What will be the next major market narrative? An argument can be made Greece and the potential change in US monetary policy is not as significant as they once were. There was little market reaction—defined as volatility greater than 5%–with each of the above. Yes the markets did trade on the news and the anticipation of such, but the veracity and velocity of such paled in comparison as to market reaction to each of the above in years past.
Will it be rising oil, the effect of a chaotic Middle East? What?? Consensus view is for oil to reverse its rising tide.
Will it be greater than expected economic growth that increase demand pull inflation? What??? This is even more ludicrous than oil staging a significant rebound.
Or will it be individual sectors greatly outperforming the general indices, the inverse of the last 10-12 months where according to Bloomberg and CNBC the markets is as myopic as 2000.
[Note: CNBC stated yesterday the NASDAQ 100 would be down considerably if five stocks were eliminated from this index. Bloomberg wrote at the end of January the “typical” stock is down about 23%]
In my view the odds of three occurring above are over 50%. The Middle East is in anarchy as there are Muslim countries bombing Muslim countries, the result of the atrocities committed by ISIS.
There are number of countries that already have negative interest rates and JP Morgan was the latest money center bank who will begin charging large depositors a surcharge to hold their deposits. Will this force companies to begin expanding?
Regarding market performance, referencing 2000, individual sectors greatly outperformed following the tech implosion that crushed the NASDAQ.
Returning to the here and now, markets were relatively quiet. Today the CPI, Durable Goods Orders, a home price index and weekly jobless claims are released. Will the data impact trading?
Last night the foreign markets were up. London was flat, Paris up 0.20% and Frankfurt up 0.35%. Japan was down 1.08% and Hang Sang up 0.50%.
The Dow should open quiet following two days of Congressional testimony by FRB Chair Yellen that inflation and wage growth remain too low for the central bank to raise rates at its next meeting. The 10-year is up 7/32 to yield 1.95%.