The ‘devil is in the details’ seems appropriate when looking at the Greek debt solution as threats of a mutiny, mass protests and multibillion dollar bridge loans are on the table this morning before the important ratification of the terms verbally agreed to by Greek PM Tsipras. Tsipras was brought to power through the Anti-Austerity party so it is no wonder that they are not pleased with this deal which essentially gives the once proud Greek nations sovereignty over to the creditors. In fact, there is a stipulation in the deal that states that no major legislation may be brought to the floor without expressed pre-approval by the creditors of the new bailout. While that seems rational for a corporate bailout, it seems entirely un-rational for a nation to agree to allow the banks to decide what can and what cannot be voted on democratically. This is the real crux of the problem getting to the next step for Greece as citizens and statesmen alike are appalled by this measure and are doing what they can to scuttle the deal, though it does appear at the moment to have enough support to squeak by this afternoon.
Good news is once again bad news as we have seen more often than not here in the US as central banking has ruled the price discovery for years now. Similarly, we are seeing that start to dominate the price action in China as their GDP data was stronger than expected but produced a sell off as it becomes slightly less likely that the central bank would be adding more liquidity any time soon. The 4 percent fall in overnight Chinese equities appears to have a cap on our markets which definitely feel like they would like to test the all time highs in the US indices. Tangential market caps of this nature tend to be fleeting which would likely mean a possible later afternoon rally after Yellen stated that the US economy feels strong.
Crude oil had a sharp rally yesterday afternoon as the fundamental issues affecting the price discovery appeared to favor the bull camp. Further follow through came on the heels of the afternoon API report that stated WTI crude supplies had fallen by a staggering 7.3 million barrels. Confirmation of that data, though not as egregious in its decline, was found in the EIA data that showed a decline of 4.3 million barrels for the week. Nonetheless, crude oil remains slightly negative on the day at just below 3 dollars. The balance of the data fundamentally is bullish for WTI yet remains slightly bearish for Brent, possibly making the spread between the two the most significant market mover rather than the subdued nature of both of the outright contracts.
Natural gas remains bullish but just modestly as the slow grind higher continues with the market trading at 2.90. Most likely there will be a pause as we await tomorrows supply report before taking the next step higher, should the data support it.
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