• Little market on close imbalance today.

• The real estate maven comments on California.

Real estate maven Mark Hanson addresses the weakness in the San Francisco housing market this afternoon:

In July, SF City was down a whopper 24% YoY.  Santa Clara was down 15% YoY.  And the favorite "vacation home" region for young, option heavy Silicon Valley kids -- Napa Valley -- was down 25% YoY.

I don't even think there was YoY demand destruction this high from 2006 to 2010.

Important observation...July "sales" are purchase and pricing decisions done in May and June, right after the 2 month small cap, high PE, biotech etc stock rout that began at the end of March.

And just so So Cal doesn't feel left out, demand destruction is huge there too.

• The Russell 2000 continues to lag.

• The firm's stake is up to 2.6 million shares from 222,000 in its previous filing.

Omega Advisors raises its Ocwen (OCN) stake to 2.6 million shares from 222,000 in its previous filing.

• Give me an hour.

I have an errand for an hour or so.

Be back.

• At $96.80.

I just added to my PowerShares QQQ (QQQ) short at $96.80.

• Strong 30-year auction.

Break in: The 30-year Treasury bond auction was quite strong by any measure (directs, bid to cover, etc.).

Most notably, the when-issued was at 3.24%, and the auction came in at 3.22%.

• Here are his midday musings.

Midday musings from Sir Arthur Cashin:

Still churning in 1948/1958 resistance band. They have spent last hour in the core band of 1952/1955.

So far action is soporific with run rate again projecting a very slow day with a chance/risk that we might see the slowest -- very unusual for Thursday before Option Expiration. That could easily change after president speaks or convoy surprises. Run rate at 12:15 projects to an NYSE final of 510/590 million shares.

• Sizing up today's market.

In sizing up the market thus far today, I suppose we can say, "More of the same." Indices are up small and, for now, seem back into the 1,945 to 1,985 trading range.

Easing geopolitical pressures, depressed sentiment, an increase in short positions (into a recent drop) and weaker global economic data, which pushes out Fed tightening (see Stanley Fischer's speech from Monday and Tuesday's Reuters column on Janet Yellen), are all likely factors for the rally since last Thursday.

• Shares are creeping higher.

Ocwen Financial (OCN) is inching up today.

Peers Nationstar Mortgage Holdings (NSM) and Walter Investment Management (WAC) are doing the same.

• Should I move to my highest net short position of 2014?

I am considering moving to the highest net short position I have had for all of 2014 now.

So you know.

• Here are his midmorning musings.

Midmorning musings from Sir Arthur Cashin:

Thursday's before Expiration have a history of high volatility. Not so far today.

S&P churns through layers of resistance at 1948/1958. Trucks still roll but Russian market bets on no confrontation.

Away from stocks, buzz builds about an alleged massive short in U.S. bonds. Here is an example from the very savvy Peter Tchir of Brean Capital:

For all the talk about how our rates are in a bubble the U.S. 10 year treasury offers higher income than most other countries and has underperformed so far this year.

Not as thought that has stopped investors from pumping money into TBT which controls almost $9 billion of short positions despite being down 26% year to date. The long version of that same fund, UBT (which I could never recommend for a variety of reasons) has a "whopping" $0.035 billion market cap in spite of returning 31% YTD.

Then we can look at TLT. According to Bloomberg, the short interest is 34.2 million shares out of a total of 33.9 million shares. So 101% of the entire float is being shorted (someone must be failing on their stock borrow). That level of short interest would take 4.5 days of trading to cover.

If global growth is slowing, and the central banks remain accommodative, our relatively high yields and incredible short base, could cause a short squeeze of epic proportions - remember that between the Fed, Insurance Companies, and Pension Funds, the free float of longer dated bonds is not that large, and I have not included outright treasury shorts or those who are using futures or interest rate swaps to be short.

• At $24.55 for a profit.

Housekeeping item: I took in half of my Cisco (CSCO) trading short rental at $24.55 for a profit.

• Here is some commentary from the one of the firm's technical analysts.

View from UBS's technical analyst today:

On the index basis we got bullish daily candles in the SPX and in particularly in the Nasdaq Composite. Having said that, on the intraday basis we have a bigger divergence forming on the hourly basis in the SPX future and our intraday cycles are toppish, which suggests a top today and the beginning of a bit of a pull back. Generally, in our rebound call from last week's minor low at 1904 we said we expect a corrective rebound into later August. The most common corrective rebound pattern is a classic A-B-C. With the current divergence in the SPX future we think we are near to complete the first rebound wave A, which means over the next two sessions we can see a pull back towards 1925 to 1918 before starting another rebound wave next week. A re-break below 1940 would be intraday bearish!

• Here is his commentary.

Good piece on labor market from my buddy/friend/pal David Kotok from Cumberland:

Half Labor Market Improved; Other Half Won't

August 14, 2014

Underbelly of labor market improving" writes Neil Dutta of Renaissance Macro Research, who writes a daily screed on economic releases. It is a worthwhile read.

We agree with Neil. The latest data from the JOLTS (Job Openings and Labor Turnover Survey) report is used to update our Beveridge Curve series. Beveridge Curves are used for several different measures of unemployment in order to disaggregate what is otherwise the major unemployment rate. The Beveridge Curves listed on our website offer some of those comparisons. There is a lot more data in the labor report that is not evidenced in the Beveridge Curves depicted here; however, they are still just as strong in terms of suggesting that Neil is correct.

Our conclusion is that the job openings side of the Beveridge Curves has now reached recovery levels. That is shown in those charts.

The US continues to have a labor cohort that is chronically unemployed. Our bifurcated US economy now has two component parts. While one part languishes, the other part appears to be nearly fully recovered. The question is whether we will begin to see any pressures for higher employment costs and wages as a result. That question looms in front of the US economy and is a major determinant of possible Federal Reserve (Fed) policy change.

Will we see any improvement in the outlook for the chronic, long-term unemployed or for the growing cohort of disabled workers who are not in the labor force? Probably not. An improved employment outlook for that group will be driven by long-term structural solutions that will not be impacted materially by Fed policy changes or other Washington, DC-based alterations. Given our political structure, we do not expect any Washington, DC-based changes until at least 2017.

Let's get back to the first question regarding the Fed. What will be the triggers that might accelerate Fed policy change? A more fundamental question, asked by my partner Bob Eisenbeis, is whether or not rising wages are inflationary. Bob notes that productivity gains can support rising wages without exerting inflationary pressures. Will we see the productivity gains? Do we have sufficient expanding capital investment in order to do so?

In the Technology sector, it is appears that the answer is yes. In the recovery, the Technology sector is one of the early beneficiaries of realignment or improvement in capital investment. Firms and agents tend to invest in new technology software and hardware rapidly as economic conditions improve. The reason is simple. The payback for the investment is fast. Longer-term investments take more structure. Shorter-term investments, which recover quickly, have a more immediate impact. Therefore, we see improvements Technology sector.

Even as Cumberland Advisors has a strategic cash reserve because of world events, it also has an invested position in the Technology sector. We like the Technology sector. We think it has growth possibilities and is one of the few sectors where we would deploy stock market investing now. We use a selection of exchange-traded funds (ETFs) in order to establish those positions.

• I remain optimistic on Monitise but less so than I was in 2013.

I purchased Monitise (MONI.L/MONIF) in March 2013 based on several factors:

• the large size of the addressable market in mobile payments and banking;
• superior company management;
• first-class joint venture partners/alliances who are particularly well-positioned in the markets that Monitise intends to serve; and
• a relatively strong balance sheet considering the startup nature of the company.

As I mentioned previously, this morning Berenberg reduced its price target on Monitise from 74 pence to 42 pence.

In light of the price drop over the past few months, I don't expect Berenberg's report to adversely impact Monitise's shares.

Here is the report.

Berenberg's research addresses some of the concerns (specifically as it relates to the company's architecture/strategy) that the markets (and short sellers) have had over the past few months.

The report also raises the possibility that IBM (IBM) might, in the fullness of time, acquire Monitise.

As we know, there are no slam dunks, especially with regard to startup technology companies that are entering a rapidly changing business and that are disrupting a very large market (mobile payments/banking). This is why, in part, I have characterized Monitise as being a speculative investment vehicle.

Monitise's management team has superior credentials and remains very upbeat in public conversations with investors. But, as I always remind analysts who have worked for me, I am ever the cynic, as I have never met a management that didn't think its opportunities were excellent/exciting.

Having recently failed to live up to previous expectations, Monitise management already has a strike or two against it, so a healthy skepticism of its read might be called for.

That is why I have called Monitise a show-me stock, with little in the way of short-term catalysts to revive the share price.

While my contacts with current and prospective customers of Monitise confirm managements' optimism, we can't lose sight of the fact that the mobile payments/electronic banking businesses are changing weekly with innovative entrants and a lot of capital seeking market share.

September News Could Catalyze Shares

The next important date for Monitise is the formal release of its quarterly results during the second week of September. Some more upbeat subscriber/alliance news could potentially offset the recent spate of bad news, which could stabilize/ improve the company's share price.

Bottom Line

On a positive note, the recent addition of several former Visa Europe employees is a comforting signal.

Though investors should prize Monitise's managements' resumes and strategic partners, the company remains a very speculative bet with numerous outcomes (some negative) ahead.

I remain optimistic on Monitise but less so than in 2013.

That said, the sharp drop in share price has likely discounted a lot of the questions that investors have now, and, in my view, there is a relatively large option value available at $0.70 a share. Also, it is not outside the realm of possibility that the lower share price has made Monitise a potentially attractive takeover target.

Away from management's (not surprisingly) positive views, we can safely determine that the success of our investment in Monitise will key on two core questions:

1. Is it a realistic assumption that Monitise's customer base can rise to above 200 million customers in the next few years?
2. And if it does achieve this objective, will it be profitless prosperity, or will the company produce solid cash flow/profits?

As is nearly the case in evaluating any stock in any rapidly changing industry, it is still too early to answer these questions with confidence.

I intend to carefully parse the upcoming September news for more answers.

I am still a buyer of Monitise on weakness, and I intend to hold on to my investment in the name.

• Namely, jobless claims and import prices.

Peter Boockvar parses through the economic data released this morning:

Initial Jobless Claims rose by 311k, up from 290k last week and was 16k more than expected. The July auto shutdown seasonal distortion influence is likely over and the 4 week average that smoothes this out is 296k vs 294k last week. Continuing Claims rose by 25k after falling 23k in the week prior. Bottom line, while claims are higher than forecasted, it's likely due to some mean reversion after the July seasonal issues. The 4 week average is still around the lowest level since 2006. While it would be nice to just look at the better labor market data and use that as a backdrop for investing, it's unfortunately not the world we live in because the Fed has so immersed themselves into our markets and economy. The reversal of that, no matter how slow the Fed wants to go, will be the main driver of asset prices in the year to come no matter how much we want it to be the underlying fundamentals.

Import prices for July, the 1st of the upcoming inflation stats over the next week (PPI out tomorrow), was benign. It fell .2% m/o/m vs the estimate of down .3% but was flat ex all fuels. Import prices particularly from China fell .2%. Bottom line, while we can take comfort that we're not importing inflation, it's been the services side of the US economy that has been the sticky side of inflation, running north of 2% y/o/y. CPI next week is expected to rise 2% y/o/y for the 4th straight month.

• The shares have rallied from their low.

Cisco (CSCO) reported better metrics (sales, deferred revenue, EPS) for the fourth quarter but issued cautious commentary.

Particularly concerning was weakening emerging market demand and the first-quarter guidance that is short of consensus.

I shorted the stock last night, covered for a gain and reshorted on a rally from the lows.

• Here is his morning commentary.

The gospel according to Peter Boockvar:

After spending the first few hours this morning lower as the euro zone economy in Q2 did not grow q/o/q vs the estimate of up .1% and Germany's economy contracted by .2%, European stocks and the S&P futures reversed higher after Vladimir Putin in his own strange style is trying to make nice. Speaking to his political peers in Yalta at around 5:45am est he said "we are closely following what is happening, are posing questions to the Ukrainian leadership, to the world community, and to key international organizations, and we will do everything possible so that the conflict ends as soon as possible." He also said he does not want Russia isolated from the rest of the world. Putin however still managed a jab at the Ukrainians by saying the authorities there "took lots from Crimea, gave little." Russian stocks are also bouncing for a 5th day with the Micex index at a 3 week high.

In response to the weak Q2 GDP report out of Europe, I'm sure they'll be cries today for the ECB to do more but I think that's nonsense for two reasons. Number 1, the key initiatives of the targeted LTRO program hasn't even started yet and the only QE the ECB will do is the ABS buy program which they are still working on. Number 2, is the cost of money the inhibiting factor blocking faster growth in Europe? Really? as the German 10 yr yield is about to break 1%, France can pay 1.40%, the Netherlands can borrow at 1.2% to name a few? Can some finally admit that there is no working transmission mechanism between ever cheaper money and economic activity. Let's bring back the "pushing on a string" phrase, I haven't heard it in a while. Structural reform by liberalizing the labor markets in the region and putting in a competitive tax regime is what is needed. In other words, a taste of more capitalism.

After a solid run over the past month, Chinese stocks are running out of some gas as the Shanghai index fell .7% after managing to close flat yesterday in the face of weak data. The sentiment there is going back and forth between the acknowledgement that the property market bubble continues to deflate but hanging on hopes that thru both fiscal and monetary stimulus the deflation can somehow be managed. Copper is little changed but only after closing at a 7 week low yesterday. The Journal of Commerce index of 18 industrial materials has now flat lined for the past few weeks after touching 3 year highs in late July.

Japanese machinery orders grew 8.8% m/o/m in June after falling by 19.5% in May but that was well below the estimate of an increase of 15.3%. The Japanese economy is at a major crossroad between digesting the tax hike and higher inflation, waiting for higher wages/salaries to absorb it, waiting for the 3rd arrow of Abenomics to light a fire under corporate Japan and the BoJ's belief that expanding their balance sheet to 50% of GDP is somehow prudent.

Lastly, the bounce back in US stocks since last Friday has flipped the bulls and bears according to the AAII individual sentiment measure. Bulls rose to 39.8, a two month high vs 30.9 last week. Bears fell to 27 from 38.2, a 6 week low. This measure of sentiment is highly fickle.

• Where it began.

The rundown:

• U.S. futures are slightly higher at the get-go. (S&P futures are up by 2 handles, and Nasdaq futures are up by 5 handles ).
• European stocks are modestly higher. (See Peter Boockvar's parsing of the overnight EU second-quarter GDP that follows.)
• Nikkei is up 0.66%. Yesterday's poor second-quarter 2014 real GDP and last night's core machinery orders fell short of consensus as the demands for more aggressive policy moves are rising. Look for talk that Abe will scrap the next phase of the consumption tax hike and maybe even that the Bank of Japan might move a tad. All sectors were higher, with energy and healthcare outperforming. The Japanese yen is flat.
• China is down 0.74%. Growth worries (from earlier-in-the-week data) are a factor in the profit-taking. Industrials were strong, while consumer, utilities and energy were less robust.
• On the foreign-exchange front this morning, the U.S. dollar is down 0.07% and the euro is higher by 0.10%.
• Gold is down $2 an oounce, and crude is slightly lower. Copper prices are little changed.
• The yield on the 10-year U.S. note is unchanged at 2.42%. Sovereign debt yields are 2 basis points to 4 basis points lower. In my "15 Surprises for 2014," I predicted that the 10-year yield would range between 2.50% and 3.00%. (It closed 2013 at 3.03%, and the consensus was 3.50% to 4.00% at that time.) I shorted U.S. bonds, selecting ProShares Short 20+ Year Treasury (TBF) as my preferred vehicle.

Reflecting "conciliatory" language from Putin this morning, global stock markets are modestly in the green. Asia is mixed, with India stronger and China weaker. No change in the narrative nor any exceptional news released.

Eyes on earnings. Wal-Mart (WMT) guided lower and Kohl's (KSS) is also preopen. Applied Materials (AMAT), J. C. Penney (JCP), Autodesk (ADSK) and Nordstrom (JWN) come after the market's close. Also 13Fs from hedge funds come out later in the day.

Berenberg downgrades Monitise (MONI.L/MONIF) to Hold with a 42 pence price target (from 74 pence). I will have more on this later in the day. (The shares are trading flat in London.)

I am at an early breakfast meeting for the next hour or so.