TUESDAY, JUNE 09, 2015
U.S. investors are finding little reason to push stock prices higher as they face a myriad of unanswered questions both here at home and internationally. The Dow Jones is now in negative territory for the year following three consecutive weeks of declines. The recent pullbacks aren’t stemming from any new developments, rather they are spurred by growing anxiety as we get closer to next weeks Fed meeting and an overall lack of “motivational headlines” to attract new money needed to further fuel the bullish campaign. Greece and their EU counterparts are supposedly in talks that may kick the can out to March of 2016. Certainly this is not being viewed as a solution, but rather simply prolonging the inevitable. Traders also appear a bit more concerned about the Chi- nese “bubble” which continues to inflate. Not only will the trade this week be digesting several key Chinese economic numbers, but an event that many big money managers are monitoring is whether the MSCI will allow top yuan-denominated stocks into its influential Emerging Markets Index. From what I know, a lot of funds have reportedly been buying up select Chinese stocks ahead of this decision and the event has been very much hyped in the Chinese press, which in turn has a ton of Chinese retail investors placing long bets. The worry is if the answer ends up being “no”, a massive knee-jerk type selloff could en- sue, in turn sending shockwaves through the rest of global markets. On the flip side, a “yes” could provide major bullish enthusiasm. I believe the decision will be announced this evening after the market closes, so there could be some potentially odd market moves come Wednesday morning. Today here at home, we will see a more detailed look at the U.S. job market with the release of April JOLTS report. Analysts will mostly be looking at the number of jobs that are going unfilled, which indicates a lack of qualified candidates. That’s not necessarily “slack” in the labor, something the Fed is watching closely, but it is problematic for employers in that the only way to fill those positions may be to start up- ping the compensation. That in turn eventually adds to inflation, the other major card the Fed wants to see played before raising rates. As for crude oil, it seems the market is keep- ing a closer eye on Iran, believing they could quickly add new surplus to global supply if sanctions are lifted by the June 30th deadline. Something else I find interesting is the fact many U.S. shale producers are saying that OPEC’s strategy of flooding the market with “supply” is failing, because the low prices have simply forced the U.S. producer to become even more efficient…perhaps lower energy prices are here to stay for an extended period?