BIG MAC WALKS

Some might call it the Crimean Shuffle. Other may just call it business.

McDonalds yesterday closed its three restaurants in the Crimea citing uncertainty about financial and banking services. The move is not devoid of risks as some Russian politicians are calling for the American-based burger champion to close all of its restaurants inside Russia, a move that could affect Big Mac's bottom line in upcoming months should it happen.

There are also political ramifications as some view the prospect as tossing more ice water on the already chilly relations between Russia and the U.S. http://www.reuters.com/article/2014/04/04/us-ukraine-crisis-mcdonalds-idUSBREA331LU20140404

FED FIASCO

Interesting Saturday morning read.

Ironically, the Fed has admitted from get-go that the purpose of QE and ZIRP was to inflate asset prices, particularly the bond and stock markets, enrich those who hold and speculate in them, bail out the banks by fattening up their balance sheets, and lend free money to hedge funds and private equity firms so that they could pile into the housing market and drive up home prices to the point where the middle class can no longer afford them.

Read more here. http://www.testosteronepit.com/home/2014/4/5/this-chart-is-a-true-picture-of-how-qe-solved-the-unemployme.html

SMATTA, DATA

 The shop worn advice about taking things with a grain of sodium chloride should perhaps be cashed in for: Take 'em with a slug of winter.

That's the lesson from the newly released Q1 export numbers. February's decline in exports follows a 0.6% January increase. Expected pick up in demand from China and Europe remains on a wing and a prayer or, perhaps more accurately, the market Pollyanna crowd.

Now the economic pundits will be jockeying for position to see who can guesstimate the closest to the revise numbers that are sure to follow. The Dismal Science profession is one of the few where one gets to revise things until they get close to what the pundits want. It's called Economic Horseshoes.

Forget correct. Just get it close.

If making money in the markets is your goal--and it ought to be--take these pronouncements lightly. Former Fed Chairman Sir Alan was renown for basking in his bathtub with his rubber duck and poring religiously over data for hours. And we all remember how correct he got things.
 http://online.wsj.com/news/articles/SB10001424052702303987004579479142470622718?mg=reno64-wsj

MARKET WRAP

As the market digested the latest jobs report--seen by some as not so bad and others as not so good--a funny and most likely unexpected thing happened--equities closed out the day by selling off.

The DJIA dropped 160 points, down almost 1% on the day, to close at 16,412.71. At the Nasdaq and S&P 500 it was a similar ending with Nasdaq off 2.6% and the S&P 500 down 1.25%. The Nasdaq closed at 4,127.73 and the bleeding in S&P 500 for the day settled at 1815.09, down 24 points for the session.

Bio techs and internet stocks led the fallout.  Apple (AAPL), one of the Nadasq's heaviest hitters, finished the day up slightly after being down in early trading. It was the second straight down week for the Nasdaq and it's lowest close in two months. The dollar fell against the yen, gold climbed higher and oil finished at 101.06. Just in mid-February oil traded as low as $97 a barrel. 10-year U.S. Government bond yields decline as bond prices rose.

20-20 VISION IS A LAGGING INDICATOR

Despite what this article says and it's true that certain sectors tend to dominate as a percent of the S&P 500 like tech during the dot.com era, most people don't see it as a bubble because the fear of missing out or of getting out too soon blinds them.

Leaving money on the table during bull markets for many is the cardinal sin of investing.

And then there are things like it's-different-this time and new paradigm babble such as prevailed during the Greenspan years. The grossly popular Niffty-50 of the bull market of 1960s and early 1970s are just another example of how investors get hoodwinked by new era talk.

Hailed as "one-decision" wonders investors believed they could be bought and held forever; that is, until along came not a guy named Jones but the nasty 1973-74 bear market, one of the worst bear markets of all time.

http://www.businessinsider.com/chart-bubbles-within-sp-500-2014-4

RESEARCH

There is an old bromide about the poison being worse than the cure. 

The kind word for poison is side effects. In the case of Hepatitis C that's been one of the major drawbacks. For all intents and purposes Hep C is blood borne though it is believed that body fluids can transmit the virus. 

In the old days it was called non-A, non-B hepatitis. A lot of people exposed to possible infection, having heard about the side effects from others who had the treatment, opt out, instead taking their chances.  

The real truth is there's a media-CDC-caused panic that any and everyone who gets pricked with a needle or get splashed with blood, body fluids or whatever gets tested. And don't forget those astute members of the bar and their contribution. It's called the money scent.

What we're talking about here is possible-exposure panic. A series of labs have to be drawn, suspected exposure victims counseled and, according to CDC guidelines, offered treatment.  

One CDC guideline claims the virus is transmitted sexually in 1% of cases. But we'd like to view that data and see how many are drug addicts, prostitutes or others familiar with those circles.

With all due respect for those with this not-so-nice disease, it sounds like the perfect scenario for big pharmaceutical to come up with a $1,000/day drug. And why should tax-crazy politicians be upset; after all, it's a progressive rate they're charging not so different from the IRS.  

http://www.cbsnews.com/news/1000-a-day-miracle-drug-shocks-us-health-care-system/

CON GAME?

Forget Romeo and Juliet. ECB bankers are saying: "Inflation. Where art thou?"

In our End of the Day post we raised the issue, saying officials in the EU and Japan don't go to sleep at night asking for rain; they're praying for some inflation. The proof of the praying is in this excellent graph from http://www.marctomarket.com.

Another way to view it is, it's a little con game. Overstate inflation to dress up the picture.

END OF DAY

It's beginning to sound like an old Bernanke tune in Europe as the ECB played down deflation fears today and dealt the old ready-to-act-if-you-need-us card. Instead of rain these officials and those in Japan pray nightly for a little inflation. The bank left its interest rate at a record-low of 0.25% and left a window open for some Bernanke-like big buys of financial assets if need be.

The DJIA closed at 16,572.55, down just a fraction. The S&P 500 dropped off 2.13 points to close at 1,888.77 and the Nasdaq closed down almost 39 points at 4,237.71.

Where oh where have all the buyers and sellers gone. No, we're not talking equities, we're talking US home sales. According to an AP wire story, home prices are up nearly 14% over last year but sellers are not selling and buyers remain few owing to higher home prices and higher rates. Meanwhile, rents continue to rise with concerns growing that 2014 will be the fifth straight year rents are up. Again, according the the AP, 50% of renters now pay more than one-third of their pay for shelter.

Note that the S&P 500 closed today at 1,888.77. Now this is not about highs and lows, just observations. About a month ago, on 3/6/14 in fact, the index closed at 1,877. There is something called the Tobin Q ratio, created by the late James Tobin, a Yale economists, to gauge the value of  corporate assets versus their replacement cost. 

No big deal here, just this: The Tobin Q on 3/6/14 was indicating that at 1,877 the market was overvalued by 76%.  Only two times in the past has the market been more overvalued, in the late 1920s and the late 1990s.

Now one indicator does not a market overvalued make. But it's worth watching.

BUBBLES

Bubbles always have more than one element. If that weren't true, nearly everyone would see them coming. But that's never going to happen.

Lately, in their quest for yield and a large dose of impatience, investors are chasing the weak, the lame and the higher yielding to satiate their income hunger. Now we're not calling this current market a bubble. Not yet.

But places and pieces go together just as ducks eventually get lined up. And not even the twisted utopian-seeking minds of politicians who try to legislate one of today's buzz terms--outcomes--have a clue.  If anything their twisted thinking contributes to most bubbles. Equal opportunity is one thing, equal outcomes another.

http://online.wsj.com/news/articles/SB10001424052702303754404579312451913879802?KEYWORDS=chasing+higher+yields&mg=reno64-wsj&url=http%3A%

WHAT'S THE VIEW FROM HERE?

If you're looking for a unified West against what's been going on in the Ukraine, better keep looking. 

And while you're  at it you might want to send a wake-up call to all our beloved Washington politicians that our foreign policy ain't cutting it. And it hasn't been for a long time.
http://www.spiegel.de/international/germany/prominent-germans-have-understanding-for-russian-annexation-of-crimea-a-961711.html