Good morning.
European stocks rose to 17 month highs and commodities gained after a stronger-than-expected Chinese manufacturing report raised hopes that the global economy is stabilizing. Meanwhile, the U.S. dollar slid to a six-week low against the euro as U.S. budget talks remained deadlocked. The Goldman Sachs Commodity Index (GSCI) of 24 raw materials increased .3%, led by 1.1% gain in wheat and .5% gain in natural gas. Greek ten year government bond yields fell below 15% for the first time since July 2011 after Greece launched a plan to buy back up to 10 billion EUR of its debt as the bailed-out nation seeks to reduce its debt load (pfft). European stocks are up .97% at mid-day. The S&P 500 index opened .53% higher, but quickly gave up the gains. Although stocks have firmed up after the correction to 1350, some sideways action is expected after a quick 5% bounce. I’m playing it safe for now with a 55%+ cash position. My stocks are $VHC, $SRPT, and $MTL.
The Fed has showed us how mightly their pens can be, which is why I didn’t raise more cash. However, after the recent run, we are in no-man’s land at best and overbought at worst.
As the Ficasl Cliff deadline approaches, I expect stocks to be sold again. With Boehmer saying “I would say we’re nowhere”, and stocks elevated, I’m not a head-first buyer just yet.
2 