Contrarians may warn that this Fed-sponsored bull market can’t go on forever, and the late economist Herbert Stein promulgated Stein’s Law: If something can’t go on forever, it won’t. But after a Graccident-free weekend, traders are saying, bring it on. Their greatest fear is Fear of being Left Out (FOLO), and they have long since learned that the authorities — the Treasury and Federal Reserve, are standing by this market, even more so with an election year looming.
In the first clip
, Dennis Gartman, of The Gartman Letter, says a lot about how to trade with a six-month horizon. Gartman explained to Mandy Drury that it is in Greece’s interest to leave the euro, but it is not in Germany’s, because Germany needs the peripheral countries in the euro in order to weaken that currency and boost Germany’s exports. He therefore recommends selling the euro and buying an assortment of European stock markets, including those of Germany and Greece itself. Asked by Tim Seymour whether the euro’s weakness will be accompanied by a strong dollar and what the effect would be on commodities, Gartman agreed that the dollar will strengthen, although this is in part due to his belief that the Fed will raise interest rates. A stronger dollar will have a bearish effect on commodities such as crude oil.
Next, Ylan Mui, of the Washington Post, contributed to a bullish panel
discussion of the aftermath of a coming deal for Greece. Jon Najarian made the point that the current rally can more than pay for a bailout of Greece. Then Mui added that the prospect of another “taper tantrum” is helping to delay a rate rise, although she thinks the Fed will “fulfill its plan.”
CNBC’s Michelle Caruso-Cabrera reported from Athens
that a deal for Greece is “closer than we’ve ever been,” and European negotiators are no longer rejecting Greek proposals out of hand. Further, the leftist Greek government appears to be willing to accept more austerity rather than leave the euro. She pointed out that the group demonstrating today had a different attitude from last night’s demonstrators, as she found “a real class divide as this gets down to the wire.”
Finally, Willem Nabarro, of Exane-BNP-Paribas stated explicitly what other
commentators have been implying, that with a Greek deal almost in the bag, Europe is so strong that investors should dump U.S. stocks to fund purchases in Europe, because buybacks and dividends have contributed to outperformance in the U.S., but Nabarro doesn’t think they are sustainable. He cites Yellen’s plans to normalize monetary policy, making it more expensive to fund these actions by companies. This writer has questioned whether the Fed will get around to raising rates, finding excuses in a slowing economy and an approaching election for further delay, and would suggest further that the Fed will allow its client TBTF banks to pay dividends and buy back stock.
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