Monday, March 17, 2014

Monday Morning Musings

Markets shot out of the gate higher this morning after the vote in Crimea in favor of being annexed to Russia.  While the International community is not in favor of this and is considering sanctions, it looks like there was a sigh of relief in the market that military force was avoided.  This likely also led to some short covering which exacerbated the spike higher at the open.

The President spoke this morning and EU officials are meeting to come up with a response that is likely to include sanctions of some sort.  This could take some of the air out of the rally if the news comes out during market hours.

In economic news, the February NAHB Housing Index rose to 47 from 46 last month.  Also, the Empire Manuf. Survey for March rose to 5.6 from 4.5 last month.

Asian markets were mixed overnight.  Hong Kong's unemployment held steady at 3.1%.  And the People's Bank of China said they will allow the yuan's daily trading band to expand to 2% from 1%.

Oil prices are a little weaker today near $98.60.  And gold prices are roughly flat around the $1379 level.

The 10-year yield is bouncing a little to 2.67%.  And the volatility index, which spiked as high as 18 on Friday over Crimea concerns, has fallen back to the 16 level so far, down -10% today.

Trading comment: The stair-step market to a couple of steps back last week on the geopolitical concerns with Russia.  We has some higher than normal cash balances from recent profit taking as well as bonds that continue to be called by the issuers.  So we started putting some cash back to work into last week's weakness and continue to do so today.  The major indexes still trade above their rising 50-day moving averages and we would not be surprised to see performance anxiety among portfolio managers continue to exert its influence as we approach quarter end next week.


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