Stocks Rocket Higher as Greece Burns
By: Tim McPartland,
Stocks have shot up today – for who knows what real reason. While Yellen was read as dovish yesterday, todays employment claims report would seem to bolster the case for a rate increase sooner rather than later. One has to really question who is pulling the Wall Street strings this time around. Earnings continue lackluster with forward PE’s around 18-19–to us fully priced and with other cross currents there is no real reason to rally on the news. In the end markets will do whatever they do.
Interest rates have ticked a couple basis points higher today–although generally they are flat. Currently it would appear that bond traders are a bit confused on which way to drive rates. I think this market is looking at the data and coming to the conclusion that while economic data is lukewarm, Yellen may hike in September (although the consensus has now moved to December).
While the U.S. market has skyrocketed Greece continues to teeter ever closer to out and out default. The Germans appear to be holding the line on the ongoing shenanigans–and honestly someone has to put an end to the game playing. The situation places alot of uncertainty into the market and while default is a negative to all involved it would lend a partial resolution to the game. After default they can move forward negotiating the terms and conditions for repayment of their debt.