Stocks rose handsomely on Friday on reports of a deal between Greece and its creditors. It is my understanding there is a four month extension of Greece’s aid if Greece meets conditions. In my view, most have acknowledged that in most scenarios Greece may not be a significant market event given the monetary posture of the ECB.
Speaking of monetary policy, tomorrow commences the two day Humphrey Hawkins testimony given by Fed Chief Yellen. How will the testimony be interpreted? To date the majority of official fed statements have been dovish albeit there is a loud hawkish minority.
Many times I have commented on five different occasions since 1990 oil has dropped about 48% only to rally about 52% in the next six months after a floor was established. Has crude reached its nadir? Oil fell last week, the first time in four weeks.
Since its late January low, oil is up about 16%. Last Tuesday, crude was up about 24% from its lows. The oil narrative is overwhelmingly negative with many proclaiming the current advance is nothing other than noise and short covering.
I don’t accept this view for a myriad of geopolitical and geostrategic reasons, reasons that can cause a massive supply disruption. Every day I become even more discouraged from the headlines in the Middle East and Ukraine. Most will acknowledge the Middle East is facing the greatest anarchy since the dissolution of the Ottoman Empire over 100 years ago.
Moreover at current prices thee existence of various countries is threatened.
What will happen this week? The economic calendar is steep in housing statistics, regional manufacturing and confidence surveys as well as the CPI. Will this data be ignored and all instead focused upon FRB Chair Yellen’s testimony?
Last night the foreign markets were up. London was down 0.30%, Paris up 0.13% and Frankfurt up 0.38%. Japan was up 0.73% and Hang Sang up 0.02%.
The Dow should open quietly lower. The 10-year is up 5/32 to yield 2.10%.