|Dow||-6.62 to 17,862.14|
|S&P 500||-.06 to 2,068.53|
|Nasdaq||+12.83 to 4,800.47|
|10-YR Yield||-.003 to 1.988%|
|Gold||-$12.30 to $1,219.90|
|Crude Oil||-$0.75 to $49.27|
So What Will Get Hashed Out?
Summits, summits everywhere! That’s what everyone on Wall Street is watching right now – and what could determine the next big market move!
In Istanbul, Turkey, finance ministers and central bankers from the Group of 20 nations just gathered to discuss the global economic and policy outlook.
Their post-meeting statement (as usual) contained a lot of fluff and puffery. But the biggest takeaway I got was this: The global money war won’t be easing up anytime soon! That’s because officials essentially endorsed the use of currency depreciation as a tool to spark economic growth.
|Wall Streeters watching economic summits are hoping to catch a glimpse of the next big market move.|
You can expect more desperate foreign economies to try to spur growth through any means necessary. So get ready for more volatility, particularly in currencies — spurred by events like Canada’s surprise rate cut and Switzerland’s major change in currency policy!
In Minsk, Belarus, a peace summit that includes the leaders of France, Germany, Russia, and Ukraine is commencing. Before it does, both the Ukraine government and pro-Russian rebels are trying to get their licks in by fighting more aggressively in the country’s east.
So will that poison the well? Or will a deal get hammered out? The West wants rebels to pull heavy weapons out of eastern Ukraine, and is talking about more autonomy for the region as well as the establishment of some kind of a demilitarized zone. But President Vladimir Putin would have to give his buy in for this last-ditch effort to pay off.
If peace does return – even temporarily – it would likely cause the euro and European stocks to rally. If it fails, recent gains could fade quickly. But the biggest area of focus is …
In Brussels, Belgium, European Union officials are meeting with the Greek Finance Minister and officials from the International Monetary Fund to hammer out some kind of deal to prevent a “Grexit” from the euro.
Greece is looking to eliminate 30 percent of the reforms the country agreed to with its “troika” of lenders a few years ago. It claims they are killing growth. The heavily indebted country also wants to renegotiate the terms of its debts, and allow for more domestic government spending.
|“If you’re not already following the news from overseas, and the market reactions, I suggest you do.”|
But Germany and other creditor nations are staunchly opposed to a major re-write of past agreements. We should hear over the next day or two how things are going, and depending on what comes out of this summit, it could have major implications for the markets.
So if you’re not already following the news from overseas, and the market reactions, I suggest you do. They could lead to severe volatility in everything from currencies to bonds to stocks.
With that in mind, what do you think we’ll hear from Europe? Progress … or not? More can-kicking? Or something that finally puts Greece on the back burner? And how about the global money wars that are breaking out? What impact do you see them having? Let me know over at the Money and Markets website – and fasten your seatbelt for one heck of a rollercoaster ride!
|Our Readers Speak|
Yesterday’s piece on the oil market got the discussion going on the future direction of prices, and I really appreciate you weighing in.
Reader Shar thinks we’re at or near the end of the months-long selloff, saying: “All that’s left is the last ‘Hail Mary’ play which will send oil prices back down a bit — and after that, all bets are off towards the positive. Considering all the intelligent moves a majority of the oil companies have made, I feel we’ll be in excellent position to really grow our energy companies in every sector from a much stronger foundation than before.”
Reader Jim also took a bullish stance, giving the following “big picture” summary to explain why:
“We consume 93 million barrels per day. We are producing about 94 million BPD. Most of the world’s big fields are over the hill and depleting at the rate of 4.5 million BPD annually. Most new oil costs $75 or better to find and produce. Most OPEC producers need $90 or better to meet domestic outlays.
“With natural depletion and the 30-40 percent budget cuts from big oil companies, the surplus should dry up fairly quickly. Just because gas is cheap, consumption should rise. It seems logical to me that the price should stabilize between $75-$90 by this time next year.”
But Reader Jim W. took the opposite tack, suggesting weak economic growth and OPEC intransience to production cuts should continue to weigh on pricing. His take:
“I don’t think we will be seeing oil prices go up any time soon. With Europe’s economy in the tank along with Japan’s, the demand for oil is going to stay down. Another reason for the oil price to stay low is that nobody wants to cut back production.
“In the past, we have depended on Saudi Arabia to cut back production to control prices. But they’re refusing to cut back and instead are increasing production. In the fracking areas, they’re losing money hand over fist, so they’re pumping as much oil as they can to try and stay solvent. As long as the world economy stays down and oil producers continue to pump as much oil as they can, oil prices will, at best, stay low and, at worst, continue to drop.”
As you can see, the debate is far from settled. I’m leaning bullishly, but will be watching closely to see if oil undercuts the recent low down at $43 and change. On the upside, I believe $54.50 and $59 are key technical levels to watch. We break both of those and it could signal a much larger advance over time!
If you have anything else to add, don’t forget to use the website!
|Other Developments of the Day|
President Obama is officially asking Congress to approve foreign military action against ISIS. The authorization would last for three years, would have no specific geographic limitations, and would allow for limited use of ground forces (likely Special Ops troops).
NBC News decided on a middle ground punishment for noted anchor Brian Williams. He will be suspended without pay for six months, rather than fired or reinstated. It should be noted that the investigation into his alleged embellishments and misrepresentations about his time in Iraq, during Hurricane Katrina, and other past experiences is ongoing.
Speaking of big changes in TV land, Jon Stewart of The Daily Show announced he will be stepping down later this year. The sarcastic anchor has hosted the show, known for its sharp political and media commentary, since 1999.
As always, don’t forget to share your thoughts on these or other important news items at the website!
Until next time,