|Dow||-42.17 to 18,037.97|
|S&P 500||-8.77 to 2,108.92|
|Nasdaq||-31.83 to 5,060.25|
|10-YR Yield||+.007 to 1.924%|
|Gold||+$26.50 to $1,201.50|
|Crude Oil||-$0.37 to $56.78|
Is Greece greasing the gears for a deal with its European creditors?
That’s what markets started betting on today, after Prime Minister Alexis Tsipras sidelined his controversial Finance Minister Yanis Varoufakis. Specifically, he boosted the negotiating role of a deputy foreign minister and changed the responsibilities of two other Greek representatives.
The moves are a clear attempt to placate European officials fed up with the fiery and controversial Varoufakis. And they had the desired effect — sending Greek stocks and bonds sharply higher on the day. That buying spilled over into the euro currency and U.S. stocks, both of which advanced sharply.
What’s the problem with Varoufakis? In the words of euro-zone finance ministers, he’s a “time-waster, gambler, and amateur,” according to media reports. Talks in Latvia late last week devolved into a finger-pointing session, with Varoufakis taking the brunt of Europe’s anger.
|Greece needs to come up with 1.5 billion euros for pensioners and employees this week.|
It’s not like Greece has time to fiddle while Athens’ finances burn. The country has to pay 1.5 billion euros to pensioners and employees this week, and it needs to cough up another 200 million euros to the International Monetary Fund (IMF) in early May.
Plus, signs are emerging that Greece’s hard-line negotiating stance is losing favor with the country’s citizens. Two new polls in Greece suggest they want Tsipras to strike a more conciliatory tone to get a deal done and keep Greece in the euro currency union.
So what does this mean for investors like you? Well, the various negative headlines out of Europe have been having less and less of an impact on world markets over time. That’s because policymakers have taken several steps over the past couple of years to lessen the fallout from a potential “Grexit.”
But I think POSITIVE news could remove the final obstacle to a major, countertrend move higher in the euro, and a corresponding, sharp correction lower for the dollar!
Look, I’ve already highlighted how several peripheral currencies are rallying against the buck. I told you late last week how even the British pound and Canadian dollar have joined in. Then overnight, the Taiwanese dollar just surged by the most in 15 years against the dollar overnight, while the Korean won climbed to a three-month high.
|“Keep a close eye on the latest news out of Greece, and be prepared to react if events pan out!”|
If the euro can recapture the 1.10 level — and especially 1.12 — we’re going to see the dollar longs really start to panic. That, in turn, would be yet another positive force for everything from oil prices to emerging market shares and bonds. So keep a close eye on the latest news out of Greece, and be prepared to react if events pan out!
In the meantime, it’s your turn to speak out! Will Varoufakis’ exit help grease the wheels of any negotiation? Or is it too little, too late? What impact do you think this will have on the euro currency or the U.S. dollar? And how are you adjusting your investing strategy, if at all, to react? This link to the Money and Markets website should point you in the right direction if you’d like to add your comments.
|Our Readers Speak|
Drone strikes and energy policy were on your minds over the past couple of days, based on the discussions over at the website.
Reader Dan backed using unmanned drones in global hotspots, saying: “The drone warfare is worth it. Think how much more collateral damage there would be if we used armed soldiers and aircraft dropping bombs.
“I am sorry for the hostages that were taken, but ISIS was going to kill them anyway. We have no business being over there in any of the Middle East or northern Africa, and I hope that it will end soon.”
But Reader Chuck B. said: “The deaths of the hostages seem to be regarded by the White House as simply unfortunate ‘collateral damage.’ Like the deaths of police victims in New York, Ferguson, Mo., Indianapolis, Baltimore, and elsewhere.
“It’s all part of the ‘Master of the World’ psyche. Who are we to tell the rest of the world how to run their lives, so long as they don’t actually harm us? If they do us harm, of course, BOOM!”
As for tapping new foreign markets for U.S. crude oil, Reader Robert C. said: “I am in agreement. We should export oil to Europe and Japan. It is time that we stood up to Putin. Europe and Japan will be responsible for refining the oil. By exporting oil to Europe and Japan, we take the pressure off of supply and gradually prices will rise again. The Europeans will benefit from our giving Putin competition.”
Finally, Reader Jim backed one of the world’s largest commodity industry players as a “sleeper” play on rebounding energy prices. His view: “What about Freeport McMoRan (FCX, Weiss Ratings: C) as an energy rebound play? This former blue chip has been totally trashed by recent events but is still very much in the game.
“They have bought a lot of promising acreage in the Gulf of Mexico from BP (BP, Weiss Ratings: C-) and plan to greatly expand production over the next several years. I don’t know if copper is poised for any kind of rebound but they also just bought the biggest copper mine in Europe. If both these commodities make just modest recoveries, FCX could deliver some outsized returns.”
Thanks for your comments, and if anyone has any of their own to add, I encourage you to do so. I’m definitely a fan of exporting U.S. crude, as you know, and FCX does indeed look intriguing as a possible rebound play. It has a nice bottoming pattern on the charts, but it still needs some more confirming action before I’d signal an “all clear.”
Here’s the link to add your thoughts — hop on over there when you can!
|Other Developments of the Day|
The cleanup continues in Nepal after Saturday’s tragic 7.8-magnitude earthquake. The death toll hit 3,800 earlier today, with bodies continuing to be pulled out of the rubble of the capital Katmandu and surrounding villages. Dozens remain trapped or dead on Mount Everest following avalanches and landslides there.
Chinese officials reportedly want to pare down the number of state-owned enterprises in sectors like energy, materials and transportation. There are roughly 112 major SOEs, and a number down around 40 is seen as more desirable.
That could lead to mergers and acquisitions among the large, publicly traded entities, including those that trade here as American Depository Receipts (ADRs). Many of them, including PetroChina (PTR, Weiss Ratings: C-) and Sinopec (SNP, Weiss Ratings: C-) rallied in U.S. trading as a result.
The defense team for convicted terrorist Dzhokhar Tsarnaev is attempting to head off a death penalty verdict, beginning today with testimony in Boston federal court. Tsarnaev’s defense will run for a couple of weeks, after which time jurors will decide whether he should get life in prison or execution for the Boston Marathon bombings two years ago.
Fitch Ratings slashed Japan’s sovereign debt rating to A from A+, citing the nation’s rising debt load and its unwillingness to tackle it head on. The country’s debt-to-GDP is surging toward 250 percent of GDP, thanks to slow growth, the burden of caring for an aging population, and other problems.
Anything you’d like to share on these stories? Then head over to the website and weigh in!
Until next time,