Doves And Hawks Greeks And Germans

As is their usual pattern, markets can’t decide on what the FOMC minutes actually mean for the U.S. economy as a whole.

Gold was up on a dovish interpretation of the minutes for a while today, having traded as high as 1224. It is now down to 1207, just a couple of dollars off its lows. The Dow is trading in the middle of its day’s range, having swung up, then down, as well. The S&P, which touched a record today, is following suit. The NASDQ is up, largely on the strength of Apple.

Crude oil responded to an unexpected rise in U.S. oil stockpiles. The build was supposed to be around 3 million barrels but it ended up rising to 14 million barrels. Crude shrugged off the urge to shoot higher after a devastating explosion and fire at a refinery in California. Early in the day West Texas Intermediate was down 4% but has since recouped a bit, being down now less than 2%. Of course, crude fluctuations have had an impact on equities, particularly the Dow.

On the international front, Germany has rejected a deal with Greece that would have helped resolve that country’s economic malaise, one of its own doing. Greece has long been a reluctant partner in European affairs, many there feeling as if it was treated unfairly after the second World War. From there, Greece’s economic history has been peripheral to the rest of the continent.

Early on, Greece elected to opt out of certain measures under the post war reconstruction effort called the Marshall Plan, most notably provisions for a revolving credit scheme funded through an outright grant by the United States. This program was the footing for creating the forerunner of the EU and came with a couple of strings attached.

One string was that certain keystone industries – steel, coal, high tech ceramics, ship building, etc. – would draw from the grants and then return to circulation a very high percentage of their profits. Today’s prosperous European countries said yes and got off to a huge head start, while today’s economic backwaters stayed on the sidelines. (Or were excluded as non-belligerents friendly to the Nazis, like Spain.)

Out in the field, too, there is a distinct “anti-Nazi” tone from Greece, (not to mention an anti-Jewish-banker tone), which is ridiculous. While no one should ever forget the heinousness of the Nazi regime, we live in a world 70 years removed from it. Greece was devastated by the nefarious doings of the Nazis, but so were The Netherlands and Belgium, who suffered greatly and yet recovered magnificently. A country such as Poland had not only total devastation by the Nazis but 45 years of debilitating and corrupt governance by the Soviets. Yet, there stands Poland, a thriving economy only 25 years after coming in from the cold.

The Greeks want no interference and the EU is going to give them just that. To the Greek people: someone has got to pay the bills. If not the EU, then who?

One of Greece’s complaints is that it will take 50 years to pay off the debt they’ve elected to accumulate. Well, that’s not so bad from the vantage point of people who have 30-year mortgages on their houses. And it’s certainly nothing to the British who, last year, just finished paying off their loans for the Napoleonic Wars, which ended 200 years ago.

European equities flicked away the concerns over the Greek impasse to rise modestly.

Gold bulls were not the beneficiaries of any of these events. Gold seems very tied to its own rhythm right now, technically and fundamentally. As we have been saying, this is a wait-and-see period.

Wishing you as always, good trading,