U.S. economy, and it has nothing to do with any government initiatives or infrastructure investment. Indeed, it comes despite Obama's reluctance to approve the Keystone pipeline.

Mark Perry has been doing a terrific job of cov

• No shocker here as the FTC issues a blistering rebuke of states limiting sales of TSLA direct consumer sales.
• So much for the peace accord with Russia as they begin military exercises (WSJ)  Markets will not like this continued uncertainty.  Watch crude oil, gold, silver and copper.  You will note that bonds $BND (flight to safe haven) have been holding up.  Not everyone is pouring money into equities.
• The first regulation proposals are coming out on e-cigarettes  $LO currently holds a 42% market share..
• Talk about putting cash to work.  AAPL has bought 24 companies in the last 18 months.  Searching for innovation allthewhile announcing an increase to their stock buyback, stock split and quarterly dividend to keep value investors in the name.  Oh, and an earnings beat once again to a low bar set.  Way to go Tim Cook.
• The FCC said it will propose rules today that could give high-speed Internet providers more power on what content moves the fastest on the Web based on which firms pay th

• New homes sales down -14.5% and if it were the weather, why were they up in the Northeast?  Looking at reality. Mish
• Einhorn warns of a second tech bubble in 15 years.  It's all about overvaluation in certain names and momentum stocks folks.  Oh, for the days of fundamentals. 
• Test your knowledge, take the quiz.  Who's the worst of developed countries?  The U.S.?
• Slap in face to NFLX as AMZN signs a deal with HBO.  Amazon prime lovers, don't get too excited.  The deal does not include shows newer than three years old so you'll still have to tune into HBO to view Game of Thrones.  Still, this move has generated more talk about NFLX and how it's ability to offer new streaming is limited in contrast to what's available due to licensing agreements.
• More talk today about "fringe" energy other than solar.  We've already witnessed Elon Musk (TSLA) transforming the electric car market.  What about the artificial leaf based on photosynthesis and others?  Check out this very interesti

• Saving down, lending up and tapering combine in a perfect storm.  One of our favorite bloggers CalifiaBeachPundit
• More tech companies are experiencing DDoS cyber attacks including SAY Media (Typepad), Meetup, Basecamp, Vimeo, Bit.ly and others.
• 51% of Americans are unsure of the validity of the Big Bang theory.  For many it's because it can't be seen or seems too far away  A look at the iron triangle of science, religion and politics,
• For the first time in history, the rich find themselves working longer than the poor.
• The Fed must choose:  more jobs or lower inflation.
• Shipments through the port of Los Angeles jumped 34% spurring a bit of (recovery) conversation today on Wall Street
• Google follows Facebook and Twitter with app-installed advertising.

• London market closed today in observance of Easter
• (Part of me is chuckling at this one)  A federal judge will allow Wells Fargo's (WFC +0.7%) dreaded foreclosure manual into evidence in the bankruptcy case of a former homeowner. The homeowner's lawyer alleges the manual is "a blueprint for fraud," and contains step-by-step instructions for - among other things - processing notes without endorsements.
• The disruptive potential of solar power McKinsey
• General Mills (GIS) apologizes (more like oops we got caught) and pulls it's sneaky forced arbitration wording on its' Facebook page fine print.

• Energy is better than technology Stocktwits
• State Department indefinitely postpones the Keystone pipeline (obviously waiting for November mid-terms or if all else fails, a new, hopefully more persuasive President in 2016) Ecowatch
• General Mills pulls a fast one (I'm sure more will follow) using the fine print when you "like" a page on Facebook ($FB) thereby agreeing to forced arbitration.  In simple terms, you won't sue them for product recalls, mis-labeling, you name it.  Pretty slick, I must say. Rawstory 
• Money rotation into late cycle names continues Stocktwits

• "We're obviously in the throes of what feels like a correction for the small-cap and growth-equity companies," said David Golden.  (ya think?! LOL)  Not good news for start ups such as BOX who has filed for IPO and will begin their road show shortly seeking (they hope) high end of the range valuation.  Good news for the investor however as we'll be able to scoop up names at lower (not peak) levels.  Full story at  WSJ
• Due to tighter regulation, banks have reverted back to the use of block trades.  There were 48 such deals in the U.S. ust in the first three months of this year, more than in any first quarter since 1998, according to Dealogic.   Full story at WSJ
• Markets are instrumental, not intrinsic, for human flourishing. As with any tool, wielding capitalism for good requires deep moral awareness. Only activities motivated by a concern for others’ well-being, he declared, could be truly “constructive.”"Washington needs to be more like the Dalai Lama. Without abandoning princi

• U.S. markets are closed tomorrow in observance of Good Friday.  Have a safe and Happy Easter.
• Roads, rail top targets as UK government seeks economy boost through infrastructure. Reuters
• The U.S. Federal Highway Fund is nearly broke........and is asking Congress (of course) to help.  TCC

At their inception, autos were considered speculative investments. In fact, so were railroads, the light bulb, telephone and internet.  They'll never catch on.  It'll be too expensive.  No one will be able to afford it.  There's no infrastructure for it.  It'll pass.  It's a FAD.

McKinsey feels "The world is on the cusp of a resource revolution". 

So, is cleantech failing? In a word, no. Rather, the sector has experienced a cycle of excitement followed by high (and often inflated) expectations, disillusionment, consolidation, and then stability as survivors pick up the pieces. We’ve seen this before with other once-emerging technologies.

The shakeout is brutal—and typical. It has weeded out weaker players, making the industry as a whole more robust. Despite the rough patch, annual growth is at double-digit rates. It’s also important to look beyond financial statements. Global wind installations, for example, have soared about 25 percent a year since 2006 (exhibit). And global co

• Amazon ($AMZN) is developing plans to roll out it's own payment solutions program to compete with PayPal ($EBAY) but sorry guys.........no Bitcoin is not part of their master plan. Note Amazong already has over 200 million credit cards already in their registered accounts.  This after plans came out the Facebook ($FB) is planning the same.  We have been accumulating EBAY for months but all of this is not good news for the online name.
• People's Bank of China disclosed it withdrew 172B yuan ($28B) through repurchase agreements. China's money supply grew at its weakest pace in over a decade during March. Shares of banks and brokerage firms in China stumbled on concerns of capital outflow. 
• Many will be watching for a follow through up day in the indexes today as the Nasdaq bounced off of February support.  If this is the case, watch for precious metals to take a beating.
• Investor confidence in Germany fell for a 4th straight month which has a depressing effect on sentiment because German

Art Cashin called it.  Wasn't difficult to spot.  Possible bounce off of the February low.  Now what?  Next stop.........right shoulder?  Short trading weeks tend to be bullish.  We shall see.  I know I'm eager to re-short names at their falling 20d or 50d.  At least there, risk would be defined.  How about you?

Eerie or creeped out is a good way to explain how you'll feel watching this video on how much robots have replaced the worker but it's estimated that nearly 50% of jobs out there could be replaced by automation over the next few decades.  50% MORE!  Bottom line:  Force your kid to stay in school, no matter what it takes.

Yes GT, I could not resist.  *LOL*  Enjoy your weekend.