This week promises more volatility as it is a short week, more data about the US economy comes out, Greece promises more excitement, and Iran comes to the table with a deal or it does not.
- Though markets will be closed for the Good Friday public holiday, the Labor Department will release March U.S. payrolls in the morning. Wall Street will keep one eye on the situation in Greece. The Greek government promised its European Union creditors a comprehensive list of economic reforms for Monday, a mandatory condition for future debt relief.
The first point above is an important one for the market, as the recent data about the US economy has shown some softness this winter, which is understandable given the horrible winter that beset the East and Midwest of the US and the fourth year of a major drought that has hit the west. If labor can show that it is holding onto gains, then, the market will like that.
Greece, of course, is more a sideshow than anything else. What is the likelihood Greece will default and quit the EU? Virtually zero is my guess. However, Iran is no sideshow, and the outcome there is pivotal for the world on two fronts.
First, Iran cannot be allowed to pursue a nuclear bomb. For the market, though, the big story is oil, oil, and more oil … Inventories are at a record, 80-year high.
- Oil prices fell for the second straight session on Monday as Iran and six world powers negotiated a deal for Tehran’s nuclear program that could end Western sanctions, allowing the OPEC member to ship more crude into an already flooded market.
The negotiations could go either way, but understand that if Iran and the six world powers fail to get a deal this week, an extension will likely happen, but so might stiffer sanctions. Stiffer sanctions will happen if no deal is reached and no extension is given. This will not likely affect oil prices, as Iran’s oil production and distribution are already stifled, but it will have geopolitical fallout and that could affect the market.
Now, if the powers reach a deal, and sanctions already in place are lifted gradually, then expect the price of oil to drop further, as speculation will go quickly to the bearish side. It will take time for Iran to ramp up and get its oil back on the legal market, but speculation always leads reality.
Turning back to the general market …
How crazy is all of this up and down? Okay, so maybe “crazy” is not the word, but “irrational” is appropriate. Everybody just needs to take a breath, chill, relax, or take walk in the woods, on the beach, up a mountain trail, or down the street to a favorite haunt. If not that, then take a look at technology, an interesting place right now in the market.
- Last week’s biotech pullback was largely a matter of giving up gains from last week’s Federal Reserve rally.
- U.S. stocks rallied more than 1 percent on Monday, with biotech stocks among the most active names amid a number of major deals in the space.
Money still flowing into the market via technology, the VIX is down again (as is the VXN), the Russell 2000 (small caps) is working back up, the US dollar seems to be holding steady, as is the euro, and gold is losing steam, again. Despite the irrationality (craziness?), all signs are the market is still just trying to find its balance. We will know more when the earnings start coming out.
Trade in the day; invest in your life …
