• Expect the market to react a negatively.

IBM (IBM) misses on the top line and hits consensus expectations on the bottom line. I expect, as with Google (GOOG), that there will be a negative market response.

I remain short IBM.

• Paid clicks were a bit weaker than expected.

Google (GOOG) misses modestly on the top and bottom lines. Paid clicks came in a bit weaker than consensus expectations.

• Goldman Sachs reports on the Fed Chair's remarks at the Economic Club of New York.

Goldman on Whirlybird Janet Yellen:

• The Lindsey Group's Peter Boockvar reviews the Beige Book.

Coming shortly after comments from Yellen that were nothing new (watching how the bond market behaves is now more important than what the crystal ball of the Fed says), the Fed's Beige Book described US economy activity has having increased in most regions of the country since the previous report. 8 Districts described activity as "modest or moderate," Chicago said "growth had picked up," and NY and Philly said things "rebounded from weather related slowdowns earlier in the year."  Two other districts reported a decline in economic activity. Here are other bullet points:

"Consumer spending increased in most Districts, as weather conditions improved and foot traffic returned."

"Sales of cars and light trucks picked up in recent weeks as the weather improved and consumer traffic returned to dealerships."

"The transportation sector generally strengthened in recent weeks, with higher port volumes and increased trucking."

"Manufacturing improved in most Districts."

"Reports on residential housing markets varied. However, home prices rose modestly and inventory levels remained low."

"Commercial construction strengthened."

"Loan demand strengthened since the previous Beige Book."

"Labor market conditions were mixed but generally positive."

"In most Districts, wage pressures were contained or minimal."

"Prices were generally stable or slightly higher."

Bottom line, the weather hit areas certainly saw a rebound in economic activity which begs the question soon to be answered of whether the economy is just getting back to its previous 2.5% type range or is on the cusp of accelerating to above 3% on a sustainable basis, aka the 2nd half of 2014. We remain in the former camp until income growth speeds up from its still current lackluster level.  In terms of inflation, March saw 3 inflation reads that were higher than expected, with CPI specifically Tuesday and after gaining 4 bps yesterday, the 2 yr inflation breakeven is higher by another 4 bps today to 1.81%, the highest in a month. Inflation expectations 10 yrs out are also rising to one month highs at 2.17%. These are obviously still very benign reads but points to greater signs that the bottom in inflation is behind us. Lastly and in terms of Fed policy, the economic data supports another cut in Fed asset purchases in two weeks to $45b per month, a come down of $480b at an annualized pace, thus about half way done. While many in the market are mostly focused on when the Fed may raise the fed funds rate, I continue to believe that tapering is tightening and remains the #1 headwind for stocks this year that will result in lower prices by about 15% at some point in 2014 before all is said and done.

• Midday musings from Sir Arthur Cashin.

Not much movement as they hold in narrow range.  No surprises from Yellen so far.  Run rate at 1:00 projects to final NYSE volume range of 680/760 ¿ slower than yesterday.

• I just added to my iShares China Large Cap (FXI) short at $35.83.

Knowledge@Wharton has an interesting column on the subject of "China's Ticking Debt Bomb,"  and the case being made is that China will soon experience a "disorderly unwind" of private and local government debt.

• Monitise (MONIF) trading back at more than $1 a share.

I suspect we willl look back two years from now and recognize what an opportunity the recent selloff has afforded us.

• Now that the business media is almost universally bullish after yesterday's "reversal," it might be time to get back net short.

• Whirlybird Yellen sounds hawkish in her remarks just out at the Economic Club of New York.

• They're at the helm today.

Defensive stocks -- Procter & Gamble (PG), Coca-Cola (KO), International Flavors & Fragrances (IFF), Clorox (CLX) and so on -- are leading the parade today.

• This is your captain speaking.

If it is 11 a.m, it is time to fasten your seat belts.

Beware of the turbulence. 

And err on the side of conservatism.

• Looking at a few while stuck in EWR.

I am bidding for more Ocwen (OCN) at $39, Bon-Ton Stores (BONT) at $10.50 and Northwest Bancshares (NWBI) at $14.50,

Baxter (BAX) is bid well and now well above my $73.40 limit.

Some other of my holdings like P&G (PG) and GM (GM) are trading better.

That said, I dont trust today's advance.

But maybe my downbeat mood is based on the fact that I am stranded at Newark Airport!

• The Lindsey Group's Peter Boockvar comments on the better industrial production numbers.

March industrial production rose .7% m/o/m, above the estimate of up .5% and February was revised sharply higher to a gain of 1.2%, twice the initial print. A sharper than expected gain in manufacturing output driven by auto's/parts helped February but it was utilities and mining that drove the upside in March. Capacity Utilization was 79.2% vs 78.8% in February and that's the best level since June '08 but still hasn't reached its 30 yr average of 79.7%.

Bottom line, the manufacturing production index (about 75% of IP) is back to the best level since March '08 at 98.7, not far from the record high of 100.8 in December '07. Auto production has been a key component of this rebound but has flattened out since November as the industry likely digests the sharp inventory increases in the last few months. Utility output due to the weather has also helped the production figures. In terms of the market, this data point is never market moving but hopefully as capacity utilization gets ever closer to the 80% level, maybe companies will finally start to increase capital spending to a level that will more forcefully move the GDP needle. That said, if it occurs, higher interest rates that will be a coincidence will have to be overcome. This is a natural roadblock that the Fed has unfortunately perpetuated because of the extremity of its policy.

I continue to believe that the bond market is overpriced and I added to my already-large ProShares Short 20+ Year Treasury (TBF) long yesterday.

• The market has no memory from hour to hour or day to day

The only certainty is the lack of certainty and the likelihood of continued volatility.

Those that profess to be able to conjure up short-term predictions in this setting are charlatans. Special sauce is not for market prognostications, it is for Big Macs.

The recent volatility is here to stay and is great for opportunistic traders, but uncomfortable for the buy-and-hold crowd.

I am not willing to commit much capital into the uncertainty in the markets and in the economy.

• I am hearing many commentators and analysts suggest that Bank of America's (BAC) earnings were just fine.

I couldn't disagree more and my short position is already starting to pay off.

• Short three and long two.

In the banking sector (net short), I am short Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC) and long Citi (C) (low-hanging expense reductions lie ahead and likely CCAR approval) and Northwest Bancshares (NWBI) (niche regional with superb capital allocation strategy and in the middle of fracking area in Pennsulvania).

• Bernstein on Apple (AAPL) this morning:

1. We expect an update on cash return on Apple's earnings call - while many investors would like to see a commitment to return the majority of ongoing cash to shareholders, we think an increase in current authorization of $30B+ is more likely.
2. We see more downside than upside risk to numbers, particularly for June qtr guidance, due to weaker iPhone. We forecast 38.8M iPhones for Q2, and 33M for Q3, and Q3 guidance of ~$37B in revs and $8.15 in EPS vs. consensus of $38.5B/$8.58.
3. The see trade in AAPL as iPhone6 & new offering approach - big question is whether to purchase before or after qtr. Expectations are tepid & Apple is likely to aggressively buy shares on any pullback towards $500. We would buy on any pullback. OP, PT=$575

I sold most of my Apple above $540 share (after putting the stock on my Best Ideas list at $500) and recently sold out my tag ends.

• The Gospel According to Peter Boockvar

The economic data overnight in China further confirms the slowdown there but relative to expectations the figures were mixed. GDP in Q1 rose 7.4% y/o/y, down from 7.7% in the previous quarter but a touch above the estimate of 7.3%. It is the slowest rate of gain since Q3 '12. Retail sales were up 12.2% y/o/y, the smallest gain since February '11 but above the estimate of 12.1%. Both industrial production and fixed asset investment gains were below the estimates with the former growing at the slowest pace since April '09 while FAI grew at the weakest rate since December '02. The Shanghai index and Hong Kong China index responded with a basically unchanged closed while copper is up .5%. Outside of the 3% spike in the Nikkei, the rest of Asia was mostly little changed. Late yesterday, the US Treasury again did not call China a 'currency manipulator' but said "recent developments in the RMB FX rate would raise particularly serious concerns if they presage renewed resistance to currency appreciation and a retreat from China's announced policy of reducing intervention and allowing the FX rate to reflect market forces. The Treasury Dept will continue to monitor China's FX rate regime." These comments I say are laughable and the height of hypocrisy considering the extraordinary money printing over the past 5 years from our own Federal Reserve, the brother in arms of the US Treasury Dept but politics will always be politics.

It's a good think Mark Carney and the BoE rid itself of its own quantitative guidance where a 7% unemployment rate was supposed to herald the possibility of a rate hike because the UK unemployment rate for the 3 months ended February fell to 6.9% from 7.2% as 239k new jobs were created during this 3 month period, well above the estimate of up 90k. Also, average hourly earnings rose 1.7% y/o/y, finally exceeding the rate of inflation after years of standard of living compression in the UK. The March UK jobless claims figure was also good, falling 30.4k, about in line with the forecast. In response, the pound is rising to just shy of the highest level vs the US$ since November '09 and gilt yields are up across their curve.

The March EU CPI final read was in line with the preliminary, up .5% y/o/y while the core rate was revised down to a gain of .7% from .8%. Because energy and food prices have since rebounded and the timing of Easter this year is in April instead of March last year, CPI should pick up in April. The euro is higher on the day, remaining sticky at the 1.38ish level notwithstanding all the best verbal efforts of Draghi and his mates.

In the US, the MBA said refi applications bounced 6.9% w/o/w after 3 weeks of declines as the average 30 yr mortgage rate fell to 4.47% from 4.56%, a 6 week low. Refi apps however are still down 70% y/o/y. Purchase applications were up slightly by 1.3% to the best level since late January but remains 16% below its level of last April. Housing starts and permits for March come today at 8:30am. In terms of stock market sentiment, II said Bulls fell to 50.5 from 54.6 last week and 50.5 in the week prior. Bears rose 4 pts to 20.6 and is above 20 for the 1st time since October but the gap between the bulls and bears of about 30 is still pretty wide.

• I shorted Bank of America (BAC) in premarket trading  at $16.34.

• BofA gives us more evidence.

I recently wrote, in Time to Make a Withdrawal, a negative thesis on the banking sector.

To verify my cautious outlook, all one has to look at is the revenue and profit components of the hedge fund community's favorite bank stock Bank of America (BAC).

Net interest income hit a record low (at 2.29%), net interest income disappointed ($10.1 billion vs $11 billion expected), credit quality has begun to deteriorate (1Q 2014 loan loss provision increased to $1 billion from fourth quarter's $335 million).

FICC revneues declined by 2% (weaker rates, currencies, lower market volumes, higher volatility) and home loan originations down by more than 60%, etc.

• The general view is that China is irrelevant to the S&P index.

Last night, China's 1Q 2014 real GDP came in at +7.4%, down from the fourth quarter's rate of growth of +7.7%, but slightly ahead of consensus of +7.3%.

Industrial production was +8.8% for March vs. consensus of+ 9%, retail sales were +12.2% compared with the consensus of +12.1% and fixed-asset investment was +17.6% vs consensus of +18%.

Everything was broadly in line and China's local market's were not impacted by the release. ( I put an iShares China Large Cap (FXI) short on yesterday).

The economic numbers are, to a large extent, fudged, as we know. And, as always, there are no subcomponents given for GDP and no deflator. The relevance here is simply to have this out of the way, as data out of China of late has been to the weak side, especially recent import data. 

The general view is that China is irrelevant to the S&P index and to most capital markets in general (certain commodity markets are a different story). 

GDP growth has slowed to the 7-7.5% level, down from 9.8% in 2010, 8.9% in 2011, 7.9% in 2012 and 7.7% in 2013. And the Chinese economy may slow to the 6.5-7% range by year end. But the market has likely discounted this. The slowdown would have to be much more dramatic to matter and there is no reason to expect this. Most believe markets are safe with anything aobve +6.5%.

• A seven-hour flight delay at Newark Airport turned into a flight cancellation at midnight last night.

Without a hotel reservation -- New York City hotels were all booked due to the Easter hoilday -- I have had a wonderful evening.

That said, futures are up big for no apparent reason in a market without memory from hour to hour.

More to come.