Ups And Downs In US Stock Market

Financial Review

Strange Days

Sinclair Noe — August 12, 2015

Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)

Subscribe: iTunes | Android | RSS

DOW – 0.33 = 17,402
SPX + 1 = 2086
NAS + 7 = 5044
10 YR YLD – .01 = 2.13%
OIL + .23 = 43.31
GOLD + 16.80 = 1126.80
SILV + .18 = 15.64

Strange days indeed. While the closing numbers paint a picture of a calm day on Wall Street, it was anything but. The Dow Industrial Average started the session deep in the red; with a session low of a 277 point loss. And then it started clawing higher, briefly going positive for the day. US stocks gapped lower on the open following the lead of global stocks, Asian currencies, commodities and government bond yields were all heading south after China allowed the yuan to fall sharply for a second day, triggering concerns over the country’s economic health. The currency is down 4% over the last two days.

The IMF has offered a cautious endorsement of the new pricing regime – which lets the market play a greater role in setting the value of the currency – in a step that may help Beijing win reserve currency status later this year. Late in the day, the Chinese government reportedly stepped in to prop up the yuan. And once again the shorts were shredded.

The number of available jobs fell in June, even as companies hired more. The latest Job Openings and Labor Turnover Survey, or JOLTS, shows there were 5.25 million job openings, down from 5.36 million in May, while the number of hired rose to 5.18 million from 5.06 million. The quits rate — a measure of worker willingness to leave to search or go to a new job — stayed at 1.9% in June. There were 1.6 unemployed in June for every job opening.

The United States posted a budget deficit of $149 billion in July, up 58 percent from the same period last year. The government had a deficit of $94 billion in July of 2014. The July deficit was larger because of $42 billion in payments that were shifted into that month from August. About $4 billion in extra revenue was also included in July for the same reason. Accounting for those items, the July deficit would have been $111 billion.

Grain commodity futures collapsed after the US Department of Agriculture raised its projections for output. In a report, the USDA said it now expects corn production to total 13.7 billion bushels this year from about 81 million acres of land, up from the forecast of 13.53 billion a month ago. Soybean output is expected at 3.916 billion bushels, up from 3.885 estimated last month. Corn and soybeans futures fell about 6%. Persistent rains in the Midwest early in the growing season led many to believe the crops would be light. A period of heavy rainfall, while concerning at the time, can often be recovered from prior to harvest, and the weather has been good for the past month or so. “Rain makes grain” is an old farmer axiom for good reason.

The global oil glut will last through next year and oil prices will be lower for longer. That’s the conclusion of the International Energy Agency in its widely followed monthly report. Stockpiles won’t be reduced until the fourth quarter of 2016, or after, if sanctions on Iranian crude are lifted. The production surplus was 3 million barrels a day in the second quarter of 2015, the highest in 17 years.

Just eight days after it defaulted on bond payments for the first time, Puerto Rico said it planned to issue $750 million more in bonds for several construction and maintenance projects. Issuing new debt while planning to restructure pre-existing debt, and even letting certain bonds default, “reflects the individual financial circumstances of the various issuers across the commonwealth,” announced GDB President Melba Acosta. So far, little is known about the island’s debt restructuring proposal; details will be made public at the end of this month.

McDonald’s plans to close  59 net U.S. locations this year, attempting to reverse its worst sales slump in more than decade. According to a franchise operations document, the chain is closing 184 restaurants and opening 125 new ones in 2015. The move follows seven straight quarters of slumping sales across the nation, and marks the first time in 45 years McDonald’s has closed more U.S. locations than it has opened.

Kraft Heinz said it will eliminate 2,500 jobs in the United States and Canada, including about 700 at its headquarters in Northfield, Illinois. Kraft Heinz currently has about 46,000 employees; the company expects to save about $1.5 billion in annual costs by the end of 2017.

Capital One is buying GE’s health care lending unit  for approximately $9 billion. The sale means GE has shed $78 billion in assets this year, bringing it closer to its year-end goal of $100 billion. . The deal is expected to close in the fourth quarter. The size of GE’s finance arm, GE Capital, and the potential risk stemming from its lending portfolio has made it subject to government oversight. GE plans to apply next year to escape its designation as a systemically important financial institution following the sale of finance assets. For Capital One, the deal will bolster its healthcare lending operations.

Financial industry software maker Fidelity National Information Services said it would buy SunGard Data Systems for $9.1 billion including debt, scooping up one of the longest-held investments in private-equity history.

Wells Fargo may divest its crop insurance business, one of the biggest in the U.S., as regulatory restrictions on banks force some to reconsider underwriting insurance policies. Wells Fargo expects a price tag of about $1 billion for the unit, and has launched an auction for the business.

More Legionnaire’s disease concerns are surfacing after GlaxoSmithKline shut down a North Carolina plant upon discovering the bacteria in a self-standing cooling tower. The closure is not expected to disrupt supplies of medicines made at the factory, which ironically include Glaxo’s $7 billion-a-year inhaled respiratory drug Advair. About 400 of the 850 employees who work at the plant were told to stay away until the towers are cleaned.

Dark pools are getting darker. Credit Suisse and Barclays have entered settlement negotiations with the SEC and NY attorney general over facilitating unfair advantages, incorrect stock pricing and other wrongdoing in their dark pools. Credit Suisse is in talks to pay a fine in the high tens of millions, which would be the largest fine ever levied against a private trading venue operator, while Barclays’ discussions also suggest a large fine.

U.S. prosecutors have separately announced charges against an insider-trading ring consisting of 32 traders and hackers, marking the first time criminal allegations have been brought for a securities fraud scheme involving hacked inside information. Stolen press releases gave the rogue traders $100 million in illegal proceeds by allowing them to trade on news before it hit the wires. Hackers were then paid a flat fee or a percentage of the profits gained from the trading.

Discount Tire is recalling nearly 80,000 light truck and SUV tires because the tread could separate. Discount Tire says there are no reports of deaths or injuries due to the defect. Stores will notify owners and will either replace the tires for free or offer refunds.

Angry Orchard Cider Company is recalling select cases of Crisp Apple Hard Cider over concerns that the bottles may explode. The actual cider poses no health risk.

The breakfast cereal Wheaties has partnered with a craft brewery in Minneapolis, to create a limited-edition Hefeweizen beer named HefeWheaties. Beer, the breakfast of champions.

More than 35,000 combat veterans have had their health care delayed by a Department of Veterans Affairs computer program that automatically put them in limbo, many for years. Yet the VA says it lacks the authority to override the system. The veterans, most of whom served in Iraq and Afghanistan, were erroneously put onto a “pending” list for failing to fill out a means test. But combat veterans are not required to fill out means tests to receive health care. About 16,000 of the cases have been pending for more than five years. Under VA rules, combat veterans are eligible for five years of free health care after discharge, but the period begins the day of discharge.

Yesterday we told you about Google’s plan to form a new holding company called Alphabet. Just one problem. Google/Alphabet decided on this name for its new holding company even though it couldn’t secure the most obvious domain name (or social media accounts, for that matter). Alphabet.com belongs to the fleet management company owned by BMW, and they aren’t giving up the domain. So Google/Alphabet is using abc.xyz. Yea, not so good.

A meteor shower that could feature as many as 100 shooting stars an hour will peak tonight. The Perseid meteor shower should be particularly brilliant this year because the sky will be dark and the view won’t be obstructed by moon light, as a new moon rises Friday. The meteor shower continues for a couple of days but tonight is the best night. To watch, you do not need a telescope; in fact a telescope or binoculars will hurt your viewing because the meteors move fast. For best viewing get away from city lights or any lights, lean back and look up toward the constellations Cassiopeia and Perseus in the Northeast part of the sky.

FINANCIAL REVIEW

Veterans Day 2014

Sinclair Noe — November 11, 2014

Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)

Financial Review
DOW + 1 = 17,614
SPX + 1 = 2039
NAS + 8 = 4660
10 YR YLD = 2.36%
OIL + .12 = 77.52
GOLD + 12.60 = 1165.20
SILV + .14 = 15.85

The Dow and the S&P 500 hit intraday records today, then dipped into negative territory for most of the session, and then in the final minutes managed to eke out gains, good enough for another record high close.

The bond market was sort of closed in observation of Veterans’ Day. The US Treasury observes the holiday, and since much of the bond market deals with Treasuries, most bond traders take the day off. Stock traders just keep trading. The stock market used to take a 2-minute pause to recognize veterans, but that ended a few years ago. Wall Street just doesn’t seem to have much respect.

Back in the early 70’s, the politicians tried to change Veterans’ Day to October so it could be a Monday holiday, but that didn’t last long. Veterans’ Day of course sprang from Armistice Day, and the end of World War I, on the 11th hour of the 11th Day of the 11th month, the great guns went silent, and the war to end all wars was ended.

A bunch of companies are offering deals for veterans. There are a bunch of restaurants offering a free meal or lunch or appetizers. Here’s a partial list: Applebee’s, California Pizza Kitchen, Chili’s, Claim Jumper, Golden Corral, Denny’s, Hooters, MOD Pizza, Olive Garden, Sizzler, Texas Roadhouse, Outback, Longhorn, Carraba’s, Krispy Kreme, Starbucks, Red Lobster, IHOP, Chuck E. Cheese, and others.

You might want to call ahead and ask what restaurant is offering what deal. There are also a whole bunch of local restaurants offering deals. The point is, if you are a veteran, it is a good day to eat out. You will probably need something to show you are an actual veteran; most places will accept discharge papers, Uniform Services ID, and American Legion or VFW card, or wear your uniform, or a picture of you in uniform. Again, call to check.

Many stores are offering discounts to veterans today, including: Home Depot, Lowe’s, Macy’s, Bed, Bath & Beyond, and many others. Great Clips is offering free haircuts for vets, or you can go in today and get a free haircut card for a veteran to use before the end of the year.

In the United States alone, there are 19.6 million veterans. According to the Independent Voter Network, approximately 3.6 million veterans have a service-related disability, 7 percent of veterans are unemployed, and veterans make up 13 percent of the adult homeless population. The National Coalition of Homeless Veterans finds that 1.4 million more are at risk of homelessness due to poverty and lack of support. Additionally, up to 20 percent of Iraqi War veterans have post-traumatic stress disorder (PTSD), and 30 percent of Vietnam War veterans have suffered from PTSD at some point in their life.

And while a free lunch or a discount on something is nice, there are other ways to express your thanks to a veteran today or any other day. It’s a good idea to say thank you for your service. Beyond that, it makes sense to employ a veteran. One of the biggest hurdles service members face after leaving the military is finding a job. About 77% of veterans have struggled through unemployment and more than a quarter have searched for more than a year for a job. The unemployment rate for post 9/11 veterans peaked in January 2011 at 15.2%; in October 2013, there was 10% unemployment. Last month, the job picture for veterans improved as unemployment hovered around 7%, and that compares to 5.8% overall.

A new University of Phoenix national military survey suggests that while the veteran unemployment rate continues to decline, many veterans may actually be underemployed. A majority (61 percent) of past service members who have held civilian jobs say they have previously been or currently are in jobs beneath their skill sets, with nearly three-quarters (72 percent) saying they accepted a position because they were unemployed and needed a job. Forty-two percent of past service members who are currently employed say they are working in jobs today that are beneath their skill sets. The transition to civilian workforce can be difficult, but more and more businesses are recognizing the incredible skill sets that veterans bring to the market.

Many corporations have launched new hiring initiatives for veterans. In April 2013, Walmart pledged to give 100,000 veterans jobs within five years. In November 2013, Starbucks launched a nationwide initiative to hire 10,000 veterans and spouses by the end of 2018. Edward Jones has hired more than 1,250 veterans as financial advisers since 2012, and it is on track to hire 500 this year. Want to hire a veteran? The Returning Heroes Tax Credit should provide a financial incentive. For veterans who need jobs, the veterans’ job bank and resources on the VA website might help.

The VA should be doing much more to help, but as you probably know, the VA has made a mess off things lately. Many of the problems can be traced to inadequate staffing and training, along with chronic underinvestment in the system. Politicians seem quick to take military action and slow to pay the price. And as citizens, we let them get away with it.

The VA hospital scandal broke in May when it was revealed 1,700 veterans were put on secret waiting lists at the Phoenix VA hospital. The lists were made to hide the length of time it took for veterans to see a doctor.
Fourteen-hundred more veterans had to wait more than 90 days to see a primary care doctor at the Phoenix facility. VA hospitals in the Midwest were found to have similar problems. The scandal led to the resignation of VA Secretary Eric Shinseki last May. Robert McDonald was named the new Veterans Affairs Secretary, and after about 3 months on the job he finally announced yesterday that he is trying to take some serious action.

The VA announced it is set to fire 35 VA employees in response to the discovery that some 100,000 veterans did not receive timely access to health care. Disciplinary action was taken against 5,600 VA employees this year, including some who are still with the federal agency; an additional 1,000 employees may also be punished.

Veterans Affairs is establishing a position called chief customer service office, who will report to McDonald. The department is also creating new “VA-wide customer service organization to ensure we provide top-level customer service to veterans. … The mission of the new office will be to drive VA culture and practices to understand and respond to the expectations of our veteran customers.”

The agency also said it would improve coordination through a national network of community veterans advisory councils “to coordinate better service delivery with local, state and community partners.” It’s unclear how long it will take to roll out the reforms. The VA now has nine organizational maps and at least a dozen websites, many with their own user names and passwords. Eventually, McDonald would like all veterans to have one user name and password for all VA services.

But while the spotlight has been on firings, McDonald’s biggest and most important challenge appears to actually concern hiring. McDonald has said the agency needs 28,000 more doctors and nurses in order to keep up with the current requests for appointments by veterans. So, until he fixes one of the problems that led staff members to manipulate wait-time records in the first place — that demand for services far outstripped supply — all the terminations and online suggestion boxes in the world will do little to help. Whistle-blowing doctors have, after all, blamed clinical shortages for the mess at the Phoenix hospital, where the fiasco first surfaced.

McDonald has visited medical school campuses to recruit doctors and nurses. He’s given raises to doctors to bring their salaries more in line with private sector opportunities, but there is already a projected shortage of doctors in the general population. Maybe it is time to re-think our approach to educational funding opportunities for doctors and nurses. Hiring alone will hardly fix an organization in need of modernizing, restructuring and culture change, but it is a big part of the problem.

More important, we must dedicate ourselves to the sacred promise: leave no one behind. That applies on the battlefield as well as in civilian life. That means that if we have to pay more for doctors to treat our veterans, we do it. We don’t let politics get in the way, we don’t let anything get in the way. We do what must be done. Leave no one behind. It’s a mission that hasn’t ended, and as long as wars continue, it never will.

What truly makes a veteran has to do with the expression of qualities, such as self-sacrifice, courage, discipline, honor, integrity, thoughtfulness, brotherly love, and teamwork. This list could go on and on, but these qualities speak for themselves when it comes to why we respect those who have served, or are serving, in uniform. So many of us have a friend, relative, or acquaintance who fits this description. Taking a moment to pause and be grateful for those who have expressed these spiritual qualities says something important—not only about them, but about us, as well as about the culture that lifts up and values these qualities.

And to all veterans, thank you for your service.

Tuesday, August 26, 2014 - A Few Old Sayings

Financial Review with Sinclair Noe

DOW + 29 = 17,106
SPX + 2 = 2000.02 (record)
NAS + 13 = 4570
10 YR YLD + .01 = 2.40%
OIL + .55 = 93.90
GOLD - .70 = 1280.90
SILV - .08 = 19.38

The S&P 500 notched its 30th record of the year and closed above 2000 for the first time ever. The Dow also rose but fell short of its record closing high after setting an all-time intraday high earlier in the session.

There are a few old sayings about the market that seem to fit. The first is, “the trend is you friend”; we have seen a few minor pullbacks since the bottom in 2009, but since the start of 2013 there has been a strong and steady uptrend. “A trend in place is more likely to continue than it is to reverse, until it reverses” and today marked a continuation of the trend, not a reversal.

Why is the market going up? Who knows? There are plenty of problems around the world. The US economy looks sluggish, but “stocks climb a wall of worry to march into bullish territory”; that’s a phrase that’s been thrown around for more than 60 years, but was made popular by Joe Granville in the 1980s.  Another financial proverb claims “Worry is interest paid on trouble before it falls due.” And the opposite of the “wall of worry” is “Bear markets slide down a slope of hope.”

And then there is the very, very old saying “buy low, sell high.” Any idiot off the street could repeat this phrase to you as if they had the secret recipe for investing success. Honestly, it’s good advice, because the overwhelming top indicator for investors and traders is price. You can’t spend volume or moving averages or stochastics or relative strength, and eventually, inevitably the trend will change.

If you want to look at a chart of an uptrend, just look at the S&P 500. If you want to see a chart of a downtrend look at the past four months’ worth of charts for wheat and corn and soybeans. As we near the end of summer, farmers are preparing for record crops in the Midwest. Wheat crops are forecast at a record 273 million bushels, up from 235 million last year; this year’s  soybean harvest is also expected to be a record, and corn will be a near record. But there is a problem. In many areas, such as the Dakotas, where agriculture has been a mainstay, the energy boom has taken over, and most of that oil travels by rail, and that means grain shipments have been held up, right as we head to harvest.

Reports the railroads filed with the federal government show that for the week that ended Aug. 22, the Burlington Northern Santa Fe Railway, North Dakota’s largest railroad, had a backlog of 1,336 rail cars waiting to ship grain and other products. Another railroad, Canadian Pacific, had a backlog of nearly 1,000 cars. Agriculture Department officials estimate that Canadian Pacific would not be able to fulfill nearly 30,000 requests from farmers and others for rail cars before October.

We have a couple of reports on home prices. The Federal Housing Finance Agency’s home price index shows house prices rose just 0.8% in the second quarter of 2014. This is the twelfth consecutive quarterly price increase for the FHFA index, but it also shows a slowdown. The FHFA index is based on home sales prices from conforming mortgages through Fannie Mae and Freddie Mac. Home prices are up 5.2% from the second quarter a year ago. Arizona ranked 5^th in annual appreciation.

In another indicator of a housing slowdown, the S&P/Case-Shiller National Home Price Index gained just 6.2% in the 12 months ending June 2014, while the 10-City and 20-City Composites gained 8.1%. That’s a dramatic shift from the double-digit, year-over-year price increases that had become the norm in the second half of 2013 and the first part of this year. All three indices saw their rates slow significantly from last month. To be clear, home prices are not dropping, simply rising at a slower rate.

The 20-city composite rose 1% in June. Phoenix posted a 0.6% gain for June, and a 6.9% gain from June of last year. Nationally, prices are still 17% below their peak. In Phoenix, the peak was measured to June 2006; from that point prices dropped 56%, and although prices have recovered, we are still 35% below peak prices.  

The takeaway from the housing reports is that price gains are slowing, and home supply has increased with higher prices and more people renting; consumers are slowly losing their ability to finance large purchases as home price appreciation continues to outpace wages. Absent a big increase in wages, you might expect home prices to remain flat or even decrease a bit in coming months.

Orders for durable goods jumped 22.6% in July; that is a record move, but much of the increase is because Boeing saw a jump in signed contracts for the 777X; it will take years before those planes are flying. Along with Boeing, automakers also turned in a strong performance. Demand for cars and small trucks climbed by 10.2%. Orders excluding the transportation sector, however, fell 0.8% with widespread weakness. Orders for primary metals, machinery, computers and defense goods all declined. Another key measurement of business investment, a category known core capital goods, dropped 0.5% in July. Orders for durable goods are volatile, and can jump around from month to month. While business investment has fallen in three of the past four months, it’s increased by an annual pace of 9% so far this year.

The Conference Board’s consumer confidence index jumped to 92.4 in August, the highest level since October 2007, from a revised 90.3 in July. Confidence has now increased for four straight months, and consumers remain quite positive about the short-term outlooks for the economy and labor market, even as the future expectations index declined from 91.9 to 90.9.

It’s official, minus the approval of regulators; Burger King will buy Tim Hortons for $11.4 billion and move the corporate headquarters to Canada, except they will keep corporate offices in Miami; and even though the deal would make sense without the tax dodging; it is a tax inversion deal. Warren Buffett’s Berkshire Hathaway is providing $3 billion in financing for the acquisition. Berkshire will earn 9% annual interest by taking a preferred equity stake.

The Department of Veterans Affairs says investigators have found no conclusive proof that delays in care caused any deaths at a VA hospital in Phoenix. That may be technically accurate, or not, but a troubled health care system in which veterans waited months for appointments while employees falsified records to cover up the delays, certainly did not serve those veterans with the care they deserved. The inspector general's final report has not yet been issued.

The VA is preparing a whole host of fixes for its healthcare system. Congress approved $17 billion to expand health care resources at the VA. Across the entire VA system, $400 million must be spent on staff overtime or private doctors to ensure veterans are treated quickly. As of Aug. 6, the VA had allocated $128 million in private care costs for 83,000 veterans; 8,248 VA schedulers across the country have been trained in appropriate ways of scheduling patients, including 764 Phoenix workers; an internal investigation board will be created to identify managers at the Phoenix hospital responsible for wrongdoing and what disciplinary actions should be taken; nearly $17 million has been spent in Phoenix to send veterans to private doctors for speedier care.

Also, mental health resources have been expanded in Phoenix by filling all but three of 13 psychiatric vacancies and six of seven psychologist positions and adding four social workers. The hospital's primary care staff has been expanded by 53 doctors, nurses and other caregivers. Twenty-seven temporary examination rooms have been opened, and two new outpatient clinics are planned with an additional 30,000 square feet of space.

President Obama went to Charlotte North Carolina today to address the national convention of the American Legion; and he announced steps to expand veterans’ access to mental health care and an initiative with financial companies to lower home loan costs for military families.

The US has begun surveillance flights over Syria to gather intelligence that might lead to airstrikes against ISIS militants in Syria. Military action inside Syria has not been approved yet. Pentagon officials have been drafting potential options for the president, including airstrikes.

Here’s a thought, before we send any more troops back into Iraq, or approve any airstrikes in Syria, we should make sure the VA has figured out a way to provide the best medical care to veterans. No excuses.

Ukraine has captured 10 Russian soldiers, though it did not state how they were caught. Weapons and fighters are able to cross the porous border freely, but until now there has never been confirmation that serving Russian soldiers were active inside Ukraine, despite repeated claims from Kiev. Russian President Vladimir Putin and Ukrainian President Petro Poroshenko held one-one-one talks today in Minsk, aimed at defusing the situation, which is positive, but the Russian POWs undoubtedly makes talks a bit awkward.

After 50 days of fighting, Egypt has brokered a ceasefire between Gaza and Israel. Palestinian and Egyptian officials said the deal called for an indefinite halt to hostilities, the immediate opening of Gaza's blockaded crossings with Israel and Egypt and a widening of the territory's fishing zone in the Mediterranean.

The United Nations has produced a new study on climate change; it includes a summarization of hundreds of scientific papers and is considered to present the best scientific and economic analysis on global warming, and is designed to provide policymakers with a scientific foundation for dealing with global warming. Bloomberg says it has received a leaked copy of the report which highlights the dangers from rising temperatures including damage to crop production, rising sea levels, melting glaciers and more pervasive heatwaves. The report mentions the word “risk” more than 350 times; “vulnerable” or “vulnerability” are written 61 times; and “irreversible” comes up 48 times.

The study, called the “Synthesis Report”, says global warming already is impacting “all continents and across the oceans,” and further pollution from heat-trapping gases will raise the likelihood of “severe, pervasive and irreversible impacts for people and ecosystems”. And the longer we wait to address the problems the more it will cost.

Thursday, May 15, 2014 - A Calm Port in a Stormy World

Financial Review with Sinclair Noe

DOW – 167 = 16,446
SPX – 17 = 1870
NAS – 31 = 4069
10 YR YLD - .04 = 2.50%
OIL - .81 = 101.56
GOLD – 8.90 = 1297.80
SILV - .29 = 19.56

Today, it seems there is a lot going on. Let’s start with international hotspots.

Turks are angry following a deadly mine explosion that has killed at least 300 miners and trapped possibly 100 more; thousands of workers joined a protest strike, demonstrators clashed with security forces, and the discontent threatens the government. An aide to the prime minister was photographed assaulting a protester and there are claims that Prime Minister Erdogan himself struck a teenage girl; that after he was forced to flee an angry crowd and seek safety in a nearby grocery store. Turkish trade unions held a one-day strike over safety standards in the mining industry. Security forces deployed tear gas and water canons against protesters.

Meanwhile, reports of dozens of deaths from an explosion along the border between Syria and Turkey. Also, further allegations of ongoing chemical attacks by the Syrian government. Speaking in London today, Secretary of State John Kerry announced the US, Britain, and European and Arab states are increasing efforts to support rebels fighting to overthrow President Assad. Assad still has the backing of Russia, and that makes already tense relations with Russia even more edgy.

Fears of a civil war in Ukraine are mounting. Nobody wants to jump in with troops, and so there are clandestine forays by unidentified groups or squads of soldiers. And the major powers are only explicit with sanctions. Today, Russia announced it will halt the export of rocket engines crucial to US military defense and space programs. It must be very uncomfortable on the International Space Station these days.

Anti-Chinese sentiment has been running high in Vietnam ever since Beijing deployed an oil rig into disputed waters in the South China Sea on May 1st. There have been encounters including ramming and exchanges of water cannon between Chinese vessels operating near the rig and boats from Vietnam, which wants China out of the area. Today, Cambodia reports hundreds of Chinese nationals had poured across the border from Vietnam to escape riots.

Also, Japan’s Prime Minister, Shinzo Abe, has called for a review of how Japan interprets its pacifist constitution to allow its military to participate in conflicts beyond its borders for the first time since the end of the second world war; this in response to a growing conflict between China and Japan over islands claimed by each country; of course, it’s not just islands but the oil reserves around the islands.

Meanwhile, China issued a bunch of economic data this week, and it mostly points to a real estate slump; home sales fell 18%; housing starts were scaled back by 25%. Moody’s Analytics estimates that the building, sale and outfitting of apartments accounted for 23% of Chinese gross domestic product last year. That is higher than in the US, Spain or Ireland at the peaks of their housing bubbles. The scale of China’s building boom and the country’s reliance on infrastructure investment for growth is unprecedented. In just two years, from 2011 to 2012, China produced more cement than the US did in the entire 20th century, and it all seems to be on shaky ground these days. Each attempt to rein in China’s $25 trillion credit bubble seems to trigger wider tremors.

Brazil has sent army troops to Recife, the capital of the northeastern state of Pernambuco, after strikes lead to riots. State police walked off the job Tuesday. Schools and universities also closed down because of concerns for student safety. Today, further protests in Sao Paolo and Rio de Janeiro drew tens of thousands to the streets. The protests are centered on cities that will host the upcoming World Cup, the quadrennial global soccer championship games. Huge anti-government protests across Brazil last year overshadowed the Confederations Cup, a warm-up tournament for the World Cup. Some of the demonstrations saw clashes between activists and police, and at least six people were killed.

Many Brazilians are angry at the billions spent to host the World Cup. Protesters have said the government should focus spending instead on improving Brazil's woeful health, education, security, housing, and infrastructure systems. The World Cup starts in less than 30 days, and the whole world will be watching.

In one week, Europeans will elect a European Parliament. It’s the second biggest election in the world, after India. Voters look set to choose more assorted extremists, anti-Europeans and oddballs than ever. The Euroland economy is going nowhere, and with the razor thin exception of Germany, most countries are seeing economic contraction; that tends to lead to strange election results.

There are other hotspots around the World. The president of Yemen has declared all-out war on Al Qaeda militants and army troops are now trying to dislodge Al Qaeda from the Arabian Peninsula. Political violence returned to Bangkok Thailand, and the Thai army killed a handful of protesters and threatened more military action if the protests continue. And of course, the Nigerian crazies, Boko Haram, and the kidnapping of hundreds of schoolgirls. And of course, all the old seething conflicts that haven’t been resolved. And don’t forget, the US is still at war in Afghanistan. I know, it’s easy to forget. Apparently, it’s even easier to forget the veterans that have served our country.

Today, Secretary of Veterans Affairs, General Eric Shinseki went before the Senate Veterans Committee to explain the mess that is the VA; this following revelations that as many as 40 veterans died while waiting for medical care at the VA facility in Phoenix.

Since the allegations arose last month that veterans were forced to wait months for appointments at the Phoenix VA medical center and that VA officials were covering up the problem, Shinseki said he has asked the VA's inspector general to investigate. He said he has also launched an intense investigation of scheduling practices at the VA's other 151 medical centers. Shinseki said he was “mad as hell” and the various Senators all acted very indignant. Of course, it wasn’t very believable theatre.

One of the documents brought forth today was an internal VA memo, written in 2008 by a team of VA managers, listing 25 ways that VA scheduling clerks were cooking the books to make it appear that veterans waiting for medical care actually were being seen on time, when in fact they were being made to wait weeks or months.

And then, 2 years ago, the Government Accountability Office reported that VA schedulers were fudging wait times for veterans seeking outpatient care and avoiding using the electronic waitlist as required. The GAO report includes a response from Shinseki's chief of staff at the time, writing that the VA has "proactively taken steps in response to GAO's findings." Clearly that didn’t happen.

Meanwhile, Southern California is on fire. Actually nine fires are burning in the greater San Diego area and they have already destroyed more than 10,000 acres, forcing evacuation of about 125,000 residents. California Governor Jerry Brown has declared a state of emergency to free up resources. It’s hot, it’s dry, and it’s just the start of the fire season.

The 2014 fire season is repeating a pattern of destruction established over the past decade by a combination of high temperatures, parched vegetation and more people living in wooded areas. Fires feeding on plentiful dry grass, brush and hardwood are requiring more personnel and money to bring them under control. More than twice as many acres burned across the US through May 9 this year than during the same period in 2013.

Last week, 96% of California was considered to be under “severe” or worse drought conditions, with about 4% of the southeastern tip of the state still in “moderate” drought conditions. A year ago, only 46% of the state suffered from “severe” or worse conditions. As of today, the National Drought Mitigation Center reports severe drought conditions now engulf 100% of California.

Meanwhile, former Treasury Secretary Tim Geithner is trying to polish his tarnished image; he’s on a book tour peddling the notion that the Wall Street bailout was a huge success. And while it might be argued it prevented a Great Depression, it is delusional to consider it a success. It was at best an experiment that did not result in a worse catastrophe. It did little or nothing for the tens of millions of Americans who lost billions of dollars in home equity and savings, and the millions more who lost their jobs. The toll was greatest on the poor and the middle class. Nor have reforms been enacted that will help the middle class and the poor the next time Wall Street implodes.

Economic data today showed industrial production in the US unexpectedly declined in April, held back by a plunge in utilities as temperatures warmed and a broad-based decrease in manufacturing. That contrasted with a higher-than-forecast reading on the Fed Bank of New York’s gauge of regional manufacturing, which climbed to 19.01 this month, from 1.29 in April.

Initial claims for state unemployment benefits declined 24,000 to a seasonally adjusted 297,000 last week. It was the lowest reading since May 2007.

Consumer prices recorded their largest increase in 10 months in April. The Consumer Price Index increased 0.3% last month as food prices rose for a fourth consecutive month and the cost of gasoline surged. In the 12 months through April, consumer prices rose 2.0%. Stripping out food and energy prices, the so-called core CPI rose 0.2% after advancing by the same margin in March. In the 12 months through April, the core CPI increased 1.8%, the biggest gain since August last year.

Normally you might expect higher inflation numbers to result in lower bond prices, which means bond yields would move higher; not today. The yield on the 10-year Treasury note dipped below 2.5% intraday. Of course, Treasuries are considered a safe haven investment, and it seems a lot of people are looking for a calm port in a stormy world.