Advisor Login Contact Us

Stocks Rose Handsomely on Friday on Reports of a Deal Between Greece and its Creditors.

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%.

Return To Index Page
Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.